Firm Sustainability Reporting Policy in Response to International GHG Exposure

We investigate the nexus between a firm’s international exposure to greenhouse gases (GHG) emissions and its sustainability reporting policy. We argue that firms exercise their discretion to conceal their global activities in their reporting agenda when their international exposure to GHG emissions heightens. Consistent with this argument, our empirical evidence shows that a firm’s international exposure to GHG emissions is negatively and significantly associated with the firm’s likelihood todisclose their global activities in their sustainabilityreporting. These findings remain robust after we control for other factors or employ an instrumental-variable approach, and are further corroborated when we perform a falsification test. Moreover, we document that thenegative relation is mitigated following the passage of Paris Agreement, for firms with better emission control, and firms with more transparent information. JEL Classification Codes: G14, G32, G41