Voluntary Disclosures of Emissions by US Firms

Abstract

This paper examines voluntary disclosures about Greenhouse Gas emissions by the US S&P 500 firms to the Carbon Disclosure Project. Trends in three disclosures (answering the questionnaire, disclosing emissions and disclosing accounting methodology for emissions) are examined from 2006 to 2008. The frequencies of all three disclosures increased from 2006 to 2008. However, many firms answer the questionnaire, but do not disclose emissions amounts or how they account for emissions. The differences between the high rates for answering the questionnaire and the lower rates for disclosing emissions and methodology support the legitimacy theory. Previous disclosures are highly predictive of subsequent ones with less than 37 percent of the firms changing disclosures during the three years. The most significant factor in explaining subsequent disclosures are previous ones. When previous disclosures are accounted for the proxy for regulatory threat does not contribute to explaining most of the disclosures. The research contributes to the understanding of emissions disclosures, in particular, and voluntary disclosures, in general, by highlighting the importance of considering previous disclosures in understanding subsequent ones.

Keywords: voluntary disclosure, environmental disclosure, emissions, Carbon Disclosure Project

JEL Classification: M14, M41, M49, G39