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The purpose of this study is to examine the impact of legitimacy threats on corporate incentive to obtain external carbon assurance.

The sample consists of the largest US companies that disclosed carbon emissions to CDP (formerly the Carbon Disclosure Project) over the period 2010-2013. Based on legitimacy theory, firms are more likely to obtain carbon assurance when they are under greater legitimacy threat. Carbon assurance is measured using CDP data. Three proxies are identified to measure legitimacy threat related to climate change: carbon emissions intensity, firm size and leverage.

This paper finds that firms with higher levels of emissions are more likely to obtain independent assurance, and large firms show the same tendency, as they are probably under pressure from their large group of stakeholders. In sum, the findings suggest that firms with higher carbon emissions face greater threats to their legitimacy, and the adoption of carbon assurance can mitigate risks to legitimacy with enhanced credibility of carbon disclosure in stakeholders’ decision-making.

The study has some limitations. The authors have relied on CDP reports for analysis and focus on the largest companies in the US. Caution should be exercised when generalising the results to smaller firms, other countries or voluntary carbon assurance information disclosed in other communications channels.

This study provides extra insights into and an improved understanding of determinants and motivation of carbon assurance, which should be useful for policymakers to develop policies and initiatives for carbon assurance. The collective results should be useful for practicing accountants and accounting firms.

The paper investigates how legitimacy threats affect firms’ choice of external carbon assurance in the context of US, which has not been documented previously. It contributes to the understanding of legitimacy theory in the context of voluntary carbon assurance.

With the growing attention around carbon emissions disclosure, the demand for external carbon assurance on emissions reports has been increasing by stakeholders as it provides additional credibility and confidence. This study investigates the association between the higher level of external carbon assurance and improvement in a firm's carbon emissions. It provides an understanding of corporate incentives for obtaining a higher level of carbon assurance, particularly in relation to carbon performance enhancements.

Data are collected from 170 US companies for the period 2012–2017 and are analysed using a change analysis. Generalised method of moment (GMM) is used to address endogeneity.

Following the rationales taken by legitimacy and “outside-in” management views, the findings reveal that a higher level of carbon assurance (i.e. reasonable assurance) marginally improves firms' carbon performance (i.e. reported carbon emissions). This is consistent with “outside-in” management view suggesting that a higher level of assurance could be utilised as a tool for accessing more information about stakeholders' needs and concerns, which can be useful in enhancing carbon performance.

The findings are generalisable to US firms and may not extend to other contexts.

The implication of this study for companies is that a high level of sustainability assurance is a useful tool to access detailed information about stakeholder concerns, of which internalisation can help to marginally improve carbon performance. For policymakers, the insights into and enhanced understanding of the incentives for obtaining carbon assurance can help policymakers to develop effective policies and initiatives for carbon assurance. Considering the possible improvements in carbon performance when obtaining a high level of sustainability verification, governments need to consider mandating carbon assurance.

This study extends the existing studies of assurance in sustainability context as well as in carbon context by explaining why companies voluntarily get expensive external verification (i.e. higher level of assurance) of their carbon emissions disclosure. This study responds to calls in the literature for empirical research investigating the association between environmental performance and external assurance with a focus on level of assurance.

1. A higher level of carbon assurance Marginally improves firms' carbon performance.

2. Corporate incentives to obtain higher level of carbon assurance is beyond seeking legitimacy.

3. Higher level of assurance is a useful tool for accessing more information about stakeholders' concerns.

4. Consistent with “ouside-in”management view, companies internalise stakeholders' concerns to marginally improve performance.

A higher level of carbon assurance Marginally improves firms' carbon performance.

Corporate incentives to obtain higher level of carbon assurance is beyond seeking legitimacy.

Higher level of assurance is a useful tool for accessing more information about stakeholders' concerns.

Consistent with “ouside-in”management view, companies internalise stakeholders' concerns to marginally improve performance.

The market for the assurance of carbon emissions disclosures is showing intensive growth. However, due to the largely voluntary nature of carbon reporting and assurance, there are currently no clear standards or guidelines and little is known about it. The purpose of this paper is to examine the reporting and assurance practices for carbon emissions disclosures.

This study provides evidence on this market, with a sample that includes 13,419 firm-year observations across 58 countries between 2010 and 2017 from the Carbon Disclosure Project (CDP) database.

The results show that the demand for carbon emissions reporting comes mainly from North America, the UK and Japan. Recently, markets such as South Africa have also shown increased demand for carbon reporting. The data also shows that more firms are seeking assurance for their carbon emissions reports. Legitimacy, stakeholder and institutional theories are used to explain the findings of this study.

The results have important implications for firms that produce carbon emissions disclosures, assurance service providers, legislators, regulators and the users of the reports and there should be more specific disclosure guidelines for level and scope of reporting.

Amongst the firms that do provide assurance on their carbon emissions reports, a majority do so using specialist assurance providers, with only limited assurance being provided. The results further show that a myriad of assurance frameworks is being used to assure the carbon emissions disclosures.

The purpose of this research is to examine the impact of external assurance on the level of voluntary corporate climate change disclosures by Finnish firms.

The sample of this study includes 228 firm-year observations over the period 2008–2015 for listed Finnish companies that have issued sustainability reports and responded to the Carbon Disclosure Project (CDP) questionnaire at least once during the sample period. The authors conduct a panel regression analysis to study the afore-mentioned linkage. In addition, the Tobit regression model is also estimated to check the robustness of our findings.

The findings suggest that assurance has a highly significant positive impact on the level of corporate climate change disclosures even after controlling for the effect of a number of control variables. Moreover, among the control variables, firm size and asset age are found to have significant effect on the extent of carbon emissions disclosure. Furthermore, the additional analysis reveals that the type of assurance providers (accounting firms vs non-accounting firms) and the type of financial auditors (Big4 financial auditors vs non-Big4 financial auditors) do not influence the level of climate change disclosure of assured companies.

This research is subject to certain limitations. First, the source of the data used in this research is the CDP database which has limitations in that it is a voluntary disclosure process where all the observations collected are self-reported by the responding firms. This may bias the reported findings. Second, our sample includes only listed companies and hence the results might have limited explanatory capacity for unlisted firms.

By using the results of this research, corporate managers will be able to reduce the information asymmetry between various stakeholders and them through disclosure of accurate, reliable and credible environmental information. Such disclosures will, in turn, allow socially responsible investors to choose eco-friendly investments and will thus enable them to make appropriate investment decisions.

Research on the external assurance-corporate climate change disclosure nexus is scarce. This study addresses this gap in the nonfinancial disclosure assurance literature by demonstrating that external assurance increases the level of voluntary corporate climate change disclosure. Drawing on stakeholder-agency theory, this study views external assurance as a monitoring structure that potentially curbs the monitoring problem between corporate managers and other stakeholders and increases the amount of climate change disclosures making a possible avenue for the reduction of the information asymmetry between them.

This paper aims to examine whether an expectation gap exists between different stakeholders (i.e. emissions preparers, emissions assurers and shareholders) in relation to the assurance of greenhouse gas emissions. Further, the paper seeks to explore whether stakeholder expectations are influenced by the uncertainties inherent in the assurance engagement for different industry sectors (i.e. greenhouse gas emitter or greenhouse gas user entities).

An experimental survey was used to address the stated aims. Three stakeholder groups: shareholders, greenhouse gas emissions preparers and assurers, completed a survey based on the greenhouse gas emissions assurance for either an emitter or user entity.

The results provide support for the existence of an expectation gap in the emission assurance setting. Fundamental differences were identified between the stakeholder groups in relation to the responsibilities of the assurer and management; as well as the reliability and decision usefulness of the emissions statement. Moreover, the extent of the gap was found to differ between user entity engagements and emitter entity engagements.

The paper highlights the need for the assurance services profession and assurance standard setters to consider mechanisms to enhance the effectiveness of communicating the assurance function in this setting in order to enhance the credibility and social value of emissions assurance.

The paper is the first to examine the expectation gap in the greenhouse gas emissions assurance context. It thereby also contributes to the literature on the expectation gap in the assurance of non‐financial information. Moreover, the research findings provide standard setters with unique insights into areas to consider as they work toward the development of an international assurance standard for greenhouse gas emissions statements.

The purpose of this paper is to draw out the accounting implications of the National Greenhouse and Energy Reporting (NGER) Act in Australia.

An analytical approach is undertaken to ascertain the (accounting) practice and research implications of the NGER Act.

Accounting researchers, especially those with interests in social and environmental issues, have a critical role to play in highlighting the potential of the accounting practice in managing, and providing accountability over, carbon emissions, facilitated via the NGER Act. A number of opportunities in social and environmental accounting research are also identified in this paper.

The paper highlights that the NGERS legislation which requires reporting of carbon emissions by affected parties has a number of implications for the accounting practice.

The paper relates a practical issue, in this case the NGER Act, to accounting and suggests that the accounting process can play a critical role in organizational attempts to manage, communicate and price carbon emissions.

Although the association between sustainability assurance (SA) quality and firm value has been examined in previous studies, the moderating relationship is novel in this study and highlights the effect of corporate environmental sustainability performance (CESP) on the relationship between SA quality and firm value. This study aims to examine whether such an effect is strengthened or weakened by eco-efficiency, as measured by ISO 14001 certification, aggregate CESP score and each individual dimension of CESP (emission reduction [ER], resource reduction [RR] and product innovation [PI]).

The sample includes 40 companies in Euronext Paris with the largest market capitalisations (the Cotation Assistée en Continu 40 [CAC 40] index) from 2010 to 2020. The authors apply the feasible generalised least squares regression technique to estimate all the regression models. Because observed associations may be biased by reverse causation or self-selection, the authors use the instrumental variable approach and Heckman two-stage estimation.

The results show that SA quality had a positive and significant effect on firm value. Second, the authors demonstrate that CESP, as assessed by ISO 14001 certification, has a stronger interaction with assurance quality and acting as a moderator variable. Using the ASSET4 scores, an alternative proxy for CESP, the authors find inconsistent evidence regarding the impact of CESP attributes. The CESP and ER scores are homogeneous and have a positive effect on firm value. However, the PI and RR CESP attributes are not homogenous and do not have the same interactive effect on firm value. The results are robust to the use of an instrumental variable approach and the Heckman two-stage estimation procedure.

Policy implications: Regulators may be interested in the findings when considering current and future assurance requirements for sustainability reporting, and shareholders when considering SA as an investment choice criterion. The insights into and enhanced understanding of the incentives for obtaining high SA quality can help policymakers develop effective policies and initiatives for SA. Considering the possible improvements in sustainability performance when obtaining a high level of sustainability verification, governments need to consider mandating SA.

Firms receive clear confirmation of the importance of investing in SA quality. Financial markets do not evaluate SA dichotomously but reward companies with higher SA quality because of the greater credibility it provides. Firms should allocate a significant percentage of their annual budgets and other relevant resources to environmental training and development programmes to improve and maintain environmental performance. If they care about environmental issues, they must announce this by issuing sustainability reports and seeking assurance of the information disclosed. High-quality assurance not only has a significant effect on investors’ investment reliability judgements but also the perceived credibility of environmental performance fully moderates the effect of assurance on these judgements.

This study has social implications; the authors find that the French market rewards firms that provide a high-quality assurance to guarantee the integrity of their sustainability reports. Therefore, by incorporating environmental sustainability into their financial goals, a better assurance ultimately will urge firms to move from green washing to strategic goals, which is beneficial for society. Further, firms that focus on sustainability as part of their business strategy may attract employees who engage in green behaviours at work and create a friendlier and productive environment because it gives meaning to the work they do and keeps them engaged to the level needed to perform their jobs capably.

This study contributes to the literature by re-examining the relationship between SA quality and firm value. It also provides new evidence on the moderating effect of CESP on the SA quality–firm value nexus. Specifically, it explores the joint effect of credibility and eco-efficiency on market confidence in sustainability information.

This paper aimed to explore the submissions made to the National Greenhouse and Energy Reporting (NGER) policy paper by corporations and other stakeholders. It also sought to establish whether broader climate change issues were addressed in the context of the submissions.

The agenda‐setting framework was utilised to provide the theoretical perspective for the study. This research applied a combination of concept analysis and mapping, and content analysis, of the submissions using the Leximancer software tool.

The study found a divergence in the responses of corporations and other stakeholders, with the former focusing primarily on the NGER policy paper, while the latter presented significant concerns over carbon pollution and climate change, an issue that was not the primary concern of the policy paper. Moreover, corporations also acknowledged the close link between the NGER process and a future emissions trading scheme, and expressed concerns over the development of a mechanism that would put a price on carbon.

The paper contributes to the limited literature on carbon accounting and reporting in relation to both the local and international context. Moreover, an agenda‐setting perspective provided a suitable lens for understanding the NGER submissions process and its role within the broader climate change policy area in Australia.

Policies are influenced by key players and their familiarity with these policies could lead to successful implementation. The establishment of the NGER legislation was deemed successful, despite concerns raised in the submissions. This was because the policy used corporate reporting as a means of assessing accountability for carbon emissions. This finding has implications for other nations seeking to develop mandatory carbon reporting.

The paper has built further explanatory potential of the agenda‐setting framework, provides direct evidence in relation to stakeholder submissions to prospective environmental legislation, and adds to the use of combination methods that can be utilised for effectively analysing stakeholder submissions on major policy questions and issues.

Given the emerging importance of the chief financial officer’s (CFO) role, this study aims to probe into the prevalence of corporate social responsibility (CSR) assurance practices in China and to examine whether or not CFO foreign, professional or academic experience affects the likelihood of CSR assurance decision.

All A-share listed Chinese companies during the year 2008–2017 with 5,144 firm-year observations have been investigated for this study.

This study finds a positive effect of CFO foreign and professional experience on CSR assurance. No significant association has been found between the CFO’s academic experience and CSR assurance. Additional analysis for Global Reporting Initiative (GRI) sampled firms shows that the academic and professional experience of CFOs has a significant positive association with CSR assurance. However, the main findings are replicated in the case of firms under mandatory CSR reporting.

The limitations of this study are its generalizability, unidimensional measure of CSR assurance which is unable to capture its quality and explore the other traits of CFOs.

It provides assurance practitioners with valuable longitudinal data on China’s CSR reporting and assurance services. Also, firms should recognize the importance of having competent CFOs to improve the credibility of their CSR reporting. The cross-sectional variation analysis (GRI and mandatory CSR) will help firms to assess the value of each CFO attribute for their nonfinancial reporting and auditing choices while considering internal and external stakeholder demands.

This study not only updates the existing understanding of CSR assurance methods in China but also explains the significance of CFO-specific experience in enhancing the credibility of nonfinancial reporting.

This study aims to examine whether good carbon performers disclose more carbon information overall than poor performers, and if yes, how firms select different types of carbon information to signal their genuine superior carbon performance.

The level of disclosure is measured based on content analysis of Carbon Disclosure Project (CDP) reports. The study sample consists of 487 US companies that voluntarily participated in the CDP survey from 2011 to 2012. The authors use the t-test and multiple regression models for analyses.

The results consistently indicate that firms with better carbon performance disclose a greater amount of overall carbon information, supporting the signalling theory. In addition, in contrast to previous studies that merely consider the overall disclosure level, the authors also investigate disclosure of each major aspect of carbon activities. The results show that good carbon performers disclose more key carbon items, such as goods and services that avoid greenhouse gas (GHG) emissions, external verification and carbon accounting, to signal their true type.

This study has some limitations. The authors rely on CDP reports for analysis and focus on the largest companies in the USA. Caution should be exercised when generalising the results to other countries, smaller firms or voluntary carbon information disclosed in other communications channels.

Because carbon disclosure has already been moving from a voluntary to mandatory requirement in many jurisdictions, the format and content of CDP reports might be considered for a formal standalone GHG statement. Based on the results, the authors believe that there should be industry-specific disclosure guidelines, and more disclosure should be made at the project level.

In the context of climate change, this study provides support for the signalling theory by utilising the relationship between voluntary carbon disclosure and performance. The study also provides empirical evidence on how companies may use different types of carbon information to signal their underlying carbon performance.