Countries’ regulatory context and voluntary carbon disclosures

Abstract

Purpose - This study analyses the relationship between countries’ regulatory context and voluntary carbon disclosures. To date, little attention has been paid to how specific climate change-related regulation influences companies’ climate change disclosures, especially voluntary carbon reporting. Design/methodology/approach – The New Institutional Sociology perspective has been adopted in order to examine the pressure of a country’s climate change regulation on voluntary carbon reporting. This research uses Tobit regression to analyse data from 2,183 companies in 12 countries that were invited to respond to the CDP questionnaire in 2015. Findings - The results show that countries’ specific climate change-related regulation does influence both the participation of its companies in the CDP, and their quality, as measured by the CDP disclosure score. Research limitations – The sample is restricted to 12 countries’ regulatory environment. Thus, caution should be exercised when generalizing the results to other institutional contexts. Practical implications – The results are of use to regulators and policymakers to better understand how specific climate change-related regulation influences voluntary carbon disclosure. Investors may also benefit from this research as it shows which institutional contexts present greater regulatory stringency, and how companies in more stringent environments take advantage of synergy to disclose high-quality carbon information. Social implications – By linking regulatory and voluntary reporting, this study sheds light on how companies use voluntary carbon reporting to adapt to social expectations generated in their institutional context. Originality/value – This is the first research that considers specific climate changerelated regulation in the study of voluntary carbon disclosures.