Corporate environmental disclosure in Europe: the effects of the regulatory environment

Abstract

Purpose – This paper aims to assess the impact of regulatory changes on corporate environmental disclosure practices in Europe. More specifically, the authors perform a difference-in-differences analysis to study the impact of the Paris agreement (United Nations Climate Change Conference, COP21) and of the French Law 2015-992 on energy transition for green growth. Design/methodology/approach – The sample consists of the listed companies belonging to the Euro Stoxx 50 index, and they are analysed over the 2010–2019 time horizon by means of an expert validated environmental disclosure dictionary and difference-in-differences analysis. Findings – The main results show that both regulatory interventions contributed to improving corporate environmental disclosure. The authors also show that firms belonging to the most polluting sectors tend to provide more information on environmental matters, likely in an attempt to divert stakeholders’ attention. Originality/value – By analysing an under-investigated topic, the paper calls for significant efforts by regulators to find the most suitable solutions to induce firms to increase their levels of transparency on the impact of environmental risks and on how these risks are managed.