Carbon disclosure and financial performance: UK environmental policy

Khaled Alsaifi · Marwa Elnahass · Aly Salama

244 citations0/0 files storedBusiness Strategy and the Environment

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Corporate Social Responsibility Reporting Environmental Sustainability in Business Accounting and Financial Management

Abstract

Abstract The outcome of carbon disclosure, the importance of which has grown remarkably in recent years to become a strategic decision‐making issue for organisations in today's competitive environment, is a subject of lively debate but remains under‐researched in the environmental accounting literature. This study is motivated by this research gap and the growing interest in assessing the financial consequences of corporate involvement in climate change beyond regulatory compliance, as evidenced by firms' voluntary participation in the Carbon Disclosure Project. Using the resource‐based view of the firm as a theoretical framework and linking it to carbon disclosure through Carbon Disclosure Project, we conceptualise and empirically investigate the impact of adopting proactive carbon management policies and communicating them to stakeholders, focusing on the financial performance of the top FTSE350 companies between 2007 and 2015. By developing a comprehensive financial performance index and controlling for several firm characteristics, we find strong evidence that voluntary carbon disclosure is positively associated with firm financial performance. The findings in this paper provide new insights and policy implications for managers, financial stakeholders, and regulators.

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References

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2022The real effects of ESG reporting and GRI standards on carbon mitigation: International evidence 2020Carbon emissions and the cost of debt in the eurozone: The role of public policies, climate‐related disclosure and corporate governance 2022ESG controversies and bank risk taking 2022Impacts on the ESG and financial performances of companies in the manufacturing industry based on the climate change related risks 2020Market responses to firms’ voluntary carbon disclosure: Empirical evidence from the United Kingdom

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