Climate change has been a hot-button issue for years, made even hotter by President Trump’s move to pull out of the Paris Climate Agreement and roll back Obama-era policies concerning greenhouse gas emissions and coal.
So how does the Trump administration’s hands-off approach to environmental regulation affect what companies say about their own impact on climate change?
Den Patten, a distinguished professor of accounting at Illinois State University’s College of Business, is an expert in these corporate social responsibility (CSR) disclosures. Standalone CSR reports, which became popular in the 1990s and 2000s, are where companies disclose their environmental impact, community involvement, worker safety, and product-related issues.
Patten recently studied 173 large, publicly traded companies to track how their climate change disclosures evolved before and during the Trump presidency.
“I’ve been interested in understanding CSR disclosure, and particularly environmental disclosure throughout my career,” Patten said. “The theoretical model that underlies my beliefs about why companies use this disclosure is that they use the disclosure as a tool for addressing their exposures to social and regulatory pressures.”
Patten’s research explores how those disclosures are affected by social and political exposure—and what exactly prompts companies to change their disclosure practices.
“What’s interesting here,” Patten said, “is that in contrast to virtually all of the previous events that have been examined for changes in disclosure, this is the first situation that I’m aware of where we have this divide between how society seems to see something—the social exposures—as opposed to what’s going on with respect to the actual political and regulatory actions that the Trump administration is making.”
One example of this disconnect: After Trump was elected, there was a marked increase in public support for environmental nonprofits.
“The Sierra Club saw a significant increase in the membership applications in the one month following the election of Trump,” Patten said, “and I believe the number was 12,000 or 18,000 new member applications, where they had never had more than 1,500 in a month.”
Patten’s research found companies headquartered in more Republican states that supported Trump showed major decreases in disclosure, compared to those in blue states.
“The argument here is that the Republican party is obviously less concerned with environmental issues. They believe that there should be less regulation of environmental types of activities and the general argument that where a company is headquartered, the CEO and the primary operating officers of the company are more likely to be similar to the underlying values of that particular area,” he said.
Patten argues in his research that companies in red states are more aligned with the Trump administration’s view of the environment and change disclosure practices accordingly.
“What I would like to see, and I think society in general, is for companies to be accountable for their social and environmental impacts,” Patten said.
Patten will deliver the Hobart & Marian Gardner Hinderliter Endowed Professorship Lecture on this research at 11 a.m. Friday, Oct. 25, at the State Farm Hall of Business room 412.
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