To read this content please select one of the options below:

Climate change disclosure ratings: the ideological play

Binh Bui (Department of Accounting and Corporate Governance, Macquarie University, Sydney, Australia and School of Accounting and Commercial Law, Victoria University of Wellington, Wellington, New Zealand)
Mohamed Chelli (Telfer School of Management, University of Ottawa, Ottawa, Canada)
Muhammad Nurul Houqe (School of Accountancy, Massey University, Palmerston North, New Zealand)

Meditari Accountancy Research

ISSN: 2049-372X

Article publication date: 4 August 2021

Issue publication date: 9 September 2022

464

Abstract

Purpose

The purpose of this paper is to investigate the impact of climate change rating organisations on rated firms, to understand whether disclosure ratings can facilitate enhanced emissions performance.

Design/methodology/approach

This study uses 1,848 cross-country firm-year observations from organisations that responded to the carbon disclosure project (the rater) between 2011 and 2015 and, hence, were rated for their disclosure. Drawing on the ideology of numbers, this paper hypothesises that the disciplinary power of ratings will result in rated firms improving their subsequent disclosure scores. Following the environmentally-friendly ideology, this study hypothesises that poorly-rated firms will adopt decoupling behaviour, by improving their climate change disclosure scores without reducing the intensity of their greenhouse gas (GHG) emissions.

Findings

The results indicate that climate change disclosure ratings pressure poorly-rated firms to improve their disclosure scores in subsequent years, yet these firms are not inclined to lower their GHG emissions. Further, the direct publication of firms’ GHG emissions intensity can exert some restricted disciplinary impact on rated firms, as the more polluting firms tend to improve their subsequent climate change performance compared with those having lower emissions levels.

Practical implications

This paper argues that the ability of corporate sustainability rating schemes to influence corporate behaviour comprehensively is limited and should be used with caution.

Originality/value

This paper sheds new light on the ideological dynamics at play between the rater and the rated, while highlighting new aspects of the power-rating nexus in the climate change arena.

Keywords

Acknowledgements

The authors are grateful for valuable feedback on the paper provided by participants at the New Zealand Management Accounting Conference, Christchurch, November 2017, AFAANZ Conference, Auckland, July 2018 and APIRA Conference, Auckland, July 2019. We are also thankful to Professor Charl de Villiers and Professor Paul Griffin for their comments on earlier versions of the paper and Cao Tri Nguyen for his research assistance.

Citation

Bui, B., Chelli, M. and Houqe, M.N. (2022), "Climate change disclosure ratings: the ideological play", Meditari Accountancy Research, Vol. 30 No. 5, pp. 1367-1392. https://doi.org/10.1108/MEDAR-09-2020-1021

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

Related articles