Shareholders boost carbon disclosure – study

stock tickerJan. 30, 2012

Companies that disclose greenhouse gas emissions see a small rise in stock price following disclosure, compared to similar companies that keep mum, researchers say.

'It pays to be green.'

By Douglas Fischer

The Daily Climate

Disclosures about greenhouse gas emissions and carbon-reduction strategies can lift a company's economic value, a new study has found.

Investors are saying they would prefer to invest in an environmentally responsible firm. 
- Paul Griffin, University of California, Davis

Business scholars tracking stock prices of 172 firms in the days after those companies voluntarily released carbon emission information found that prices jumped an average of just under half a percent over five days.

Smaller companies, the researchers found, saw bigger effects – an average of 2.3 percent increase in the value of their shares in the wake of the emissions disclosure.

The report, conducted by researchers at the University of California, Davis, and University of California, Berkeley, and released Monday, compared the stock movements of companies releasing emissions information to similar companies that did not disclose carbon information during the same time periods.

Researchers tracked stock prices of the companies from two days before the information was released to two days after.

Companies that did not release information saw no statistical change in their stock values over that period, the researchers said.


"This is evidence that managers' voluntary climate change disclosures generate positive returns for shareholders," said Paul Griffin, a professor at the UC Davis Graduate School of Management and a study co-author. 

Broad impact

The findings could give lift to the demands of investor groups, environmental advocates and watchdog organizations who seek greater disclosure of company responses to climate change. 

The Securities and Exchange Commission does not require companies to report greenhouse gas emissions. That could change if these findings are upheld, as firms must disclose any information material to stock values. 

Griffin and his co-author, graduate student Yuan Sun of UC-Berkeley, attributed the pronounced jump in the share prices of small firms to the relative lack of information about those firms: Small companies are not followed as closely by analysts, and investors know less about them, making emissions disclosures more important to the market.

And while economic markets have focused attention recently on the carbon footprint of utilities and energy companies, the California study found that a broad range of industries enjoyed a bump in stock values following disclosure: Information technology, health care, telecommunications and financial services were among the companies sampled.

"When a company makes a voluntary disclosure of this kind, it signals to the investment community that this is a firm that is environmentally responsible," Griffin said in a statement. "Investors are saying they would prefer to invest in an environmentally responsible firm."

Activist pressure

Activists have also pressured companies to disclose greenhouse emissions and develop strategies to reduce them. 

In 2009, descendants of John D. Rockefeller led an unsuccessful shareholder campaign pushing for Exxon Mobil Corp. to loosen its embrace of fossil fuels. 

Last year, large blocks of investors pushed Exxon and rival Chevron Corp. for more disclosure on the environmental risks of extracting oil and gas through hydraulic fracturing, or "fracking." Both efforts fell short, with 30 percent of Exxon shareholders approving the effort and 41 percent of Chevron's shareholders agreeing.

Some companies have taken up the environmental challenge, examining the environmental impacts of their business. Others have balked at disclosing the information, fearing it could lead to litigation of loss of shareholder value, Griffin said.

The economic data, Griffin noted, shows such fears are misplaced.

"The matched samples do not behave the same way as the companies that disclose," he said. "It pays to be green."

Photo credits: Stock ticker on a building in New York City's Times Square, courtesy Mike Lee/flickr. New York Stock Exchange headquarters building in New York City courtesy Helico/flickr

Douglas Fischer is editor of, a nonprofit news service covering climate change.


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