Under pressure: The link between mandatory climate reporting and firms' carbon performance

We examine whether mandatory climate reporting leads to changes in firms' carbon emissions. Using propensity score matching and a difference-in-differences design, we assess the effects of the Greenhouse Gas Reporting Program (GHGRP), introduced by the Environmental Protection Agency (EPA) in 2...

Full description

Saved in:
Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Bauckloh, Michael Tobias, Klein, Christian, Pioch, Thomas, Schiemann, Frank
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2022
Subjects
Carbon
Online AccessGet full text

Cover

More Information
Summary:We examine whether mandatory climate reporting leads to changes in firms' carbon emissions. Using propensity score matching and a difference-in-differences design, we assess the effects of the Greenhouse Gas Reporting Program (GHGRP), introduced by the Environmental Protection Agency (EPA) in 2010, on the carbon performance defined as carbon intensity and absolute carbon emissions of affected firms. Institutional and legitimacy theory serve as theoretical underpinnings to investigate the degree to which firms comply with their ethical obligations. We find that firms affected by the GHGRP improve their carbon performance significantly more than unaffected firms after the introduction of the GHGRP, but not their absolute carbon emissions. The results are robust to changes in the difference-in-differences design and the matching sample.Overall, our study add to research on climate-related disclosure regulation by assessing the GHGRP's suitability as a regulatory measure to limit firms' negative impacts on our climate.