CSR Disclosure and Benchmarking-Learning: Emissions Responses to Mandatory Greenhouse Gas Disclosure

59 Pages Posted: 2 Oct 2019

See all articles by Sorabh Tomar

Sorabh Tomar

Southern Methodist University (SMU) - Accounting Department

Date Written: September 6, 2019

Abstract

Examining the US Greenhouse Gas Reporting Program, I find that facilities reduce greenhouse gas emissions by 7.0% after mandatory disclosure of facility-level emissions. A facility's prior GHG inefficiency predicts subsequent GHG emissions reductions, but only after public disclosure occurs, which lags reporting to the regulator considerably. Industry emissions dispersion falls, and emissions reductions are larger for facilities with more disclosing peers nearby. These results suggest facilities learn from their peers' disclosures. Combining Bayesian techniques with physical relations underlying fossil fuel use, I estimate pre-reporting period emissions and find that reporting to the regulator, prior to disclosure, does not lead to emissions reductions. Lastly, the reduction following disclosure holds after scaling by revenue, and capital expenditure and gross margins increase, consistent with facilities investing in efficiency improvements. The broader takeaway is that “benchmarking-learning” can play a role in CSR improvements following mandatory CSR disclosure.

Keywords: Corporate Social Responsibility; Disclosure Regulation; Climate Change; Benchmarking; Peer Effects; Real Effects

JEL Classification: D22; D83; K32; L11; L21; L51; M41; M48; Q54; Q58

Suggested Citation

Tomar, Sorabh, CSR Disclosure and Benchmarking-Learning: Emissions Responses to Mandatory Greenhouse Gas Disclosure (September 6, 2019). SMU Cox School of Business Research Paper No. 19-17, Available at SSRN: https://ssrn.com/abstract=3448904 or http://dx.doi.org/10.2139/ssrn.3448904

Sorabh Tomar (Contact Author)

Southern Methodist University (SMU) - Accounting Department ( email )

United States

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