How government procurement shapes corporate climate disclosures, commitments, and actions

74 Pages Posted: 11 Dec 2022 Last revised: 20 Jan 2025

See all articles by Omri Even-Tov

Omri Even-Tov

Haas School of Business - UC Berkeley

Guoman She

The University of Hong Kong - Faculty of Business and Economics

Lynn Linghuan Wang

The University of Hong Kong - Faculty of Business and Economics

Detian Yang

The University of Hong Kong - Faculty of Business and Economics

Date Written: November 22, 2023

Abstract

This study examines how government procurement impacts firms' environmental disclosures and whether they have tangible effects. Using a triple-difference (DDD) research design that exploits the exogenous increase in federal funding allocations to counties based on population census revisions, we find that firms with high exposure to government contracts significantly increase climate disclosure following expanded procurement opportunities. We also document that enhanced disclosure is characterized by a positive tone that emphasizes firms' green investment and commitment to climate adaptation. The effect is more pronounced in counties with a greater increase in procurement volume and when firms have lower ex ante sustainability performance. Finally, we find firms that increase climate disclosure are more likely to earn government contracts, and they undertake real actions by reducing toxic emissions and enhancing the development of green products. Overall, our results suggest government procurement promotes corporate climate responsibility by incentivizing firms to undertake climate mitigation actions.

Keywords: Climate disclosure, Government procurement, Climate change, Census count, Federal spending JEL Classification: H57, M14, M40, O13, Q54

Suggested Citation

Even-Tov, Omri and She, Guoman and Wang, Lynn Linghuan and Yang, Detian, How government procurement shapes corporate climate disclosures, commitments, and actions (November 22, 2023). HKU Jockey Club Enterprise Sustainability Global Research Institute - Archive, Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4283831 or http://dx.doi.org/10.2139/ssrn.4283831

Omri Even-Tov

Haas School of Business - UC Berkeley ( email )

Haas School of Business
Berkeley, CA 94720
United States
3104302236 (Phone)

Guoman She (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Lynn Linghuan Wang

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
Hong Kong

Detian Yang

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

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