Does information on reduced financing cost change firms' perception of sustainability reporting and its benefits?

We survey German firm managers on sustainability reporting. Under the current German and EU-level regulation, even firms falling below the official reporting threshold may be asked to report on sustainability, for instance by supply chain partners or banks. In deciding on whether and how extensively to report, firms thus need to weigh the costs and benefits of sustainability reporting.

In an information experiment, we introduce exogenous variation in the expected benefits of sustainability reporting. The treatment group receives information that firms disclosing CO2 emissions face lower costs for bank loans. (The control group receives generic information on the importance of bank loans for firms in Germany.) We then test whether this information changes how firms assess the benefits of reporting.

The starting hypotheses are:

1) The information increases the perceived benefits of reporting and the reported likelihood of reporting at all or more extensively. It may also affect the support for a policy standardizing SME sustainability reporting and thus reducing reporting costs.
2) The treatment effect is driven by firms a) that update their asssessment of a change in bank financing cost due to reporting; b) for which the transition to carbon neutrality is relevant; c) relying on bank financing. The treatment effect will be lower for firms where other stakeholders than banks ask for sustainability information, and may move in a different direction if firms update their financing cost expectation upward.

Survey respondents are managers of German firms of varying size and industry. Via the "ifo Management Survey", these managers regularly take part in surveys on different topics.

2024-04-09

2024-04-19

- Perceived benefits of sustainability reporting
- Reported likelihood of (improved) sustainability reporting in the future
- Support for a policy reducing reporting costs

The perceived benefits of sustainability reporting are elicited in terms of access to finance and other economic outcome variables, and via a hypothetical "willingness to spend personnel resources" on sustainability reporting.

- Sample is split into two groups of similar size. Each group receives information on bank financing.
- The control group receives generic information about the importance of bank financing for German firms.
- The treatment group receives information on reduced bank financing costs for firms disclosing CO2 emissions.

- Respondents are asked for their prior estimate of the impact of sustainability reporting on bank lending costs.
- Sample is split into two groups of similar size. Each group receives information on bank financing.
- The control group receives generic information about the importance of bank financing for German firms.
- The treatment group receives information that according to a recent study, the bank financing costs for firms disclosing their CO2 emissions were by 0.16 percentage points lower than for non-disclosing firms.
- Respondents are asked for a posterior estimate on lending costs.
- Respondents are asked about the primary outcomes described above.

Randomization by computer (implemented in Qualtrics)

Firm

No

420 firms

420 firms

210 firms control, 210 firms treatment