Towards Credible GHG Reporting: The Role of GHG Assurance and Assurance Providers in Firm Valuation

The demand for greenhouse gas (GHG) emissions disclosures is rising globally; yet, the credibility of such information remains uncertain when assurance is not mandated. Drawing on a sample of firms from 43 countries, this study examines the role of GHG assurance and the choice of assurance provider in the market value effects of GHG emissions. We find that the negative association between GHG emissions and firm value is mitigated when emissions disclosures are assured, particularly when assurance is provided by accounting firms. This effect is stronger for firms in carbon-intensive industries and stakeholder-oriented countries. Similar patterns are observed in countries with weaker legal environments, higher financial opacity, higher climate performance, and stronger SDG commitments. Moreover, three key attributes of GHG assurance-assurance opinion, assurance standards, and the proportion of verified emissions-further reduce the adverse market impact of emissions. Our results remain robust after controlling for observable and double-selection biases and are validated through extensive robustness checks. These findings offer practical implications for investors, regulators, policymakers, and researchers as climate-related risks, including GHG emissions, increasingly become integrated into mainstream financial reporting under IFRS S2.