Global energy corporations and climate change: The role of formal and informal institutions in shaping climate change risk disclosure

This study examines climate change risk disclosure in the global energy sector, where firms face intense stakeholder scrutiny and legitimacy pressures. We develop a novel domain-specific textual analysis measure to capture climate change risk disclosures, improving on prior approaches based on generic environmental terminology. Drawing on neo-institutional theory, we analyze how national cultural development and governance quality shape firms' strategic responses to climate-related risk and stakeholder expectations. Using a global panel of listed energy firms from 2016 to 2021, we find that stronger cultural development and higher governance quality are associated with significantly greater disclosure of climate change risk. These findings suggest that climate risk disclosure functions as a strategic mechanism of legitimacy through which firms manage stakeholder pressure and signal their responsiveness to institutional demands. The study contributes to the literature by linking macro-institutional contexts to firm-level risk management and strategic transparency in environmentally sensitive industries.