Green financing and climate change disclosure (CCD): the moderating effect of climate policy uncertainty

Purpose This paper aims to examine the association between green financing (GF) and climate change disclosure (CCD) and whether this relationship is moderated by climate policy uncertainty (CPU) in the US setting. Design/methodology/approach This study uses a sample of 6,048 firm-year observations from 2010 to 2023. CCD is measured using three proxies: (1) a binary indicator of scope 1, 2 and/or 3 emissions disclosure; (2) an ordinal variable ranging from 0 to 3 scoring; and (3) a proportional score disclosure ratio. Green financing is operationalised via green bond issuance. And the CPU was measured by Gavriilidis’s (2021) index based on a textual analysis of eight major newspapers. Hypotheses are tested using robust panel regressions with firm/year fixed effects and moderation analysis. Findings The findings indicate that GF positively affects the CCD, which subsequently improves the firm’s environmental transparency. In addition, results from the moderating effect indicate that CPU enhances the effect of GF, measured by green bond issuance, on CCD. The heterogeneity analysis indicates that the effect of GF on CCD is more pronounced in carbon-intensive industries. Practical implications This study offers new insights to managers to reduce their company’s financial constraints through CCD. CCD can also help them mitigate information asymmetry caused by climate uncertainty. This study is also useful to policymakers regarding mitigating market uncertainty and information asymmetry through CCD. Originality/value This research enhances the discussion of the consequences of GF and environmental reporting by empirically investigating the effect of green bond issuance on CCD. Furthermore, it investigated the moderating effect of CPU, providing evidence of the role of CCD in mitigating CPU and attracting green investors.