Financial performance and carbon emission disclosure

Abstract

Purpose – This study aims to investigate the impact of financial performance on carbon emission disclosure. Design/methodology/approach – The study uses ordinary least squares (OLS) multiple regression analysis on a sample of 177 Financial Times Stock Exchange 350 index (FTSE-350) non-financial firms to test the impact of market (Tobin’s Q) and accounting (return on equity) financial performance indicators on carbon emission disclosure. Findings – The results show that the financial performance market indicator has a significant positive impact on carbon emission disclosure. The accounting indicator illustrates similar results except for Scope 3, where the results are insignificant. This study may help firms understand how financial performance affects carbon emission disclosure, particularly by showing that high-performing firms are motivated to maintain strong environmental practices and enhance carbon emission awareness. Originality/value – This paper enhances stakeholders’ understanding of how firms’ environmental policies align with their financial objectives, thereby expanding knowledge in carbon accounting.

Keywords

• Financial performance
• Carbon accounting
• Carbon emission disclosure