Greenhouse gas reporting and the Carbon Disclosure Project (original) (raw)
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Journal of Business Ethics, 2014
This study examines the impact of corporate governance mechanisms on greenhouse gas emission disclosure and the extent to which the disclosure of greenhouse gas emission information is associated with earnings management and the liquidity of firms' shares. The sample for this study is drawn from Australian publicly listed firms that voluntarily disclosed their greenhouse gas emission information through voluntary disclosure channels such as the Carbon Disclosure Project, annual reports, standalone sustainability reports, and corporate websites between 2006 and 2009. This study adopts the Carbon Disclosure Project 2010 scoring methodology to measure the quality of greenhouse gas emission disclosure. A content analysis was used to score the quality of voluntary disclosures in annual financial and sustainability reports, and the information provided on company websites. v
Global Warming Disclosures: Impact of Kyoto Protocol Across Countries
Journal of International Financial Management & Accounting, 2010
The Kyoto Protocol that went into effect in February 2005 set limits on the amount of greenhouse gas (GHG) emissions. We document in this study that firms from countries ratifying the Protocol and setting limits on GHG emissions (i.e., European Union [EU] countries, Canada and Japan) are associated with higher GHG disclosures compared with firms in the United States, which has not ratified the Protocol. Additionally, we document that firms from India, which has not set any limits on GHG emissions, make even less GHG disclosures than firms from all other countries covered in this study. Our findings also show that GHG disclosures are greater for Canadian and Japanese firms compared with firms from the EU countries and that they also differ somewhat across EU firms. These findings suggest that ratification of the Protocol and limits on emissions improve pollution disclosures. In the absence of Protocol ratification, mandatory disclosure requirements may be needed to ensure adequate and reliable pollution disclosures.
Carbon Disclosures: Comparability, the Carbon Disclosure Project and the Greenhouse Gas Protocol
Australasian Accounting Business and Finance Journal, 2012
Corporate carbon disclosures have become increasingly commonplace and are often presented as a useful voluntary mechanism for internal and external decision making. The production of the data is said to assist corporations position themselves strategically in terms of the carbon risks and opportunities they may face. External to the firm, carbon disclosures hold the promise of assisting capital allocation decisions that are 'carbon responsible' . It is claimed that the process of disclosure can sensitise the market to global environmental problems such as climate change. In order to consider these claims, the broad purpose of this paper is to question whether the voluntary information that is produced can live up to its expectations and provide a meaningful basis for climate change related decision making. To that end, this exploratory study examines the carbon disclosures of Australasian mining companies over three years in compliance with a voluntary carbon disclosure regime -the Carbon Disclosure Project (CDP) -and assesses those disclosures with respect to comparability, an important criterion for information usefulness.
Journal of Indonesian Economy and Business
The purpose of this study is to determine the characteristics of companies that voluntarily disclose carbon emissions and to examine the economic consequences of the carbon emissions’ disclosure. Companies used in the sample are oil, gas and coal companies in non-Annex 1 member countries registered in the Osiris database. The observation period was from the commencement of the Kyoto Protocol's second commitment to date, or from 2013 to 2016. Measuring the carbon emissions’ disclosure is achieved by using a checklist developed from an information request sheet from the CDP (Carbon Disclosure Project). An assessment of the extent of the disclosure is made using the content analysis method. Company characteristics are proxied with leverage, profitability and firm age, while the economic consequences are proxied by using bid-ask spreads, the trading volume and share price volatility. The data analysis method used in this research is the Partial Least Square (PLS) method using the Wa...
This paper examines corporate responses to climate change in relation to the development of reporting mechanisms for greenhouse gases, more specifically carbon disclosure. It first presents some background and context on the evolution of carbon trading and disclosure, and then develops a conceptual framework using theories of global governance, institutional theory and commensuration to understand the role of carbon disclosure in the emerging climate regime. Subsequently, a closer look is taken at carbon disclosure and reporting mechanisms, with a particular focus on the Carbon Disclosure Project (CDP). Our analysis of responses shows that CDP has been successfully using institutional investors to urge firms to disclose extensive information about their climate change activities. However, although response rates in terms of numbers of disclosing firms are impressive and growing, neither the level of carbon disclosure that CDP promotes nor the more detailed carbon accounting provide information that is particularly valuable for investors, NGOs or policy makers at this stage. As a project of commensuration, carbon disclosure has achieved some progress in technical terms, but much less with regard to the cognitive and value dimensions.
Accounting for climate change and the self-regulation of carbon disclosures
Accounting Forum, 2011
Adopting a form of "critical dialogic engagement" , this paper explores how dominant environmental discourses can influence and shape carbon disclosure regulation. Carbon-related disclosures have increased significantly in the last five years, and many of these disclosures remain voluntary. This paper considers both the construction of self-regulated carbon disclosure practices and the role that this kind of carbon information may have in climate change-related decision making. Our preliminary findings indicate that the methodological diversity underpinning carbon disclosures may inhibit the usefulness of climate change-related data. To explore these issues, this paper focuses on the Carbon Disclosure Project (CDP) and the use of the Greenhouse Gas (GHG) Protocol as a reporting model within it.
This issue brief provides an assessment on the role of carbon emissions disclosure as a governance tool in the recently rekindled global effort to limit temperature increases to no more than two degrees Celsius. Since the 1990s, a number of mandatory and voluntary government schemes emerged, which, together with non-governmental initiatives, require or encourage enterprises to measure and report their emissions. a variety of public and private climate governance arrangements, including the UNFCCC now call for disclosure as a way to further a variety of goals in climate change mitigation. Carbon disclosure involves the regular collection and dissemination of information about firm's carbon emissions and environmental performance. Instead of mandating specific outcomes, governance by disclosure is concerned with establishing procedures for information generation, dissemination, accessibility or usability. Information disclosure provide consumers, investors, and regulators with more knowledge to assess corporate strategies and liabilities in relation to climate change, thereby giving companies an economic incentive to reduce emissions. KEY FINDINGS • Carbon disclosure is increasingly playing a role in the global governance effort in climate change mitigation with more governments, NGOs and corporations taking part in various mandatory and voluntary disclosure schemes. • Carbon disclosure plays a role beyond inducing behavioral change and inputs into other governance mechanisms by increasing transparency and accountability. • Evidence of its direct role in reducing emissions is limited and raises doubt about the value that carbon disclosure initiatives have for investors, NGOs or policy makers. • Lack of standardization limits the value of disclosed information to key stakeholders and is a major reason for its ineffective role in climate change governance. POLICY RECCOMENDATIONS for carbon emissions disclosure to overcome its current limitations and play a significant role in global governance efforts to limit temperature increase to no more than 2-degrees, a set of actions must be taken; • Encourage further research on the effectiveness of carbon disclosure to develop a better understanding of the confounding results in the existing literature • Further global effort to ensure standardization in reporting and accounting • Establish an international institution mandated to collect, verify and publicly disclose information about emissions from all significant global carbon sources
Greenhouse gas disclosures: evidence from the EU response to Kyoto
International Journal of Critical Accounting, 2012
In 2005, the European Union instituted the first phase of the Kyoto Protocol by implementing a carbon allocation scheme (cap and trade) to reduce greenhouse gas (GHG) emissions. Prior to 2005, the Scandinavian countries had imposed a carbon tax to reduce carbon emissions. In this study, the EU experience with cap and trade and carbon taxes is compared concluding that neither endeavour was particularly successful in reducing GHG emissions. Disclosures made by firms that were impacted by the GHG emission reduction schemes are then examined. After controlling for size and industry group, firms from the UK and firms that just participated in cap and trade made significantly greater disclosures.
The International Journal of Accounting, 2005
This study evaluates disclosures on pollution and greenhouse gases by firms domiciled in countries that have ratified the Kyoto Protocol compared to others. The study is based on disclosures made in the annual reports, environmental reports, and websites of 120 of the largest (in terms of revenues) public firms from the chemical, oil and gas, energy, and motor vehicles and casualty insurance industries. The study uses content analysis to construct weighted and unweighted disclosure indices. The results show that firms from countries that ratified the Protocol have higher disclosure indexes as compared to firms in other countries. Additionally, larger firms disclose more detailed pollution information. Multinational firms that operate in countries that ratified the Protocol but have their home offices in countries that did not are associated with lower disclosures. This lack of consistency in disclosure is not likely to be helpful in informing shareholders about the social responsibility of their investments.
Transparency of Corporate Carbon Disclosure: International Evidence
SSRN Electronic Journal, 2011
Increased awareness regarding environmental issues has encouraged corporations to disclose carbon related information. The study concerns carbon disclosure in the typical form of the Carbon Disclosure Project (CDP). The CDP constitutes an international voluntary code developed by a non-government organization to encourage consideration of carbon emission issues in decision making. Such a code can flexibly bridge the gap between individual companies' sustainability initiatives and mandatory, legal regulation. We examine the effectiveness of the code and the determinants of the transparency of the carbon disclosure. The study contributes to the understanding of management (dis)incentives to be (un)accountable for their carbon impact on global warming. Design/methodology/approach-The paper is based on the academic literature on motivations for sustainability and environmental reporting, together with an analysis of the carbon disclosures made by the Global 500 firms. We assess the degree of transparency using the Carbon Disclosure Transparency Score (CDTS) adopted from the CDP reports. The CDTS focuses on carbon risks and opportunities, carbon footprints, carbon reduction activities, governance and verification of carbon information. We consider the influence of information needs of stakeholders and institutional effects on carbon transparency. Findings-We find the CDP has attracted an overwhelming majority of the Global 500 to disclose carbon information. However, we observe a great disparity in carbon transparency between firms in different sectors and institutions. Our results show 74% of 243 firms in our sample achieved 50% or higher on the CDTS (sample average is 60%), so their reports are reasonably transparent, and the remaining were un-transparent (or opaque). We interpret the lack of transparency as evidence of a lack of managerial incentive to be accountable. In addition, we find firm size, leverage, industry membership, emission trading scheme (hereafter ETS), stringency of environmental regulation, as predicted, are significantly associated with carbon transparency. Research limitations/implications-The results imply that stakeholder theory and institutional theory provide different but complementary explanations for the development of carbon disclosure practices. Future research is needed to gauge how the CDP code impacts front-line decision making. It could be useful to have further standardization of CDP reporting formats and contents, including more details about project-level implementation. Practical implications-The CDP in its current incarnation is a system which produces assessable reports of carbon activities, and it encourages the development of web-based forms of corporate accountability. From the organization's perspective, the study provides immediate feedback and has the potential to improve practice through the identification of forces for change not considered in prior theorizing. Based on the findings, we make some suggestions for improvement of carbon disclosure. Some firms have already been involved in voluntary external assurance, which added creditability and value to the reports. Use of voluntary external assurance should be encouraged. Originality/value-Our study attempts to propose a research instrument to measure carbon transparency (obscurity) as a multi-item construct. Our findings help to illuminate the effectiveness of a voluntary code in the social construction of how stakeholder theory and institutional theory are to be interpreted and implemented. In addition, our international cross-sectional evidence for determinants of carbon transparency contrasts with findings in previous research focusing on general environmental issues, and research in national settings.