Understanding the relation between climate change risks and biodiversity disclosures: an international analysis

Abstract

Purpose : this study explores the relation between firm-level climate change risks, measured by carbon emissions and waste generation, and the level of biodiversity disclosures.

Design/methodology/approach: drawing on an international sample from 2009 to 2021, our study employs panel regression models to assess the effects of climate change risks on biodiversity disclosures. We also conduct a range of sensitivity analyses, including additional proxies, endogeneity tests, and alternative samples to examine the robustness of our inferences.

Findings: we find that firms with higher carbon emissions and waste generation levels tend to disclose extensive biodiversity information. Furthermore, we provide evidence that the disaggregated components of carbon (Scope 1 and 2) emissions and waste (hazardous and non-hazardous) generation volumes are positively associated with biodiversity disclosures. Our results also reveal that the effects of climate change risks on biodiversity disclosures are stronger for firms from environmentally sensitive industries. Finally, our results show that climate and biodiversity protection regulations appear to be effective in limiting legitimation efforts.

Originality/value: consistent with legitimacy theory, our findings suggest that high carbon and waste emitting firms tend to utilize increased biodiversity disclosures as a legitimizing tool to conform to societal expectations and protect their legitimacy.

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Identifiers

ORCID for Collins G. Ntim: orcid.org/0000-0002-1042-4056

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