Mandated Climate Change Disclosures by Firms Participating in the Regional Greenhouse Gas Initiative

In February 2010, the Securities and Exchange Commission (SEC) issued an interpretive release clarifying what registrants should disclose related to climate change on their documents filed with SEC (i.e. 10-K or 20-F). This study investigates whether the electric utility firms participating in the Regional Greenhouse Gas Initiative (RGGI) are virtually fulfilling this mandate. An equal weighting content analysis was performed with two types of disclosure indices for RGGI and climate change, respectively. The results show that there are cross-sectional differences in the disclosures on both RGGI and climate change among the sample firms. However, we do not find any significant temporal difference in the disclosure on RGGI among the sample years from 2008 to 2011. Although there is no significant difference in the disclosure on climate change between the initiative 2009 and 2010 (the year targeted by the SEC), we find a significant difference between 2008 and 2010. This finding suggests that there was an impact of the SEC interpretive release on firms' disclosure on climate change.