Shareholder groups that pressure companies to release greenhouse gas emission data could have more strength behind their arguments, now that a study found share prices increase when companies voluntarily disclose information on their emissions.
Looking at press releases issued over 10 years, the study found average stock prices increased nearly half a percent in the days after emissions announcements, with larger gains for smaller companies.
"It's a transparency issue," said study co-author Paul A. Griffin, professor of management at University of California-Davis. "(On average), it's ok to go ahead and do these and not be fearful the market will misinterpret them or take them the wrong way."
The study, "Going Green: Market Reaction to CSR Newswire Releases," involved 172 press releases put out by 84 U.S. companies through the Corporate Social Responsibility (CSR) Newswire service from 2000 to 2010.
The companies in the study, whose industries range from utilities to IT to health care, saw a $10 billion increase in market value related to their CSR releases in that period.
While stock prices went up overall in the days surrounding press releases, they increased more for companies that had less information publicly available. Smaller companies saw a 2.32 percent share price increase when they put out releases about their emissions, partly, the authors say, due to the fact that they're receiving less attention from financial analysts.
Griffin, co-author with Yuan Sun, a doctorate candidate at U.C. Berkeley, note in the report that disclosure through press releases is a different type of disclosure than disseminating information through voluntary programs like the Carbon Disclosure Project (CDP), since a news release is more timely and occurs closer to the period of emissions, while the CDP puts out company emission data nine or more months after the fact.
Shareholder or investor activism usually centers on pressuring companies to join projects like the CDP or disclose environmental information in company CSR reports, rather than pushing for more press releases.
The Corporate Sustainability Reporting Coalition, for instance, has called on members of the United Nations to require companies to disclose sustainability data in annual financial reports.
The study also adds to previous research on how different aspects of sustainability affect stock prices. In early 2011, a report in the Journal of Operations Management found that company share prices went down when they announced plans to cut emissions, based on news articles from 2004-2006. And a study involving the Standard and Poor 500 Index found that company values decreased as they emitted more carbon.
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