The Role of Voluntary Corporate Governance Mechanisms on Environmental Risk Disclosure: Australian Evidence

We examine the factors associated with the establishment of an environmental committee at the board level and its impact on the disclosure of environmental risks in an Australian context. Using a sample of Australian Stock Exchange firms disclosing their information to the Carbon Disclosure Project, we document a strong association between the existence of environmental committee and board independence, CEO duality, directors’ share ownership, and institutional shareholding. Firms that belong to environmentally sensitive industries are more likely to have environmental committees. Furthermore, we find that firms with environmental committees are more likely to disclose environmental risk information and this leads to mitigation in information asymmetry between managers and stakeholders.