Does voluntary carbon disclosure lead to supply chain leakage : evidence from U.S. firms’ container carbon emissions

Abstract

Most existing studies on carbon emissions in the shipping industry focus on the effects of regulatory or market-based policies. Relatively little attention has been paid to the firm's perspective. In this study, we aim to investigate the impact of voluntary corporate actions on shipping-related Scope 3 emissions, defined as shipping emissions associated with firms’ import activities within their supply chains, using the case of U.S. firms that entered the carbon disclosure information system from 2018 to 2022. We first develop a methodology to estimate their international shipping carbon footprints based on data from the Automatic Identification System (AIS) of ship movements and U.S. customs records. We then examine the firm level and the impact of carbon disclosure on shipping-related Scope 3 emissions using a difference-in-differences (DID) model and test our model using various robustness checks. The findings reveal that following the decisions of over 7,000 U.S. firms to disclose information on their emissions, we observe a general increase in shipping-related Scope 3 emissions, suggesting that firms disclosing their in-house emissions tend to shift environmental burdens upstream in the supply chain. A heterogeneous analysis reveals that this effect is more likely to occur for firms in the manufacturing sector, as opposed to those in wholesale and retailing, for which shipping emissions tend to decrease following disclosure. Firms sourcing from regions with relatively worse climate performance have also increased their shipping-related Scope 3 emissions after disclosure. Moreover, we find an increasing diversification in firms’ global shipping networks after disclosure, particularly in terms of shipping routes and exporting ports. This study provides new empirical insights into the environmental trade-offs associated with voluntary carbon disclosure.