Rina Datt

This study examines the relationship between voluntary carbon assurance (VCA) and carbon management system quality (CMSQ). Using a sample representing more than 40 countries over the period 2011–2018, we show empirically that firms with superior CMSQ tend to adopt VCA to show their commitment to a green transition to a decarbonised business model. Furthermore, the institutional context has a significant influence on this relationship. More specifically, the relationship between CMSQ and VCA is stronger in carbon‐intensive sectors. In addition, the existence of an emissions trading scheme and better governance also strengthen the association. However, the relationship is weaker in companies that operate in developing countries and in code‐law countries compared to common‐law countries. The results are robust to alternative proxies and various model specifications. Our study yields important insights for policymakers, managers and researchers. Specifically, by identifying the factors that motivate firms to adopt VCA, stakeholders can develop more robust policies to promote both VCA and high‐quality carbon management systems.

We examine the impact of voluntary carbon assurance on a firm’s cost of equity capital (COE). Based on 6500 firm-year observations across 44 countries covering a period of 8 years (2010–2017), we find that the adoption of carbon assurance is negatively associated with the COE. Cross-sectional analyses show that the negative relationship is stronger for firms with poor emissions reduction performance and for firms that do not participate in an emissions trading scheme. We also find that a country’s legal institutions and economic development have significant moderating effects on this relationship. Furthermore, the scope and the percentage of carbon emissions assured, the level of carbon assurance, and the auditing standards adopted have varied effects on the COE. These findings should be useful to regulators, managers, and investors looking to improve the credibility of voluntarily reported information. JEL Classification: M41, M42, Q56, G32

This study investigates the influence of compensation on companies' decision to undertake carbon assurance. Using a sample of 1326 firm‐year observations from the United Kingdom between 2010 and 2018, this study finds that firms that include corporate sustainability incentive terms in executive compensation packages, firms that have higher director compensation and firms that have been involved in compensation controversies are more likely to undertake voluntary carbon assurance. Additional analyses show that the United Kingdom's mandatory greenhouse gas emissions reporting mandate, industry and gender diversity of the board of directors play significant moderating roles in the relationship between compensation and voluntary carbon assurance. The results of this study will help investors, managers and regulators better understand the factors that influence the growing carbon assurance market.

We examine whether board governance dimensions, carbon risks and opportunities, and environmental management affect carbon management system quality (CMSQ). Based on 1035 firm‐year observations from UK companies from 2011 to 2018, we find that internal governance is significantly related to CMSQ. In addition, firms with a heightened degree of carbon risks and/or opportunities are motivated to adopt a high‐quality carbon management system to mitigate exposure and harness opportunities. Finally, climate risk and opportunity have an interactive and complementary effect on CMSQ (i.e., both climate risk and opportunity can strengthen the effect of the other on CMSQ). This study contributes significantly to a growing body of research on how corporate governance, carbon risks and carbon opportunities may simulate proactivity of corporate sustainability in general and carbon management strategy in particular. Our results provide insights for investors, policymakers, managers and regulators on the combined effect of greenhouse gas emissions and corporate governance practice.

This chapter seeks to assess if there is any evidence that overseas development assistance (ODA), through its influence upon the climate-resilient grants and development grants, has impacted Fiji's developmental goals and climate resilience as a Small Island Development State (SIDS). To broaden the framework, it develops and applies two indicators of development and climate resilience for Fiji and seeks to establish – from the time series analysis – if these indicators bear a long-term and equilibrium relationship with the ODA for Fiji. By exploiting a suitable data set, it brings three important insights into the literature on climate shocks from global warming for SIDS. There are three critical elements found from the study: first, ODA did not play any role in reducing underdevelopment (DVIT) in Fiji. Secondly, ODA played an important role in increasing sustainability, or resilience, in Fiji: an increase in ODA by 1% increased sustainability, or resilience measured by the sustainability index SUS, by 0.24% at 1% level of significance. Finally, it is noted that oil price hikes compromised Fiji's resilience or sustainability. In the short-run, both ODA and OILP compromised the sustainability of Fiji.

There is a growing volume of literature on corporate governance and sustainability. Despite this, the relationship between corporate governance (CG) and carbon emissions performance (CEP) is an unresolved issue. This motivates us to examine the impact of CG on CEP, using a sample of all Australian firms that have participated in the Carbon Disclosure Project (CDP) questionnaire survey. This study employs fixed-effects modelling for an unbalanced panel of 425 firm-year observations from 2010–2018. We find that firms with higher board independence and the presence of an environmental committee show enhanced CEP. Further, frequency of board meetings and gender diversity lead to improved CEP. However, ownership concentration does not appear to improve CEP. Our article provides valuable insight for corporate directors and regulators to help them recognize the vital role that board meetings, board gender diversity, board independence, and the presence of an environmental committee play in driving the carbon performance of companies. They can also use these results to identify positive elements of CG that may deserve additional regulatory focus to achieve carbon policy objectives. This study contributes to the increasing literature on the association between CG and climate change and presents a new direction for related research on whether and how CEP is influenced by CG.

NGOs are expected by their social mission not only to assess but to report on sustainability issues in response to the growing public awareness of the sustainability agendas. Since NGOs are globally renowned as watchdogs for advancing socio-economic development and sustainable societies, research on their efforts in this regard will help develop recommendations on how they can be better positioned as the watchdog. The purpose of this article is to review and assess the understanding of sustainability (reporting) in NGO literature as well as the barriers and drivers. The study investigates various practices of sustainability and identifies the drivers and barriers in sustainability reporting (SR). The authors reviewed 61 articles published between 2010 and 2020 on sustainability and assessed the strengths and weaknesses in the understanding of sustainability in literature as well as the reporting phenomenon in NGOs. The misconceptions in the definition of SR tend to weaken its relevance and applicability, and the reporting process is often focused on demonstrating the legitimacy of NGOs rather than improving their performance. As such, it provides more evidence in support of the need for a more holistic and all-inclusive definition that will aid regulation and enforcement. We also found that, although it is often assumed all NGOs share similar objectives, it is not always the case as there are as diverse objectives as there are numbers of NGOs and their reporting pattern varies in accordance with this diversity. The review makes a case for a more comprehensive definition of SR suitable for NGOs using four elements as well as providing suggestions for where research in this area might focus to enhance the overall body of knowledge. The study contributes to theory and practice by introducing new elements guiding the definition of SR in NGOs which supports accountability and proper functioning of a circular economy and promotes sustainable development.

Purpose: The purpose of this study is to examine the impact of legitimacy threats on corporate incentive to obtain external carbon assurance.Design/methodology/approach: The sample consists of the largest US companies that disclosed carbon emissions to CDP (formerly the Carbon Disclosure Project) over the period 2010-2013. Based on legitimacy theory, firms are more likely to obtain carbon assurance when they are under greater legitimacy threat. Carbon assurance is measured using CDP data. Three proxies are identified to measure legitimacy threat related to climate change: carbon emissions intensity, firm size and leverage.Findings: This paper finds that firms with higher levels of emissions are more likely to obtain independent assurance, and large firms show the same tendency, as they are probably under pressure from their large group of stakeholders. In sum, the findings suggest that firms with higher carbon emissions face greater threats to their legitimacy, and the adoption of carbon assurance can mitigate risks to legitimacy with enhanced credibility of carbon disclosure in stakeholders’ decision-making.Research limitations/implications: The study has some limitations. The authors have relied on CDP reports for analysis and focus on the largest companies in the US. Caution should be exercised when generalising the results to smaller firms, other countries or voluntary carbon assurance information disclosed in other communications channels.Practical implications: This study provides extra insights into and an improved understanding of determinants and motivation of carbon assurance, which should be useful for policymakers to develop policies and initiatives for carbon assurance. The collective results should be useful for practicing accountants and accounting firms.Originality/value: The paper investigates how legitimacy threats affect firms’ choice of external carbon assurance in the context of US, which has not been documented previously. It contributes to the understanding of legitimacy theory in the context of voluntary carbon assurance.

Driven by a scarcity of literature on the issue, this study investigates corporate incentives for external carbon emissions assurance. Our sample comprises 5,184 firm-year observations across 44 countries between 2010 and 2014. The descriptive result suggests that 66 percent of the sample firms received assurance and the number of firms that adopted carbon assurance increased during the period investigated. We find that firms exposed to higher carbon risks are more likely to voluntarily seek carbon assurance. Moreover, firms that had adopted carbon reduction initiatives, with an environmental committee, with carbon reduction incentives, or with higher carbon disclosure scores tend to obtain assurance. Our study is based on a number of corporate social responsibility theories; namely, legitimacy, signaling, information asymmetry, and institutional theory. This study contributes to the literature by empirically testing the validity and applicability of these theories in the emerging field of nonfinancial assurance services. JEL Classifications: M42; Q54; Q56.