SEMESTER 1, 2018
ATMC Sydney

Title: Carbon performance and voluntary disclosure in various companies.
Research Question: Is there any significant relationship between carbon performance and voluntary disclosure in various companies?
Parwinder Kaur

I certify that I have carefully reviewed the university’s academic misconduct policy. I understand that the source of ideas must be referenced and that quotation marks and a reference are required when directly quoting anyone else’s words.

Literature Review: –
Climate change is the one of the big issue that is has endangered the global sustainable development (Alhassan, et al., 2017). The information about Disclosure of climate change provides risk and opportunities for companies and provides corporate managers disclosure challenges (Aggarwal & Dow, 2012). Voluntary disclosures and mandatory disclosures provide the information about Greenhouse Gas emission of the companies. Nowadays, companies rapidly facing climate change risk and it became major concern for the companies worldwide (CDP, 2013). Monitoring the power of large companies’ governance is based on agency theory. Agency theory predicts, that the power of monitoring can be reduce by power of CEO duality. Fama and Jensen, (1983) objects to that in most of the companies, the contracts are not free of charge written and enforced, which arise the agency problems.
As reported by Ramanathan, Poomkaew ; Nath (2014:171), agency theory highlights the environmental regulations and essential environmental disclosures that are significant for the organisation in connecting between the environmental performance standards and the corporate value. The agency point of view states that companies can tackle the environmental investments without necessary implicating that the net present value will positive. On this study, the literature view is very restricted. The adjustments in climate conditions have implies that new measures on climatic conditions are attempted in dealing with the circumstance and affecting the basic leadership process (Ellram, Zsidisin, Siferd ; Stanly, 2012:10). To predict the relationship between carbon performance and disclosure score, various studies come forward by researchers. However, the relationship between carbon disclosure and carbon performance has limited literature analysis. Delmas and Blass, Stanny and Ely discover the negative connection between carbon performance and carbon disclosure. Stanny and Ely concluded that Carbon performance is not operated by carbon disclosure, because investments and landings does not have relationship with carbon disclosure. Akhtaruddin and haron (2010) and Eng and Mak (2003) disclosed that there is a negative relationship between managerial share ownership and levels of voluntary disclosure, as agency theory estimates that an industry’s top management should have equity-based ownership on the behalf on owners. Luo and Tang (2014) examined the relationship between carbon emission and voluntary carbon disclosure and get the result that voluntary carbon disclosure positively effects by carbon performance.
In this study, Carbon performance is independent variable, voluntary disclosure is dependent variable and company types as control variable. This paper already discussed above that the literature analysis is very limited on the relationship of carbon performance and voluntary disclosure. As agency view, according to the study of research paper by Ben-Amar and Mcllkenny (2014), “Board effectiveness and voluntary disclosure of climate change information” found that disclosure is depends upon board effectiveness, whereas, there is a positive relationship between board effectiveness and carbon disclosure. Carbon performance and disclosure score can be measured by carbon emission. Furthermore, Economic based theories contend that companies’ performance is a key determinant of revelation (disclosure behaviour and transparency). To conclude, there is not a wide research on carbon performance and voluntary disclosure. Nowadays, the success of the firm is based upon its ability to communicative to the environmental guidelines and this is fundamental in achieving keenness in the industry. This study uses company size, profitability leverage and firm growth and age as control variable besides to main independent variable. the main reason of this study is to find out how companies recognise climate change issues with agency theory.

Conceptual Model: –
The figure 1, describes the Voluntary disclosure as dependent variable which is depends on Carbon performance and company types. The carbon performance is Independent variable and company types is controlling variable.

Figure 1: Dependent, Independent, and Controlling variable

Hypothesis: –
H1: There is significant relationship between carbon performance and voluntary disclosure in various companies.
Proxy Measures of theoretical constructs: –
Theoretical Construct Proxy measure Dependent Variable, Independent Variable, and Control Variable Source
Carbon Performance carbon emission in Metric tonnes Independent Variable CDP Reports
Voluntary Disclosure Disclosure score Dependent Variable CDP Survey
Company’s classification Company’s profile Control Variable CDP Reports

Measurement of variables: –
Independent Variable: The independent variable is Carbon performance. Carbon performance of the companies can be measured by using carbon emission in Metrix tonnes, per full time employment. The more carbon emission in companies indicates to low carbon performance.
Dependent Variable: In this study, the dependent variable is Voluntary Disclosure. A company’s annual report and sustainability report measures voluntary disclosure of Greenhouse Gas emission’s quality by using the scoring methodology from CDP reports.
Control Variable: In this study, the controlling variable is Company types. Carbon emission is depending upon company’s profile. The main objective to measure this variable is to find out that quality of disclosure of performance and share price performance are corresponded to related performance or not correlated to responded performance. It shows that how companies give to emission and disclosure effected by them.

Research Method: – Sample
This study is finding the relationship between voluntary disclosure and carbon performance in various company applying the concepts of agency theory. Further, moving forward to this research study for doing a sampling method our necessary task is to collect the data. This study research uses a sample of largest listed companies which were choose by CDP, that include in CDP overview. Some of the reports of CDP (2015) including the responses for the inclusive of the company’s performance and disclosure factor. That companies who made their responses public, will be the top scoring companies (CDP 2015). CDP is the most trustworthy source to get the transparent information and analysis the data because it is holding a largest database statistic regarding climate change information. The annual survey of the CDP provides many opportunities to the different organisations as it is the most leading sources of quality.

References: –

Aggarwal ; Dow, R. ;., 2012. ‘Corporate governance and business strategies for climate change and environmental mitigation,’ The European Journal of Finance, vol. 18, no.3-4,pp. 311-31.
Alhassan, S. ;. H. ; W., (July 2017). ‘Challenges and Opportunities for mainstreaming climate change adoption into wash development plainning in Ghana.’ International Journal of Enviornmental Research and Public Health, Issue 14, pp. 794-769.
CDP, 2013, Sectore insight: what is driving climate change action in the world’s largest companies?, Carbon Disclosure project, .
CDP, 2015, Cliamte Change Information Request, .
Fama, EF & Jensen, MC 1983, ‘Sepration of ownership and control’, Journal of Law &Economic, vol.26, pp.301-26.
Ramanathan, R., Poomkaew, B., & nATH, p. (April 01 2014). The impact of organizational pressure on enviornmental performance of firm. Business Ethics: A European Review, 23, 2, 169-182.
Stanny, E. and K. Ely (2008) “Corporate environmental disclosure about the effects of climate change.” Corporate Social Responsibility and Environmental Management 15, 338-348.
Delmas, M. and V. Doctori Blass (2010), “Measuring Corporate Environmental Performance: the Trade-offs of sustainability Rating.” Business Strategy and the Environment 19. 245-260.
Akhtaruddin, M & Haron, H 1010, ‘Board ownership, audit committees’ effectiveness, and corporate voluntary disclosure’, Asian Review of Accounting, vol. 18, no. 3, pp.245-59.
Eng, LL; Mak, YT 2003,’Corporate governance and voluntary disclosure’, Journal of accounting and Public Policy, vol. 22, no. 4, pp. 325-45.
Hassan, A. (2015). Environmental performance and voluntary disclosure on specific environmental activities: an empirical study of carbon vs. non-carbon intensive industries. Legitimacy proactive approach. International Journal of Sustainable Economy, 7(4), 243-261. DOI: 10.1504/IJSE.2015.073406
Liao, L, Luo, L; Tang, Q 2014, ‘ Gender Diversity, board independence, environmental committee and greenhouse gas disclosure’, The British Accounting Review, Forthcoming.
Ben-AMAR, W. and Mcllkenny, P., 2015. Board effectiveness and the voluntary disclosure of climate change information. Business Strategy and the Environmental, 24(8), pp.704-719.
Eswaran Velayutham, Australian evidence: “Voluntary disclosure of greenhouse gas emissions, corporate governance and earnings management”.
Green Technology and Sustainable Development (GTSD) 2014 Conference, Ho Cho Minh City, Vietnam.