Relationship between carbon disclosure and carbon performance: the role of environmental exposure, environmental certification and environmental committee

Purpose This paper aims to study the relationship between carbon disclosures and carbon performance. In particular, the research investigates the moderating influence of environmental exposure, environmental certification and the existence of an environmental committee on carbon disclosures. Whether companies should adopt carbon disclosures as a strategy to address the demands of their stakeholders or simply use it as a reporting mechanism. Design/methodology/approach The data in the study is based on the annual corporate reports of Fortune Global 500 companies. To address the problem of endogeneity, the study uses two-step system GMM dynamic panel regression as a key method. Other methodologies such as difference-in-differences analysis and ordinary least squares are used for robustness checks. Findings The findings of the study reveal a significant link between past carbon disclosure and carbon performance in the future. These findings empirically validate the “management outside-in” perspective. Additionally, findings reveal a more significant effect when environmental exposure is high among corporations, thus confirming the influence of industry on the relationship. Originality/value This study contributes by reconceptualizing carbon disclosure as a strategic input rather than outcome, using dynamic modelling to address potential endogeneity. Furthermore, the study challenges the view that disclosure primarily serves legitimacy purposes, providing evidence that it can drive substantive carbon management when external pressures are present.