Corporate voluntary carbon disclosure strategy and carbon performance in the USA

Abstract

Purpose This study aims to examine whether good carbon performers disclose more carbon information overall than poor performers, and if yes, how firms select different types of carbon information to signal their genuine superior carbon performance. Design/methodology/approach The level of disclosure is measured based on content analysis of Carbon Disclosure Project (CDP) reports. The study sample consists of 487 US companies that voluntarily participated in the CDP survey from 2011 to 2012. The authors use the t-test and multiple regression models for analyses. Findings The results consistently indicate that firms with better carbon performance disclose a greater amount of overall carbon information, supporting the signalling theory. In addition, in contrast to previous studies that merely consider the overall disclosure level, the authors also investigate disclosure of each major aspect of carbon activities. The results show that good carbon performers disclose more key carbon items, such as goods and services that avoid greenhouse gas (GHG) emissions, external verification and carbon accounting, to signal their true type. Research limitations/implications This study has some limitations. The authors rely on CDP reports for analysis and focus on the largest companies in the USA. Caution should be exercised when generalising the results to other countries, smaller firms or voluntary carbon information disclosed in other communications channels. Practical implications Because carbon disclosure has already been moving from a voluntary to mandatory requirement in many jurisdictions, the format and content of CDP reports might be considered for a formal standalone GHG statement. Based on the results, the authors believe that there should be industry-specific disclosure guidelines, and more disclosure should be made at the project level. Originality/value In the context of climate change, this study provides support for the signalling theory by utilising the relationship between voluntary carbon disclosure and performance. The study also provides empirical evidence on how companies may use different types of carbon information to signal their underlying carbon performance.

Corporate carbon accounting: a literature review of carbon accounting research from the Kyoto Protocol to the Paris Agreement

“…Unfortunately, the empirical results for this research question are not conclusive. Luo and Tang (2014b) and Datt et al (2019b) find support for signalling theory by showing that the extensiveness of carbon disclosure is positively associated with the firm's carbon mitigation performance. Ott et al (2017) present similar but relatively weak evidence.…”

Corporate climate‐related voluntary disclosures: Does potential greenwash exist among Australian high emitters reports?

“…explained earlier, previous research has employed different indicators as proxies of environmental performance. Carbon emission data from the CDP database(Datt et al (2020);Giannarakis et al (2017);Luo and Tang (2014), hazardous waste produced(Iatridis (2013), toxic waste recycled(Al-Tuwaijri et al (2004), and waste diversion rate(Oates and Moradi-Motlagh (2016). Our study focuses on mandatorily disclosed to government annual carbon emissions volume data under the NGER Act, argued to be superior since it relates to the same fiscal year for each company, is determined using the same stipulated definitions and method, and is reliable since it is subject to random audit by regulators.Environmental performance is measured as 1-year lagged change in carbon emissions from one year to the next (Scope 1 plus Scope 2) deflated by sales from the previous period.…”

Voluntary Disclosure of Carbon Emissions and Sustainable Existence of Firms: With a Focus on Human Resources of Internal Control System

“…Carbon emission is becoming increasingly important for stakeholders who are interested in the effects of global warming. Stakeholders demand transparent information and firms tend to disclose their real obligations to fulfill their commitment and to improve their environment-based decision making (Datt et al, 2018) [9]. Additionally, to cope with the rising attention on the environment, firms may have the intent of persuading stakeholders that they are concerned about the environment and voluntary disclosure is a way to spread the message.…”

“…Firms that voluntarily disclose information about carbon emissions, which can be negative information, will signal that they are performing their required social responsibilities in good faith. Datt et al (2019) [9] found that firms use carbon performance as a signal when they are better than other firms. In other words, firms with a high performance in their use of voluntary CDP are more engaged in reporting their commitment to controlling carbon emissions.…”