The relation between voluntary carbon disclosure and environmental performance: The case of S&P 500

Abstract

Purpose

The purpose of this study is to investigate the effect of environmental performance on the environmental disclosure level.

Design/methodology/approach

Carbon disclosure leadership index score is considered as a proxy of carbon disclosure level, while greenhouse gas (GHG) emissions as a proxy of environmental performance. In addition, six control variables are used: return on assets, financial leverage, company’s size, CEO duality, board size and percentage of independent directors on board. The sample comprises 102 companies from a population of Standard & Poor’s 500 (S&P 500) companies over a five-year period, 2009-2013.

Findings

Results revealed that higher pollution levels in terms of GHG emissions affect negatively the dissemination of carbon disclosure information, suggesting a positive relationship between environmental performance and environmental disclosure level. In addition, companies with good environmental performance in relation to their average environmental performance disseminate more carbon information in their disclosures. Thus, the carbon disclosure level is indicative of environmental performance consistent with the voluntary disclosure theory.

Practical implications

The managerial behavior regarding the relation of environmental disclosure and environmental performance is explained. In addition, the findings should be of use to those investors interested in finding carbon emission information so that they assess investments and evaluate their current portfolios in terms of environmental sustainability.

Originality/value

It is intended to ascertain the reliability level of carbon disclosure regarding carbon emission information by incorporating the carbon disclosure leadership index score and GHG emissions.

Citation

Giannarakis, G., Konteos, G., Sariannidis, N. and Chaitidis, G. (2017), "The relation between voluntary carbon disclosure and environmental performance: The case of S&P 500", International Journal of Law and Management, Vol. 59 No. 6, pp. 784-803. https://doi.org/10.1108/IJLMA-05-2016-0049