Against a background of increased regulatory and stakeholder pressures, we present the first literature review of firm- and country-related determinants of carbon reporting quality (CRQ) and the financial and sustainability consequences of CRQ for firms. Based on legitimacy and stakeholder theories, this structured literature review considers 91 peer-reviewed empirical quantitative (archival) studies. We find that board gender diversity, firm size, and carbon performance are the main drivers of increased CRQ. Furthermore, in line with the business case argument for sustainability, there are indications that CRQ leads to increased financial performance and value relevance. This literature review also stresses the urgent need to rely in the future on valid and more comparable CRQ proxies, based on automated text analyses.