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Article

Ragini Rina Datt, Le Luo and Qingliang Tang

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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.

Details

Accounting Research Journal, vol. 32 no. 3
Type: Research Article
ISSN: 1030-9616

Keywords

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Article

Jose Maria Gonzalez-Gonzalez and Constancio Zamora Ramírez

– This paper aims to identify and analyze the factors contributing to the decision of organizations to disclose carbon information, as well as its transparency level.

Abstract

Purpose

This paper aims to identify and analyze the factors contributing to the decision of organizations to disclose carbon information, as well as its transparency level.

Design/methodology/approach

The Tobit regression is used to analyze the results of the Spanish companies that were invited in 2012 to respond to the Carbon Disclosure Project (CDP) questionnaire. The results of this study are interpreted according to the legitimacy and stakeholder theories.

Findings

The results show that the probability of carbon disclosure and its transparency level are explained by the influence of pressures from society, markets, shareholders and international interactions. In the Spanish case, the factors that have shown a stronger influence are the size of the company, financial risk, their listing in the IBEX35 and FT500 indexes and the ownership concentration.

Originality/value

One of the main contributions of this study to the previous literature lies in the used research method. Thus, while previous studies analyze the factors that can determine whether companies disclose carbon information, this paper has also considered the quantification and differentiation of the effect of these factors on the probability of supplying this information, as well as obtaining a higher score in the CDP questionnaire, representing a higher transparency level in the information provided. For this objective, the usefulness of the Tobit regression is to be highlighted.

Details

International Journal of Climate Change Strategies and Management, vol. 8 no. 1
Type: Research Article
ISSN: 1756-8692

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Article

Le Luo, Qingliang Tang and Yi‐Chen Lan

The purpose of this paper is to investigate differences in voluntary carbon disclosure between developing and developed countries and the role of resource availability in…

Abstract

Purpose

The purpose of this paper is to investigate differences in voluntary carbon disclosure between developing and developed countries and the role of resource availability in explaining these differences.

Design/methodology/approach

The authors used a sample consisting of 2,045 large firms from 15 countries and representing divergent industries that released Carbon Disclosure Project (CDP) company reports in 2009. Profitability, leverage and growth were used as proxies for the degree of resource availability and the firm's participation in the CDP was used as a proxy for carbon disclosure propensity.

Findings

Consistent with the authors' predictions, the empirical results show that the carbon disclosure propensity is correlated in the right direction with resource availability proxies; this relationship is stronger in developing nations, suggesting that the shortage of resources is one reason for the lack of commitment to carbon mitigation and disclosure in these countries. The results are robust when disclosure motivation proxies are controlled for. In addition, it is shown that firms tend to disclose carbon information if their shares are owned by CDP signatories, because it allows them to be viewed as more powerful stakeholders. This finding, which enhances the validity of stakeholder theory, previously has not been documented in the literature.

Research limitations/implications

The findings are relevant to the world's largest organisations, as determined by their market capitalisation. Thus, caution should be exercised to generalise the paper's inferences to small or medium‐sized organisations.

Practical implications

The evidence suggests that resource shortages may constrain a firm management's carbon decisions. As the regulatory environment becomes more stringent, firms, particularly those in developing countries need to take a more proactive strategy to tackle global warming challenges and balance the need to achieve financial goals and prevent carbon pollution with their limited resources.

Originality/value

Although prior studies typically considered external pressures that motivated voluntary environmental disclosure, the paper's results offer extra insight and suggest that resource restriction provides a complementary explanation – largely ignored in the existing literature – for variation in the carbondisclosure propensity of firms.

Content available
Article

Merve Kılıç and Cemil Kuzey

The purpose of this study is to investigate whether corporate governance characteristics impact the voluntary disclosure of carbon emissions.

Abstract

Purpose

The purpose of this study is to investigate whether corporate governance characteristics impact the voluntary disclosure of carbon emissions.

Design/methodology/approach

This empirical research was carried out in two stages. Initially, the carbon disclosures data were sourced from the annual and stand-alone sustainability reports of Turkish non-financial companies listed on Borsa Istanbul during 2011-2015. Later, the corporate governance characteristics that influence carbon disclosures were examined using panel data regression models.

Findings

The empirical findings of this study suggested that entities with a higher number of independent directors on their boards were more likely to respond to the Carbon Disclosure Project. In addition, board nationality diversity and the existence of a sustainability committee had a significant positive impact on the propensity to disclose carbon emissions and the extent of those disclosures.

Originality/value

This research provides empirical evidence of the determinants of carbon emission disclosures, which could be useful for organizations and regulatory bodies. Such an understanding is crucial to specify necessary policies that will provide emission reduction practices and policies for entities. This paper fills some of the gap in the literature by concentrating on the association between corporate governance characteristics and disclosures of a more specific environmental issue, being carbon emissions.

Details

International Journal of Climate Change Strategies and Management, vol. 11 no. 1
Type: Research Article
ISSN: 1756-8692

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Article

Mohammed Hossain, Omar Al Farooque, Mahmood Ahmed Momin and Obaid Almotairy

This paper aims to investigate the relationship between gender diversity and the Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant…

Abstract

Purpose

This paper aims to investigate the relationship between gender diversity and the Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant research on theoretical perspectives, and the impact of women on corporate boards (WOBs) on carbon emission issues in the global perspective.

Design/methodology/approach

This study uses the carbon disclosure scores of the CDP from 2011 to 2013 (inclusive). A total observation for the three-year periods is 1,175 companies. However, based on data availability for the model, the sample size totals 331 companies in 33 countries with firms in 12 geographical locations. The authors used a model which is estimated using the fixed-effects estimator.

Findings

The outcomes of the study reveal that there is a positive relationship between gender diversity (WOB) and carbon disclosure information. In addition to establishing a relationship between CDP score and other control variables, this study also found a relationship with Board size, asset size, energy consumption and Tobin’s Q, which is common in the existing literature.

Research limitations/implications

The limitations of the study mostly revolve around samples and the time period. To further test the generalizability and cross-sectional validity of the outcomes, it is suggested that the proposed framework be tested in more socially responsible firms.

Practical implications

There are increasing pressures for WOBs from diverse stakeholders, such as the European Commission, national governments, politicians, employer lobby groups, shareholders, Fortune and Financial Times Stock Exchange (FTSE) rankings and best places for women to work lists. The study offers insights to policy makers implementing gender quota legislation.

Originality/value

The study has important implications for putting into practice good corporate governance and, in particular, gender diversity. The outcomes of the analyses advocate that companies that included women directors and had a smaller board size may expect to achieve a higher level of carbon emission performance and to voluntarily disclose the level of carbon information assessment requested by the CDP.

Details

Social Responsibility Journal, vol. 13 no. 4
Type: Research Article
ISSN: 1747-1117

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Article

Antonio J. Mateo-Márquez, José M. González-González and Constancio Zamora-Ramírez

This study aims to analyse the relationship between countries’ regulatory context and voluntary carbon disclosures. To date, little attention has been paid to how specific…

Abstract

Purpose

This study aims to analyse the relationship between countries’ regulatory context and voluntary carbon disclosures. To date, little attention has been paid to how specific climate change-related regulation influences companies’ climate change disclosures, especially voluntary carbon reporting.

Design/methodology/approach

The New Institutional Sociology perspective has been adopted to examine the pressure of a country’s climate change regulation on voluntary carbon reporting. This research uses Tobit regression to analyse data from 2,183 companies in 12 countries that were invited to respond to the Carbon Disclosure Project (CDP) questionnaire in 2015.

Findings

The results show that countries’ specific climate change-related regulation does influence both the participation of its companies in the CDP and their quality, as measured by the CDP disclosure score.

Research limitations/implications

The sample is restricted to 12 countries’ regulatory environment. Thus, caution should be exercised when generalising the results to other institutional contexts.

Practical implications

The results are of use to regulators and policymakers to better understand how specific climate change-related regulation influences voluntary carbon disclosure. Investors may also benefit from this research, as it shows which institutional contexts present greater regulatory stringency and how companies in more stringent environments take advantage of synergy to disclose high-quality carbon information.

Social implications

By linking regulatory and voluntary reporting, this study sheds light on how companies use voluntary carbon reporting to adapt to social expectations generated in their institutional context.

Originality/value

This is the first research that considers specific climate change-related regulation in the study of voluntary carbon disclosures.

Details

Sustainability Accounting, Management and Policy Journal, vol. 11 no. 2
Type: Research Article
ISSN: 2040-8021

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Article

Jibriel Elsayih, Qingliang Tang and Yi-Chen Lan

The purpose of this paper is to explore the association between corporate governance (CG) mechanisms and the extensiveness of carbon disclosure.

Abstract

Purpose

The purpose of this paper is to explore the association between corporate governance (CG) mechanisms and the extensiveness of carbon disclosure.

Design/methodology/approach

This paper uses Ordinary Least Squares (OLS) regression model with data from 2009 to 2012 for largest Australian companies that voluntarily disclose their information to the carbon disclosure project.

Findings

The authors find that board independence, board diversity and managerial ownership are significantly correlated with the degree of carbon transparency, while the existence of environmental committee is not.

Practical implications

The findings of this paper should be useful for government and capital market regulators who concern the quality of CG and carbon actions. First, the evidence in this paper suggests that current CG practice that emphasize board diversity and independence seems encouraging an environment friendly decision and adopt carbon reduction initiatives. Second, however, the current version of CG codes need more stress on none financial goals that should help corporate executives to balance value enhancement vis-à-vis ecosystem protection. Finally, another implication for policy-makers is CG should be re-structured so as to motivate firms to pursue long-term sustainable development instead of taking short-sight view of firm performance.

Originality/value

This paper contributes in the increasing body of literature indicating that CG encourages a proactive corporate strategy in general and carbon disclosure in particular. The authors add new empirical evidence which has policy implication that CG should be improved so as to encourage executives to engage in more sustainable development and stakeholder long-term value protection.

Details

Accounting Research Journal, vol. 31 no. 3
Type: Research Article
ISSN: 1030-9616

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Article

Jonas Grauel and Daniel Gotthardt

Wide differences in response rates to the Carbon Disclosure Project’s (CDP’s) climate change program between countries have been explained by legal origins and the varying…

Abstract

Purpose

Wide differences in response rates to the Carbon Disclosure Project’s (CDP’s) climate change program between countries have been explained by legal origins and the varying extent of environmental regulation. This paper seeks to enhance the explanation by examining the relevance of two dimensions of “democratic capital” – both the influence of countries’ experiences with democratic government recruitment are considered, as well as experiences with civil liberties. In addition, it is examined whether these forms of democratic capital are mediated by environmental regulation.

Design/methodology/approach

The authors draw upon the literature on the relationship between political regime form and environmental policy and the environmental disclosure literature debate. Hypotheses are based on institutional and stakeholder theory. Methodologically, multilevel regression analysis is used.

Findings

Results show that the history of democratic government recruitment is a relevant factor to explain firms’ disclosure decisions. The amount of freedom in civil society seems to also matter, but results are less clear in this regard. The hypothesis concerning the mediation effects of environmental regulation could not be corroborated. Findings, thus, corroborate the claim that standards of informational transparency flourish best in countries with a pluralistic political culture.

Practical implications

The results imply that voluntary carbon transparency may thrive as democratization advances, but its success may also be endangered by the recent revitalization of authoritarianism.

Originality/value

The authors deliver the first paper which tests the hypotheses on the influence of the “democratic capital” on the countries-of-origin on the firms’ carbon disclosure decisions, based on a multilevel analysis.

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Article

Probal Dutta and Anupam Dutta

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.

Abstract

Purpose

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.

Design/methodology/approach

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.

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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.

Details

Journal of Applied Accounting Research, vol. 22 no. 2
Type: Research Article
ISSN: 0967-5426

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Article

Somaiya Yunus, Evangeline O. Elijido-Ten and Subhash Abhayawansa

This paper aims to examine whether the perceived pressures from stakeholders with high potential to cooperate and/or threaten the firm’s survival affect the decision to…

Abstract

Purpose

This paper aims to examine whether the perceived pressures from stakeholders with high potential to cooperate and/or threaten the firm’s survival affect the decision to adopt carbon management strategies (CMSs).

Design/methodology/approach

A logistic panel regression model is estimated using longitudinal data from Australia’s Top-200 listed firms over seven years from 2009 to 2015. The authors test the firm’s propensity to adopt CMSs conditioned on the influence of four groups of stakeholders: the regulators, institutional investors, media and creditors. Data on CMSs adopted by firms are sourced from Thomson Reuters ASSET4 database, the Carbon Disclosure Project survey, annual reports, company websites and sustainability reports.

Findings

The authors show that stakeholder pressures are associated not only with the adoption or non-adoption of CMSs but also with the type of CMSs adopted. Three types of CMSs are identified, namely, compensation, reduction and innovation strategies. The findings reveal that CMS adoption and the firms’ propensity to adopt compensation and reduction strategies are significantly related to perceived pressures from the regulators, media and creditors. While pressure from the regulators is also associated with the firms’ propensity to adopt innovation strategies, a more advanced type of CMSs, the potential pressure from the media and creditors are not significantly related.

Practical implications

The findings imply that a firm’s adoption of CMSs is not merely about managing stakeholders in the regulatory sphere but also about taking into account the perceived pressures from non-regulatory stakeholders and the context-dependent nature of their influences. The authors show that by influencing the voluntary disclosure of carbon emissions, the government continues to be effective in encouraging firms to take action on climate change despite the abolition of the carbon tax in Australia.

Social implications

This study highlights that, apart from a heavy-handed approach, regulators can adopt softer forms of regulation such as the National Greenhouse and Energy Reporting (NGER) Act and a less invasive, stakeholder-driven approach to encourage firms to adopt CMSs and thereby work towards climate change mitigation.

Originality/value

This study extends the literature by showing that perceived pressure from some stakeholders found to be influential in relation to some corporate decisions (such as environmental strategy adoption and climate-change-related disclosure) may not necessarily be influential in relation to CMS adoption.

Details

Sustainability Accounting, Management and Policy Journal, vol. 11 no. 7
Type: Research Article
ISSN: 2040-8021

Keywords

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