Voluntary Disclosure and Information Intermediaries: Evidence from the Carbon Disclosure Project

Abstract

Investors, customers, and other stakeholders rely on the information disclosure by firms to evaluate numerous dimensions of the firm's operations and potential for future profitability. As environmental performance has become increasingly important to customers and investors, intermediaries have developed to fill the void left by the lack of standardized or required reporting and help alleviate the information asymmetry between firms and stakeholders. The ability of these intermediaries to provide accurate and useful information depends on the strategic disclosure of information and reporting by firms. In this paper, we examine one of the largest and most influential intermediaries, the Carbon Disclosure Project, to examine how the contents and the linguistic characteristics of the firm's survey response determines the CDP scoring, and whether the CDP scores are informative to predict subsequent environmental performance.

Firm climate risk, risk management, and bank loan financing

“…King and Lenox (2002) show that pollution reduction leads to financial gain. Fabrizio and Kim (2016) indicate that a firm's environmental performance significantly influences its operations and potential for future profitability. Tadasse, Algieri, Kalkuhl, and Braun (2016) and World Energy Council (2015) find that regional extreme weather renders costs of raw materials less predictable, as reflected in increased food and energy price volatilities.…”