The impact of disclosure is real (and quantifiable sometimes)

Disclosure impact

Alex Edmans provides these startling statistics in this note that is pulled from this paper by Lavender Yang, Nicholas Z. Muller & Pierre Jinghong Liang:

When large power plants were required to disclose their carbon dioxide output, emissions fell by 7%. But small plants, exempt from disclosure, increased emissions by at 25-56%. Firms that owned both small and large plants shifted production to small ones.

I think when the SEC adopts disclosure rules, the topic of climate will be elevated in those companies where it’s not being talked about enough in the C-suite – so that climate will start being baked into business strategy and not just a “check-the-box” exercise…