Environmental Legislation, Emissions and Emissions Disclosures – A multinational study

Abstract

This study draws on stakeholder theory to investigate the relationship between environmental legislation (both mandated and voluntary) and greenhouse gas emissions for the top 100 largest global emitters as identified by the Carbon Disclosure Project (CDP). Using a sample of 505 observations, we find that: i) mandated environmental disclosure legislation has an inverse association with greenhouse gas emissions, ii) voluntary environmental disclosure legislation does not have any association with greenhouse gas emissions, iii) neither mandated nor voluntary environmental disclosure legislation has an association with corporate environmental disclosures, and iv) Kyoto agreement ratification is positively associated with corporate environmental disclosures. These findings are consistent with stakeholder theory, which predicts organisations use of strategy to manage stakeholder expectations.