Corporate governance and carbon transparency : Australian experience

Purpose: The purpose of this paper is to explore the association between corporate governance (CG) mechanisms and the extensiveness of carbon disclosure. Design/methodology/approach: This paper uses Ordinary Least Squares (OLS) regression model with data from 2009 to 2012 for largest Australian companies that voluntarily disclose their information to the carbon disclosure project. Findings: The authors find 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. Practical implications: The findings of this paper should be useful for government and capital market regulators who concern the quality of CG and carbon actions. First, the evidence in this paper suggests that current CG practice that emphasize board diversity and independence seems encouraging an environment friendly decision and adopt carbon reduction initiatives. Second, however, the current version of CG codes need more stress on none financial goals that should help corporate executives to balance value enhancement vis-à-vis ecosystem protection. Finally, another implication for policy-makers is CG should be re-structured so as to motivate firms to pursue long-term sustainable development instead of taking short-sight view of firm performance. Originality/value: This paper contributes in the increasing body of literature indicating that CG encourages a proactive corporate strategy in general and carbon disclosure in particular. The authors add new empirical evidence which has policy implication that CG should be improved so as to encourage executives to engage in more sustainable development and stakeholder long-term value protection.