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This study aims to examine the impact of mandatory adoption of The Act 2013 in UK on voluntary carbon disclosure. Mandatory adoption of The Act 2013 in UK is a compelling setting to examine this research question because it is an exogenous imposed event and is unlikely to be affected by disclosure choice.

This study uses a difference-in-differences research design to examine the impact of mandatory adoption of The Act 2013 in UK on voluntary carbon disclosure. The treatment sample includes 451 UK firms subject to mandatory adoption of The Act 2013, and the control sample includes firms from 15 EU countries that did not mandate adoption during the sample period.

The authors document an increase in the quantity and quality of voluntary carbon disclosure following adoption of The Act 2013 in the treatment sample relative to the control sample. They also find that firms with better environmental, social and governance (ESG) performance experience a highly significant increase in voluntary carbon disclosure after adoption of The Act 2013. For firms from carbon-intensive vs less-carbon-intensive sectors, the results suggest that firms in carbon-intensive sectors experience a greater increase in the propensity of voluntary disclosure after adoption of The Act.

The authors examine the impact of mandatory adoption of The Act 2013 in UK on voluntary carbon disclosure and the impact of firms’ ESG activity on the relationship between voluntary and mandatory carbon disclosure. To the best of the authors’ knowledge, this insight has never been documented in the literature.