Environmental Disclosure in the Canadian Resource Industry - The Impact of Reporting Regulations

Abstract

This study examines environmental reporting by Canadian mining and oil & gas companies in their annual reports and stand-alone Corporate Social Responsibility (CSR) reports over a 24-year period from 1985 to 2008. It investigates whether environmental disclosure strategy is driven by economic considerations or legitimization efforts. Therefore, the investigation involves examining the relationship between the companies’ environmental disclosures, measured using a disclosure score derived from the Global Reporting Initiative guidance, and their actual environmental performance, measured by emissions reported to the Canadian government’s National Pollutant Release Inventory. We find evidence that companies with good environmental performance are using disclosure for signaling purposes, when regulation is ignored. The study examines the impact on environmental disclosure levels and content of different types of disclosure regulations introduced over this period. Disclosure changes around the time each new regulation is introduced indicate that increases in disclosure focus largely on information related to the credibility of company information. We also see that once the companies introduce standalone CSR reports, much of the increase in disclosure was shifted out of the annual report and into the CSR document where it was no longer subject to auditor oversight.