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Environmental disclosures: electric utilities and Phase 2 of the Clean Air Act

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  • Freedman, Martin
  • Stagliano, A.J.

Abstract

In 1999, American Electric Power, anticipating its future need to comply with Phase 2 of Title IV of the 1990 Clean Air Act (CAA), spent about $37 million to purchase sulfur dioxide emissions allowances on the spot and futures markets [EPA, 2004. Emissions tracking site for acid rain. ETS/CEMS, website: http://www.epa.gov/ardpublic/edata.html]. This information was not disclosed in the company's 1999 annual report to shareholders or in its Form 10-K annual report to the U.S. Securities and Exchange Commission (SEC). No information was included in these reports regarding how the firm planned to achieve the emission standards of Phase 2. Potomac Electric Power Company disclosed in its 1999 Form 10-K that it planned to spend $5 million to comply with Phase 2 and would sell its remaining electric-generating plants [PEPCO, 1999. Potomac Electric Power Form 10-K report]. Stakeholders and regulators might view these two “events” and wonder why there is no consistency in disclosure concerning the CAA requirements. This is especially so given that the Clean Air Act mandates specific remedies for non-compliance and is known to have given rise to significant capital expenditures.

Suggested Citation

  • Freedman, Martin & Stagliano, A.J., 2008. "Environmental disclosures: electric utilities and Phase 2 of the Clean Air Act," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 19(4), pages 466-486.
    • Handle: RePEc:eee:crpeac:v:19:y:2008:i:4:p:466-486
    DOI: 10.1016/j.cpa.2007.01.006
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    References listed on IDEAS

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    1. Wiseman, Joanne, 1982. "An evaluation of environmental disclosures made in corporate annual reports," Accounting, Organizations and Society, Elsevier, vol. 7(1), pages 53-63, January.
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    Cited by:

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    2. Ali Meftah Gerged & Eshani S. Beddewela & Christopher J. Cowton, 2023. "Does the quality of country‐level governance have an impact on corporate environmental disclosure? Evidence from Gulf Cooperation Council countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1179-1200, April.
    3. Nicolo, Giuseppe & Zampone, Giovanni & Sannino, Giuseppe & Tiron-Tudor, Adriana, 2023. "Worldwide evidence of corporate governance influence on ESG disclosure in the utilities sector," Utilities Policy, Elsevier, vol. 82(C).
    4. Roberts, Robin W. & Wallace, Dana M., 2015. "Sustaining diversity in social and environmental accounting research," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 32(C), pages 78-87.
    5. Perera, Luckmika & Jubb, Christine & Gopalan, Sandeep, 2019. "A comparison of voluntary and mandated climate change-related disclosure," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(2), pages 243-266.
    6. Deegan, Craig, 2017. "Twenty five years of social and environmental accounting research within Critical Perspectives of Accounting: Hits, misses and ways forward," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 43(C), pages 65-87.
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    8. Leopizzi, Rossella & Palmi, Pamela & Di Cagno, Pierluca, 2023. "Sustainability reporting and electric utilities: A bibliometric analysis," Utilities Policy, Elsevier, vol. 84(C).
    9. Jonathan Maurice & Emmanuelle Plot, 2010. "Double diffusion des entreprises dans le rapport annuel : renforcement ou contradiction ?," Post-Print hal-00479533, HAL.
    10. Lucia Silva‐Gao, 2012. "The Disclosure of Environmental Capital Expenditures: Evidence from the Electric Utility Sector in the USA," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 19(4), pages 240-252, July.
    11. Siddique, Md Abubakar & Akhtaruzzaman, Md & Rashid, Afzalur & Hammami, Helmi, 2021. "Carbon disclosure, carbon performance and financial performance: International evidence," International Review of Financial Analysis, Elsevier, vol. 75(C).
    12. Ali Meftah Gerged & Eshani Beddewela & Christopher J. Cowton, 2021. "Is corporate environmental disclosure associated with firm value? A multicountry study of Gulf Cooperation Council firms," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 185-203, January.
    13. Giovanni Zampone & Giuseppe Sannino & Isabel‐María García‐Sánchez, 2023. "Exploring the moderating effects of corporate social responsibility performance under mimetic pressures. An international analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 53-65, January.

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