Symbolic Capitalism vs. Substantive Action: A Governance Diagnostic Model for Evaluating Executive Compensation Alignment with Verifiable Carbon Accounting Standards

• Asher Noah

  covenant University

  Author

The decoupling of executive compensation from verifiable environmental performance represents a critical governance failure undermining corporate climate accountability. This study addresses the gap between symbolic compensation practices—where carbon-linked pay exists in form but not substance—and substantive emissions reductions. Drawing on a panel dataset of 1,122 firms across 28 countries spanning 18 years (13,413 firm-year observations), this research develops and validates a Governance Diagnostic Model (GDM) that evaluates the alignment between executive compensation structures and verifiable carbon accounting standards. The GDM integrates diagnostic constructs from greenwashing literature with predictive analytics to identify symbolic versus substantive governance practices. Results demonstrate that governance mechanisms—including board size, sustainability committees, and independent directors—significantly moderate the executive compensation-carbon performance nexus, with the GDM achieving 89.4% accuracy in distinguishing symbolic from substantive compensation alignment. The model reveals that effective governance amplifies the impact of climate contracting on direct (Scope 1) emissions reductions by 42.7% . This research contributes a replicable diagnostic framework enabling boards, investors, and policymakers to systematically evaluate compensation-accounting alignment and enforce environmental integrity, offering practical tools for enhancing transparency in corporate climate claims.

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Copyright (c) 2026 Asher Noah (Author)

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