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Do environmental and emission disclosure affect firms’ performance?

Author

Listed:
  • Gianni Guastella

    (Università Cattolica del Sacro Cuore
    Fondazione Eni Enrico Mattei - Corso Magenta 63)

  • Matteo Mazzarano

    (Università Cattolica del Sacro Cuore
    Fondazione Eni Enrico Mattei - Corso Magenta 63)

  • Stefano Pareglio

    (Università Cattolica del Sacro Cuore
    Fondazione Eni Enrico Mattei - Corso Magenta 63)

  • Riccardo Christopher Spani

    (Fondazione Eni Enrico Mattei - Corso Magenta 63
    Università degli Studi di Roma La Sapienza - Facoltà di Economia - Via del Castro Laurenziano 9)

Abstract

This study analyzes the relationship between firms’ financial performance and their environmental performance, with a particular focus on greenhouse gas-intensive industries. Using financial and environmental data of international listed companies from 2011 to 2017, the financial impact of environmental performances was estimated, measured with multiple indicators that take into account disclosure aspects. The analysis was conducted across different industry aggregation levels, namely the entire group of industries, the Global Industry Classification System (GICS) Industry Group, and the GICS Industry. We found that environmental disclosure indexes are mostly not significant after controlling for environmental performance, suggesting that the effect of environmental disclosure on corporate financial performance is limited, if not altogether absent. In contrast, environmental performance seems to play an important role, and that holds even for high-emitting companies. Overall, our results were consistent with the interpretation that financial markets effectively consider the actual environmental performance of listed companies and, only to a minor extent, the quality of their disclosure.

Suggested Citation

  • Gianni Guastella & Matteo Mazzarano & Stefano Pareglio & Riccardo Christopher Spani, 2022. "Do environmental and emission disclosure affect firms’ performance?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 695-718, December.
    • Handle: RePEc:spr:eurasi:v:12:y:2022:i:4:d:10.1007_s40821-021-00195-9
    DOI: 10.1007/s40821-021-00195-9
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