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Management & Engineering 05 (2011) 1838-5745
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Management & Engineering
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Carbon Information Disclosure Issues Research in the Listed
Company in China
Chen Zhang*, Chunbo Wang
School of Economics and Management, Lanzhou University of Technology, Gansu 730050, P.R. China
KEYWORDS
Carbon emissions,
Carbon information disclosure,
Listed companies
ABSTRACT
The paper aims to study corporate carbon information disclosure in the listed companies in
China and to provide theoretical basis for businesses to disclose carbon information better
and reduce GHG emission. In addition to analyze the information data of Chinese companies
provided by CDP, the paper also analyzes the carbon information disclosure of 85 listed
companies from different industries in the SSE. The effective laws, regulations and
guidelines related to the environmental information disclosure are examined as well. The
findings are as follows. Firstly, how to disclose the carbon information is seldom considered
in the effective laws, regulations and guidelines. Secondly, the valuable information is not
fully disclosed. Thirdly, there is inconsistent as far as how companies address this subject in
their filings of annual reports, social responsibility reports, sustainable development reports
and CDP questionnaires is concerned. The practical implication is that the majority of listed
companies in China do not voluntarily disclose carbon information makes it difficult for
stakeholders to assess how the companies will be affected by risks related to climate change.
Therefore, regulatory authorities should clarify the application of existing law to the
disclosure of carbon information, the development of mandatory disclosure standards at the
corporate level should be considered, and it is necessary for companies to develop carbon
reduction strategy and realize the importance of carbon information disclosure.
© ST. PLUM-BLOSSOM PRESS PTY LTD
1 Introduction
Scientists believe that global warming caused by carbon emissions of human has made the natural ecological environment and human
life getting worse. From the view of climate change there is no difference in carbon emissions, but from the standpoint of
international political, carbon emissions is not only an economic problem but a political issue. So, carbon information disclosure of
listed companies has characteristics of economic and political and the quality of disclosure has become increasingly important in
larger scope. Many foreign institutions and industries have begun to disclose carbon emissions information actively, such as Carbon
Disclosure Projects (CDP). Along with the influence expanding of CDP in the world, The CDP data has been used in several research
papers (e.g., Ans Kolk, David Levy and Jonatan Pinkse; 2008; Stanny and Ely; 2008; Reid and Toffel; 2009; Freedman and Jaggi;
2009; Elizabeth Stanny; 2010). Kolk et al. (2008) examined the data of the 500 global companies from 2003 to 2007 provided by
CDP and found that the CDP questionnaire response rate has larger, but it has been less successful in prompting firms to disclose
*
Corresponding author.
E-mail address: [email protected]
English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD
DOI: 10.5503/J. ME. 2011.05.013
91
comparable and reliable emissions data, the level of detail provided about emissions and carbon accounting is insufficient for
investors needs. Elizabeth Stanny (2010) analyzes the information data of American s&p 500 companies from 2006 to 2008 provided
by CDP and found that while the frequencies of all three disclosures increased from 2006 to 2008, a high percentage of firms opt to
only answer the questionnaire and do not disclose emissions or methodology.
Compared to many foreign research results, the research of carbon information disclosure has only just started, and research results
are poor and most of which mainly introduce foreign experience in China. In practice, although in recent years more and more
enterprises in our country begin to pay close attention to the emissions of greenhouse gases, for now the listed companies carbon
information disclosure is not involved in the laws and regulations of our country, the quality of carbon information disclosure in
listed companies is very poor.
2 The Current Law and Regulations for Environmental Information Disclosure
People pay more and more attention to carbon information disclosure in many developed countries. In 2005, the Canadian Institute of
Chartered Accountants released climate risk disclosure guidelines; this is the first guidelines in the world released by the accounting
profession [1]. In 2007, five American electric powers were cited by New York State Attorney General's Office for inadequate
disclosure of climate information [2]. In 2009, U.S. EPA released Mandatory Reporting of Greenhouse Gases Final Rule [3]. In 2009
Copenhagen Climate Summit, IFAC called on for a single and generally acceptable climate change disclosure rules made by an
independent standard setting bodies [4]. Issue of Climate change may affect to the company financial supported by the IASB and
FASB. In 2010, the SEC issued Commission Guidance Regarding Disclosure Related to Climate Change which directs the public
company to disclose climate change information.
The legal documents on listed company's environmental information disclosure in China mainly include Environmental Open
Information Measures, The Listed Company Environment Information Disclosure Guidelines (drafts), Listed Company Environment
Information Disclosure Guidelines in SSE, Listed Company of the Social Responsibility Guidelines in SZSE, etc. Of all,
Environmental Open Information Measures is in the core and leading position. Environmental Open Information Measures is the first
comprehensive department regulations about environment information disclosure. It requires all environmental information
disclosure of the enterprise through the media, internet voluntarily or mandatorily. September 14, 2010, Environmental Protection
Department issued the Listed Company Environment Information Disclosure Guidelines (drafts), it forces heavy pollution listed
companies in SSE or SZSE to publish annual environment report, and it first points out the contents of report. But the documents
have not been officially released so far.
It informed from the above analysis that the provisions in our country about environmental information disclosure is too general, also
not developing the carbon disclosure terms of the enterprise. Many scientific research and practice indicate that the companies’ risks
and opportunities caused by climate change and information about carbon abatement should be analysis and disclose importantly. At
the same time the listed companies should disclose carbon information for the international political and economic attributes of
carbon information disclosure.
3 Application Situation Analysis of Listing Companies’ Carbon Information
Disclosure
This paper analyzes the application situation of listing companies’ carbon information disclosure from two aspects. One is the
information provided by CDP, another is the information comes from the Financial Report, Corporate Social Responsibility Report,
Sustainability Report and other ways. CDP China reports from 2008 to 2010 show that Chinese enterprises investigated by CDP
response aren’t aggressive enough. Only 13 companies filled out and submitted the questionnaire, there are ten companies filled
questionnaire for two or three years continuously†, but only 4 agreed to open questionnaire information ‡. All investors should enjoy
equal rights to corporations’ information. If the survey results of CDP only offered to institutional investors, it will impact the
investment decisions of the rational investors. Further compare and analyze questionnaire and find that the quality of carbon
information disclosure of listing companies in China is very poor. (1) The related information disclosure is not full. First, the
response rates to questionnaire are very low. In the three companies, China ShenHua Energy Company Limited answered the
questionnaire of about 49%, but Bank of communications is less than 5%, Huaxin Cement is a high energy consumption and high
pollution firms, and it is almost no answer; Second, The answer to the question is too simple. Even ShenHua Energy Company, the
answer is too easy and no explaining. (2) The information revealed is too broad. It tends to disclose qualitative information, the
†
In 13 companies, for two years to fill in the questionnaire of companies from 2009 to 2010, including Bank of communications, China merchants
bank, industrial bank, Lenovo group; for two years to fill from 2008 to 2010 including China merchants international, Shenhua energy, China national
offshore oil corporation, ETE, Foxconn international holdings Co., LTD, Industrial and commercial bank of China; companies to fill in the
questionnaire in The first time, including China merchants real estate holdings Co., LTD, China mobile, China ping an insurance Co., LTD.
‡
The four companies, China merchants bank provide the 2010 questionnaire but couldn't download, Shenhua energy, Huaxin cement, bank of
communications provide in 2009, but don’t provide in 2010.
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quantitative information and company special risks and opportunities and other information is insufficient. Although data of GHG
emissions has disclosed, but lack of calculation basis, computational tool, the method of calculation, etc. (3) Comparability of
information should be improved. Information is not identical of annual report and the social responsibility of the enterprise. Even for
the same question, three ways to provide information also has a big difference.
In order to understand carbon information of listed companies in China, This article chooses the samples of 85 listed companies. The
companies belong to five industries respectively and listed on Shanghai stock exchange. They are financial insurance industry,
petrochemical industry, food beverage industry, electric power industry and automobile industry. See table1.
Table1 Sample constitute
Industry
Total
Sample number
Financial insurance industry
25
10
Petrochemical industry
79
30
Food beverage industry
33
15
Electric power industry
46
20
Automobile industry
§
-
10
Automobile industry
**
-
85
According to the carbon disclosure of the international consensus, disclosure content should be included risks and opportunities,
emissions data, governance, strategy, engagement with policy makers, etc. In form, it advocates and fuses financial reports.
According to the above standard, information is further classified by content and way (table 2).
Research indicates that characteristics of carbon information disclosure of listing companies in China are shown as follows: (1)
Carbon information disclosed is very inadequate. On the one hand, enterprise number that discloses information is less; On the other
hand, the carbon information that is disclosed is very simple, most of the carbon information is relevant to energy conservation and
emission reduction. Other information such as risks and opportunities, quantitative information about GHG emissions, strategy and
governance is not mentioned. (2) Quality of carbon information is poor. First, there is no simple carbon information disclosure, most
of the information disclosed is in the board of directors of the report; Second, most information are just text description, and there is
few quantitative information, such as index data, the standard, protocol or methodology used to collect activity data and calculate
emissions, etc. Third, the understanding to the problem is mistake. From the information disclosed can learn that most enterprises
understand carbon disclosure into energy saving and emission reduction. (3) Government policy has big effect to carbon information
disclosure of enterprise. Enterprises more inclined to disclose information in the Social Responsibility Report.
§
Climate change risk and opportunity are analyzed in the annual reports of three companied; only policy risk of development a low carbon economy
is analyzed in three other companies reports.
**
Climate change risk and opportunity are analyzed in the annual reports of three companied; only policy risk of development a low carbon economy
is analyzed in three other companies reports.
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Table 2 Information classifications by content and way
Food
beverage
industry
15
Electric
power
industry
20
Automobile
industry
sample
total
10
Petrochemical
industry
30
10
85
0
2
0
63
0
8
0
4
1
3
1
9
0
6
1
5
0
12
governance
0
6
0
2
0
8
financial reporting fusion
0
0
0
0
0
0
classify
Industry
Financial
insurance
samples
Risks
and
opportunities
Emissions
data
strategy
4 Countermeasures and Suggestions
4.1 Enterprise should be fully aware of the importance of the carbon disclosure
Many research shows that climate change is the third risk most commonly mentioned and influencing shareholder value in the short
term. So, enterprise should take the following action actively. First, clear climate change strategy and set up reasonable governance
structure and internal control mechanism; Second, measure GHG emissions according to accepted technical standards. Third,
reasonably evaluate all kinds of risks caused by climate change. Fourth, make scientific report of carbon management to disclose
information better.
4.2 Set mandatory carbon disclosure rules
As a typical representative of voluntary disclosure, decision usefulness of CDP information is under question for reliability, integrity,
comparability and other characteristics[5][6]. The survey to investors signed agreement with CDP also indicates that most investors
don’t integrate CDP information into the financial report yet. The lack of authority accounting standards and GHG diversity of
quarantine standards also seriously influence the quality of carbon information [7]. So, it should formulate relevant laws and
administrative rules and regulations to manage carbon information disclosure. Regulators of mandatory information disclosure
system should be established also to improve the quality of information disclosure.
4.3 Authentication and audit is the important means to ensure information reliability
The essence of the reliability is verification, it refers to the independent third party processes the same initial data according to the
same program can draw the roughly same results. Authentication business means that information is audited by the independent third
party using professional knowledge, skills and experience, aims to put forward audit opinion to the reliability, accuracy and integrity
of audit matters. Authentication to carbon information should include the test to accuracy and completeness of quantitative
information of carbon emission reduction, evaluation and test to production, summarizing, and reports of data; it can increase the
credibility of the carbon report. For the enterprise itself, authentication is in favor of enterprises to improve the quality of carbon
accounting and the report, recognition the status quo of enterprise carbon emissions, determine the improvement opportunities.
5 Conclusion
Research shows that China’s current regulation system of environment information disclosure exists some problems, such as system
is not complete, regulation is not perfect, cooperation mechanism of information disclosure is not perfect, etc; Overall situation of
carbon information disclosure of listing companies is not optimistic and it exists many problems as quantity is insufficient, low
quality, information not complete, attitude not positive etc. Now, we must take some measures to raise the quality of carbon
information disclosure.
Acknowledgement:
The paper is the stage research result of Philosophy and Social Science Planning Project of Gansu Province (Project number:
0911ZSB141).
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References
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