*3.2. Dependent Variables*

A variety of proxy variables are used in the literature in order to evaluate corporate environmental performance. For instance, some research undertaken in the United States exploits the Environmental Protection Agency (EPA) information on the toxic emissions the companies have to communicate. With regard to this information, certain authors [38,68,69] adopt the emissions of toluene and benzene, both toxic, as a negative indication of a company's environmental performance. On the other hand, authors such as King and Lenox or Kock et al. utilise EPA data to elaborate a calculation of waste on the basis of toxicity [8,48]. This waste is calculated as the number of chemicals (measured in kilogrammes) the firm emits while considering the toxicity coefficient of those chemicals, which is the opposite of the 'reportable quantities' (RQ). EPA uses the idea of RQ to explain how an accidental spill of chemicals has to be reported if it exceeds a set level for that given substance. For instance, a spill of methanol, among the substances considered relatively innocuous, has to be reported if it exceeds 5000 pounds (2268 kg), whereas a spill of as little as a pound (454 g) of the highly dangerous chemical warfare agent Heptachlor has to be reported. The United States has not ratified the Kyoto Protocol, the international treaty aimed at achieving a reduction in greenhouse gas emissions, whereas Italy has; therefore, Italian businesses are encouraged to disclose their emissions. Consequently, as a negative proxy of a firm's green performance, we used the data on how much greenhouse gas it emits. Indeed, the *environmental performance* variable is measured as the natural logarithm of the quantity (Kg) of the emissions of CO2eq (CO2 equivalent) multiplied by −1. This means that a good environmental performance will be indicated by higher values of the variable. For instance, in 2018, Enel S.p.A. released a total of 104.29 million tonnes of CO2eq into the atmosphere, meaning that its *environmental performance* was −25,370 (= − ln 104, 290, 000, 000). CO2eq levels are often used in environmental studies as an indication of pollution, as well as being a point of reference that our sampled firms had to declare in their annual reports. This level was calculated as the weighted sum of the capacity of six different gases (carbon dioxide, sulphur hexafluoride, nitrous oxide, methane, hydrofluorocarbons, and perfluorocarbons) known to cause climate change according to the Kyoto Protocol (effective since 2005).
