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An investigation of voluntary corporate greenhouse gas emissions reporting in a market governance system: Australian evidence

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Author Info

  • Michaela Rankin
  • Carolyn Windsor
  • Dina Wahyuni
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    Abstract

    Purpose – Institutional governance theory is used to explain voluntary corporate greenhouse gas (GHG) reporting in the context of a market governance system in the absence of climate change public policy. This paper seeks to hypothesise that GHG reporting is related to internal organisation systems, external privately promulgated guidance and EU ETS trading. Design/methodology/approach – A two-stage approach is used. The initial model examines whether firms' GHG disclosures are associated with internal organisation systems factors: environmental management systems (EMS), corporate governance quality and environmental management committees as well as external private guidance provided by the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) for 187 ASX 300 firms. EU ETS trading is also included. Determinants of the extent and credibility of GHG disclosure is examined in the second stage where an index constructed from the GHG reporting standard “ISO 14064-1” items for a sub-sample of 80 disclosing firms as the dependent variable. Findings – Firms that voluntarily disclose GHGs have EMSs (uncertified and certified), higher corporate governance quality and publicly report to the CDP, tend to be large and in the energy and mining and industrial sectors. The credibility and extent of disclosures are related to the existence of a certified EMS, public reporting to the CDP, and use of the GRI. Firms that disclose more credible information are more likely to be large and in the energy and mining, industrial and services sectors. Originality/value – The paper shows that some proactive but pragmatic Australian firms are disclosing their GHGs voluntarily for competitive advantage in the current market governance system in the absence of public policy.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Accounting, Auditing & Accountability Journal.

    Volume (Year): 24 (2011)
    Issue (Month): 8 (October)
    Pages: 1037-1070

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    Handle: RePEc:eme:aaajpp:v:24:y:2011:i:8:p:1037-1070

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    Web page: http://www.emeraldinsight.com

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    Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
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    Web: http://www.emeraldinsight.com/aaaj.htm

    Related research

    Keywords: Carbon; Environmental management systems; GHG emissions disclosure; Governance;

    References

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    1. Erin Marie Reid & Michael W. Toffel, 2008. "Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies," Harvard Business School Working Papers 09-019, Harvard Business School, revised Jun 2009.
    2. Griffiths, Andrew & Haigh, Nardia & Rassias, Jenine, 2007. "A Framework for Understanding Institutional Governance Systems and Climate Change:: The Case of Australia," European Management Journal, Elsevier, vol. 25(6), pages 415-427, December.
    3. Ans Kolk & Jonatan Pinkse, 2012. "Multinational enterprises and climate change strategies," Grenoble Ecole de Management (Post-Print) hal-00835257, HAL.
    4. Ans Kolk & David Levy & Jonatan Pinkse, 2008. "Corporate Responses in an Emerging Climate Regime: The Institutionalization and Commensuration of Carbon Disclosure," European Accounting Review, Taylor & Francis Journals, vol. 17(4), pages 719-745.
    5. Madhu Khanna & William Rose Q. Anton, 2002. "Corporate Environmental Management: Regulatory and Market-Based Incentives," Land Economics, University of Wisconsin Press, vol. 78(4), pages 539-558.
    6. Kathy Gibson & Gary O'Donovan, 2007. "Corporate Governance and Environmental Reporting: an Australian study," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(5), pages 944-956, 09.
    7. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    8. Simon Dietz & Chris Hope & Nicholas Stern & Dimitri Zenghelis, 2007. "REFLECTIONS ON THE STERN REVIEW (1) A Robust Case for Strong Action to Reduce the Risks of Climate Change," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 8(1), pages 121-168, January.
    9. Jan Bebbington & Carlos Larrinaga & Jose M. Moneva, 2008. "Corporate social reporting and reputation risk management," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 21(3), pages 337-361, April.
    10. Cowen, Scott S. & Ferreri, Linda B. & Parker, Lee D., 1987. "The impact of corporate characteristics on social responsibility disclosure: A typology and frequency-based analysis," Accounting, Organizations and Society, Elsevier, vol. 12(2), pages 111-122, March.
    11. Patten, Dennis M., 1992. "Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on legitimacy theory," Accounting, Organizations and Society, Elsevier, vol. 17(5), pages 471-475, July.
    12. Neu, D. & Warsame, H. & Pedwell, K., 1998. "Managing public impressions: environmental disclosures in annual reports," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 265-282, April.
    13. Wendy Beekes & Philip Brown, 2006. "Do Better-Governed Australian Firms Make More Informative Disclosures?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3-4), pages 422-450.
    14. Carol A. Adams, 2008. "A commentary on: corporate social responsibility reporting and reputation risk management," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 21(3), pages 365-370, April.
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    Citations

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    Cited by:
    1. Hajnalka Ván, 2012. "Environmental Accounting – A New Challenge for the Accounting System," Public Finance Quarterly, State Audit Office of Hungary, vol. 57(4), pages 437-452.
    2. Markus J. Milne & Suzana Grubnic, 2011. "Climate change accounting research: keeping it interesting and different," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 24(8), pages 948-977, October.
    3. Talbot, David & Boiral, Olivier, 2013. "Can we trust corporates GHG inventories? An investigation among Canada's large final emitters," Energy Policy, Elsevier, vol. 63(C), pages 1075-1085.

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