Conference Programme

We examine the operational consequences of mandatory carbon disclosure (MCD) using the United Kingdom’s 2013 carbon disclosure regulation as a quasi-natural experiment. We exploit differential exposure between manufacturing firms listed on the London Stock Exchange and comparable European-listed firms; and estimate difference-in-differences, event-study, and synthetic difference-in-differences models to identify causal effects on productivity-related outcomes. Our results show statistically and economically significant declines across a structured, multi-dimensional productivity system including total factor productivity, operational productivity, labour productivity, and inventory efficiency, following disclosure. Event studies show that effects emerge shortly after implementation, persist for several years, and propagate across interdependent production efficiency, labour deployment, and inventory execution. Consistent with an attention-based view, mandatory disclosure acts as a regulatory attention shock, shifting managerial focus and operational resources toward compliance and governance and away from productivity-enhancing investments. Effects are heterogeneous: productivity declines are more pronounced among firms with longer investment horizons and higher market valuations, consistent with strategic resource reallocation rather than reporting costs. Our findings show that MCD-based environmental regulation, often assumed operationally neutral, can create unintended productivity trade-offs. The study provides causal evidence that informational regulation reshapes firm operations and highlights the need for transparency-based policies to account for Unintended operational spillovers.