Abstract
The previous literature has demonstrated that countries’ regulative contexts positively influence voluntary corporate carbon disclosures. However, little research has been conducted into the relationship between the different components of the regulative dimension of institutions and voluntary carbon disclosure. Drawing on the theoretical framework of New Institutional Sociology (NIS), this study examines the influence of the different components of the regulative context (rules; monitoring mechanisms and punishments; rewards) both on firms’ propensity to disclose carbon information and on the quality of disclosures. Based on a global sample of 2176 companies that participated in the 2015 Carbon Disclosure Project (CDP) climate report, this paper uses the Heckman two-stage approach in an attempt to model firms’ decisions as to whether to disclose carbon information, as well as the quality of said disclosures. The results show that the regulative components positively influence firms’ decisions to voluntarily disclose carbon data. They also show that the quality of disclosures is positively affected by climate-related rules and rewards, but that it is not influenced by monitoring mechanisms and punishments related to climate change. This paper is the first to take the step of addressing the components of the climate-related regulative pillar of institutions in the same regression setting.
Highlights
With the increase in disclosures of carbon-related information by companies in recent years, voluntary carbon disclosure has become a prominent research topic
This study finds that the rules component of the regulative pillar is positively and significantly associated with voluntary carbon disclosure
The results show that companies headquartered in countries that have implemented a rewards system for behavior in line with established climate change regulation will be more likely to disclose carbon information
Summary
With the increase in disclosures of carbon-related information by companies in recent years, voluntary carbon disclosure has become a prominent research topic. There has been considerable research into the factors influencing voluntary carbon disclosure, there is still very little scientific understanding of the institutional pressures involved, especially those related to the regulative dimension. In this regard, previous studies have found that the regulative context plays a crucial role in influencing voluntary carbon disclosure on the part of companies [6,7]. Prior investigation has found that climate-related laws contribute to increased visibility of climate change challenges in society This in turn contributes to the generation of social expectations as regards appropriate environmental behavior of firms subject to these laws as well as those that are not [7]. According to institutional theory, firms may participate in voluntary carbon disclosure in order to adapt to social expectations generated by climate-related
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