Corporate climate risk disclosure : assessing materiality and stakeholder expectations for sustainable value creation
Journal article
Arian, Adam Gholami and Sands, John Stephen. (2023). Corporate climate risk disclosure : assessing materiality and stakeholder expectations for sustainable value creation. Sustainability Accounting, Management and Policy Journal. 15(2), pp. 457-481. https://doi.org/10.1108/SAMPJ-04-2023-0236
Authors | Arian, Adam Gholami and Sands, John Stephen |
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Abstract | Purpose: This study aims to evaluate the adequacy of climate risk disclosure by providing empirical evidence on whether corporate disclosure meets rising stakeholders’ demand for risk disclosure concerning climate change. Design/methodology/approach: Drawing on a triangulated approach for collecting data from multiple sources in a longitudinal study, we perform a panel regression analysis on a sample of multinational firms between 2007 and 2021. Inspired by the Global Reporting Initiative (GRI) principles, our innovative and inclusive model of measuring firm-level climate risks underscores the urgent need to redefine materiality from a broader value creation (rather than only financial) perspective, including the impact on sustainable development. Findings: The findings of this study provide evidence of limited corporate climate risk disclosure, indicating that organisations have yet to accept the reality of climate-related risks. An additional finding supports the existence of a nexus between higher corporate environmental disclosure and higher corporate resilience to material financial and environmental risks, rather than pervasive sustainability risk disclosure. Practical implications: We argue that a mechanical process for climate-related risk disclosure can limit related disclosure variability, risk reporting priority selection, thereby broadening the short-term perspective on financial materiality assessment for disclosure. Social implications: This study extends recent literature on the adequacy of corporate risk disclosure, highlighting the importance of disclosing material sustainability risks from the perspectives of different stakeholder groups for long-term success. Corporate management should place climate-related risks at the centre of their disclosure strategies. We argue that reducing the systematic underestimation of climate-related risks and variations in their disclosure practices may require regulations that enhance corporate perceptions and responses to these risks. Originality/value: This study emphasises the importance of reconceptualising materiality from a multidimensional value creation standpoint, encapsulating financial and sustainable development considerations. This novel model of assessing firm-level climate risk, based on the GRI principles, underscores the necessity of developing a more comprehensive approach to evaluating materiality. |
Keywords | Climate risk disclosure; Corporate sustainability; Financial materiality; Sustainable Development Goals (SDGs) |
Year | 01 Jan 2023 |
Journal | Sustainability Accounting, Management and Policy Journal |
Journal citation | 15 (2), pp. 457-481 |
Publisher | Emerald Group Publishing Limited |
ISSN | 2040-8021 |
Digital Object Identifier (DOI) | https://doi.org/10.1108/SAMPJ-04-2023-0236 |
Web address (URL) | https://www.emerald.com/insight/content/doi/10.1108/sampj-04-2023-0236/full/html |
Open access | Published as non-open access |
Research or scholarly | Research |
Page range | 457-481 |
Publisher's version | License All rights reserved File Access Level Controlled |
Output status | Published |
Publication dates | |
Online | 15 Dec 2023 |
Publication process dates | |
Accepted | 29 Nov 2023 |
Deposited | 12 Nov 2024 |
Additional information | Copyright © 2023, Emerald Publishing Limited |
Place of publication | United Kingdom |
https://acuresearchbank.acu.edu.au/item/910vw/corporate-climate-risk-disclosure-assessing-materiality-and-stakeholder-expectations-for-sustainable-value-creation
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