Carbon myopia

The transition to a low-carbon economy is being impeded not only by technology and regulation but also by the mindset of corporate leaders, according to research in the International Journal of Sustainable Development. The study looks at companies in China and finds a degree of managerial myopia, where short-term financial gains are prioritised over efforts to reduce emissions and adopt more sustainable practices. The same lack of foresight is likely to be seen the world over.

Managerial myopia is a decision-making bias whereby executives prioritise immediate gains over long-term value creation. While this bias can improve short-term performance, this study shows that it commonly leads to underinvestment in areas essential for future growth, particularly environmental innovation.

The research focuses on what the team refers to as low-carbon total factor productivity. This is a measure of how efficiently a company uses inputs, such as labour, capital, and energy, while reducing its carbon footprint. In practical terms, it determines whether or not a firm can produce more with fewer resources and less environmental harm. The findings indicate that companies led by short-termism perform consistently worse on this metric.

Several mechanisms explain this relationship. Managers focused on near-term profits tend to cut spending on research and development, which is vital for developing cleaner technologies. They also scale back investment in environmental protection measures, such as pollution controls or energy-efficient systems. The team also notes that this mindset compromises human capital, which includes the skills, knowledge, and experience of employees. Training and development programmes, which support innovation and adaptability, are often reduced or even removed under short-term pressure. Such behaviour ultimately weakens a company’s capacity to transition to low-carbon operations.

Ma, F. and Li, H. (2026) ‘Managerial myopia and low-carbon transition development: evidence from listed companies’, Int. J. Sustainable Development, Vol. 29, No. 2, pp. 209–219.