Climate governance and emissions change across the global oil and gas value chain

This study investigates the relationship between climate governance mechanisms and short-term changes in greenhouse gas (GHG) emissions within the global oil and gas value chain. Using cross-sectional data from publicly listed firms, the analysis examines whether annual changes in emissions are associated with four governance dimensions: emissions policy stringency, emissions targets, climate risk and opportunity management, and prior emissions performance, as well as the value chain segment. The results show that emissions policy stringency and climate risk and opportunity management are most strongly associated with favorable emissions outcomes, while emissions targets and prior emissions performance also help explain variation in emissions change. Governance mechanisms integrated into managerial decision-making—such as emissions policy and risk management—have a stronger link to emissions reduction than mechanisms centered solely on disclosure. Additionally, midstream firms display more favorable emissions dynamics than upstream firms. In summary, climate governance is more closely linked to favorable short-term emissions dynamics when operationally embedded. These results offer practical implications for managers and policymakers seeking to improve internal climate governance and develop more credible disclosure and accountability systems to support emissions reduction.