Corporate governance and carbon transparency : Australian experience

Although there is growing evidence that carbon information is relevant to decision making and that performance in non-financial areas is correlated with overall firm value, few studies have been conducted to determine the impact of corporate governance on carbon activity. The purpose of this article is to report the association between corporate governance mechanisms and the extent of carbon disclosure. We used a sample of Australian companies and found that board independence, board diversity and managerial ownership are significantly correlated with the degree of carbon transparency, while the existence of environmental committee is not. The study contributes in the increasing body of literature indicating that corporate governance encourages a proactive corporate strategy in general and carbon disclosure in particular. We have added new empirical evidence implying that corporate governance should be improved to encourage executives to engage in sustainable development to protect their firms’ value in the long term.