Fighting Climate Change with Disclosure? The Real Effects of Mandatory Greenhouse Gas Emission Disclosure

42 Pages Posted: 15 Mar 2019 Last revised: 5 Jun 2020

See all articles by Benedikt Downar

Benedikt Downar

Technische Universität München (TUM)

Jürgen Ernstberger

Technische Universität München

Hannes Rettenbacher

Technische Universität München (TUM) - TUM School of Management

Sebastian Schwenen

Technische Universität München (TUM); German Institute for Economic Research (DIW Berlin)

Aleksandar Zaklan

German Institute for Economic Research (DIW Berlin)

Date Written: August 1, 2019

Abstract

We examine whether mandatory disclosure of greenhouse gas (GHG) emissions influences companies’ GHG emission levels. We identify the disclosure effect by exploiting a mandate requiring UK-incorporated listed companies to disclose information on GHG emissions in their annual reports. Using a difference-in-differences design, we show that disclosing GHG emissions in annual reports reduces emission levels by about 18% over three years. We find that emission reductions primarily occur for first-time mandatory reporters compared to firms who already voluntarily reported GHG information prior to the mandate. Further, we find that the emission reductions are permanent rather than transitory and we obtain stronger results for firms with larger savings potentials. Our effects are robust to various sample specifications, i.e., analysis at the installation- and firm-level, alternative control groups, and propensity score matching.

Keywords: Disclosure of non-financial information, greenhouse gas emissions, real effects

JEL Classification: Q28, Q40, M41, M48

Suggested Citation

Downar, Benedikt and Ernstberger, Jürgen and Rettenbacher, Hannes and Schwenen, Sebastian and Zaklan, Aleksandar, Fighting Climate Change with Disclosure? The Real Effects of Mandatory Greenhouse Gas Emission Disclosure (August 1, 2019). DIW Berlin Discussion Paper No. 1795 (2019), Available at SSRN: https://ssrn.com/abstract=3352390 or http://dx.doi.org/10.2139/ssrn.3352390

Benedikt Downar

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

Jürgen Ernstberger

Technische Universität München ( email )

Arcisstraße 21
Munich, 80333
Germany

Hannes Rettenbacher

Technische Universität München (TUM) - TUM School of Management ( email )

Freising
Germany

Sebastian Schwenen

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Aleksandar Zaklan (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
186
Abstract Views
1,101
rank
177,395
PlumX Metrics