The effect of corporate governance on carbon emission disclosures

TLDR

Understanding the link between corporate governance and carbon emission disclosures is essential for shaping policies that promote emission reduction practices. The study investigates whether corporate governance characteristics influence voluntary carbon emission disclosure. Using a two‑stage empirical design, the authors collected Turkish non‑financial firms’ carbon disclosure data (2011‑2015) and applied panel data regression to assess the impact of governance characteristics. Companies with more independent directors, greater board nationality diversity, and a sustainability committee were more likely to disclose carbon emissions and provide more extensive disclosures.

Abstract

Purpose The purpose of this study is to investigate whether corporate governance characteristics impact the voluntary disclosure of carbon emissions. Design/methodology/approach This empirical research was carried out in two stages. Initially, the carbon disclosures data were sourced from the annual and stand-alone sustainability reports of Turkish non-financial companies listed on Borsa Istanbul during 2011-2015. Later, the corporate governance characteristics that influence carbon disclosures were examined using panel data regression models. Findings The empirical findings of this study suggested that entities with a higher number of independent directors on their boards were more likely to respond to the Carbon Disclosure Project. In addition, board nationality diversity and the existence of a sustainability committee had a significant positive impact on the propensity to disclose carbon emissions and the extent of those disclosures. Originality/value This research provides empirical evidence of the determinants of carbon emission disclosures, which could be useful for organizations and regulatory bodies. Such an understanding is crucial to specify necessary policies that will provide emission reduction practices and policies for entities. This paper fills some of the gap in the literature by concentrating on the association between corporate governance characteristics and disclosures of a more specific environmental issue, being carbon emissions.