THE IMPACT OF CLIMATE CHANGE AND ENVIRONMENTAL COST DISCLOSURE ON FIRM PERFORMANCE

Abstract

There is a lack of literature explaining the effect of climate change and environmental cost disclosure on corporate performance and corporate welfare. The impact on welfare has been recognized through the declaration by G20 countries in Bali in 2022. This paper investigates the effects of climate change and environmental cost disclosures on firm performance. The research used 61 samples from the energy sector that directly impacted climate change from 2017 to 2022. The research findings suggest that climate change disclosures can improve the performance and value of the firm, while environmental cost disclosure does not. Investors tend to view environmental costs as expenses that decrease net income and they are indifferent to environmental cost disclosures, as these do not directly impact the firm's value.