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Chief Sustainability Officer (CSO) power and sustainability-based compensation for climate change disclosure and carbon performance: is it different for developed and developing nations?

Mohamed Toukabri (College of Science and Arts in Dhahran al Janoub, King Khalid University, Abha, Saudi Arabia)

Society and Business Review

ISSN: 1746-5680

Article publication date: 27 August 2024

119

Abstract

Purpose

Companies are increasingly appointing a Chief Sustainability Officer (CSO) to anchor the need to highlight climate change at the senior management level. This study aims to examine how CSO power and sustainability-based compensation influence climate reporting and carbon performance.

Design/methodology/approach

Using one of the largest data sets to date, consisting of 18,834 company years through the author’s observations, spanning an 11-year period (2011–2021) in 33 countries. This paper used quantitative methods – specifically, ordinal logistic regression estimation. This paper measures the level of climate change disclosure based on the carbon disclosure leadership methodology. Carbon performance is based on the intensity of carbon emissions (Scope 1, Scope 2), which is a quantitative and relatively more objective measure.

Findings

The results suggest that climate change disclosure continued to increase and the carbon emissions intensity of the companies in this study gradually decreased over the sample period. This paper finds that the presence of the CSO within the top management team has a positive and significant influence on the level of information on climate change of the companies in the sample. This finding confirms the idea that the managerial capacity of CSOs motivates the disclosure of climate change. The empirical results confirm that there are differences in the role that the CSO and sustainability-based compensation play in influencing the quality of climate information disclosure in developed and developing countries.

Originality/value

The recourse on a mixed theoretical framework, which highlights upper echelons theory, argues the understanding of the role of CSOs in explaining the relationship between climate change disclosure–carbon performance relationship. The novelty of the study lies in the approaches adopted to describe the quality of climate change disclosure. To control for endogeneity, this paper uses a difference-in-difference analysis by adding a firm to the Morgan Stanley Capital International index as an exogenous shock.

Keywords

Acknowledgements

The authors extend their appreciation to the Deanship of Scientific Research at King Khalid University for funding their work through the Research Small Group project under grant number RGP1/157/45.

Funding information: No funders available.

Declaration of competing interest: None.

Data availability statement: The data that support the findings of this study are available from the corresponding author upon reasonable request.

Citation

Toukabri, M. (2024), "Chief Sustainability Officer (CSO) power and sustainability-based compensation for climate change disclosure and carbon performance: is it different for developed and developing nations?", Society and Business Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/SBR-12-2023-0356

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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