Climate change and mandatory carbon reporting:Impacts on business process and performance

UK-listed companies are now required to disclose their greenhouse gas emissions as part of their annual directors’ report to publicly account for their contributions to climate change. This paper uses this mandatory carbon reporting to explore wider debates about corporate social responsibility and the purpose, practice and impacts of such non-financial reporting. Empirically, it combines documentary analysis 176 firms’ carbon reporting practices with 60 interviews with stakeholders involved in carbon reporting. Firms disclose their emissions in response to financial incentives, social pressure and/or regulatory compulsion. In turn rationales shape whether and how carbon reporting influences internal business processes and performance. The importance of reporting to the bottom line vary by sector depending on two variables—energy intensity and economic regulator status—yet there is limited evidence that carbon reporting is driving substantial reductions in emissions. Findings suggest reasons for caution about hopes for ‘nudging’ firms to improve their environmental performance and social responsibility through disclosure requirements