Environmental Implication of Environmental Disclosure

Recent environmental incidents and disasters have intensified awareness and concerns about environmental issues, making the reduction of the private sector’s environmental impact a pressing necessity. The path to better environmental performance depends on enhancing environmental disclosure. While an increasing number of firms are embracing environmental disclosure, and legislative efforts are steering towards mandating such disclosures, the comprehensive understanding of the environmental implications of these disclosures remains surprisingly limited. A significant gap exists in understanding the challenges of environmental disclosure in promoting sustainability and complex consequences in various contexts. The dissertation aims to fill this literature gap by focusing on the risk of negative spillover effects across supply chains and within facilities. Through two essays, it empirically delves into these spillover effects, examining how a firm’s environmental disclosure impacts its suppliers’ disclosure behavior and the unintended consequences of mandatory environmental disclosure regulations on other environmental management areas. Utilizing secondary datasets and employing advanced statistical methods, the findings reveal the complexities of environmental disclosure efforts, including supplier free-riding and the trade-offs in managing different environmental priorities. Ultimately, the dissertation provides valuable insights for policymakers, corporate managers, and other stakeholders. It suggests that while environmental disclosure is key to addressing sustainability challenges, a nuanced understanding of its impacts is crucial to optimizing its benefits and mitigating potential drawbacks.