Coming clean about greenhouse gas emissions can make some companies squeamish. Because emissions are bad, businesses fear that talking about them might be, too. But a new study out of the University of California, Davis finds that by entering into the conversation voluntarily, companies can boost their bottom line.
A study of 172 companies found that stock prices jumped, on average, a half a percent in the five days surrounding an emissions-related press release. While that change might not seem substantial, bundling all those little benefits together meant an extra $10 billion for the companies included in the survey.
“There was some concern the greenhouse gas emissions disclosures would be interpreted the wrong way,” explains the Paul Griffin, the study’s author and a professor of management at UC Davis. “There’s always a downside risk, and I think that risk is moving down, not up.”
For big operations that gab a lot about their goings on, disclosures don’t make quite as big a splash as, say, a small company with a quieter public relations department. While both came out ahead, smaller companies did better with a 2.32 percent average increase in stock price two days after a press release was issued; larger firms saw a less-dramatic 0.48 percent increase. The reason for the favorable response from investors, explains Griffin, is that talking about emissions sounds like environmental responsibility.
The news that companies benefit from entering the conversation is good, but the medium is important. When the company spills news about their environmental impact in a mandatory government filing, the disclosure can seem forced and both investors and customers are more likely to approach the information with concern. “Because companies have an obligation to file these reports, there’s an equal likelihood for good and bad news,” says Griffin. When companies control the message by volunteering it, coming clean on emissions has rewards that are more than just intrinsic.