Environmental key performance indicators: the role of regulations and stakeholder influence

Ewelina Zarzycka,Joanna Krasodomska

doi:10.1007/s10669-021-09825-z

Abstract

Environmental protection is of vital importance and needs to be considered in the context of business strategies, including companies’ reporting decisions. This paper aims to investigate the importance of stakeholders for environmental key performance indicators (KPIs) and the significance of different types of environmental KPIs to various stakeholders. The study is based on a content analysis of the disclosures provided by large public interest companies operating in Poland. The data were processed to produce descriptive statistics as well as classification and regression trees (C&RTs). According to the study results, the sample companies provide a variety of environmental indicators, with a total of 735 KPIs identified. The research confirms the importance of stakeholders interested in environmental issues for corporate decisions regarding environmental KPI disclosure. The study contributes to the extant literature by providing new insights into the importance of different stakeholder groups for the disclosure of environmental KPIs. It may serve as an incentive for standard setters and practitioners to take a proactive approach in further developing and improving environment-related reporting regulations.

Highlights

According to a United Nations report (UN 2020), the natural environment continues to deteriorate at an alarming rate
Directive 2014/95/European Union (EU) certainly changed the status of corporate nonfinancial reporting in the EU
As noted in European Commission (EC) communication (EC 2020), market pressures on their own have not proven to be sufficient to ensure that companies report the nonfinancial information that stakeholders say that they need

Summary

Introduction

According to a United Nations report (UN 2020), the natural environment continues to deteriorate at an alarming rate. Observable high water stress, unsustainable use of resources, inadequate waste management, a slow increase in the share of renewable energy in total energy consumption, and still high greenhouse gas (GHG) emissions could have devastating consequences for the environment and our common future. The COVID-19 outbreak, apart from its obvious negative consequences, has led to some positive environmental impacts such as enhanced air and water quality in urban areas, mainly due to massive decreases in transportation usage and industrial activities (Cheval et al 2020). Scientists warn that even this sharp but relatively brief decline is unlikely to make a meaningful difference in the responsibility for environmental protection is considered to lie primarily with countries and governments, the role of business in this process is critical. The public and private sectors need to cooperate, and businesses need to contribute to the more sustainable global economy by undertaking initiatives aimed at environmental protection. Relevant policy- and decision-making frameworks are needed to improve the actual situation and enable evaluation of the results of the environmental actions undertaken (Linkov et al 2020)

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