Disclosures Of Climatic Change And Carbon: A Research Perspective

The report is prepared for conducting the research on the disclosures of climatic change in the context of any country. For the external and internal decision making, a disclosure about the corporate carbon is presented as the voluntary mechanism and increasingly common place. Data production regarding the climatic change tends to assist the corporations in strategically positioning themselves in terms of opportunities faced and the carbon risks. Disclosures of carbon lead to the promising of assisting with the decisions of capital allocation that is external to the firm. The broad purpose of this study is to conduct research on the disclosures related to the climatic change incorporating carbon disclosures by reviewing the journal articles that is relevant in the context of any country. In addition to this, the accounting theory in relation to the climatic disclosures would also be addressed. The articles selected will be addressing the issue of climatic disclosures in different aspects along with exploring the practice of disclosure of carbon in practice.

In this section, reviewing of the four selected journal articles have been for analyzing the climatic disclosures with the help of research perspective and using current accounting theoretical knowledge. In addition to this, the research paper or the article discussed intends to conduct the investigation of the role of accounting and accountants in response to the change in the matter of environmental concerns. The perception of accountants towards the environmental issues has also been explored and the attitude of accountants is explored within the corporation of developed and developing countries.

The first article titled “Shareholder proposals: A catalyst for climate change-related disclosure, Analysis and Action” presents different case studies in relation to climatic disclosures in the context of different corporations. It presents that the proposals of shareholders are considered as an effective means for furthering the progress related to any climatic change in American oil and gas companies. It has been found that such proposals of the climatic change related disclosures acts as a catalyst for action and analysis. Proposals of shareholder tend to have an educational effect on fostering dialogue between shareholders and management (Rindfleisch 2008).

Analysis of the case study presented in the article depicts that Anadarko Corporation petroleum intends to make genuine efforts for analyzing and disclosing the climatic change business practice and reduction in the emission of green house gas. The proponents and directive of shareholders regarding the climatic change disclosures were agreed by Anadarko. A company wise management system of green house emission is established by Anadarko and the same have been incorporated in the management plan (Najah and Cotter 2012). It has been found that significant efforts have been taken by the corporations in reducing the emission of green house across its operations. In addition to this, ConocoPhillips Company is also committed to address the climatic change issue. However, the emission of green house gas is limited and there is no existing benchmark of performance and progress. The progress of company regarding the quantification of reduction of green house emission is difficult to determine. Compared to their competitors, Anadarko and Conoco Philips have been lagging behind and it is required by them to take substantive actions for mitigating the risks related to climatic change and taking the advantage of available business opportunities. Business are required to implement and set green house emission for pursuing the technologies of renewable energy and taking the advantage of the opportunities that is bestowed by the climatic change (Grauel and Gotthardt 2016). Nevertheless, it can be inferred that the shareholder proposals had acted as a catalysts in analyzing, disclosing and taking actions related to climatic change disclosures.

Carbon Disclosures: Comparability, Carbon Disclosure Project, and Green House Gas Protocol

The second article titled “Carbon disclosures: Comparability, carbon disclosure project and Green house gas protocol” has the objective of providing meaningful for decision making in relation to climatic change.  In this study, the carbon disclosures of mining companies of Australia have been examined by conducting exploratory study that is in compliance with the regime of voluntary carbon disclosures. The carbon related data that is produced by mining companies have been examined in compliance with the information request. Data relating to the carbon disclosure project is supposed to provide assistance institutional investors in making decisions about allocation of resources by incorporating then financial position alongside the green house gas position (Andrew and Cortese 2011). However, the information relating to the carbon disclosure is considered new for making investment decisions in contrast of financial information that has been used for long.

It has been examined by the exploratory research that the project of carbon disclosure has increased the amount of carbon related corporate information along with the scope and size holding impressively on the allocation decision related to widespread climatic change. All this helps in disciplining the market towards the carbon sensitivities and sustainable future. However, there is no literature on the data of carbon disclosure project based on country and industry research. Furthermore, it is possible to document the limitations of carbon disclosure project that would help in providing opportunities to deeply exploring the reasons behind the choice of company to not respond to the information request. The paper has identified a number of challenges concerning decision usefulness for the information that is derived from the implementation of such methods. It has been found that there are considerable variations in the method used for accounting of green house emissions between reporting organization and this makes it difficult for users to understand, interpret and make the comparison. The facilitation of data comparison is done by making improvement in standardize report and quality improvement (Sullivan and Gouldson 2017). From the analysis of the sample companies, it was ascertained that the data related to carbon disclosure project lacked comparability and uniformity. The classification and change in method of carbon disclosure project have compounded this problem. Moreover, the validity of carbon disclosure data across companies has been found to be difficult in determination. It has been portrayed that the one of the integral factors to the financial reporting is carbon reporting. Although, it has been found that the significant response rates have been generated by carbon disclosure project in producing information that is not considered important to investors. Assessment of the performance of company in relation to other is not possible by the production of data without creating an emphasis on comparability (Cormier and Magnan 2015). In the social and environmental reporting, one of the key missing ingredients that have been cited is comparability which is certainly true in case of disclosure of carbon project.

Are Climatic Change Disclosures an Indicator of Superior Climatic Change Management Risk?

The third articles titled “Are climatic change disclosures an indicator of superior climatic change management risk” have been extracted from research paper on Sustainable business and development of University of Southern Queensland”. Under this article, the disclosure of climatic change and environmental performance of organization have been revisited by using the theories of economic based disclosures. The implementation of carbon risk management is implemented and its relevance to non investor stakeholders and investors has been examined. It has been fond from the research paper that carbon risk management is significantly and positively related with the quality of disclosures of climatic carbon change (Najah and Cotter 2012).

For the purpose of fulfilling the description of carbon disclosures is regarded s a set of qualitative and quantitative information in relation to the forecasted and last level of carbon emissions. Analysis of disaggregated scores has revealed that the disclosure quality is enhanced by the practices of carbon risk management. It has been found that the disclosure is not associated with the historical carbon risk management. Contrary to this, the strategies of future and current carbon risk management are positively associated with such strategies quality. Furthermore, the importance of disclosure measurements and the partitioning the carbon risks management have also been highlighted (Kjellstrom 2016). The consequences and benefits of activities related to environmental performance disclosures have been debated in this research paper.

Data related to the disclosures of climatic change have been extracted from the sustainability and annual report of the companies. It has been found that the analysis of carbon intensity is parallel to the emission trading category. Analysis of the research paper indicates that the market value of firms is not enhanced by a better and quality carbon disclosure. The participants of stock market is not effectively engaged in making the assessment about the carbon information generated from annual and sustainability report (Najah and Cotter 2012). The reason is attributable to the fact that investors are more reliable on other information channels for assessing risk management and carbon emissions.

Furthermore, it is indicated by the research that management of carbon risk is significantly and positively associated with the sustainability report and quality of carbon disclosure. Hence, the findings generated from the research paper lend support to the disclosure theories based one accountants and economies. Organization tends to make disclosure of their strategies and policies if they are dealing adequately with the risk and opportunities related to climatic change. The management practices of disclosing carbon is done by the superior firms to differentiate from inferior firms (Cormier and Magnan 2015). The issues associated with the information asymmetry can be reduced by such disclosures between external and internal parties to the organization.

Multinational Corporations and Climatic Adoptions- Are We Asking the Right Questions? A Review of Current Knowledge and Research Perspective

The journal article titled “Multinational corporations and climatic adoptions- Are we asking the right questions? A review of current knowledge and research perspective” has been extracted from centre for climatic change economics and policy. Many multinational corporations are taking steps forward to incorporate the adoption to climatic change into their operations. The review presented in the article highlights on the impact of outcome and identification of adaption of climatic change disclosures on MNC. There is a growing recognition at both national and international level concerning the climatic change magnitude (Averchenkova et al. 2015). However, not much attention has been received in the management and business academic literature in relation to the evaluation of climatic change in general by the private sectors.

It is suggested by the review that regarding the climatic disclosures adoption, MNC are currently in the initial stage. The corporations are required to tend data for responding to the concerns of climatic disclosures by designing various strategies such as making improvement to resilience to climatic change, redesigning products and building workforce. Furthermore, it has been found that the key driver for Multinational Corporation to adopt the climatic change disclosures is due to the policy makers (Damert and Baumgartner 2018). However, additional research is also required for analyzing different drivers of such climatic change adaption. It is required by corporations to have a better understanding of the existing level of corporate adoption relating to the internal and external drivers.  

Conclusion: 

The study illustrates the importance of climatic change disclosure to the corporations by reviewing the four journal articles extracted from different sources. Analysis of the findings generated from research papers have yielded mixed results where the non financial information disclosure relating to the climatic change have been important to stakeholders such as non investors and are least important to stakeholders such as investors. In addition to this, the research paper has also found that the climatic change disclosures have not been extensively adopted by the firms presented in the first journal article.  However, the findings generated have found to be a contributory factor in accounting theories.

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