Corporate Environmental Disclosure Research Articles

Audit Committee Characteristics and Environmental Disclosure Among Nigeria Listed Non-Financial Firms

This study investigates the influence of audit committee attributes on the corporate environmental disclosure using listed non-financial firms in Nigeria as case study. The population of the study consists of all non-financial listed firms on the Nigerian Exchange Group (formerly NSE). Using purposive sampling techniques, the study selected a total 70 listed non-financial firms having required information necessary for the study between 2011 and 2020. The study employed fixed effect and feasible generalized least square (FGLS) panel regression technique. The fixed effect of FGLS regression analysis indicates that while audit committee independent and audit committee gender diversity recorded significant positive influence on the environmental disclosure among Nigerian listed non-financial firms, the impact of audit committee size and audit committee meetings were negligible. Based on results, it is not the size of the committee nor the number of their meetings that matter for the disclosure of environmental information but the composition of the committee in terms of female and independent members representation. In conclusion, the study found evidence in support of the critical role of audit committee characteristics in environmental disclosure practices among Nigerian listed non-financial firms. Hence, it is recommended that efforts should be made to encourage higher composition of female and independent members on the audit committee.

Environmental information disclosure, earnings quality and the Readability and Emotional Tendencies of Management Discussion and Analysis

This study aims to investigate how corporate environmental disclosure affects the readability and tone-emotional tendency of management discussion and analysis reports of Chinese listed companies from 2018 to 2020. Moreover, this study introduces earnings quality indicators to further explore the mediating and masking effects of earnings quality on the relationship between environmental disclosure and report quality. The main findings of this study are as follows. First, the more comprehensive the environmental disclosure, the higher the readability and the more positive the tone of the management discussion and analysis reports. Second, the more comprehensive the environmental disclosure, the higher the earnings quality of the companies, which indirectly enhances the readability of the management discussion and analysis reports, and indirectly enhances the credibility of the positive tone.

“Environmental disclosure greenwashing” and corporate value: The premium effect and premium devalue of environmental information

AbstractEnvironmental disclosure is a crucial method for companies to demonstrate their environmental efforts. However, in some institutional contexts, companies may be inclined to “greenwash” their environmental disclosures, strategically seeking social rewards. Anchored on impression management theory, this study delves into the relationship between environmental disclosure and corporate value. The research substantiates the premium effect of environmental information while shedding light on the adverse impact of “environmental disclosure greenwashing” (EDG) on corporate value. Moreover, EDG leads to a further devaluation in the premium effect of environmental information. A more profound analysis reveals that the market trust acts as the mediating mechanism in the premium devaluation effect caused by EDG. Notably, when information user capability and media attention are scrutinized as distinct groups, the impact of EDG displays pronounced heterogeneity. These findings provide a theoretical foundation for verifying the authenticity of corporate environmental disclosures. Additionally, they offer valuable policy insights for rectifying EDG practices and enhancing environmental disclosure mechanisms.

Corporate climate risk disclosure: assessing materiality and stakeholder expectations for sustainable value creation

PurposeThis study aims to evaluate the adequacy of climate risk disclosure by providing empirical evidence on whether corporate disclosure meets rising stakeholders’ demand for risk disclosure concerning climate change.Design/methodology/approachDrawing on a triangulated approach for collecting data from multiple sources in a longitudinal study, we perform a panel regression analysis on a sample of multinational firms between 2007 and 2021. Inspired by the Global Reporting Initiative (GRI) principles, our innovative and inclusive model of measuring firm-level climate risks underscores the urgent need to redefine materiality from a broader value creation (rather than only financial) perspective, including the impact on sustainable development.FindingsThe findings of this study provide evidence of limited corporate climate risk disclosure, indicating that organisations have yet to accept the reality of climate-related risks. An additional finding supports the existence of a nexus between higher corporate environmental disclosure and higher corporate resilience to material financial and environmental risks, rather than pervasive sustainability risk disclosure.Practical implicationsWe argue that a mechanical process for climate-related risk disclosure can limit related disclosure variability, risk reporting priority selection, thereby broadening the short-term perspective on financial materiality assessment for disclosure.Social implicationsThis study extends recent literature on the adequacy of corporate risk disclosure, highlighting the importance of disclosing material sustainability risks from the perspectives of different stakeholder groups for long-term success. Corporate management should place climate-related risks at the centre of their disclosure strategies. We argue that reducing the systematic underestimation of climate-related risks and variations in their disclosure practices may require regulations that enhance corporate perceptions and responses to these risks.Originality/valueThis study emphasises the importance of reconceptualising materiality from a multidimensional value creation standpoint, encapsulating financial and sustainable development considerations. This novel model of assessing firm-level climate risk, based on the GRI principles, underscores the necessity of developing a more comprehensive approach to evaluating materiality.

Corporate environmental disclosure and sustainability governance practices among listed manufacturing firms in Nigeria

Corporate environmental disclosure and sustainability governance practices among listed manufacturing firms in Nigeria

Apakah Koneksi Politik Mempengaruhi Pengungkapan Lingkungan?

Purpose: This research aims to determine the influence of political connections, company size and company age on environmental disclosure in manufacturing companies listed on the IDX in 2020-2021, either simultaneously or partially, by using company size and company age as control variables.. Methodology/approach: This research uses quantitative methods through a sampling approach, obtaining 99 companies with 198 data. Using multiple linear regression analysis. Data processing was carried out using SPSS Statistics 25. Findings: The results of this study indicate that political connections and company size have a significant positive impact on corporate environmental disclosure. However, company age does not have a significant impact on environmental disclosure. Practical and Theoritical contributio/Origanlity: This research provides knowledge about political connections, company size and company age for environmental disclosure of manufacturing sector companies in 2020-2021. The implication is that companies use environmental disclosure to generate good relations with the government and are expected to increase positive views of the company and attract investors to invest. Research Limitation: This research is still limited to the scope of the research sample for a research period of two years so that the results do not reflect the long-term situation. In addition, it does not discuss the quality of environmental disclosure items disclosed by the company.

PENGARUH PENGUNGKAPAN EMISI KARBON DAN KINERJA KEUANGAN TERHADAP REAKSI INVESTOR DENGAN KINERJA LINGKUNGAN SEBAGAI PEMODERASI

The objective of this study is to investigate how environmental performance serves as a moderator in the association between carbon emissions disclosure (CED) and investor response. The objective of this research is to investigate the correlation between non-standard stock returns and carbon emission disclosure, utilizing environmental performance as an intermediary factor. The present analysis comprises manufacturing firms that were listed on the IDX and PROPER platforms during the period spanning from 2017 to 2020. The statistical software package SPSS version 22 was utilized to perform the hypothesis testing. The dataset comprised 27 distinct commercial entities, encompassing a cumulative count of 138 individual records. The study's sample was selected through the utilisation of purposive sampling. Multiple regression analysis is utilized in this study for the purpose of hypothesis testing. The aforementioned results indicate that the implementation of Corporate Environmental Disclosure (CED) and favorable financial performance have a constructive influence on the responses of investors. The relationship between the disclosure of carbon emissions and investor response is influenced and reinforced by environmental performance. However, the relationship between financial performance and investor response is not influenced by environmental performance.

Corporate environmental disclosures and financial distress: evidence from an emerging market

This study examines the effect of corporate environmental disclosures on financial distress in Vietnam. From sustainability reports and annual reports of firms listed on the Ho Chi Minh Stock Exchange, we manually collected a dataset on environmental information disclosures about seven management standards, including the utilization of raw materials, energy usage, water consumption, conservation of land and soil, gas emissions, wastewater and solid waste, and compliance with environmental protection laws. We measure the level of environmental information disclosures based on the counts of these standards that a firm has disclosed and employed both Altman’s Z-score and Ohlson’s O-score as proxies for financial distress. The research sample includes 269 firms from 2015 to 2020. The findings indicate that firms with better corporate environmental disclosures tend to have lower financial distress levels. The results are robust with respect to different measures of environmental information disclosures and financial distress, and have implications for investors, creditors, and policymakers. We contribute to the literature by providing evidence from a frontier market with weak legal institutions, where various environmental issues and regulations about disclosing environmental information have just gone into effect.

Financial Analyst Coverage and Corporate Environmental Disclosure

AbstractConsistent with the monitoring function played by financial analysts, we find that greater analyst coverage leads to the same extent of improvement in the quantity and quality of environmental information disclosed by the firm. This result is remarkably robust after conducting a difference‐in‐differences analysis that exploits brokerage closures and mergers as an exogenous decrease in analyst coverage, as well as using an instrumental variable approach. The positive influence of analyst coverage on corporate environmental disclosure is particularly evident for firms that cause high environmental damage, firms with low information asymmetry and those followed by analysts with superior experience, accuracy and reputation. Taken together, our empirical findings provide new insights into the bright side effect of analyst coverage on corporate environmental‐related activities.

Corporate governance perspective on environmental reporting: Literature review and future research agenda

AbstractThe last three decades have witnessed substantial growth in the literature exploring the motives and drivers of corporate greening. Extant research analyzing the governance determinants of corporate environmental disclosure provides competing and contrasting results; despite the growing sustainability challenges create an urgent need for effective monitoring and incentive mechanisms to promote corporate transparency and accountability. This warrants further inquiry in the field, yet very few comprehensive reviews have been presented on governance determinants of corporate environmental disclosure. To fill this gap we conduct a systematic review of 121 published papers and distinguish the governance mechanisms fostering corporate environmental disclosure. Our paper identifies factors influencing the adoption, extant, and quality of environmental disclosure, and provides useful future research directions.

The Effect of Profitability, Good Corporate Governance, and Environmental Disclosure on Firm Value in Mining Companies Listed on The Indonesia Stock Exchange

The purpose of this research is to examine and analyze the influence of profitability, good corporate governance, and environmental disclosure on the firm value of mining companies listed on the Indonesia Stock Exchange. The research method utilized is descriptive research with a quantitative approach. The study population encompasses all mining companies registered on the Indonesia Stock Exchange (IDX) within the period from 2019 to 2022. In this study, a non-probability sampling technique was employed, specifically purposive sampling, resulting in a sample size of 72 from a span of 18 companies over 4 years. The variables under scrutiny include Return on Assets (ROA) as a measure of profitability, the proportion of independent board commissioners as an indicator of good corporate governance, the number of GRI disclosures as an indicator of environmental disclosure, and Tobin’s Q as a gauge of firm value. The analytical methodology and hypothesis testing were carried out using the Partial Least Square (PLS) method with SmartPLS 3.2.9 software. The PLS analysis consists of three stages: Outer Model, Inner Model, and Hypothesis Testing. The hypothesis testing results show that profitability has a significant impact on firm value, while good corporate governance and environmental disclosure do not exhibit a significant influence on firm value. These findings contribute to the understanding of how these factors interplay within the mining sector. However, this study has several limitations, including the variables used, the company's disclosures, and the limited period. Subsequent research can address these limitations and delve deeper into exploring the relationships of these variables or other variables with firm value.

Environmental Awareness of Enterprises through Their Disclosure Magnitude: UK and US Evidence

In the absence of a validly mandatory public policy and a meaningful conceptual framework, corporate environmental disclosure practices have been diverse (Matthews, 1993). In other words, the lack of a single generally accepted standard in which environmental reports can be developed, akin to that of financial reporting principles, is one of the reasons for this undoubted dissimilarity in environmental reporting practices. However, there are imperative requirements relating to environmental information disclosure in many developed countries, for example, environmental related information is required in the Business Review in accordance with s.417 of the Act (Great Britain. Companies Act 2006) in the UK and the US Securities and Exchange Commission (SEC) has developed rules governing disclosure of environmental liabilities, in relation to Items 101, 103, 303 and 503(c) in SEC Regulation S-K (SEC, 2008). The former is rather vague as it is not underpinned by a robust speculative structure, whereas the latter has only focussed on the disclosure of financial information that is environmentally related despite the non-financial nature of predominant environmental information. In response to these, the International Accounting Standards Board (IASB) and The International Sustainability Standards Board (ISSB) has very recently issued the foundational standards, which are IFRS S1 and IFRS S2, to steer corporate sustainability-related disclosures worldwide. The former inaugurally provide general conceptual foundations and the latter has primarily pointed on climate risks and opportunities. The other dimensions are forsaken to line up sometimes in the future. Keywords: Environmental Information Disclosure, Environmental Reporting, Disclosure Quantity, UK, US

Environmentally Sensitive Industries Attributes and Environmental Disclosure in Nigeria: Modelling the Double Hurdle Technique

The environmental damages firms’ activities have caused, has aroused the need for firms to be very sensitive to their operations. The 2011–2020 research examines firm-specific features and corporate environmental disclosure for listed environmentally sensitive firms in Nigeria. Age, size, leverage, and management ownership are the explanatory variables. Environmental disclosure explains the GRI environmental disclosure index. The research assessed corporate involvement in environmental disclosure using double hurdle regression. The population and sample are all 23 Oil & Gas and Industrial Goods firms. The research found that firm size and financial leverage influence disclosure choice and extent of disclosure. Firm age does not affect disclosure choice or intensity. The study proposes that Nigerian corporations should give detail disclosure of environmental information. It should be a listing requirement for companies. This promotes green accounting. As captains of industries, managers should push environmental policies that improve their environmental performance to better align the organisation and its stakeholders.

Corporate Governance and Environmental Disclosure: Assessing The Role of Environmental Performance

This research aims to examine and provide empirical evidence of the influence of Corporate Governance on Environmental Disclosure, with Environmental Performance as a mediating variable. The study was conducted on publicly traded companies that disclosed Corporate Social Responsibility during the period from 2018 to 2021 and participated in PROPER (Program for Environmental Performance Rating and Disclosure). The sample was determined using purposive sampling and consisted of 61 companies. The results of the research show that Corporate Governance is positively related to environmental performance and disclosure. The findings also indicate that environmental performance partially mediates the relationship between corporate governance and the quality of environmental disclosure.

Environmental disclosures in mining companies: are there any stakeholder demands?

This research investigates the influence of stakeholder demands on environmental disclosure in mining companies in ASEAN. The influence of these stakeholders is analyzed using the stakeholder theory framework. The research sample is 100 companies in the mining industry listed in the OSIRIS database in 2017-2019. This research uses seven independent variables that represent the strengths of three stakeholder groups. Environmental disclosure data is obtained using content analysis from annual reports and company sustainability. Shareholders, creditors, and auditors were found to be significant predictors of environmental disclosure in mining companies. On the contrary, creditor’s demands are not seen as driving corporate environmental disclosure in most ASEAN countries but have a significant effect in Philippine. In general, this research is in line with stakeholder theory which encourages companies to pay attention to the demands of stakeholders to carry out the best corporate social responsibility, especially on environmental disclosure.

Nexus between corporate environmental disclosures and gender diversity: Interaction effects of board independence

AbstractThis study examines the impact of gender diversity (GD) in the board of directors on corporate environmental disclosures (ED). It develops an integrative theoretical framework to explore diverse facets of the nexus of GD and ED. Using Indian‐listed firms for a sample period of 2015 to 2021, panel models have been used to validate the theoretical assumptions of the study. The empirical results reveal that women directors improve ED. Moreover, the role of women in driving environmental disclosure becomes evident only after achieving a critical mass of three directors. Our research contributes to the literature using board independence as moderator, for the first time in this context, and it was found that it moderates GD–ED relationship significantly. The findings could be beneficial for policymakers and regulators to recognize how GD is vital to firms to achieve best environmental practices. More initiatives may be deployed to reinforce women's representation in boardrooms for enhancing ED. Our study is one of the foremost studies to examine the impact of board GD on ED based on gender socialization, critical mass, and resource dependency theoretical framework.

Corporate environmental disclosure in Europe: the effects of the regulatory environment

Purpose This paper aims to assess the impact of regulatory changes on corporate environmental disclosure practices in Europe. More specifically, the authors perform a difference-in-differences analysis to study the impact of the Paris agreement (United Nations Climate Change Conference, COP21) and of the French Law 2015-992 on energy transition for green growth. Design/methodology/approach The sample consists of the listed companies belonging to the Euro Stoxx 50 index, and they are analysed over the 2010–2019 time horizon by means of an expert validated environmental disclosure dictionary and difference-in-differences analysis. Findings The main results show that both regulatory interventions contributed to improving corporate environmental disclosure. The authors also show that firms belonging to the most polluting sectors tend to provide more information on environmental matters, likely in an attempt to divert stakeholders’ attention. Originality/value By analysing an under-investigated topic, the paper calls for significant efforts by regulators to find the most suitable solutions to induce firms to increase their levels of transparency on the impact of environmental risks and on how these risks are managed.

Does the “Greenwashing” and “Brownwashing” of Corporate Environmental Information Affect the Analyst Forecast Accuracy?

Taking the listed firms of heavy pollution industries in China for 2010–2021 as a sample, this study explored the impact and heterogeneity of corporate environmental disclosure behavior on analyst forecasts’ accuracy. We discovered that corporates measure or disclose environmental information and, the more environmental information is measured or disclosed, the more accurate analysts’ forecasts are; moreover, there is a strong and significant correlation between the environmental information given in the special reports and analysts’ forecast accuracy. This positive correlation is even more significant in cases of “matching words to deeds” and “brownwashing” by corporates. A mechanism analysis revealed that the analysts’ coverage and site visits both have a full or partial mediating effect. Specifically, analysts’ coverage is more likely to be elicited when corporates measure or disclose environmental information; the higher the degree of measurement or disclosure, disclose in the special reports, “matching words to deeds” and “brownwashing”. Analysts conducted site visits when corporates measured or disclosed environmental information, the higher the degree of measurement or disclosure, disclose in the special reports and “brownwashing”. The information above demonstrates that, on the one hand, specialized reports are published to supplement financial disclosures and, on the other hand, that analysts place importance on corporates’ incremental and explicit environmental information; however, “information screening” is insufficient and some “information mining” was carried out when corporate environmental information disclosure was insufficient. This study shed light on analysts’ roles in the improvement of the information environment of China’s capital market as well as the objective appraisal of the impact of corporate environmental information disclosure.

The impact of corporate environmental disclosure practices and board attributes on sustainability: Empirical evidence from Asia and Europe

This study analyzes the impact of environmental disclosure, board attributes, and firms' specifics on the levels of environmental and ESG performance in Europe and Asia. The study utilizes secondary data from Refinitiv Eikon database for 8094 firms for the period between 2016 and 2021. The study employs panel data analysis using fixed effect models to estimate the results. The findings suggest that disclosure on emissions, innovations, environmental controversies, environmentally friendly products, proactive environmental investments, environmental expenses, and fines charged by authorities have a positive and significant influence on the level of firms’ environmental and ESG performance. Furthermore, the study identifies board tenure, independence, size, and meetings as being associated with greater levels of environmental disclosures, reporting, and sustainability score. However, board diversity is found to have a limited contribution to environmental disclosures, especially in Asian countries. Additionally, the results reveal that companies with higher revenue growth, larger size and market capitalization, and better performance have greater and better disclosure of environmental and sustainability issues. The study provides practical implications for policymakers to establish comprehensive guidelines for environmental and sustainability reporting based on the analysis of institutional, regulatory frameworks, legislation, and sustainability score enforcement status of the country.

Enhancing sustainable development through effective disclosure: Corporate environmental performance and readability

AbstractAlthough previous studies have explored the effect of corporate environmental performance on the content of environmental disclosure, little research has investigated its impact on the textual characteristics of environmental disclosure, particularly readability. This study constructs three measures of corporate environmental disclosure (CED) readability and examines the effect of corporate environmental performance on it. Using panel data from Chinese listed firms in heavy pollution industries during the period from 2008 to 2019, we find a robust positive association between corporate environmental performance and CED readability. Furthermore, we find that this association is stronger in firms with worse earning performance, stricter regional environmental regulation, or more media attention. Our analyses also reveal a positive association between CED readability and stock price crash risk. Overall, our study contributes to the research on corporate environmental performance and environmental disclosure readability and has important implications for optimizing the regulations of environmental disclosure. Our study contributes to the literature on corporate environmental performance and environmental disclosure and also provides important theoretical and practical implications for improving corporate environmental disclosure regulation.