Sustainable Business as a Force for Good in the Context of Climate Change: An Econometric Modelling Approach

Global CO₂ concentrations continue to rise despite significant efforts to decarbonize and reduce greenhouse gas emissions. This paper examines the role of sustainable business in reducing and limiting global CO₂ concentrations based on daily CO₂ data from the Mauna Loa Observatory. Based on the theory of the carbon cycle, factors considered significant in determining global CO₂ concentrations include emissions, affected by economic variables like the crude oil price and Dow Jones Sustainability Index but also absorption capacity, affected through biomass growth by astronomical variables such as total solar irradiance and cosmic rays. Considering pair-wise correlations between variables, particular attention is drawn to the fact that in the COVID-19 pandemic, when everyone was working from home, cars were not allowed on the roads, and planes were not flying, the correlation between the Dow Jones Sustainability Index and the global CO₂ concentration was negative. The article tests the hypothesis that business can be a force for good and make a meaningful contribution towards reducing global CO₂ concentrations. To this end, it offers an integrated model of global CO₂ concentrations built according to the theory of the carbon cycle based on 2195 daily observations, including all the variables outlined above. The results confirm the hypothesis that business, expressed in the form of Dow Jones Sustainability Index, can play a role in reducing the global CO₂ concentrations. A range of policy conclusions is drawn.