Today, the issue of climate change has garnered attention from various sectors, including governments, international organizations, business communities, and the general public. One primary global concern is the carbon footprint generated by companies during production activities, which not only impacts the environment but also affects consumer perception and trust.
An increasing number of consumers are now concerned about the environmental impact of the products they use, including the carbon footprint generated throughout the production process. For environmentally conscious consumers, information regarding a company’s carbon footprint can influence their decision to support a product. They tend to be more loyal to companies that demonstrate a commitment to environmental sustainability and actively work to avoid environmental harm.
As consumer awareness of climate change grows, companies that openly disclose their carbon emissions are viewed as having a higher level of social responsibility. This can enhance the company’s positive image in the eyes of consumers, strengthen their trust, and create a competitive edge. Conversely, companies that do not prioritize carbon emission reduction may be viewed negatively, potentially decreasing consumer interest in their products or services.
Thus, carbon disclosure is an activity that is not only crucial for environmental sustainability but also has the potential to influence consumer perception and, ultimately, the company’s competitiveness in a highly competitive market.
Carbon Disclosure
Carbon disclosure is an activity where companies report the greenhouse gas (GHG) emissions generated during the production of goods and services, including information on the volume of carbon emissions produced, strategies to reduce them, and the sustainability measures taken. This information can be shared through annual reports, sustainability reports, or other publicly accessible platforms.
The results of the research conducted by Muhammad and Aryani in 2021 reveals that companies with foreign ownership or foreign investors are generally more concerned about environmental issues. Therefore, public carbon disclosure can enhance a company’s value and demonstrate its commitment to sustainability, strengthen its reputation among the public, and solidify its standing with stakeholders.
Despite the benefits of transparency in carbon disclosure, there are challenges to maintaining this activity, including significant cost burdens, especially for small companies with limited resources. The varying standards and regulations across countries also add to the complexity of the carbon emission reporting process.
However, as market and regulatory pressures increase, carbon disclosure will become a standard in many industries. Companies that do not disclose or fail to show a commitment to sustainability will likely fall behind competitors who have adopted these measures early on.
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Author : Rahmidevi Alfiani
REFERENCE :
Muhammad, G. I., & Aryani, Y. A. (2021). The impact of carbon disclosure on firm value with foreign ownership as a moderating variable. Jurnal Dinamika Akuntansi Dan Bisnis, 8(1), 1-14.