CEO education level significantly affects companies’ CO2 emissions

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The higher your education level, the more aware you are of the climate crisis and apply this to your company through more energy-efficient initiatives.

That is the conclusion of a new CBS study of the connection between CEOs’ educational background and environmental impact.

“Our results show that companies where the CEOs have a higher education are significantly more energy-efficient than those where the education level of the CEO is lower. One year of additional education per CEO reduces the company’s energy emission with 7-9 percent,” explains Birthe Larsen, Associate Professor at the Department of Economics at CBS.

In collaboration with researchers from the University of Copenhagen and Bocconi University in Milan, she has studied the effect of education on energy emission in 600 Danish companies between 1996 and 2012.

“It does not matter what type of education it is – as long as it is above bachelor degree level. This indicates that the effect of education is about information and the ability to acquire the necessary knowledge,” says Birthe Larsen.

Hospitalisations explain the connection
Long-cycle higher education creates more awareness of the climate and CEOs bring this awareness with them to the workplace. This is the thesis of the study published in Journal of Environmental Economics and Management.

“We do not know exactly which initiatives CEOs with higher education level use in their companies that have a positive effect on the energy emission. However, the connection between educational duration and the amount of energy used is clear,” says Birthe Larsen.

The researchers have studied this connection by means of data from the hospital services in relation to what happens to the company when CEOs – with short and long education – are absent from the workplace due to illness.

“Our data shows that when CEOs with a higher education are on long-term sick leave, the energy efficiency is decreasing and more CO2 is emitted. When CEOs with a shorter education fall ill, nothing changes in this area,” explains Birthe Larsen.

Society and the climate benefit from the education of one person
The results of the new study is of immediate interest to the current climate debate and what we can do to lower the level of greenhouse gases in the atmosphere, according to Birthe Larsen:

“I think people should consider appointing CEOs with a higher education, not only because it is beneficial to the company but also because it has a positive effect on our environment in general,” she says.

Does everyone need a higher education in order to be good CEOs?

“Generally, we need a lot of different types of education in Denmark. In this case, however, it is very effective to appoint CEOs with a higher education. As already mentioned, it does not only benefit the individual person but society at large. I do not believe in over-education in this context,” Birthe Larsen concludes.
 

For more information please contact Journalist Ida Eriksen