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Institutional investors, climate disclosure, and carbon emissions

Author

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  • Cohen, Shira
  • Kadach, Igor
  • Ormazabal, Gaizka

Abstract

Exploiting the unique features of the CDP, the world-leading platform of corporate climate risk disclosures, we study the relationship between institutional investors' demand for climate-related information (as reflected in their CDP signatory status), firms' decision to disclose this information, and corporate carbon emissions. We provide systematic international evidence that ownership by CDP signatories is positively associated with the probability of disclosing information to the CDP, and that such disclosure is associated with subsequent lower carbon emissions. We also observe that CDP signatories are more likely to engage with and divest from top emitters disclosing to the CDP. Overall, these results are consistent with the notion that investor demand for climate-related information results in greater corporate disclosure and contributes to firms’ decisions to lower future carbon emissions.

Suggested Citation

  • Cohen, Shira & Kadach, Igor & Ormazabal, Gaizka, 2023. "Institutional investors, climate disclosure, and carbon emissions," Journal of Accounting and Economics, Elsevier, vol. 76(2).
    • Handle: RePEc:eee:jaecon:v:76:y:2023:i:2:s0165410123000642
    DOI: 10.1016/j.jacceco.2023.101640
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    More about this item

    Keywords

    Climate-related disclosure; Shareholder activism; Institutional ownership; Carbon emissions;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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