Check the Box: Does Information on the Existence of Public Climate Disclosure Reduce Federal Suppliers' Emissions?

We examine whether suppliers reduce emissions when their federal customers start requesting information on the existence of their public climate disclosure. In 2016, the U.S. federal government implemented the first climate-related contractual provision through FAR 52.223-22, which requires certain federal suppliers to represent whether and where they have public disclosure of greenhouse gas emissions and reduction goals. Using novel data on suppliers’ representations, we find that suppliers that make the representation decrease emissions more than other suppliers. This finding is robust to different designs that mitigate endogeneity concerns. We further show that the effect is stronger when suppliers are more concerned about losing federal contracts and when contracting officers can better process suppliers’ climate disclosures using information obtained by the representation. Our evidence highlights how reducing customers’ information processing costs can have real effects on suppliers’ carbon emissions—economically reliant suppliers respond to increased perceived risks of carbon emissions when their environmentally inclined customers can more easily process their climate disclosures.