Climate governance and carbon transparency: evidence from nonfinancial firms

Purpose The Asia-Pacific region faces high stakeholder pressures because of its significant carbon emissions and vulnerability to climate change impacts. In this context, integrating climate concerns into corporate governance has the potential to enhance corporate sustainability commitment and address climate concerns from various stakeholder groups. This study examines the determinants of corporate carbon transparency from the perspective of climate governance among Asia-Pacific nonfinancial firms as well as the role of stakeholder pressures in shaping this relationship. Design/methodology/approach Based on a sample of 5,391 firm-year observations from 2016 to 2021, this study uses an ordinal logistic model to analyze how climate governance affects firm carbon transparency, measured by the Carbon Disclosure Project score. This study also uses a lead-lag approach and Heckman’s two-stage method to mitigate potential endogeneity concerns. Findings Climate governance has a significant positive impact on the level of carbon transparency. Specifically, climate governance mechanisms, including the existence of a sustainability committee, climate risk awareness and environmental, social and governance-related incentives, can promote the level of carbon transparency in Asia-Pacific non-financial firms. Further analysis reveals that stakeholder pressures influence this relationship, with a stronger positive effect observed for firms listed on foreign exchanges and those operating in countries with civil law systems. Originality/value This study contributes to the growing body of research on how climate governance may encourage more transparent carbon disclosure in Asia-Pacific nonfinancial firms. These insights can help investors, managers and policymakers promote a more sustainable and environmentally responsible business landscape in the region.