Opening up the firm

What explains participation and effort in voluntary carbon disclosure by global businesses? An analysis of internal firm factors and dynamics

Research output: Contribution to journalArticle

Abstract

A voluntary climate initiative that has emerged over the past two decades as an institutional arrangement for corporations around the globe to signal and demonstrate their proactive climate leadership is the CDP (formerly known as the Carbon Disclosure Project). Unlike the extant literature that has emphasized stakeholder and regulatory pressures, this paper argues that voluntary carbon disclosure is both beneficial and costly for corporations with respect to the existence of supportive management structures, explicit CSR practices, and the existence of complementary assets. Moreover, there is variation between European firms and other global businesses because of Europe's distinctive national business systems framework in conjunction with global supply chain imperatives. Empirically, this study employs a novel discrete-continuous modeling approach to distinguish between a corporation's decision to disclose and the linked but subsequent decision of how much to disclose climate change information. Results indicate that the main drivers of participation in voluntary carbon disclosure by the Global 500 firms is the existence of senior managers and executive-level officers and the adoption of ESG principles by global businesses. Conditional on participation, European Union-based and other global businesses that articulate a corporate vision for environmental sustainability, adopt ESG principles, and invest in complementary assets disclose climate change strategies and emissions at higher levels than companies without these internal firm capabilities. This study has implications for national climate policy and global climate change governance more generally, both of which increasingly focus on concrete climate solutions by corporations.

Original languageEnglish (US)
JournalBusiness Strategy and the Environment
DOIs
StatePublished - Jan 1 2019

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corporation
firm
participation
climate change
carbon
climate
assets
climate policy
leadership
environmental policy
global climate
European Union
stakeholder
driver
sustainability
manager
governance
supply
analysis
Disclosure

Keywords

  • carbon disclosure
  • climate change policy
  • corporate management
  • corporate social responsibility
  • firm-level analysis
  • global businesses
  • industry self-regulation
  • private regulation

ASJC Scopus subject areas

  • Business and International Management
  • Geography, Planning and Development
  • Strategy and Management
  • Management, Monitoring, Policy and Law

Cite this

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abstract = "A voluntary climate initiative that has emerged over the past two decades as an institutional arrangement for corporations around the globe to signal and demonstrate their proactive climate leadership is the CDP (formerly known as the Carbon Disclosure Project). Unlike the extant literature that has emphasized stakeholder and regulatory pressures, this paper argues that voluntary carbon disclosure is both beneficial and costly for corporations with respect to the existence of supportive management structures, explicit CSR practices, and the existence of complementary assets. Moreover, there is variation between European firms and other global businesses because of Europe's distinctive national business systems framework in conjunction with global supply chain imperatives. Empirically, this study employs a novel discrete-continuous modeling approach to distinguish between a corporation's decision to disclose and the linked but subsequent decision of how much to disclose climate change information. Results indicate that the main drivers of participation in voluntary carbon disclosure by the Global 500 firms is the existence of senior managers and executive-level officers and the adoption of ESG principles by global businesses. Conditional on participation, European Union-based and other global businesses that articulate a corporate vision for environmental sustainability, adopt ESG principles, and invest in complementary assets disclose climate change strategies and emissions at higher levels than companies without these internal firm capabilities. This study has implications for national climate policy and global climate change governance more generally, both of which increasingly focus on concrete climate solutions by corporations.",
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