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

  • Erin Marie Reid

    ()

    (Harvard Business School)

  • Michael W. Toffel

    ()

    (Harvard Business School, Technology and Operations Management unit)

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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File URL: http://www.hbs.edu/research/pdf/09-019.pdf
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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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Web page: http://www.hbs.edu/
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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. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 519-540, November.
  3. 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.
  4. 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.
  5. John W. Maxwell & Thomas P Lyon & Steven C.. Hackett, 1995. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," University of Chicago - George G. Stigler Center for Study of Economy and State 122, Chicago - Center for Study of Economy and State.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 31-66, 03.
  11. 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.
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