Carbon management strategy effects on the disclosure and efficiency of carbon emissions: A study of Colombian companies’ context and inherent characteristics

Abstract

The purpose of this study is to identify the contextual characteristics and the company-inherent characteristics to analyze the disclosure of carbon emissions and the efficiency of emissions from the incorporation of a Carbon Management Strategy. This study is based on two models: i) Carbon emissions disclosure and ii) Efficiency of carbon emissions. We develop the models using the relationship between A) the adoption of a Carbon Management Strategy and the disclosure of carbon emissions and B) the impact of having a Carbon Management Strategy and the efficiency of direct and indirect emissions by Colombian companies. We use an Ordinary Least Square regression model for the carbon emissions disclosure model and a robust Ordinary Least Square model on the efficiency model of carbon emissions based on a balanced panel data of Colombian listed companies for the period 2016–2019 and we take sub-samples to analyze scope 1, scope 2 and scope 3. The study includes variables in relation to the companies’ context (fiscal strategy through carbon taxation and geographical location) and company-inherent characteristics (size and sensitive industry sector). The results of the carbon emissions disclosure model suggest that, in large companies, there is a positive relationship between the adoption of a Carbon Management Strategy and the disclosure of emissions for scopes 1 and 2. Sensitive industries disclose the three scope levels. In the regional analysis, the quantitative information on the scope is scarce and suggests that companies are not willing to disclose information that sends a negative signal of their environmental actions to the stakeholders. The results of the carbon emissions efficiency model show an important connection with the indebtedness of companies as a leverage mechanism to acquire technology or manage innovation projects for a more efficient management of Greenhouse Gas emissions. Shareholders also have an impact on efficiency. This is associated with a growing interest in incorporating environmental criteria into their investment decisions and the effect of obtaining information on emissions through voluntary reports. The Carbon Management Strategy index is positive for the efficiency of controlled indirect emissions (scope 2). This finding suggests that emission reduction strategies focus on the management of electricity consumption or the use of renewable sources to improve financial costs and emission indicators. This study is innovative because it is focused on a country without established Greenhouse Gas regulations and it is in a complex scenario where political stability and the rule of law are affected. This study raises a potential topic to explore further because the topic is in a germinal stage in the academic and business field.