Ritualism and beyond: corporate response to environmental disclosure regimes

It is well known that organizations often respond to global environmental governance with hypocrisy, or gaps between talk and action. In this paper, however, we explore what happens in global disclosure regimes, which require not action but the reporting of information. Our case is the implementation of the Task Force on Climate-related Financial Disclosure (TCFD) among financial corporations (FCs) in the small, highly financialized city-state of 'Capital City.' Drawing on qualitative interviews with key Capital City informants, we find that some firms focused on producing TCFD reports while failing to adapt their lending operations to climate risks. We argue that the leading hazard of disclosure regimes such as TCFD may be ritualistic compliance: following the letter of the rules without embracing their spirit. At the same time, we find evidence of internal reformers successfully pushing for modest adjustments that went beyond ritualism, forcing defenders of the status quo to adjust to new incentive structures, and potentially playing an important role in diverting capital flow towards low-carbon sectors in the long run. We highlight the importance of further research in environmental sociology into (1) the impacts of disclosure regimes and (2) the role of internal organizational dynamics in the impact of global environmental mandates.