Abstract

Does a firm's tolerance and nurturing of its employees with different sexual orientations influence its long-term sustainability? Based on corporate sexual orientation equality (CSOE), we find that firms with higher CSOE ratings emit less greenhouse gases (GHGs) that thereby ensure long-term sustainability. In addition, we report that the CSOE–GHG relationship is stronger for firms with less agency issues (e.g., less powerful CEOs and more monitoring). Finally, we find that carbon emitting firms (CEFs) that invest in more CSOE initiatives do not do it for external rewards (e.g., they suffer from lower valuations and face higher costs of raising capital).