Corporate Incentives to Disclose Carbon Information: Evidence from the CDP Global 500 Report

Abstract

We investigate how the Global 500 companies respond to the challenge of climate change with regard to their carbon disclosure strategies. This paper is motivated by a growing body of research that examines the role of large companies in carbon disclosure responsibility and practices. We consider the impact of social, financial market, economic, regulatory, and institutional factors on the motivation to voluntarily participate in the 2009 Carbon Disclosure Project. We find that economic pressure is significantly associated with the decision. That is, companies facing direct economic consequence are more likely to disclose. Companies in greenhouse gas (GHG) intensive sectors show the same tendency. In addition, big companies have a higher propensity for disclosing, suggesting that social pressure plays an important role. We also provide possible explanations as to why a large proportion of our sample firms refuse to disclose. Furthermore, our results suggest that the proxies for information needs of investors are not associated with a higher propensity to disclose the amount of their emission footprints. In sum, it appears that the major driving force for climate change disclosure comes from the general public and government rather than from the other major stakeholders such as shareholders and debtholders. Our results are robust after controlling for other influences.

Corporate Sustainability Performance and Assurance on Sustainability Reports: Diffusion of Accounting Practices in the Realm of Sustainable Development

“…To deflect attention from bad sustainability performance, in particular in companies with an inferior CSP, the management may self-servingly prefer to selectively disclose mostly good CSP in sustainability reports, rather than reveal the company's good and bad CSP in a balanced report (Cho et al, 2012;Boiral, 2013). In this case, the company's management may utilize SA as a tool to proactively manage investors' and other stakeholders' perceptions of the credibility of the CSP information revealed in the company's sustainability reports, rather than employ a third party to assure that the CSP information is not materially misstated (Cho & Patten, 2007;Cho et al, 2012;Luo et al, 2012;Perego & Kolk, 2012;Hahn & Lülfs, 2014;Gürtürk & Hahn, 2016;Odriozola & Baraibar-Diez, 2017). In addition, they may also selectively choose the assurance provider, as well as the scope and level of assurance to enhance perceived legitimacy and corporate reputation.…”

Board Independence and Corporate Social Responsibility Disclosure: The Mediating Role of the Presence of Family Ownership

“…A board of directors has full discretionary power in deciding the information to be disclosed in the reports (Luo et al 2012). In such a scenario, the role of an independent director becomes very crucial as they are the representative of shareholders and stakeholders in the board and responsible for safeguarding the interest of the shareholders (Fama and Jensen 1983).…”

“…However, due to the voluntary nature of CSR information, its disclosure could be purely based on the preference and motives of the managers and directors (Healy and Palepu 2001;Meek et al 1995). The board of directors enjoys full discretion in revealing the information and in deciding the content of the report to be disclosed (Luo et al 2012). In such cases, the independent director plays a very important role as they are not only accountable to shareholders but also ensure the welfare of other stakeholders (Ibrahim and Angelidis 1995); they also engage in motivating firms to disclose sustainability information (Frias-Aceituno et al 2013a).…”

Relationship Between Climate Risk Disclosure and Abnormal Return of Brasilian Companies

“…Em relação à evidenciação de mudanças climáticas, segundo Ahmad e Hossain (2014), há quatro tipos de pesquisas: a) os estudos empíricos sobre a divulgação de questões relacionadas à mudança climática (PRADO-LORANZO et al, 2009;PELLEGRINO;LODHIA, 2012;FREEDMAN;JAGGI, 2010;FREEDMAN;JAGGI, 2005;SOLOMON et al, 2011;LUO;TANG;LAN, 2013;BELAL et al, 2010); b) as investigações teóricas e normativas (ANDREW; CORTESE, 2011;OLSON, 2010;BOWEN;WHITTNEBEN, 2011;METE;DICK;MOERMAN, 2010;MILNE;GRUBNIC, 2011;BEBBINGTON;LARRINAGA-GONZALEZ, 2008); c) Estudos realizados por profissionais, a fim de fornecer orientações sobre a contabilidade de carbono (LOVELL et al, 2010;KPMG, 2008;KPMG, 2012) Os riscos climáticos correspondem à vulnerabilidade das empresas em relação à variação dos índices climáticos (temperatura, precipitações, ventos, vazão da água, furacões, tempestade, furacões, chuvas fortes etc.). Em muitos setores da economia (agricultura, têxtil, turismo, lazer, energia), o risco climático é muito importante na medida em que ele pode impactar diretamente as atividades da empresa e consequentemente seu desempenho econômico.…”