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Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies

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Author Info

  • Erin Marie Reid

    ()
    (Harvard Business School)

  • Michael W. Toffel

    ()
    (Harvard Business School, Technology and Operations Management unit)

Abstract

The challenges associated with climate change will require governments, citizens, and firms to work collaboratively to reduce greenhouse gas emissions, a task that requires information on companies' emissions levels, risks, and reduction opportunities. This paper explores the conditions under which firms participate in this endeavor. Building on theories of how social activists inspire changes in organizational norms, beliefs, and practices, we hypothesize that shareholder actions and regulatory threats are likely to prime firms to adopt practices consistent with the aims of a broader social movement. We find empirical evidence of direct and spillover effects. In the domain of private politics, shareholder resolutions filed against it and others in its industry increase a firm's propensity to engage in practices consistent with the aims of the related social movement. Similarly, in the realm of public politics, threats of state regulations targeted at a firm's industry as well as regulations targeted at other industries increase the likelihood that the firm will engage in such practices. These findings extend existing theory by showing that both activist groups and government actors can spur changes in organizational practices, and that challenges mounted against a single firm and an industry can inspire both firm and field-level changes.

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Bibliographic Info

Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 09-019.

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Length: 46 pages
Date of creation: Aug 2008
Date of revision: Jun 2009
Handle: RePEc:hbs:wpaper:09-019

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Related research

Keywords: social movements theory; institutional change theory; private politics; activist shareholder resolutions; climate change; environmental sustainability;

This paper has been announced in the following NEP Reports:

References

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  1. Shimshack, Jay P. & Ward, Michael B., 2007. "Enforcement and over-compliance," MPRA Paper 25993, University Library of Munich, Germany.
  2. 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.
  3. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," MPRA Paper 25994, University Library of Munich, Germany.
  4. David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 31-66, 03.
  5. Michael W. Toffel, 2008. "Coerced Confessions: Self-Policing in the Shadow of the Regulator," Journal of Law, Economics and Organization, Oxford University Press, vol. 24(1), pages 45-71, May.
  6. Cho, Charles H. & Patten, Dennis M., 2007. "The role of environmental disclosures as tools of legitimacy: A research note," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 639-647.
  7. Gillan, Stuart L. & Starks, Laura T., 2000. "Corporate governance proposals and shareholder activism: the role of institutional investors," Journal of Financial Economics, Elsevier, vol. 57(2), pages 275-305, August.
  8. Sasser Erika N. & Prakash Aseem & Cashore Benjamin & Auld Graeme, 2006. "Direct Targeting as an NGO Political Strategy: Examining Private Authority Regimes in the Forestry Sector," Business and Politics, De Gruyter, vol. 8(3), pages 1-34, December.
  9. Patten, Dennis M., 2002. "The relation between environmental performance and environmental disclosure: a research note," Accounting, Organizations and Society, Elsevier, vol. 27(8), pages 763-773, November.
  10. Stuart L. Gillan & Laura T. Starks, 2007. "The Evolution of Shareholder Activism in the United States," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(1), pages 55-73.
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Citations

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Cited by:
  1. Fisher-Vanden, Karen & Thorburn, Karin S, 2008. "Voluntary Corporate Environmental Initiatives and Shareholder Wealth," CEPR Discussion Papers 6698, C.E.P.R. Discussion Papers.
  2. Michaela Rankin & Carolyn Windsor & Dina Wahyuni, 2011. "An investigation of voluntary corporate greenhouse gas emissions reporting in a market governance system: Australian evidence," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 24(8), pages 1037-1070, October.
  3. Lyon, Thomas & Lu, Yao & Shi, Xinzheng & Yin, Qie, 2013. "How do investors respond to Green Company Awards in China?," Ecological Economics, Elsevier, vol. 94(C), pages 1-8.
  4. Sarasini, Steven, 2013. "Institutional work and climate change: Corporate political action in the Swedish electricity industry," Energy Policy, Elsevier, vol. 56(C), pages 480-489.
  5. Michael W. Toffel & Jodi L. Short & Melissa Ouellet, 2012. "Codes in Context: How States, Markets, and Civil Society Shape Adherence to Global Labor Standards," Harvard Business School Working Papers 13-045, Harvard Business School, revised Oct 2013.
  6. Timothy Simcoe & Michael W. Toffel, 2012. "Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California," Harvard Business School Working Papers 13-030, Harvard Business School, revised Oct 2013.
  7. Min-Dong Lee, 2011. "Configuration of External Influences: The Combined Effects of Institutions and Stakeholders on Corporate Social Responsibility Strategies," Journal of Business Ethics, Springer, vol. 102(2), pages 281-298, August.
  8. Cedric Dawkins & John Fraas, 2011. "Coming Clean: The Impact of Environmental Performance and Visibility on Corporate Climate Change Disclosure," Journal of Business Ethics, Springer, vol. 100(2), pages 303-322, May.
  9. Holtbrügge, Dirk & Dögl, Corinna, 2012. "How international is corporate environmental responsibility? A literature review," Journal of International Management, Elsevier, vol. 18(2), pages 180-195.
  10. Timo Busch & Nils Lehmann & Volker H. Hoffmann, 2012. "Corporate Social Responsibility, Negative Externalities, and Financial Risk: The Case of Climate Change," Tinbergen Institute Discussion Papers 12-102/IV/DSF40, Tinbergen Institute.
  11. Chonnikarn Fern Jira & Michael W. Toffel, 2011. "Engaging Supply Chains in Climate Change," Harvard Business School Working Papers 12-026, Harvard Business School, revised Oct 2012.
  12. Anil R. Doshi & Glen W.S. Dowell & Michael W. Toffel, 2011. "How Firms Respond to Mandatory Information Disclosure," Harvard Business School Working Papers 12-001, Harvard Business School, revised Jun 2012.
  13. Timo Busch & Nils Lehmann & Volker H. Hoffmann, 2012. "Corporate Social Responsibility, Negative Externalities, and Financial Risk: The Case of Climate Change," Tinbergen Institute Discussion Papers 12-102/IV/DSF40, Tinbergen Institute.
  14. Christopher Marquis & Michael W. Toffel, 2011. "Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing," Harvard Business School Working Papers 11-115, Harvard Business School, revised Dec 2013.
  15. Matisoff, Daniel C., 2013. "Different rays of sunlight: Understanding information disclosure and carbon transparency," Energy Policy, Elsevier, vol. 55(C), pages 579-592.
  16. Thomas Koslowski & Jens Strüker, 2011. "ERP On Demand Platform," Business & Information Systems Engineering, Springer, vol. 3(6), pages 359-367, December.

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