Carbon emissions, ESG performance, and market reaction: Implications for sustainability project management in Thai listed companies

Climate change has increased the importance of carbon emissions and sustainability disclosure in corporate decision-making and capital markets. Despite growing interest in environmental, social, and governance (ESG) practices, limited evidence explains how ESG performance influences the relationship between carbon emissions and market reaction, particularly in emerging markets. This study examines the relationship between carbon emissions and market reaction and investigates the mediating role of ESG performance using panel data from 110 companies listed on the Stock Exchange of Thailand during 2021-2024, comprising 440 firm-year observations. Random-effects panel regression and mediation analysis are employed to test the proposed relationships. The results indicate that carbon emissions are negatively associated with market reaction, suggesting that investors perceive firms with higher carbon emissions as facing greater environmental and financial risks. ESG performance is positively associated with market reaction and partially mediates the relationship between carbon emissions and market reaction. These findings suggest that stronger ESG performance and sustainability disclosure can partially mitigate the adverse market effects of higher carbon emissions. This study contributes to the literature by providing empirical evidence from an emerging market where mandatory sustainability disclosure has recently been introduced. The findings also provide implications for sustainability project management by highlighting the importance of integrating carbon management and ESG practices into organizational planning, implementation, and performance evaluation to strengthen stakeholder confidence and support long-term organizational value.