Should the entire firm adopt environmental corporate social responsibility (ECSR)? Welfare comparison between full-ECSR and semi-ECSR

We develop a new setting of partial ‘green’ managerial delegation under emissions taxation, which is referred to as semi-environmental corporate responsibility (semi-ECSR). We also show that under precommitted emissions taxation, semi-ECSR, in which firm owners delegate only decision-making rights to environmental R&D to a green manager, can be privately and socially beneficial regardless of whether the market is a monopoly or a Cournot duopoly when environmental damage is small enough and when environmental R&D costs are sufficiently low. Then, the owners of the firm choose semi-ECSR rather than full ‘green’ managerial delegation (full-ECSR) that owners delegate the decision-making rights on production and environmental R&D. Consequently, in stark contrast to common beliefs, we reveal that full-ECSR does not always increase net profit and social welfare and that semi-ECSR can be indispensable for increasing social welfare and net profit.