Political environment and voluntary disclosure in the U.S.:
Evidence from the Carbon Disclosure Project
Department of Business Administration,
Washington and Lee University, Lexington,
Department of Accounting, Washington and
Lee University, Lexington, Virginia, USA
Stephan Fafatas, Washington and Lee
University, Lexington, VA, USA.
We investigate whether the political leaning of the state where a given firm is headquartered is
related to that firm's decision to voluntarily disclose climate change information. We study S&P
500 firms that were surveyed by the Carbon Disclosure Project (CDP) and find that firms
headquartered in more Democratic states are more likely to disclose carbon emissions informa-
tion to the CDP. Furthermore, firms in more Democratic states are more likely to permit public
disclosure of their survey responses and tend to receive higher disclosure scores. We consider
two political variables, one based on political power and one based on public political preference.
Our results are consistent with political power driving the firm's willingness to voluntarily disclose
information about climate change. These results suggest that the relation between the political
environment and disclosure is more closely linked to concerns over regulatory threats as opposed
to acquiescence to social norms.
The interaction between political forces and business decisions is
clearly an important one, with U.S. firms spending over $3 billion
annually on lobbying efforts.
We explore the extent of other ties
between politics and corporate behavior by considering whether
state political leanings in the United States are related to a firm's
decision to voluntarily disclose climate change information, specifi-
cally information related to carbon emissions. Is it the case that firms
headquartered in Democratic‐leaning states (relative to those in
Republican‐leaning states) are more likely to voluntarily disclose
Our analysis is based on the perception that Democrats believe
there should be more legislative focus on environmental issues. This
perception is evident in media stories and political campaigns. For
example, one focus of the 2012 Democratic platform was the need
for more regulation concerning carbon emissions.
Democrats pledge to continue showing international
leadership on climate change, working toward an
agreement to set emission limits in unison with other
emerging powers. Democrats will continue pursuing
efforts to combat climate change at home as well,
because reducing our emissions domestically—through
regulation and market solutions—is necessary to
continue being an international leader on this issue.
In contrast, the 2012 Republican platform reflected a tempered
approach, arguing that care for the environment is best handled
Experience has shown that, in caring for the land and
water, private ownership has been our best guarantee of
conscientious stewardship, while the worst instances of
environmental degradation have occurred under
This contrast is heightened by the fact that there is no clear political
preference for the nation as a whole. Statewide political preference
has been quite fluid over time according to Gallup polls, with a plurality
of citizens of 42 states having expressed an affiliation with the Demo-
cratic Party in 2008.
That number had slipped to 26 by 2011 as Pres-
ident Obama's popularity fell. This is also evident among the 10 most
populous states, with only California, New York, and Illinois considered
solidly Democratic and only Texas considered solidly Republican.
President Obama's Clean Power Plan, introduced in August 2015,
illustrates the different viewpoints. The plan is aimed at coal‐burning
The Center for Responsive Politics tracks and reports lobbying expenditures
through its website: https://www.opensecrets.org/lobby/. Expenditures have
exceeded $3 million in every year beginning in 2008, with an estimated $3.22
billion spent in 2015.
Obtained from the Democratic Party website at https://www.democrats.org/
party‐platform (most recently accessed on May 10, 2016).
Obtained from the Republican Party website at https://www.gop.com/platform
(most recently accessed on May 10, 2016).
Gallup poll results obtained from http://www.gallup.com/poll/114016/state‐
states‐political‐party‐affiliation.aspx (most recently accessed on May 3, 2016).
Received: 18 May 2016 Revised: 12 October 2016 Accepted: 30 October 2016
J Public Affairs. 2018;18:e1637.
© 2016 John Wiley & Sons, Ltd.wileyonlinelibrary.com/journal/pa 1of12