Business Strategy and the Environment Bus. Strat. Env. 22, 145-158 (2013) Published online 8 May 2012 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/bse.1732 Voluntary Disclosures of Emissions by US Firms Elizabeth Stanny* School of Business and Economics, Sonoma State University, Rohnert Park, CA, USA ABSTRACT This paper examines voluntary disclosures about greenhouse gas emissions by the US S&P 500 firms to the Carbon Disclosure Project (CDP). Trends in three disclosures (answering the questionnaire, disclosing emissions and disclosing accounting methodology for emis- sions) are examined from 2006 to 2008. The frequencies of all three disclosures increased over this period. The finding that many firms answer the questionnaire, but do not disclose their emission amounts or how they account for them, is consistent with a prediction from the legitimacy theory literature that firms will disclose the minimum to avoid scrutiny. Disclosure patterns are routine since previous disclosures are the most significant variable in explaining subsequent ones. The research contributes to the understanding of emission disclosures, in particular, and voluntary disclosures, in general, by highlighting the importance of considering previous disclosures in understanding subsequent ones. Copyright @ 2012 John Wiley & Sons, Ltd and ERP Environment Received 27 December 2010; revised 13 January 2012; accepted 2 February 2012 Keywords: disclosure; stakeholder; environmental; emissions; reporting; legitimacy Introduction N UMEROUS STUDIES HAVE EXAMINED WHY FIRMS MAKE VOLUNTARY ENVIRONMENTAL DISCLOSURES (PATTEN, 1991; Berthelot et al., 2003; González-Benito and González-Benito, 2006; Brammer and Pavelin, 2008; Freedman and Jaggi, 2009; González-Benito and González-Benito, 2010; Carroll and Shabana, 2010). The 'traditional' business case explanation is that environmental and business interests can be aligned, and firms disclose to reveal this to investors (Brown and Fraser, 2006). In the case of voluntary climate change, for shareholders to assess whether business and environmental interests can be aligned, firms' risks from climate change and their emissions must be disclosed. However, firms have not been forthcoming about this information in their annual reports. In particular, Doran and Quinn (2009) found that only 24 percent of the firms in the US S&P 500 mention climate change in their 2008 annual reports and only one-quarter of these (5.6 percent of the total) disclose their climate change, greenhouse gas (GHG), emissions. In light of the low level of climate change disclosures in annual reports, one group of stakeholders, investors, have attempted to increase disclosures by directly soliciting information from firms. The largest investor solicitation of climate change information is the CDP.' By publishing reports and making disclosures available to the public, the CDP attempts to compel firms to disclose by increasing the benefits and/or reducing the costs of disclosing. The *Correspondence to: Elizabeth Stanny, School of Business and Economics, Sonoma State University, Rohnert Park, CA, USA. E-mail: stanny@ sonoma.edu www.cdproject.net [12 January 2012]. Copyright @ 2012 John Wiley & Sons, Ltd and ERP Environment
146 E. Stanny CDP has been successful in increasing the percentage of firms disclosing. In particular, 70 percent of the S&P 500 firms responded to the 2008 CDP compared with 24 percent that