Mandatory Carbon Disclosure: Evidence from France

Abstract

We examine firms’ response to a carbon disclosure mandate imposed on French firms with more than 500 employees by the Grenelle II law. We find that only half of the firms subject to the mandate comply and file at least one carbon report between 2014 and 2021. Conditional on filing a report, virtually all the firms report their scope 1 and scope 2 emissions. However, only a fraction of the firms report their scope 3 emissions. Similarly, we document considerable heterogeneity in firms’ decisions to provide an action plan to reach targeted reductions in future carbon emissions. Importantly, the propensity to file a carbon report and to include an action plan is lower for firms in more carbon-intensive industries. Finally, we find that expected carbon emission reduction is associated with the actual reduction in emissions, especially for firms that provide clear action plans with quantitative metrics.

Keywords: Mandatory disclosure, carbon emissions, climate change, CSR reporting

JEL Classification: K22, L51, M40, M48, Q54