Corporate Carbon Disclosure Research Articles

Achieving corporate carbon neutrality: A multi-perspective framework

The objective of this study is to analyze the corporate disclosures related to carbon neutrality in the agri-food sector using several complementary theoretical lenses. A qualitative content analysis of climate disclosures made by 135 food and beverage companies shows numerous gaps in the information they provide about carbon emission monitoring, the setting of net-zero emission targets, carbon footprint reduction, and offsetting practices. Taken together, these seriously undermine the credibility of the data disclosed. However, the proliferation of opaque information, unclear targets, and poorly defined concepts on carbon neutrality cannot be explained solely by greenwashing practices. Interpreting the results using functionalist, critical, and postmodernist perspectives leads to different conclusions about the underlying reasons for the lack of transparency in disclosures and offers a broader perspective on corporate carbon neutralization practices. This study makes important contributions to the literature on corporate carbon disclosure and the ideology of numbers that characterizes sustainability reporting. It also responds to calls from a variety of stakeholders for more scrutiny of corporate climate performance. The practical implications of the study and avenues for future research are also discussed.

Media Pressure and Carbon Disclosure of Indonesian Greenest Firms

Even with the advantages, carbon taxes are still one of the least effective instruments for climate policy. The purpose of this study is to examine the connection between non-mandatory carbon disclosures specifically in developing countries. This research sample is a green ranking company, and 108 data observations were carried out on 36 selected companies in the year between the Covid-19 out-break 2019-2021. Multiple linear regression testing is carried out to test the alleged hypothesis, by first testing the assumptions. The statistical results support the hypothesis that only legitimacy pressure (media exposure) increases corporate motivation to disclose carbon emissions. This study is novel because, while earlier research has mostly focused on the external factors that drive voluntary disclosure, our findings provide new perspectives and imply that media pressures offer a supplemental explanation for the variation in corporate carbon disclosure propensity that has been largely ignored in the body of existing literature. This suggests for the need to call for holistic mandatory disclosure requirements that encourage companies to participate in climate policy.

Do corporate carbon emissions affect risk and capital costs?

This study explores the impact of corporate carbon emissions on idiosyncratic risk and capital costs. Leveraging a dataset comprising 1016 company-year observations from Australian-listed companies over the period 2007 to 2020, our panel regression analysis reveals significant associations. We find that companies with higher carbon emissions experience elevated idiosyncratic risk, contributing to increased capital costs in both debt and equity markets. Our results remain robust after using alternative model specifications, accounting for the diverse nature of corporate carbon performance among industries, shaped by unique industrial factors. These results highlight the significance of carbon emissions pricing within financial markets and emphasize the importance of standardized corporate carbon disclosure in enhancing market efficiency, facilitating more accurate valuation, and guiding resource allocation in the broader economy.

The impact of green finance on corporate carbon disclosure: Financial regulation as a moderator

The transparency of corporate carbon information has become a key topic in today's context of increasing attention to global climate change issues. Based on the data of A-share listed companies from 2013 to 2021, this study explores the relationship between green finance, financial regulation and corporate carbon information disclosure. The study shows that: (1) Green finance can promote corporate carbon disclosure. (2) Financial regulation plays a positive moderating role between green finance and corporate carbon information disclosure. (3) The heterogeneity test reveals that green finance plays a stronger role in corporate carbon information disclosure among state-owned enterprises (SOEs) compared to non-SOEs.

Ownership structure and climate-related corporate reporting

ABSTRACT We investigate the impacts of various types of corporate ownership structures (i.e. institutional, government, and managerial ownership) on climate-related corporate reporting as reflected in the levels of voluntary carbon disclosure. Using a sample of S&P 500 companies from 2015 to 2020 across both environmentally sensitive and non-environmentally sensitive industries, we find that diverse ownership structures have distinct impacts and preferences in corporate carbon disclosure. Specifically, government ownership is likely to promote transparency of carbon information. In contrast, the ownership held by institutional investors (total, short-term, and long-term), managers (i.e. CEOs, directors), and block-holders are negatively associated with the proactive greenhouse gas disclosure. We also find evidence that climate governance quality plays a positive moderating role in the relationship between two ownership types (i.e. long-term institutional investors and block-holder) and a firm’s climate-related corporate reporting. Our findings offer some practical insights for managers, regulators, and policymakers to focus on the configuration of corporate ownership in the context of improving green practices.

Unraveling the impact of stakeholder pressure on carbon disclosure in an emerging economy

PurposeThe purpose of this paper is to seek to shed light on the influence of stakeholder pressure on carbon disclosure in an emerging economy.Design/methodology/approachThe present study is based on Bombay Stock Exchange 100 Indian firms for the period of 5 years from 2016–17 to 2020–21. The association between stakeholder pressure and carbon disclosure, along with certain control variables, has been explored through a regression model.FindingsThe results of the study suggest that stakeholders exert a significant influence on corporate carbon disclosure. Further results confirm that regulatory and customer pressure have the most significant and positive influence, while shareholders and creditors exert a significant and negative influence on carbon disclosure. The study also finds that employee pressure does not have any association with carbon disclosure.Practical implicationsThis study adds to the existing literature on climate change, carbon disclosure and stakeholder pressure.Social implicationsThe present study provides useful insights to corporate managers and policymakers as the study concludes that stakeholders exert a significant influence on carbon disclosure.Originality/valuePrevious studies examining the stakeholder pressure on carbon disclosure ignored emerging economies, while the present study has considered India, which is a developing as well as an emerging economy. Further, to the best of the authors’ knowledge, the current study is the first of its kind to investigate the stakeholder pressure on carbon disclosure in the Indian context. The present study develops a comprehensive index to measure corporate carbon disclosure.

Carbon emissions, carbon disclosure and organizational performance

This study draws on the multi-perspectives of organizational legitimacy theory to investigate the simultaneous association between corporate carbon emissions, carbon disclosure and organizational performance. Based on a sample of 62 UK Financial Times Stock Exchange (FTSE) 100 firms in carbon-sensitive sectors during 2010–2017, we find that carbon emissions are negatively associated with organizational performance, but firms with higher carbon emissions tend to employ more disclosure as a communicative legitimacy process to manage the legitimacy threat in order to conform to institutional pressures and protect the firm value. Cumulatively, carbon disclosure plays a mediating role in the relationship between carbon emissions and organizational performance. Most importantly, this legitimacy effect is more pronounced following the introduction of the UK mandatory carbon reporting regulation in 2013, as a result of the increased corporate capability of carbon disclosure. This study fills the literature gap in the value-protective attribute from resource-based view of organizational legitimacy by providing important insights into corporate carbon disclosure strategy over time.

Does the level of corporate carbon disclosure affect the audit opinion decision?

Does the level of corporate carbon disclosure affect the audit opinion decision?

The effects of corporate governance mechanisms on voluntary corporate carbon disclosures: evidence from the emerging economy

PurposeThis study examines the effects of corporate governance mechanisms on voluntary corporate carbon disclosure in Bangladeshi firms.Design/methodology/approachTo investigate the association between corporate governance mechanisms and corporate carbon disclosures, this study employs ordinary least square (OLS) methods. To mitigate the potential endogeneity concerns, the authors also introduce firm fixed effect (FE) and random effect (RE). Primarily, the study sample includes 250 firm-year observations over the period 2015–2019 for listed companies on the Dhaka Stock Exchange (DSE) in Bangladesh. Subsequently, corporate governance mechanisms that influence voluntary carbon disclosure were examined using both univariate and OLS models.FindingsThe findings of this study suggest that firms with a larger board size and more independent directors have a positive impact on the firm's intensity to disclose carbon-related information. However, no evidence has been found of the existence of an environmental committee, and the presence of female directors on the board tends to be associated with a higher level of voluntary corporate carbon disclosure.Originality/valueThe study offers necessary evidence of the determinants of corporate carbon disclosures, which will be useful for managers, senior executives, policymakers and regulatory bodies. To improve corporate governance practices and formulate separate sets of regulations and reporting criteria, disclosing extensive and holistic carbon-related information obligatory. Further, the outcomes of this study based on Bangladeshi firms can be comprehensive for other developing countries to take precautions to tackle the effect of global climate change.

Effect of market-based regulations on corporate carbon disclosure and carbon performance: global evidence

PurposeIn this study, the authors examine the relationships between market-based regulations and corporate carbon disclosure and carbon performance. The authors also investigate whether these relationships vary across emission-intensive and non-emission intensive industries.Design/methodology/approachThe study sample consists of the world's 500 largest companies across most major industries over a recent five-year period. Country-specific random effect multiple regression analysis is used to test empirical models that predict relationships between market-based regulations and carbon disclosure and carbon performance.FindingsResults indicate that market-based regulations significantly and positively affect corporate carbon performance. However, market-based regulations do not significantly affect corporate carbon disclosure. This study also finds that the association between regulatory pressures and carbon disclosure and carbon performance varies across emission-intensive and non-emission-intensive industries.Research limitations/implicationsThe findings of this study have key implications for policymakers, practitioners and future researchers in terms of understanding the factors that drive businesses to increase their carbon performance and disclosure. The study sample consists of only large firms, and future researchers can undertake similar studies with small and medium-sized firms.Practical implicationsThe results of this study are expected to help business managers to identify the benefits of adopting market-based regulations. Regulators can use this study’s results to evaluate if market-based regulations effectively improve corporate carbon performance and disclosure. Furthermore, stakeholders may use this study to evaluate and improve their businesses' reporting of carbon disclosure and performance.Originality/valueIn contrast to current literature that has used command and control regulations as a proxy for regulation, this study uses market-based regulations as a proxy for climate change regulations. In addition, this study uses a more comprehensive measure of carbon disclosure and carbon performance compared to the previous studies. It also uses global multi-sector data from carbon disclosure project (CDP) in contrast to most current studies that use national data from annual reports of sample firms of specific sectors.

Who discloses carbon information? The joint role of ownership and factor market distortion

PurposeCorporations, as key contributors of greenhouse gas emissions, have been increasingly scrutinized by governments and stakeholders. Corporations have been asked to disclose their carbon-related information. This study investigates public corporate carbon disclosure, an imperative communication channel between firms.Design/methodology/approachThis study uses generalized estimation equation models with a longitudinal panel data of 311 listed firms in the China A-share stock index from 2010 to 2020. This study collected firm-level data from the Carbon Disclosure Project survey, the China Stock Market and Accounting Research, and the National Economic Research Institute of China. Stata was used as the primary statistic software in empirical analyses.FindingsThis study finds that compared to state-owned enterprises (SOEs), private firms are more willing to disclose carbon information under legitimate environmental pressure, and firms in highly distorted factor-markets are reluctant to disclose carbon information. This study finds that factor-distortion markets further moderate ownership and lead private firms in highly distorted factor-markets to behave like SOEs by significantly reducing their carbon disclosures.Originality/valueThis study intends to contribute to the corporate carbon disclosure literature by adding important institutional determinants to the conversation in the context of China.

Corporate Carbon Disclosure: A Critical Review

Corporate Carbon Disclosure: A Critical Review

Research on Market Reaction to Corporate Carbon Information Disclosure—Evidence from China

This study examines the impact of corporate carbon disclosure on the capital market reaction using 100 companies listed in China SSE Social Responsibility Index from 2018 to 2021 and reveals two significant findings. Firstly, there is a positive correlation between the quality of corporate carbon information disclosure and the company's stock price. Moreover, the higher the quality of carbon information disclosure, the more significant the positive market response it brings. Secondly, the impact of carbon information disclosure on stock price improvement is more evident in non-heavy polluting industries compared to heavily polluting industries. These findings can encourage enterprises to adopt sustainable development practices and improve the quality of their carbon information disclosure, ultimately promoting greener economic and social development.

Democracy, corruption and civil liberties: does national context influence corporate carbon disclosure?

Design/methodology/approach: This research analyzes the carbon disclosure of 1328 companies based in 19 countries. The level of democracy, corruption and civil liberties in the countries was measured using variables from the Varieties of Democracy database. The data were analyzed using three econometric models. Purpose: This research paper answers the following question: How does the country level of democracy, corruption and civil liberties affect carbon disclosure? Findings: The results show that the carbon disclosure of companies is affected by the institutional context of the country where the company operates. Therefore, in countries where the level of democracy and control of corruption is higher, companies are more involved in carbon disclosure. Research limitations/implications: The findings confirm the Institutional Theory, by reinforcing that not only the organizational context, but also the social and political context of the country are relevant for the dissemination of carbon. Practical implications: Managers of companies based in countries with a greater voice for citizens and a lower level of corruption should invest more resources for the dissemination of carbon. In these countries, companies are under greater pressure from stakeholders for information on carbon emissions. Social implications: The findings show that policy makers can incorporate protection mechanisms for stakeholders and not just shareholders. Lawmakers can propose increased penalties and criminalized corrupt practices and illicit enrichment of public officials. Less power of voice for citizens and a higher level of corruption can reduce the effectiveness of national policies for sustainable development. Originality/value: This research, in addition to advancing the studies on carbon disclosure in different national contexts, has for the first time used the credit rating control variable.

Using cumulative carbon budgets and corporate carbon disclosure to inform ambitious corporate emissions targets and long‐term mitigation pathways

AbstractWith increasing pressure for climate action, commitments to setting scientifically supported emissions targets have become more common among firms. The target‐setting methods currently endorsed by the Science Based Targets Initiative (SBTi) use emission pathways that are aligned with 1.5°C and well‐below 2°C long‐term temperature goals to inform near‐term corporate targets. However, most of these scenarios lead to a temperature overshoot, followed by a return to the temperature goal achieved via net‐negative emissions in the second half of this century. When used to inform near‐term (e.g., 2030) corporate targets, the result is a set of targets that are aligned with an overshoot of a temperature target, with no explicit long‐term commitment to using negative emissions technologies to reverse this. To decrease the risk of this misalignment with the long‐term temperature goal, we propose an alternative approach that derives corporate targets directly from the remaining global cumulative carbon budget. We illustrate this approach using global Scope 1 emissions disclosed by public firms in 2019 to estimate corporate carbon budgets and construct idealized emissions‐reduction pathways that are consistent with the remaining global carbon budget for 1.5°C and well‐below 2°C. While firms, or their sectors, may choose varying mitigation pathways aligned with either global temperature limit, consistency with remaining carbon budgets requires that any delayed mitigation action in the near term is followed by more rapid emissions reductions in subsequent years. This study emphasizes the need for a more precautionary and robust approach to corporate target setting.

How does social media drive corporate carbon disclosure? Evidence from China

As public concern over global warming increases, there is a growing requirement for companies, as carbon emitters, to disclose (and work to reduce) their carbon emissions. Previous literature has neglected the role of social media as a source of legitimacy pressure to influence corporate carbon disclosure. Based on legitimacy theory, this study analyzed the impact of social media legitimacy pressure on corporate carbon disclosure using data from 3,656 Chinese listed companies from 2009 to 2019. We found that social media legitimacy pressure significantly enhances corporate carbon disclosure. Additionally, this positive relationship is weakened by substantive corporate internal carbon management measures (corporate green innovation and environmental management systems). Accordingly, in order to ensure consistent carbon management practices, companies should focus their efforts on substantive carbon management measures along with carbon disclosure.

Determinants of corporate carbon disclosure: A step towards sustainability reporting

Present research is aimed to examine the factors affecting the disclosure of corporate carbon emission. Investors, especially shareholders, largely rely upon the disclosure of financial and other data to determine the firm value. However, disclosure of environmental performance such as carbon emission is still underdeveloped in many emerging economies including India. Using data of 141 Indian companies for a period of seven years (2014–2020), the study examines the effect of financial, industrial, and market-based factors on disclosure of carbon emission with the help of binary logistic regression. Further, the results are also checked for robustness using generalised method of moments (GMM) estimates to control endogeneity. Results convey that size, profitability, leverage, and market value are major determinants of carbon disclosure for the sample firms. Further, it is also found that propositions of legitimacy and information asymmetry theory are partly applicable in emerging context. Present research will assist managers and practitioners to devise their disclosure policy and it will also add value to the existing environmental research, especially in emerging economies.

Corporate carbon disclosure, financing structure, and total factor productivity: evidence from Chinese heavy polluting enterprises.

Low-carbon economy has become the current global economic development trend, and corporate carbon disclosure has attracted more and more attention from scholars and investors. This study creatively explores the mechanism of corporate carbon disclosure on total factor productivity with financing structure as a mediating variable. The content analysis method is employed to assess carbon disclosure that is suitable for Chinese enterprises. Through the mediating effect model and Sobel test, the internal mechanism of carbon disclosure affecting total factor productivity is analyzed, with Chinese heavy polluting enterprises from 2015 to 2018 as research samples. The results show that, firstly, carbon disclosure has a positive effect on the improvement of total factor productivity. The effect of monetary carbon disclosure on the improvement of total factor productivity is higher than that of non-monetary carbon disclosure. Secondly, the financing structure has a mediating effect between carbon disclosure and total factor profductivity, and the mediating effect of internal financing capabilities is better than those of external financing costs. Finally, external financing costs and internal financing capabilities have mediating effects in both heterogeneous carbon disclosure and total factor productivity. The mediating effect of internal financing capabilities is significantly higher than the mediating effect of external financing costs. The effect of monetary carbon disclosure on total factor productivity indirectly through internal financing capabilities is higher than that of non-monetary carbon disclosure.

Product market competition and carbon disclosure: Evidence from China

Based on a sample of Chinese publicly listed firms in eight high energy-consuming industries from 2015 to 2019, this study investigates the relationship between the intensity of product market competition and carbon disclosure and explores the moderating effect of earnings pressure and environmental legitimacy pressure on this relationship. Using content analysis to construct an integrated measure of corporate carbon disclosure, we find that the intensity of product market competition is negatively associated with carbon disclosure. The negative relationship between the intensity of product market competition and carbon disclosure is more pronounced among firms facing fewer earnings pressures and greater environmental legitimacy pressures. The additional tests also show that the effect of product market competition on carbon disclosure is more pronounced among state-owned firms and large firms. Our results are robust to various robustness tests. This study extends the literature on carbon disclosure and has important implications for different stakeholders to promote corporate climate-related disclosure in China.

Green Innovation and Corporate Carbon Disclosure

Green Innovation and Corporate Carbon Disclosure