Download This PaperMandatory Corporate Carbon Disclosure: Evidence from a Natural Experiment
68 Pages Posted: 13 Aug 2019 Last revised: 13 Jul 2021
Date Written: August 8, 2019
Abstract
We study the real and financial effects of a unique law in the United Kingdom that mandates publicly listed firms to disclose their greenhouse gas emissions (GHG) in a standardized way in their annual reports. Firms respond to the law by reducing GHG emissions by about 16 percent. Firms reduce emissions through costly operational adjustments. Examining why firms reduce emissions, we present evidence consistent with the views that the regulation increased the future costs of high emissions and facilitated across firm comparisons. We conclude that financial motivations push firms to reduce GHG emissions when mandatory emissions disclosure requirements are introduced.
Keywords: Mandatory disclosure regulation, greenhouse gas emissions, climate change mitigation, climate finance, financial performance, institutional investors
JEL Classification: G28, G18, G38, K22, K32, L51, M48, Q52, Q54
Suggested Citation: Suggested Citation
