When Responsibility Meets Risk: Firm‐Level Political Risk, GHG Disclosure, and the Moderating Role of Market Complexities

Yuan Ding, Daniel X. Zhang and Jessica K. Sun

Sustainable Development, 2025, vol. 33, issue 6, 8329-8349

Abstract: This study investigates the relationship between firm‐level political risk and greenhouse gas emission disclosure (GHGD)—a largely understudied yet critical area—and provides insights into how firms strategically respond to external uncertainties. Analyzing 13,009 firm‐year observations across diverse industries from 2008 to 2020, we find that political risk positively influences GHGD, suggesting that firms use environmental transparency to mitigate regulatory scrutiny, build stakeholder trust, and align with evolving societal expectations. Furthermore, we identify three key moderators—market diversification, international expansion, and product market threats—that strengthen this relationship. Our findings contribute to the sustainability literature by positioning GHGD as a strategic resource for managing political risk. In addition, we extend legitimacy theory to politically volatile contexts and highlight the role of GHGD in firms' strategic management. These contributions advance the understanding of corporate sustainable development in uncertain political environments and complex market conditions.

Date: 2025
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https://doi.org/10.1002/sd.70104

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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:33:y:2025:i:6:p:8329-8349

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