Corporate incentives to disclose carbon information

evidence from the CDP Global 500 report

Le Luo*, Yi-Chen Lan, Qingliang Tang

*Corresponding author for this work

Research output: Contribution to journalArticle

130 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)93-120
Number of pages28
JournalJournal of International Financial Management and Accounting
Volume23
Issue number2
DOIs
Publication statusPublished - 1 Jun 2012
Externally publishedYes

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