Mandated Climate Change Disclosures: A Study of Large US Firms That Emit Carbon Dioxide

Abstract

In February 2010, the US Securities and Exchange Commission (SEC) issued an interpretive release clarifying the information that registrants should disclose about climate change in their annual filings. Based on the industries the European Union targeted for its cap-and-trade carbon trading mechanism, this study investigates climate change disclosures for Fortune 500 firms operating in these same sectors. Using an equal-weighting scheme for content analysis of Form 10-Ks from 136 firms, we completed a comparative analysis on the extensiveness of climate change disclosures for the pre- and post-periods surrounding the SEC pronouncement. We observed a statistically significant increase in the disclosure of information related to climate change in 2010 compared to 2008, but no similar effect when comparing 2010–2009 reporting. There was a significant disclosure increase in 2009 compared to 2008. We conclude – based on a hypothesized anticipation of the SEC actually mandating climate change information in filings – that firms augmented their disclosures during 2009 in advance of the official guidance being published. This is a rather significant outcome given the historical lack of environmental disclosure subsequent to previous SEC mandates.

Citation

Freedman, M., Park, J.D. and Stagliano, A.J. (2015), "Mandated Climate Change Disclosures: A Study of Large US Firms That Emit Carbon Dioxide", Sustainability and Governance (Advances in Public Interest Accounting, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 99-121. https://doi.org/10.1108/S1041-706020150000018003