17. Exploring Financial Institution Environmental Disclosures: Evidence from China

Against the background of the Task Force on Climate-related Financial Disclosures’ (TCFDs) promotion of climate-related disclosures for financial and nonfinancial companies, this study examines the environmental disclosures of China’s financial institutions over 2016–2020, presenting preliminary evidence on the current status of their environmental disclosures. Interpreting results through an institutional theory lens and using content analysis of 285 firm-year observations on listed financial institutions, this study identifies that China’s financial institutions have not sufficiently addressed reporting of environmental information. Compared to other CSR categories, environmental disclosures have not become a primary focus for China’s financial institutions. This is despite international bodies, governments, and stock exchanges’ gradual recognition of the financial sector’s role in contributing to achievement of a green, low-carbon economy. However, financial institutions’ awareness of their role in environmental sustainability is currently deepening due to the institutional pressures placed on this sector. In addition, sample financial institutions are not managing their environmental issues in a comprehensive way, with only 51.5% of sample institutions disclosing information on the direct environmental impact of their own business activities, with much lower levels of reporting of the environmental impacts of their investment and financing activities. Very few financial institutions disclose qualitative indicators, such as environment-related governance structure, strategies, and policies. The “top three” most frequently disclosed environmental indicators include “indirect greenhouse gas emissions and indirect natural resource consumption from purchased products and service,” “greenhouse gas emissions and natural resource consumption directly generated by operating,” and “resources and energy consumption saved or replaced by online business.”