Mandatory Corporate Carbon Disclosure: Evidence from a Natural Experiment

68 Pages Posted: 13 Aug 2019 Last revised: 13 Jul 2021

See all articles by Valentin Jouvenot

Valentin Jouvenot

University of Geneva - Geneva Finance Research Institute (GFRI)

Philipp Krueger

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; European Corporate Governance Institute (ECGI); University of Geneva - Geneva School of Economics and Management

Date Written: August 8, 2019

Abstract

We study the real and financial effects of a unique law in the United Kingdom that mandates publicly listed firms to disclose their greenhouse gas emissions (GHG) in a standardized way in their annual reports. Firms respond to the law by reducing GHG emissions by about 16 percent. Firms reduce emissions through costly operational adjustments. Examining why firms reduce emissions, we present evidence consistent with the views that the regulation increased the future costs of high emissions and facilitated across firm comparisons. We conclude that financial motivations push firms to reduce GHG emissions when mandatory emissions disclosure requirements are introduced.

Keywords: Mandatory disclosure regulation, greenhouse gas emissions, climate change mitigation, climate finance, financial performance, institutional investors

JEL Classification: G28, G18, G38, K22, K32, L51, M48, Q52, Q54

Suggested Citation

Jouvenot, Valentin and Krueger, Philipp, Mandatory Corporate Carbon Disclosure: Evidence from a Natural Experiment (August 8, 2019). Available at SSRN: https://ssrn.com/abstract=3434490 or http://dx.doi.org/10.2139/ssrn.3434490

Valentin Jouvenot

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland

Philipp Krueger (Contact Author)

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland

Swiss Finance Institute ( email )

Switzerland

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

University of Geneva - Geneva School of Economics and Management ( email )

Uni Mail
Bd du Pont-d'Arve 40
Geneva, 1211
Switzerland

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