Page 301 - Ebook HTKH 2024

These regulations are being developed or implemented globally, while voluntary
initiatives, such as the Task Force on Climate-related Financial Disclosures (TCFD), the

Carbon Disclosure Project (CDP), and the Global Reporting Initiative (GRI), continue
to promote GHG emissions disclosure. However, the effectiveness of these frameworks
varies across sectors and regions.
From a financial perspective, mandatory GHG disclosures significantly impact
corporate valuation and risk assessment, particularly as carbon pricing becomes more
widespread. Carbon pricing can directly affect business costs, making it crucial for
companies to assess their GHG levels to determine their long-term viability (Tang et al.,
2022). Companies that emit significant GHGs may face increased costs from carbon

taxes or emissions trading schemes, leading to reduced profits and cash flows.
Conversely, firms investing in low-carbon technologies may experience cost savings
and increased revenues, which improve their financial performance (Baldassarri Höger
et al., 2020). Additionally, carbon pricing can affect the value of a company’s assets,
particularly fossil fuel reserves, which could decrease in value due to declining demand.
On the other hand, renewable energy assets may appreciate as demand rises and

production costs decrease. Companies must also manage risks such as market volatility
and reputational damage, which are increasingly linked to their environmental
performance and carbon pricing strategies.
The growing trend of ESG (Environmental, Social, and Governance) investing has
led to greater integration of GHG metrics into investment decision-making, influencing
capital allocation and company valuations. According to MSCI ESG Research (2023),
climate change risks and the path to net zero are among the top ESG trends to watch in

2023. Investors are now focusing on measuring, managing, and mitigating the impact of
GHG emissions in their portfolios while aligning investments with the goals of the Paris
Agreement and the UN Sustainable Development Goals. These evolving investor
expectations are driving companies to enhance transparency and consistency in GHG
emissions data and adopt strategies to reduce emissions.
There are several frameworks aimed at improving the quality and comparability of

GHG emissions reporting, such as the Task Force on Climate-related Financial
Disclosures (TCFD), the Science Based Targets initiative (SBTi), and the Carbon
Disclosure Project (CDP). Investors are increasingly seeking opportunities to invest in
companies that are developing or adopting innovative solutions to reduce GHG
emissions, such as renewable energy, carbon capture technologies, green hydrogen,
electric vehicles, and circular economy models (MSCI ESG Research, 2023). In addition
to mitigating environmental impact, these solutions can provide competitive advantages,
cost savings, and revenue growth for companies that follow them.

However, a research gap remains regarding the challenges faced by small and
medium-sized enterprises (SMEs) in complying with mandatory GHG disclosures.
Unlike large corporations, SMEs often lack the technical and financial resources
necessary to implement comprehensive GHG reporting systems. Further research is

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