The Sustainability Committee and Environmental Disclosure: International Evidence

Abstract

Using a large set of firms from 35 countries over the 2010–2017 period, we find that the existence of a sustainability committee is positively associated with higher-quality environmental disclosure. This finding is robust to endogeneity and sample selection bias concerns. The sustainability committee effect is more pronounced when external environmental institutions are too weak to properly monitor corporate environmental disclosure. We also find that raising the quality of environmental disclosure leads to a lower cost of equity capital and a higher valuation only for firms with sustainability committees in place. These findings suggest that the sustainability committee plays an important role in facilitating and certifying corporate environmental disclosure.

Keywords: Sustainability committee; environmental disclosure; GHG emissions disclosure