Impact of Corporate Reporting on Carbon Emissions

ACCOUNTING THEORY
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Contents
INTRODUCTION......................................................................................................................3
LITERATURE REVIEW...........................................................................................................3
ANALYSIS................................................................................................................................4
CONCLUSIONS:.......................................................................................................................7
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INTRODUCTION
Emission of the green house gases is the major activity harming the environment today. In
order to have a little control over the rapid climate change, the proposal of reporting on
carbon emissions by the corporate has been introduced. Climate change has been referred to
as the greatest environmental challenge which the world is facing currently. In order to have a
control over emissions, many companies involved in the business of manufacturing or power
supply have been required by the government to report on the carbon footprint (Flood, 2017)
. The authorities are of the view that if high numbers are reported by these corporate, then
they would take initiative in order to control the carbon emissions, so that the value of their
company is not affected. Many countries have taken part in this initiative. In Australia the
National greenhouse and energy reporting scheme was introduced, in order to meet up with
international reporting standards and provide a single framework on energy consumption and
carbon emissions reporting. This scheme is guided by the National Greenhouse and Energy
Reporting Act 2007 (Freeman, 2011). The scheme acts towards reducing the carbon
emissions by the corporate in the country by making policies and conducting researches for
the same.
LITERATURE REVIEW
The corporate are facing increased stress form the various shareholders, investors,
stakeholders with respect to disclosures and measures for the carbon emissions. These are
huge expenses related to carbon emissions. Some of these include heavy capital expenditure
on the carbon efficient machinery and technology. The corporate are required to take steps in
order to reduce the carbon footprint (Kauffmann, 2010). Huge expenditure on research is
being made in order to produce carbon efficient products. The carbon emissions also define
the risk profile of the corporate. Research has showed that the carbon emissions have impact
on the value of the firm. These can be classified into three major heads. Firstly, the costs
incurred due to mandatory reporting of carbon emissions by regulatory authorities, secondly,
the costs in connection with capital expenditure for emission control and lastly the costs in
correction with voluntary reporting of carbon emissions.
In the article by Tony Nwanji in The Stakeholder Theory in the Modern Global Business
Environment, the author has stated how the duty of the company is more than just earning
profits (Nwanji, 2016). The stakeholder theory states that it is the responsibility of the
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