Voluntary Climate Disclosures: A Tale of Two Venues

Abstract

We examine the determinants and consequences of firms’ choice between two disclosure venues, corporate social responsibility (CSR) reports and the Carbon Disclosure Project (CDP), for voluntary climate disclosure. We find that a firm’s CDP disclosure is positively associated with its prior CSR disclosure, but not vice versa. Firms with prior CSR disclosure are less likely to disclose to the CDP when they have more climate-related shareholder resolutions, greater emissions and tighter financial constraints. Following their first-time CDP disclosure, firms experience higher liquidity, ESG ratings, analyst coverage, and lower emissions - although these findings apply only to firms without prior CSR disclosure. Overall, our results point to a hitherto overlooked strategic angle in firms’ choice of venues for their voluntary climate disclosures.

Keywords: Climate-related disclosure, disclosure venue, CDP, sustainability report, shareholder activism, Big 3

JEL Classification: G11, Q54, M41