Abstract
This study explores the empirical relationships between GHG emissions and an extensive range of business performance measures for UK FTSE-350 listed firms over the first decade or so of such reporting. Despite the popular and policy generated environmental imperatives over this period—along with growing evidence of the corporate added-value of having an ‘environmental conscience’, voluntary disclosure of emissions has been slow to adopt by firms. The leading contribution is to present clear evidence of a non-linear relationship, initially increasing with firm performance and then decreasing. An extensive pattern of non-reporting of emissions is also observed over time, and prior literature has introduced questions of endogeneity existing between firm performance and emissions. Steps are taken to ensure confidence/robustness of the results to these concerns. Accordingly, a two-stage (Heckman-type) selection model is used to analyse the emissions-performance nexus conditional upon the firm choosing to report (i.e. treating the choice to report as being endogenously determined with firm performance). From this—in addition to confirming the robustness of the non-linear relationship—it can be observed that the decision to report emissions is not directly influenced by wider social/governance disclosure attitudes of a firm, thus suggesting that firms disassociate environmental responsibility from social responsibility.
Highlights
Since before climate change had become a recurring central policy issue there has been a long-standing research imperative to better understand the relationship between pollutant emissions and economic activities
With the exception of Konar and Cohen (2001), and Wen-Hsin Hsu and Wang (2013), relatively little methodologically comparable research, nor extensive and direct investigation of emissions exists at the firm-specific level
Economic theory suggests that these free goods would be overconsumed by such firms to the material detriment of other firms and households, which would be expected to become manifest in terms of the external costs of pollution being imposed on others through clean-up costs, deleterious health effects etc
Summary
Since before climate change had become a recurring central policy issue there has been a long-standing research imperative to better understand the relationship between pollutant emissions and economic activities. Horvathova’s (2010) review seems to point to a paucity of robust, extensive empirical GHG emissions-performance studies over a reasonable time frame at the firm-level. This is despite numerous lobby group, media and Government policy-led exhortations to, and initiatives for, firms to reduce their level of GHG emissions. The main contribution of this study lies in the clear evidence of a non-linear relationship between firm performance and emissions, with the effect initially increasing with firm performance and decreasing after firm performance reaches a certain level This conclusion is subjected to scrutiny, and after controlling for various factors that may be deemed to influence the result, is shown to be robust. The results are presented and discussed with a summary of findings and some concluding remarks proffered in the final section
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
