Mandatory Carbon Disclosures and the Transition of Corporate Production Technologies
83 Pages Posted: 8 May 2024
Abstract
In the U.S., carbon emissions escalated with patent applications until the Greenhouse Gas Reporting Program (GHGRP) mandated firms to disclose emissions. In this study, we show that, post-GHGRP, firms with a greater amount of inefficient CO2 emissions produce significantly more low-carbon patents (as classified by the Cooperative Patent Classification system as well as our text-based keyword search method), which in turn significantly reduces CO2 emissions and increases market value. We provide possible internal and external channels for corporate production technology transitions, which focus on ESG-based executive compensation, the stringency of local environmental regulations, and the coverage of climate risk-sensitive analysts.
Keywords: greenhouse gas, innovation, Environmental Regulations, climate change
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