From disclosure to decarbonization: the role of international governance in value-chain emissions

Abstract

Frame of the research: As corporate climate accountability expands beyond organizational boundaries, companies are increasingly expected to disclose and manage Scope 3 emissions across complex global value chains. However, transparency and decarbonization follow different organizational logics: disclosure aligns with reporting norms and legitimacy needs, while emissions performance depends on coordinating with suppliers, customers, and internal units. In this context, international governance offers a valuable perspective for understanding how boards, management teams, and ownership structures influence firms’ engagement with value-chain emissions.

Purpose of the paper: This paper examines how international governance structures are associated with firms’ transparency and decarbonization outcomes in global value chains. Specifically, we analyse whether board foreignness, managerial cultural diversity, and firms’ international ownership configurations influence Scope 3 emissions disclosure and emissions performance.

Methodology: We analyse an original dataset of 112 Italian listed companies (2012-2024) that combines data from Eikon ESG, Datastream financial information and the AIDA database. Using a linear probability model with high-dimensional fixed effects, we model Scope 3 disclosure and emissions intensity as functions of governance composition, ownership configurations, and international exposure, controlling for size, profitability, and management governance indicators.

Findings: The results document systematic differences in how governance characteristics are related to disclosure versus emissions performance outcomes, a pattern suggestive of a disclosure-performance gap. Firms with more internationally composed boards are significantly more likely to disclose Scope 3 emissions across value chain segments, in line with greater responsiveness to global transparency norms and stakeholder expectations. However, these governance characteristics are less consistently associated with improvements in emissions performance. In contrast, managerial cultural diversity shows weak or negative associations with both disclosure and emissions performance, which is indicative of coordination challenges that may arise in managing complex value chain emissions.

Research limits: This study focuses on Italian listed firms operating within a specific regulatory and institutional context and relies on disclosure-based and emissions intensity measures from secondary databases. While appropriate for identifying patterns in Scope 3 transparency and performance, this design does not directly observe firms’ internal decarbonization practices, supplier engagement processes, or the organizational and socio-cognitive capabilities through which governance structures may influence value chain emissions management.

Practical implications: The findings highlight the need for governance architectures that combine international board expertise with effective reporting infrastructures, internal coordination mechanisms, and supplier engagement capabilities to improve transparency regarding value chain emissions and to reduce the gap between sustainability “talk” and operational “walk”.

Originality of the paper: This study contributes to sustainable corporate governance research by documenting differential associations between international governance characteristics and sustainability transparency versus operational decarbonization. By analytically separating Scope 3 disclosure from emissions performance, this paper provides evidence consistent with the view that international governance is associated with firms’ engagement with value chain decarbonization.