We adopted this argument and predicted that companies in common-law countries would tend to disclose carbon information; we used a variable, LegalSystem, to indicate whether or not a firm is a common-law country. Emission trading scheme (ETS). ETS is a mechanism used by governments to influence individuals as well as businesses to reduce emissions. By imposing financial costs (i.e. a carbon price), the scheme creates incentives for companies to invest in lower-emitting technologies and report the impact of climate change