Extended Abstract

Climate change and its economic consequences are priority on the United Nations’ and European Union's agenda. U.S. National Oceanic and Atmospheric Administration (NOAA) has documented a surge in extreme weather events in recent years. The global community has focused on finding and implementing sustainable environmental and social practices and responsible corporate governance (Kiron et al., 2015; Rezaee, 2016). Literature documents that climate change has become an important factor with large effects for organizations (Krueger et., al 2020; Addoum, et al., 2020; Hossain and Masum, 2022). Therefore, private sector has been taking action to mitigate the effects of climate risk and develop strategies to foster competitiveness and profitability through sustainable practices (Heinkel et al., 2001; Chasiotis et al., 2023).

Environmental responsibility is also timely for public sector due to large-scale shifts in weather patterns, global warming and environmental degradation (Frost and Seamer, 2002). Core public sector organizations are either taking up carbon neutrality or being asked to become carbon neutral (Ball et. al., 2009). A stream of research has highlighted the use of environmental management accounting practices to support environmental decision-making by local governments (Ball, 2005; Qian et al., 2011). Ball and Craig, (2010) state that local governments are in a better position than central and state governments to be at the forefront of the development of such practices and proactively taken measures on sustainable development at the community level. Literature highlights the role of local governments to implement climate change policies due to their responsibilities and decision-making powers in traffic, public transport, economic development, housing, and urban and land-use planning (Vermeulen and Kok 2002; Allman et al. 2004; Ball, et. al., 2009).

Local governments are motivated to respond more actively against climate change and project a low environmental footprint to improve their image and favor economic development (Krause, 2011; Portney, 2013a). Local governments have incentives to gradually reduce their negative effects on the ecological environment by investing in less carbon-intensive infrastructure. Integrating social and environmental criteria within resource acquisition and decision-making process can contribute to reducing local government waste output and environmental footprint (Lukacs de Pereny Martens, 2022). Furthermore, local governments’ initiatives towards green practices are used to promote economic development (Hawkins & Wang, 2013; Portney, 2013b, Hawkins, 2010; O’Connell, 2008). The improvement of life quality expressed via maintenance and protecting of natural landscapes can become a competitive economic advantage (Leigh & Blakely, 2013).

Programs in reducing carbon emissions and climate investments focusing on green technology are long-term initiative and exhibit higher levels of irreversibility (Chesney et al., 2017; Ginbo et al., 2021). Local governments with irreversible investments incur high levels of adjustment costs to remove committed resources and to replace them when activity is restored. In addition, the implementation of green innovative programs resulting in long-term benefits, known as explorative strategies, includes resources’ efficient exploitation (Yanarella and Levine 2008). The type of strategy followed by local governments depends on municipality’s commitment to protect natural environment and community’s living conditions (Koski 2007). There are exploitation strategies to target at immediate cost-savings and exploration strategies to generate broader and long-term benefits as local governments are interested in the enhancement of living conditions and in the effective resources’ management (Fiorino 2010).

Deliberate managerial resource commitment decisions attribute asymmetric cost behavior. Adjustment costs and strategic choices are significant determinants of these decisions. Adjustment costs drive the asymmetric cost behavior (Anderson et al., 2003; Banker and Byzalov 2014) and entity’s strategic position determines not only the intensity of asymmetric cost behavior but also its direction (Ballas et al. 2022). In the current paper we take a fresh look at the relationship between local governments’ carbon emissions and the intensity and direction of municipality - level asymmetric cost behavior. Local governments strategic energy plans to reduce emissions (such as reducing the energy consumption of municipal buildings, energy saving policies for street lighting, innovative and renewable projects) which entail high adjustment costs, especially during periods of low revenues, are expected to affect the asymmetric behavior of municipal cost. We speculate that, municipalities with low levels of emissions increase the slack of their resources more than municipalities with high levels of emissions. This is because a high level of practices and proactively taken measures on sustainable development at the community level increases the level of adjustment costs and drives local governments’ managers to maintain the level of municipal expenses in the face of revenue declines since these expenses are viewed as green investments to reduce emissions. The level of emissions is selected as the primary variable of a local governments’ intensity of green investments in order to examine the relation between the asymmetric cost behaviour and municipal climate policies.

To investigate our propositions, we use annual greenhouse gas emissions (CO2) measurements for a sample of 325 Greek municipalities with annual observations ranging from 1.298 to 2.954 from 2011 to 2020. We apply a log-linear econometric specification for testing municipal asymmetric cost behavior (Anderson et al., 2003) as reviewed by Banker and Byzalov (2014). The model has been adjusted to the types of revenues and expenses in the local governments.

We provide empirical evidence that the degree of cost stickiness is negatively associated with the local governments’ carbon emissions. In local governments with low levels of emissions, it is plausible to assume that managers have a relatively long-term orientated horizon, they are interested in the enhancement of living conditions, proactively taken measures on sustainable development and, thus, they decide to maintain the level of expenses in the face of sales declines since expenses are viewed as investments that are associated with climate change policies.

Keywords :

carbon emissions, cost stickiness, local governments

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The paper investigates social sustainability actions with a particular focus on the dynamics of collaborations among companies and between companies and public institutions. Social sustainability implies protecting social capital such as healthcare, education systems, judiciaries, and welfare for future generations. Starting from the hypothesis that collaboration among organizations is beneficial in this context (Baumol, 1970), the study analyses the propensity of companies to engage in such collaborations and the role of public administration in encouraging these efforts. Traditionally, social sustainability has been seen as a responsibility of public organizations; however, recent trends indicate a growing involvement of businesses and hybrid organizations. Consequently, government sustainability goals often overlap with corporate social responsibility objectives. In this context, collaborative governance emerges as a vital mechanism for aligning public and private efforts toward achieving shared sustainability goals.

Recent studies have scrutinized the influence of businesses on public policies for sustainability, with a predominant focus on environmental sustainability (Lyon, et al., 2018; Favotto & Kollman, 2021). However, the relationship between businesses and public administration in the context of social sustainability remains relatively unexplored. Social sustainability, a paradigm defined by scholars in various ways, encompasses aspects such as human safety, welfare, and wellness (McKenzie, 2004; Vallance, Perkins, & Dixon, 2011). From a corporate perspective, Mani et al. (2016) describe it as encompassing both product and process aspects that impact stakeholders including suppliers, manufacturers, customers, and society.

Furthermore, there is a notable gap in our understanding of the influence exerted by public administration on firms' decisions to engage in social responsibility actions. To address this gap, we conducted a statistical analysis to identify the factors that drive manufacturing companies to engage in social sustainability actions and collaborations and to evaluate the role of public authorities in incentivizing social sustainability actions and collaborations.

The study is based on a questionnaire administered to identified manufacturing businesses in two European regions: Friuli Venezia-Giulia (in Italy) and Rhineland-Palatinate (in Germany). We seek to explore the differences and similarities in how collaborative governance is practiced in these regions, focusing on factors such as regulatory frameworks and attitudes towards collaboration. The two regions show similar characteristics in terms of economic vitality, level of individualism, and administrative culture: comparing two similar contexts improves comparability and allows shedding light on the reasons for any differences found through the questionnaires and, therefore, on policies to be imitated or, conversely, avoided. This comparison will also help to identify practices and common challenges in fostering public-private collaborations for social sustainability at a European level, offering insights that can be applied across different national contexts.

The web-based survey assesses perceptions of the role of public administrations in fostering the adoption of social sustainability practices; it analyses the organization’s sustainability initiatives; and lastly, it examines the organization’s sustainability collaborations. The questionnaire also involves aspects related to sustainability reporting: in particular, it is intended to find out whether there are any experiences of collaborative reporting where sustainability actions are carried out in cooperation with other parties.

The research holds implications for policymakers and sustainability policies at the regional level. Specifically, it facilitates an evaluation of businesses' perspectives on the contribution of public institutions to promoting social sustainability initiatives. Furthermore, the paper provides a means to assess the factors impeding the onset of social sustainability initiatives. By integrating findings on collaborative governance, this study underscores the importance of coordinated efforts between public and private sectors in achieving sustainable development goals.

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Financial sustainability constitutes a fundamental value of public action. Sustainable public finances provide increased security, giving states greater capacity to face crises. Understanding the evolution of public debt and budget deficits is essential to grasp their impact on stimulating the economy.

In this qualitative and quantitative study, we analyse the evolution of public debt and budget deficits in the 27 Member States of the European Union between 2018 and 2023, examining the behaviour of various Member States during this period. The selected period is significant for understanding the evolution of public debt and budget deficits and the effects caused by the temporary suspension, from 2020 to 2023, of European rules regarding Member States' deficit and public debt limits, established in the Stability and Growth Pact (SGP). We aim to characterise the behaviour of Eurozone Member States and non-Eurozone Member States, conducting a comparative analysis of these two groups. This analysis allowed us to understand the impacts of the temporary suspension of such rules on Eurozone Member States compared to non-Eurozone Member States. The data collected from Eurostat databases leads us to conclude that fiscal consolidation and long-term sustainability are fundamental principles incorporated into the national finance management of both groups of states. We also analysed the evolution of public spending between 2018 and 2022, trying to understand the contribution of health expenses to the evolution of other aggregates in each group studied.

We also conclude that greater freedom of action for both groups of Member States did not result in the abandonment of these rules nor in an apparent disregard for the adverse effects that high levels of deficit and debt have on the resilience of European Union Member States in the face of future crises.

The search for key of public financial management sustainability has always been a critical issue and a fortiori now, as our world enters into a phase of endemic crises. The growing need for ensuring the social wealth and values was developing in parallel and has never been as challenged as by turbulence. This conceptual paper seeks to bring together these two distinctive areas on public financial management sustainability and social sustainability, which unfold during crises. By focusing on actors and tools they apply to respond to and manage societal effects of crises, this paper explores how public financial sustainability unfolds together with social sustainability in critical situations. Our analysis is relevant for practitioners as we debate around on the ways different actors responding to crises to address social and financial forms of sustainability and how they try to find a fragile balance between these forms.