DO BUSINESSES THAT DISCLOSE CLIMATE CHANGE INFORMATION EMIT LESS CARBON? EVIDENCE FROM S&P 500 FIRMS

Lily Hsueh ()
Additional contact information
Lily Hsueh: School of Public Affairs, Center for Environment Economics and Sustainability Policy, Arizona State University, USA

Climate Change Economics (CCE), 2022, vol. 13, issue 02, 1-43

Abstract: Unlike prior literature, this paper exploits heterogeneity in the substantive contents of firms’ voluntary carbon disclosure to estimate the impact of their participation in the CDP (formerly the Carbon Disclosure Project) on firms’ entity-wide carbon footprints. Heterogeneity in firms’ substantive contents of disclosures pertains to their level of climate mitigation activity, ranging from basic transparency to carbon management and to higher levels of climate action, such as third-party verification of entity-wide carbon emissions. This paper makes use of the U.S. Environmental Protection Agency’s introduction of the Clean Power Plan, which during 2011–2016 exerted regulatory pressure on GHG-intensive firms, and the interaction between regulatory pressure and corporate management, to model firms’ decision to participate in the CDP and their subsequent environmental performance. Results based on a difference-in-difference-in-differences estimator, nested in a two-stage endogenous binary-variable model, indicate that there is evidence of increases in total carbon emissions by firms that have instituted carbon management practices but did not certify their carbon disclosures with third-party audits, among other more advanced forms of carbon management. Despite this, by one measure of carbon emissions intensity, firms’ basic carbon transparency is linked to increased carbon efficiency. Sector regressions show that consumer-oriented sectors engaged in “cheap talk†by participating in voluntary carbon disclosure at high levels irrespective of their carbon footprints, whereas firms that were already carbon efficient in GHG-intensive sectors used their participation in the CDP to signal their climate leadership to regulators and other stakeholders. Findings are robust to alternative specifications and an alternative modeling approach.

Keywords: Voluntary carbon disclosure; climate mitigation; clean power plan; regulatory pressure; corporate management; corporate social responsibility; corporate environmentalism; corporate sustainability; industry self-regulation; private provision of public goods (search for similar items in EconPapers)
JEL-codes: D22 M1 Q54 Q58 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S2010007822500038
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:ccexxx:v:13:y:2022:i:02:n:s2010007822500038

Ordering information: This journal article can be ordered from

DOI: 10.1142/S2010007822500038

Access Statistics for this article

Climate Change Economics (CCE) is currently edited by Robert Mendelsohn

More articles in Climate Change Economics (CCE) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().