Carbon Disclosure Context (CD)

Based on efforts such as the agenda for 2030 proposed by the United Nations (UN) in which 17 Sustainable Development Goals (SDG) were proposed, efforts have been redoubled to maintain a sustainable world and the achieving of these goals could not be understood without business and government support. However, carbon disclosure is within the so-called non-financial reports and to date, it is a broad report that maintains a voluntary nature in most countries, which is why it is not possible to have accurate, complete, and transparent information by organizations around the world.

This voluntary practice of reporting on their carbon emissions and their reductions arose from the signing of the Kyoto protocol in 1997, which entered into force on February 16, 2005, and its main objective is to promote responses and business actions in the face of the problem of global warming (^{Lee et al., 2015}). The Kyoto Protocol is an outcome of the United Nations Framework Convention on Climate Change (UNFCCC) that is celebrated every year since 1994, whose main objective is to “promote sustainable development by limiting and reducing GHG emissions, with the least possible adverse effects on economic relations, society and the environment, especially in developing countries” (^{Fernández & Fronti, 2005}, p. 2). Currently 192 countries are within the Kyoto Protocol, including Mexico, who ratified it since 2000.

On the other hand, the last international agreement of great importance for carbon disclosure was celebrated in December 2015, at the 21st Conference of Parties (COP21) of the UNFCCC, where the main agreement between the nations that signed it is the to maintain an average increase in global temperature below 2 ° C (^{Rogelj et al., 2016}). This agreement was ratified at the time by 55 parties that represent at least 55% of emissions worldwide. Today, the agreement is ratified by 187 parties out of a total of 197. Finally, in the same year of 2015, the United Nations (UN) approved the 2030 Agenda on sustainable development, which contains 17 Sustainable Development Goals (SDGs), of which the problem of the disclosure of carbon emissions by companies, cities and governments is found in goal number thirteen, called “action for the climate”.

Based on these international agreements and the sustainable development agenda, various regulatory bodies around the world began to consider options that would help them control these emissions, as well as to develop regulations for companies to report their carbon-related information (^{Jaggi et al., 2018}). The organizations are clear that one of the most important objectives for companies is to be able to have a favorable carbon performance for the planet, achieving net carbon emissions. This is a long-term objective and the first step to achieve it is to achieve homogeneity in the disclosure of carbon emissions (^{Córdova-Román et al., 2021}).

Method

The objective of this work is to represent through a series of bibliometric analyzes the knowledge that has been generated by the academic community about the carbon disclosure and the role that the private sector has played in the fight for the reduction of carbon emissions. Through a bibliometric analysis, the evolution of knowledge in a specific area or field can be captured in a brief and limited way, using quantitative bibliometric tools and content analysis.

Bibliometrics applies statistical methods to the study of scientific activity in a research field (^{Zupic & Čater, 2015}). Bibliometric analysis combines two main procedures: performance analysis and scientific mapping. In the performance analysis, indicators are mainly seen that provide valuable information on the impact of the topic to be investigated through various types of analysis (e.g., frequency of words, citation analysis, count of publications per unit of analysis, etc.) (^{Pizzi et al., 2020}). On the other hand, scientific mapping is mainly based on first- and second-generation relationship indicators and provides a spatial representation of how the elements of the bibliometric analysis are related to each other.

In the present analysis, the production per year, the most cited authors, the most cited papers and the most cited journals were used. These analyzes are the ones that were most appreciated during the course taught by colleagues from the Doctorate in Administrative Sciences. The main tools to obtain these indicators and maps were the VOSviewer software program (^{Van Eck & Waltman, 2010}) and the biblioshiny in RStudio (^{Aria & Cuccurullo, 2017}). The graphics represent a network of elements through circles, the size of which varies according to the importance of the element. The spatial position of the circles and the different colors are used to group the elements.

Descriptive results of the bibliometric analysis.

Through the present bibliometric analysis, it has been possible to better clarify the trend of the study in carbon disclosure by social science researchers, concerned with providing theoretical and practical implications to improve economic and sustainable development.

The first finding that could be found was the way in which the subject has grown year after year since its first appearance in what was in the registry of the data analyzed since 2008, with the only exception in 2019, where the documents published regarding it decreased. the previous year, but by 2020 he again propped up the issue. This statement can be better appreciated in graph 1.

Source: Own elaboration through RStudio.

Graph 1 Production of articles per year 

The period analyzed includes from the year 2008, which was the first year in which a publication about carbon disclosure was registered in social sciences, specifically business, economics, administration, and ethics, to the current year, which is 2020. During this period, 178 articles published in different Web of Science (WOS) journals were analyzed. The average citation per article is 19.91 and per year and article is 4.31, which shows the way in which this topic is impacting the scientific community.

The most cited journal in the analysis was Business Strategy and The Environment (614), followed by British Accounting Review (377), Corporate Social Responsibility and Environmental Management (314) and European Accounting Review (307) (Table 1) which represent 51.6% of the total citations, which were 3,123, a fact that allows us to see that much of the discussion on carbon disclosure focuses on them. The density analysis of the journals is represented in Figure 1.

Source: Own elaboration through VOSviewer.

Figure 1 Density diagram of most cited journals 

On the other hand, among 5 authors, they collected 43.2% of the citations of the total citations collected (4,409), which we can see in Table 2.

Also in figure 1, the density spheres represent the most cited journals in the same way, that the more citations they have, their sphere will become larger and predominant color.

Figure 2 shows the density spheres of the most cited authors. This figure shows the creation of a cluster between the two authors most cited in table 2.

Source: Own elaboration through VOSviewer.

Figure 2 Density diagram of most cited authors 

Finally, another issue to highlight within the bibliometric analysis carried out are the articles that have most influenced the literature on carbon disclosure.

The top five most important articles collect a total of 1,050 citations (48%) of the total citations. These articles can be seen in table 3.

Figure 3 shows the density map of these articles, among which we can see that 2 clusters were formed, but separately, 2 articles have contributed the most to carbon disclosure (^{Kolk et al., 2008}; ^{Liao et al., 2015}).

Source: Own elaboration through VOSviewer.

Figure 3 Density diagram of the most cited articles 

Advances in the knowledge of Carbon Disclosure

Carbon disclosure has been defined in several ways in the literature, however, there is a consensus in each of the definitions that have been formed on considering the risks, opportunities, benefits, and strategies by companies towards their carbon related information. Table 4 shows three of the most used definitions for the concept of carbon disclosure.

Through these definitions that, although they have not been many over time, it is possible to appreciate the value that different authors have tried to give to the concept of carbon disclosure, since it is a phenomenon highly related to change climate due to its emphasis on carbon emissions, but it is understood how business responses to the constant pressure of institutions, investors, shareholders and customers, mainly to decarbonize the world economy in order to help society in general (^{He et al. , 2021}).

The importance of carbon disclosure varies depending on the approach in which it is viewed. It is important from the economic point of view mainly because the literature mentions that it can significantly impact the value of companies due to present and future costs on compliance and carbon mitigation can mean liabilities not accounted for by companies (^{Borghei, 2021}; ^{He et al., 2021}), as well as it can help companies to obtain government subsidies, as may be the case when it is in mandatory information regimes about carbon management such as the Emissions Trading Scheme of the European Union (EU ETS) (^{Stechemesser & Guenther, 2012}; S. ^{Tang & Demeritt, 2018}).

Another reason why carbon disclosure is important is because it allows indirectly observing the behavior of organizations with respect to the information they disclose, since it can be used as a transparency mechanism to influence the decision-making of certain target actors, due to the fact that carbon disclosure is understood as an effective way of governance (^{Pattberg, 2017}), as well as to observe managerial discretion on the content and form that companies decide to report certain non-financial information on a voluntary basis (^{Hahn et al., 2015}), which may have comparability, reliability and veracity problems.

Finally, from the social point of view, corporate carbon disclosure takes on special importance since it is a practice aimed at mitigating emissions of CO ² , which is highly related to climate change, whose consequences are known worldwide (e.g., increase in global temperature, lower levels of precipitation, extreme weather events; droughts, floods, fires, among others) and it is a multidisciplinary phenomenon (^{Stechemesser & Guenther, 2012}).

For this reason, it is important to observe how companies are helping to contribute with lower carbon dioxide emissions to meet the objectives proposed by the Paris Agreement and the Kyoto Protocol. Just as it is important to know if the actions carried out by companies are effective, or if they are only a strategy to avoid scrutiny and continue in search of their own benefits and not that of society.

Carbon performance

The concept that has caused the least inconvenience because it is more limited is the concept of carbon performance. Carbon performance quantitatively details the GHG emissions of the companies, as well as the measures and strategies contemplated to reduce their level. The most common way to measure carbon performance in the literature is using scopes 1, 2, and 3, which correspond to direct, indirect and supply chain emissions respectively (^{Velte et al., 2020}). Furthermore, carbon performance generally refers to how well companies manage and control their carbon emissions and can be divided into two categories: i. How carbon performance is measured, and ii. The factors that affect the carbon performance of companies (^{He et al., 2021}).

Carbon accounting

Where more confusion begins to exist is in the other three concepts. On the one hand, as with carbon disclosure, various authors have developed an important variety of concepts for carbon accounting. Carbon accounting can have different meanings depending on the person using the term (^{Ascui & Lovell, 2011}). The most important definitions can be found in table 5.

As it can be appreciated, there is a consensus in the previous definitions that the main objective of carbon accounting is to measure and recognize the GHG emissions of companies to be able to record them in the accounting books either as assets or liabilities, and thus, to be able to integrate the financial information of organizations into a more complete image.

Another important point to note about carbon accounting is that it has been conceptualized in at least two different ways. On the one hand, ^{Ascui and Lovell, (2011}) mention that carbon accounting can beconceptualized among five main processes: i. Carbon physical accounting, ii. Political carbon accounting, iii. Carbon accounting made possible by the market, iv. Carbon financial accounting, v. Carbon social / environmental accounting. On the other hand, ^{He et al. (2021}), in a more recent study, break down carbon accounting into six components: i. Accounting for carbon assets and liabilities, ii. Carbon Disclosure, iii. Carbon assurance, iv. Carbon management, v. Carbon performance and, vi. Impact of carbon problems on the capital market. However, it is not the purpose of this study to focus on the term of carbon accounting nor its components proposed by other authors since we understand carbon disclosure as a more complete concept.

Carbon reporting

The third concept that has been used interchangeably with carbon disclosure is carbon reporting (^{Kolk et al., 2008}). Carbon reporting is about the measurement, monitoring and management of carbon dioxide emissions (^{Tang & Demeritt, 2018}), which although they share characteristics with carbon accounting specifically in measurement, seeks the correct management of emissions to report their progress in mitigating GHG emissions to the organizations' stakeholders. Furthermore, as with carbon accounting and the ways in which it is conceptualized, carbon reporting can be explained by three fundamental reasons or justifications for which carbon reporting is given.

The first is a financial justification since emissions can affect the finances of the company because they are increasingly expensive. The second justification is related to reputation, since, although the financial savings are not significant, organizations will be motivated to report their carbon emissions to demonstrate to their stakeholders (e.g., investors, shareholders, and clients) their commitment with climate change. Finally, a third justification is purely by regulation. Since many of the companies that currently report do so because they are obliged to do so, especially where the reporting scheme is mandatory (e.g., UK). They mainly do it to avoid financial penalties and taxes related to poor carbon management (^{Tang & Demeritt, 2018}).

Despite how interesting it can be to analyze the carbon report alone, the interest of this research is not to delve further into the justifications that motivate companies to carry out this practice. For its part, the central theme of this research is carbon disclosure since carbon disclosure can be seen as an emerging organizational field according to the definition of organizational fields by ^{DiMaggio and Powell (1983}, p. 145) in where they describe the conformation of an organizational field as "those organizations that, together, constitute a recognized area of institutional life."

Strategic Climate Response

Corporate responses to climate change changed dramatically since the 1990s (^{Kolk et al., 2008}). Within the DVC literature there are several works that have addressed strategic climate responses by companies (^{Bui & Fowler, 2019}; ^{Jeswani et al., 2008}; ^{Kolk et al., 2008}; ^{Kolk & Pinkse, 2004}). For example, ^{Kolk and Pinkse (2004)} highlight three types of positions in the face of corporate climate change strategies, the defensive position, the opportunistic / hesitant position and the offensive position.

While those who adopt a defensive stance are characterized by opposing an organizational climate treaty, those with an offensive stance feel the need to take the first steps towards better emissions mitigation, arguing not only environmental well-being, but also market opportunities and increased legitimacy. Finally, in the middle are those with an opportunistic / hesitant position, who are cautious about the treaties that may arise, but as long as a change does not happen (e.g., a mandatory regime), by themselves they are not proactive regarding this issue.

Adding to the above, ^{Kolk and Pinkse (2004}, ²⁰⁰⁵) analyze the strategies regarding climate change because of the market components that are available to company managers. Likewise, they develop a typology where they highlight that the strategies go in the direction of covering two dimensions: i. The main objective and ii. The form of the organization of companies, where the main objective can be broken down into innovation and compensation, while the form of organization of the company is divided into internal level, vertical level and horizontal level.

Another interesting work in which the strategic responses to climate change of companies were studied, but at the industry level was carried out in ^{Jeswani et al. (2008}) for two different contexts (United Kingdom and Pakistan). They categorize companies according to their strategic responses to climate change in four types of clusters: i. Indifferent, ii. Beginners, iii. Emerging and, iv. Actives.

The first type of cluster refers to those companies that are apathetic about environmental issues. In the second type are those organizations that, although they have started some operational activities to reduce emissions, are still at an early stage with respect to environmental management activity. The third type is where there begins to be a significant change for the benefit of the environment, since companies classified as ‘emerging’ are those that do more than ‘beginners’, but even less than ‘active’. Already the 'active' companies are mostly multinational companies concerned about the climate change movement and that undertake a wide range of operational activities to reduce their emissions by making a change in their consumption for renewable energies (e.g., solar, wind, biomass, among others).

One of the great contributions of ^{Jeswani et al. (2008}) was to analyze the type of companies in two different contexts, where it states that there is a significant disparity between companies in developed economies compared to those in underdeveloped economies. Their results show that about 75% of the organizations in the underdeveloped country are within the first two clusters, while those in the developed country, only 30% of their companies were in those stages that deal little with climate change, that is, most of these companies in a developed context implement operational activities to combat in a real and effective way the problem of high carbon emissions.

In addition, they mention that some of the factors that affect the strategies of these countries are: i. The influence of stakeholders, mainly the regulatory agencies, owners, and management of the company, and ii. Drivers (e.g., "cost savings", "management commitment", "corporate objectives" and "compliance with regulations") and barriers (e.g., high costs for GHG reduction and lack of financial resources for both contexts, while for the underdeveloped country the greatest barriers are the lack of awareness, the lack of availability of technology, and the absence of government policies).

The strategic responses of a specific industry have also been analyzed. For example, ^{Weinhofer and Hoffmann (2010}) developed a generic reference framework on companies CO ² strategies and specifically analyzed the electricity industry. The framework they developed is broken down into three types of corporate strategies with respect to CO ² : i. Compensation of CO ² , ii.

Reduction of CO ² , and iii. Carbon independence. Likewise, they mention that there are several factors that can influence a company to decide what type of strategy to take, for example, the geographical region in which the company operates, the size of the company and the extent to which the current commercial operations of the companies rely on carbon resources.

After analyzing the CDP's electricity industry through the three types of CO ² strategies, six types of clusters of companies belonging to said industry were identified, which can adopt one or more of the strategies. The six clusters are i. All terrain, ii. Compensators, iii. Replacement compensators, iv. Reducers, v. Replacement reducers, and vi. Preservatives (^{Weinhofer & Hoffmann, 2010}).

On the other hand, ^{Bui and Fowler (2019)} complement the strategic responses regarding climate change. They identify five types: i. Avoidance, ii. Operational compliance, iii. Strategic compliance, iv. Strategic differentiation, v. Negotiation and manipulation. The fifth answer is especially important because, in Mexico, as in most developing countries, business policies around carbon disclosure are in a development stage, where companies are more likely to employ strategies manipulation and negotiation to comply with certain institutional and / or economic pressures. When they find themselves in an environment with too much institutional pressure, companies through their managers can adopt a manipulation strategy where they try to control and influence those pressures under which they are exposed, for example, by persuading an institutional agent to become part of their Board of Directors (^{Oliver, 1991}).

Having described the different types of strategic responses that different authors find; it will be important to recap the government responses that have developed over the last couple of decades. One of the first responses to climate change is the EU Emission Trading System (EU ETS) (^{Kolk et al., 2008}). Other of the most common corporate responses to climate change have been of operational and investment type. For example, investments have been made in technologies for a lower emission of CO ² , in solar energy, as well as in a structure that allows companies to evaluate, measure and report their GHG emissions (^{Kolk et al., 2008}).

However, ^{Borghei (2021)} mentions that there is not enough clarity on how the specific characteristics of companies can influence their strategic climate response. To date, there is a lack of answers to know how strategic climate responses can build capacity and resilience to climate risk (^{Borghei, 2021}).

Determinants of Carbon Disclosure

The second key area within carbon disclosure is the study of the factors that drive organizations to measure, value and disclose their carbon-related information. Carbon determinants can be understood as "the reasons why some organizations voluntarily disclose their climate actions, while others do not, exploring the "motivations", "drivers" and "barriers" to carbon disclosure. " (^{Borghei, 2021}, P. 8).

Among the most common determinants found in the literature for carbon disclosure can be found economic / financial determinants and governance determinants (^{Velte et al., 2020}). Regarding the economic / financial determinants, the most studied have been financial performance, leverage, cost of capital, market-book ratio, information asymmetry and growth (^{Hahn et al., 2015}; ^{He et al., 2021}).

On the other hand, the governance-related determinants most seen in the carbon disclosure literature can be broken down into three: i. Composition and characteristics of the Board of Directors (diversity, independence, size, duality of the CEO, among others), ii. Ownership structure (institutional ownership, managerial ownership, state ownership, among others), iii. Pressure from stakeholders (environmental assurance, media coverage, external audit, among others) (^{He et al., 2021}; ^{Velte et al., 2020}). Other determinants of CD can be those related to the environment (emissions, carbon intensity industries) and regulatory (Kyoto Protocol, another specific regulation towards GHGs) (^{Hahn et al., 2015}).

Source: Figure adapted from ^{He et al. (2021)}; ^{Luo et al. (2013)}; ^{Velte et al. (2020)}.

Figure 4 Framework of determinants of carbon disclosure 

Carbon Accounting

As mentioned at the beginning of this section, the term carbon accounting has been used interchangeably when referring to carbon disclosure. Its conceptualization, as well as its definition, were discussed in the subsection above called 'Carbon related concepts'.

Carbon Disclosure Assurance

Carbon assurance is an emerging practice within the business world, which, according to ^{Datt et al. (2019)}, emanates as a dimension of the sustainability assurance and can be defined as:

A work in which a practicing professional expresses a conclusion designed to improve the degree of confidence of the intended users, other than the responsible party, about the result of the evaluation or measurement of an issue in relation to the criteria (^{Bui et al., 2021, p. 13}).

Three of the most recent and important work on carbon assurance were carried out by ^{Datt et al. (2018}, 2019, 2020), where they mention that companies can choose to hire carbon guarantee services due to very different reasons, since carbon assurance is considered a complex and strategic practice. In addition, they argue that the carbon assurance is a response to the legitimacy threats that companies face because of severe climate legislation and an increase in public awareness for the well-being of the environment.

Another reason why organizations choose to hire services of this type is to reduce information asymmetry. The carbon assurance helps companies reduce the asymmetry of information that exists for this issue between management and stakeholders due to its nature of being an independent service, since the information that is disclosed tends to be minimal or different regarding the information that their managers have (^{Datt et al., 2020}; ^{Fan et al., 2021}; ^{Shen et al., 2020}).

On the other hand, carbon assurance services currently have two main types of service providers, and they are accounting companies (e.g., Big four), and consulting companies (^{He et al., 2021}). ^{Fan et al. (2021)} mention that, to provide carbon assurance services, the members of the accounting firms adhere to the International Standard on Assurance Engagements (ISAE) 3410, which stipulates specific guidelines for the guarantee of GHG statements.

It should be noted that the reason for going to an accounting company, or a consulting company depends on the objective that the company wants to achieve. For example, ^{Datt et al. (2020)} comment that the reason for hiring an accounting company is because of the independence they offer due to their professional code of ethics, which causes greater credibility and trust in the information that is verified, but on the other hand, a consulting company has the advantage that it can provide better assistance in seeking improvements in carbon management systems due to the high technical knowledge they possess.

In short, the carbon assurance is important especially because companies are offering incentives to their administration to carry out greenwashing practices with respect to their carbon information, to get out of the way of institutional and global pressures on their GHG emissions (^{Shen et al., 2020}). However, in countries where the Monitoring, Reporting and Verification (MRV) stage is not yet fully developed, other tools will have to be developed to identify those companies that carry out greenwashing.

^{Fan et al. (2021)} comment that carbon assurance is emerging as a flourishing market and widespread practice for accounting firms and other consulting organizations and is playing an increasingly important role in managing the business transition to a future free of carbon. Greater efforts are required to empirically investigate carbon assurance, which has been rare to date, mainly because data is limited (^{Hahn et al., 2015}).

Carbon Disclosure Quality

In the literature on carbon-related information, there are few studies on how the quality of GHG disclosure has been developed, evolved and improved (^{Comyns & Figge, 2015}). A relevant study on the quality of such information is carried out by Comyns and Figge (2015), in which they measure the quality of disclosure with a self-constructed index based on seven dimensions: i. Accuracy, ii. Integrity, iii. Consistency, iv. Credibility, v. Relevance, vi. Opportunity, and vii. Transparency.

From the social pressures on carbon and GHG emissions in general, companies began to take actions to reduce or offset their carbon footprint. Among these actions are carbon disclosure and performance, however, the quality of both actions carried out by companies is unknown to stakeholders.

As ^{Pitrakkos and Maroun (2019)} well mention, 'quantity' is not the same as 'quality', which is why they conducted a study to measure the quality of the carbon information reported by companies listed on the Johannesburg Stock Exchange, in where they measured the quality of their information through eight characteristics of their reports, among them: i. A density index, ii. Attribute, iii. Management orientation, iv. Integrated, v. Assurance, vi. Strategy, vii. Legibility and viii. Repetition. In the study, they found that the quality of their disclosures is compromised depending on the level of carbon risk companies are exposed to, and the amount of disclosure varies according to the legitimacy strategy they use.

Consequences of Carbon Disclosure

The consequences and determinants of carbon disclosure have been studied interchangeably on many occasions, making it somewhat confusing to identify when some variables are used as consequences and when as determinants. The CD by companies has been studied from the perspective of financial performance variables such as return on equity (ROE), return on assets (ROA), Tobin’s Q, return on sales (ROS), among others, having inconclusive results.

On the one hand, it is reported that the reduction of carbon emissions results in a significant increase in the financial performance of companies (^{Gallego-Álvarez et al., 2015}; ^{Velte et al., 2020}), generating greater value for the public investor, showing that with sustainable activities it is possible to economically reward the investments received; Moreover, different studies have shown that carbon emission reductions have unprofitable results for companies in the short term and, therefore, poor financial performance (^{Delmas et al., 2015}; ^{Ganda & Milondzo, 2018}).

Other authors mention that companies can have consequences on their cost of capital depending on whether they voluntarily report on their carbon performance. The results have been similarly mixed on this variable, since there are authors who mention that the cost of capital and carbon disclosure maintain a negative relationship, where public companies use carbon disclosure to predispose the market and thus, obtain a lower capital cost rate (^{Lemma et al., 2019}).

A different way of looking at it is that companies that practice carbon disclosure benefit from lower rates on their cost of capital, which helps them in their financial transactions. Different authors find that the disclosure of carbon emissions affects the cost of capital of companies since it increases when the company discloses carbon emissions, thus causing it to be more expensive to obtain financing and, therefore, make it more complicated the achievement of their corporate strategies (^{Peters & Romi, 2014}).

In addition to variables of financial performance and cost of capital of companies, carbon disclosure also influences the asymmetry of information between agents and stakeholders. The CD is of great importance for financial markets since reporting on carbon emissions reduces the volatility of the price of companies' shares; Similarly, reporting such information with quality is closely related to an increase in the liquidity of the stock market (^{Borghei et al., 2018}; ^{Krishnamurti & Velayutham, 2018}).