The relevance of carbon performance and board characteristics on carbon disclosure

Abstract

Purpose The purpose of this study is to examine the impact of carbon performance on carbon disclosure among nonfinancial French-listed firms, while also considering the corporate board’s characteristics as a secondary objective. Design/methodology/approach This study uses a sample of Société des Bourses Françaises 120 Index (SBF-120) French-listed firms to investigate the effect of multiple carbon performance proxies on carbon disclosure based on random effects models for the period 2010–2021. Generalized method of moments regressions are used to encounter endogeneity problems. Findings Drawing on stakeholder theory, this paper finds that greater carbon performance leads to greater carbon disclosure. Given the growing societal awareness about climate-change issues, carbon-responsible firms are likely to disseminate relevant carbon-related information through disclosures to respond to the information demands of a varied stakeholder group. Coherent with signaling theory, large firms that undertake carbon-reduction initiatives tend to disclose more information about their enhanced carbon performance to equity participants to distinguish themselves and highlight their decarbonization efforts. Originality/value This study offers significant insights given that SBF-120 firms are involved in climate-change activities as a response to the growing institutional and societal pressure to perform better and disclose reliable environmental information in their sustainability reports.