Corporate climate change financial disclosure and financial performance in emerging nations: evidence from Fortune Global firms

Purpose The study aims to investigate the association between climate change financial disclosure and financial performance, considering the moderating effect of industry sensitivity on developing nations. Design/methodology/approach The study analyzes a panel data set of 93 non-financial companies from developing countries listed in the Fortune Global 500 from 2018 to 2022. The authors have used system generalized method of moments model followed by two-stage least square model and fixed effects model to test the hypotheses. Three cultural dimensions and a sub-sample analysis have been included to check the robustness of the results. Findings The findings indicated that climate change financial disclosure negatively affects financial performance, supporting the propositions of neoclassical theory of corporate social responsibility. Also, climate sensitivity negatively moderates the relationship between climate change disclosure and market performance. The results are robust to alternative estimation techniques, country differences and sectors. Originality/value To the best of the authors’ knowledge, this is a novel attempt to examine the impact of climate change disclosure on financial performance in a cross-country context using the task force on climate-related financial disclosure (TCFD) framework. It also contributes to the existing literature by incorporating climate-sensitive sectors as moderating variables. The study recommends a mandatory “framework of law” to protect the environment.