Accounting for the future: How will corporate business models deliver sustainability?

Haslam Colin (), Hoinaru Razvan () and Daniel Buda ()
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Haslam Colin: Queen Mary University of London
Hoinaru Razvan: Queen Mary University of London
Daniel Buda: Babes-Bolyai University, Cluj-Napoca, Romania

Proceedings of the International Conference on Business Excellence, 2019, vol. 13, issue 1, 817-828

Abstract: This paper considers the information value of carbon-emissions disclosures for investors. Our argument is that Financial Institutions (FIs) do need to map the carbon-financial intensity of corporate activities so as to provide investors with higher returns on capital relative to the carbon emissions attached to this capital. Our analysis maps out carbon-financial risks in the S&P500 constituent companies that are domiciled in the US and capturing approximately 82% of the total U.S. equity market value. We examine the extent to which carbon-financial risk has already impacted on the allocation of capital (debt and equity) and market value exposure from carbon emissions in the S&P500. Our analysis of carbon generating and carbon dependent business models in the S&P 500 reveals a complex and interconnected physical-financial value chain. This new insight will force FIs to now become active investor’s rather than simply investing (or disinvesting) at a distance in order to secure a long-term decarbonisation of their portfolios. This papers also argues for new innovative disclosures such as company’s reporting their top 10 material carbon-stakeholder relations. This would help FIs understand a company’s business model in terms of carbon interdependency and inform regulatory and technical interventions thereby avoiding the possibility of a disruptive evacuation of capital from carbon-intensive business models.

Keywords: Carbon emissions; carbon generating and carbon dependent business models; carbon-financial value chains (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:poicbe:v:13:y:2019:i:1:p:817-828:n:72

DOI: 10.2478/picbe-2019-0072

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