Carbon disclosure and the cost of capital*

We link voluntary and mandatory disclosure of carbon emissions with stock returns and volatility in a global cross-section of publicly listed firms. We find that voluntary disclosure of scope 1 emissions predicts lower stock returns relative to non-disclosing companies. We also find that UK mandatory carbon disclosure rules for publicly traded companies resulted in lower stock-level uncertainty. The effect of these mandatory disclosure rules also spilled over into other markets, especially those with close geographic and economic proximity, and companies in the same industry.