Corporate incentives for obtaining higher level of carbon assurance: seeking legitimacy or improving performance?

Article


Rohani, A., Jabbour, M. and Aliyu, S. 2023. Corporate incentives for obtaining higher level of carbon assurance: seeking legitimacy or improving performance? Journal of Applied Accounting Research. 24 (4), pp. 701-725. https://doi.org/10.1108/JAAR-03-2022-0055
TypeArticle
TitleCorporate incentives for obtaining higher level of carbon assurance: seeking legitimacy or improving performance?
AuthorsRohani, A., Jabbour, M. and Aliyu, S.
Abstract

Purpose
With the growing attention around carbon emissions disclosure, the demand for external carbon assurance on emissions reports has been increasing by stakeholders as it provides additional credibility and confidence. This study investigates the association between the higher level of external carbon assurance and improvement in a firm's carbon emissions. It provides an understanding of corporate incentives for obtaining a higher level of carbon assurance, particularly in relation to carbon performance enhancements.
Design/methodology/approach
Data are collected from 170 US companies for the period 2012–2017 and are analysed using a change analysis. Generalised method of moment (GMM) is used to address endogeneity.
Findings
Following the rationales taken by legitimacy and “outside-in” management views, the findings reveal that a higher level of carbon assurance (i.e. reasonable assurance) marginally improves firms' carbon performance (i.e. reported carbon emissions). This is consistent with “outside-in” management view suggesting that a higher level of assurance could be utilised as a tool for accessing more information about stakeholders' needs and concerns, which can be useful in enhancing carbon performance.
Research limitations/implications
The findings are generalisable to US firms and may not extend to other contexts.
Practical implications
The implication of this study for companies is that a high level of sustainability assurance is a useful tool to access detailed information about stakeholder concerns, of which internalisation can help to marginally improve carbon performance. For policymakers, the insights into and enhanced understanding of the incentives for obtaining carbon assurance can help policymakers to develop effective policies and initiatives for carbon assurance. Considering the possible improvements in carbon performance when obtaining a high level of sustainability verification, governments need to consider mandating carbon assurance.
Originality/value
This study extends the existing studies of assurance in sustainability context as well as in carbon context by explaining why companies voluntarily get expensive external verification (i.e. higher level of assurance) of their carbon emissions disclosure. This study responds to calls in the literature for empirical research investigating the association between environmental performance and external assurance with a focus on level of assurance.

KeywordsCarbon performance; Levels of carbon assurance; Legitimacy view; Outside-in management view
Sustainable Development Goals13 Climate action
Middlesex University ThemeSustainability
LanguageEnglish
PublisherEmerald
JournalJournal of Applied Accounting Research
ISSN0967-5426
Publication dates
Online27 Dec 2022
Print14 Jul 2023
Publication process dates
Deposited16 Dec 2022
Submitted09 Mar 2022
Accepted09 Dec 2022
Output statusPublished
Accepted author manuscript
Copyright Statement

Copyright © 2022, Emerald Publishing Limited. This AAM is provided for your own personal use only. It may not be used for resale, reprinting, systematic distribution, emailing, or for any other commercial purpose without the permission of the publisher

Digital Object Identifier (DOI)https://doi.org/10.1108/JAAR-03-2022-0055
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