The Transparency of Industrial Energy Management

Previous empirical evidence has elaborated on the reasoning behind corporations voluntarily disclosing information relevant to their environmental and social impacts. However, little research has been done on a subset of environmental performance, namely the consumption, efficiency and management of energy. Energy management is the internal corporate process governing the emission of greenhouse gases in the private sector and is therefore of paramount importance for mitigating climate change. To resolve this lack of knowledge, this thesis builds on past studies to understand the transparency of energy management in carbon intensive industries. The data set chosen for analysis represents 76% of all emissions disclosed by Fortune 500 companies and 5.7% of all anthropogenic emissions. The goal is to provide an overview of the transparency of industrial energy management of carbon intensive firms, based on the how they communicate externally. The thesis also analyses the driving force behind disclosure; whether the companies in question try to legitimize themselves for masking poor performance, or if they perform relatively well and want to signal this in the marketplace. Furthermore, the value of energy management standards such as ISO 50001 is discussed as a means of social coordination in accordance with the theory of ‘New Governance’. Overall it was found that companies in the dataset that emit more absolute carbon were generally more transparent than those who emitted less, while companies that were less carbon intensive tended towards greater transparency. Therefore pre-established theories are not supported when using absolute emissions as a metric for performance. However, when using carbon intensity as a performance metric it shows that those who disclose more information tend to do so to signal their good performance as opposed to legitimizing their poor performance. Standardization of reporting and business practices are seen as tools to help promote transparency while simultaneously improving the performance of carbon intensity, but not necessarily absolute emissions. It is suggested that standardization of energy management can reduce the carbon footprint per firm, but in terms of mitigating climate change it is only appropriate when used in parallel with other policies that place a cap on total emissions. Therefore, social coordination in terms of hierarchies (both international and domestic), market mechanisms and standardization is required in order to curb climate change, and must complement each other accordingly.