Environmental Disclosure Index Research Articles

Revealing the contribution of corporate sustainability practices to financial performance: Case of BIST Sustainability 25 Index companies

The purpose of the paper is to study the impact of corporate sustainability practices on the financial performance of companies included in the BIST Sustainability 25 Index. To assess the efficiency and quality of corporate sustainability, general (ESG Disclosure Index) and partial (Environmental Disclosure Index, Social Disclosure Index, and Corporate Governance Disclosure Index) indices were used, calculated based on content analysis of sustainability reports. Based on the two given types of indices and four types of financial performance indicators (return on assets, return on equity, assets turnover ratio, and Tobin’s Q), two types of regression models (GEN models and PART models) were built, and eight analytical models were examined. Company size and leverage were included as control variables in each model. The regression analysis results were contradictory, partially confirming the conclusions of some scientists and refuting the findings of others. A study of GEN models revealed that companies implementing more effective general corporate sustainability practices have a significant positive impact only on return on equity; as for other measures (return on assets, assets turnover ratio, and Tobin’s Q), an insignificant relationship between them and ESG Disclosure Index was found. Results of the PART models analysis revealed a significant positive effect of the Social Disclosure Index on return on equity and assets turnover ratio and a negative relationship between the Corporate Governance Disclosure Index and assets turnover ratio. Using control variables for the two types of models showed a significant negative effect of company size on Tobin’s Q. AcknowledgmentThis study was supported by the Ministry of Education and Culture of Ukraine within the project “Development of a mechanism for the sustainable development of economic systems in the conditions of military operations and post-war recovery of the economy” (Registration number of the project: 0124U000463).

Moderating Role of Board Independence on the Effect of Environmental and Governance Sustainability Disclosure on Firm Value of Listed Non-Financial Firms in Nigeria

A corporation’s worth may draw the attention of a variety of stakeholders, and preserving its long-term survival requires overcoming multiple hurdles, most notably the implementation of robust disclosures about environmental and governance sustainability. This study looked at how Board independence affected the link between environmental and governance sustainability disclosures and the total value of Nigerian listed non-financial firms over a decade (2012-2021). Using purposive selection, 69 firms were chosen from a population of 104 to use in a longitudinal study design. Data from the company’s annual reports were evaluated using regression analysis. The Governance Disclosure Index (GDI) and the Environmental Disclosure Index (EDI) were used as proxies for disclosures on governance and environmental sustainability, respectively, while Tobin’s Q was used to represent corporate value. The findings revealed that environmental sustainability disclosure, particularly when moderated by board independence, significantly influenced the firm value of Nigerian listed non-financial companies, whereas governance sustainability disclosure had a significant impact on firm value on its own. As a result, the research recommends that businesses encourage more sustainability transparency via rating and evaluation methods. Furthermore, they should be proactive in developing and executing governance and environmentally friendly policies and programs, since these efforts are critical to increasing their total worth.

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.

Firm-specific characteristics and environmental disclosure of energy firms in Sub-Saharan Africa

Purpose: This study investigated the relationship between firm-specific characteristics and environmental disclosure practices of energy firms in sub-Saharan Africa. It examines how profitability, size, and liquidity influence the environmental disclosure index (EDI) of listed energy firms in the region. Research methodology: A quantitative approach was adopted, utilizing secondary data from the annual reports of energy firms listed in Nigeria, South Africa, and Kenya. Regression analysis was employed to assess the impact of firm-specific characteristics on EDI using waste management data based on the Global Reporting Initiative (GRI) 306 guidelines. Results: The findings indicated that Profitability positively affected EDI, indicating greater transparency in reporting environmental initiatives for more profitable firms. Conversely, firm size is negatively correlated with environmental disclosure, suggesting challenges for larger firms in effectively communicating their environmental efforts. However, firm liquidity did not significantly affect EDI. Limitations: One limitation of the study is its focus on energy firms in only three countries, limiting the generalizability of the findings to other sub-Saharan African nations. Contribution: This research contributes to the literature by addressing environmental disclosure practices within sub-Saharan Africa's energy sector, offering stakeholders, policymakers, and regulators insights to promote transparency and sustainability in the industry. Novelty: The novelty of this study lies in its examination of firm-specific characteristics and their influence on environmental disclosure practices in the energy sector of Sub-Saharan Africa. Using waste management data as a proxy for disclosure offers a fresh perspective on the reporting practices of energy firms in the region.

Environmental Disclosure Practices in Publicly Traded Companies of Bangladesh

This study strives to identify the level of corporate environmental disclosures and their relationship with various corporate attributes using secondary data sources. The data for this study were collected under the dichotomous procedure through content analysis of the annual reports of 190 companies. The statistical results depict that the practice of the Environmental Disclosure Index (EDI) is poor, with the banking sector securing the highest and the IT sector unveils the lowest EDI observed under the study. The regression model implies that company category, company nature, profit after tax, dividend nature, ISO 14001 certification, company age, capital employed, and total revenue are statistically significant. However, net assets value per share and multi-nationality are statistically insignificant. The research will provide valuable guidance to policymakers in formulating appropriate policies for safeguarding society through the protection and reduction of environmental degradation. It will improve the livability of the Earth for future generations. Additionally, it will aid the corporate sector in implementing measures to reduce environmental pollution resulting from their activities. This research investigates the intensity of environmental consciousness among corporations in Bangladesh and reveals the link between corporate attributes and environmental disclosure.

ATRIBUTOS DO CONSELHO E DIVULGAÇÃO AMBIENTAL: QUAL É O NEXO NAS ECONOMIAS LIBERAIS?

ABSTRACT Our study investigates the impact of the board of directors’ attributes on companies’ environmental disclosure. The sample comprised 1,037 companies from Australia, Canada, Ireland, New Zealand, the United Kingdom, and the United States between 2015 and 2018. The results reveal that the percentage of independent auditors, board size, and the presence of the sustainability committee positively influence environmental disclosure. Our findings show that greater diversity on the board is an important factor for companies to disclose more information on their emissions. We conclude that companies should pay greater attention to the characteristics of their boards of directors, as this determines their engagement in environmental issues. This research presents an environmental disclosure index that is less susceptible to greenwashing. The results also bring contributions to the resource dependence theory and agency theory.

Online Environmental Reporting: Does Ownership Structure Matter?

The purpose of this paper is to empirically examine the association between each ownership structure, firm attributes, and online environmental reporting (OER) in Malaysia. Two groups of variables are examined in this study; the first group presents an ownership structure consisting of two types of ownership- management, and government. The second group presents firm attributes which include five variables - company size, company leverage, company financial performance, industry type, and technology level. Data is collected from 100 listed companies’ annual reports (2018) as well as from their websites. Both Ordinary Least Squares regression (OLS) and Two-stage Least Squares (2SLS) are used to examine the collected data and to solve any analytical problems such as endogeneity. The results generally show that the level of OER remains low and does not exceed 39% of the environmental disclosure index. Government ownership, company size, and company leverage show positive and significant relationships with OER, while other variables such as management ownership and company financial performance show negative and significant relationships with OER. however, the level of technology did not show any significant relationship. These findings support legitimacy theory as firms, in general, are consistently legitimizing their existence and operations by disclosing their online environmental information that shapes a good image in the minds of the interested parties who care about firms’ environmental activities. Regulators, on the other hand, may consider the results of this paper such as the significance of government ownership- to regulate and enhance the level of OER in Malaysia as it is yet on a voluntary based.

Corporate social responsibility, financial fraud, and firm's value in Indonesia and Malaysia

The purpose of this research is to determine if financial fraud can lessen the direct impact of Corporate Social Responsibility (CSR) on firm value. Proxies of the CSR are fourth-generation of the Initiative Global Reporting, religiosity, Philanthropy, Voluntary Environmental Disclosure Index, and ISO 26000. The company's value proxy is Price Book Value and Profit Margin. At the same time, the proxy of financial fraud is the F-Score model. This researcher researches mining companies engaged in Indonesia and Malaysia's oil and gas sectors. This study uses a fixed effect model based on the Hausman diagnostic test statistics. This research reveals evidence that financial fraud can reduce the impact of CSR on a firm's value.

Regulation intensity, environmental disclosure, and cost of capital: evidence from listed firms in China.

While theoretical deductions propose that environmental disclosure helps reduce cost of capitals, this conclusion is not always supported in empirical investigations and many factors moderate this connection. In this paper, we re-examine the issue against a unique background, say in the new development stage of China that pursues a balance between economic growth and environmental protection. Specifically, we build an environmental disclosure index and relate it with the costs of equity and debt capitals. We find the disclosure does not significantly contribute to the variation in either cost, when the relationship is estimated in pooled samples. However, when regulation intensity is involved, the puzzle is resolve. In the debt market, we find institutional investors generally devalues environmental disclosure but appreciate disclosure by essentially polluting firms. In contrast, retail investors in the stock market generally respond to environment disclosure in a positive way, but the disclosure by traditionally recognized polluting firms leads to increase in the cost of equity capital. Our work features important heterogeneity between debt and equity markets, and also the role of regulation intensity in moderating the connection.

Sustainability and Financial Reporting Quality for Listed Manufacturing Companies in Nigeria: The Legitimacy Theory Perspective

The universal declaration of a healthy and sustainable environment was adopted by the United Nations (UN) Human Rights Council in 2021 as a fundamental human right; The U.S. Security Exchange Commission in March, 2022 and the European Union's directives in 2014 strengthen the need for all reporting entities to include sustainability reports in their annual reports, for the purpose of improving the quality of financial reporting. Our study examined how sustainability reporting affects the quality of financial reporting from the perspective of legitimacy theory, within the manufacturing sectors in Nigeria as a result of their environmental impact amongst other sectors. The published annual reports of 16 listed manufacturing companies, on the Nigerian Stock Exchange Market, were observed between the financial reporting periods of 2011 and 2020. Sustainability indices were proxied using both the Environmental Disclosure index and Social Disclosure index, while the financial reporting quality was measured using the Accrued earnings management, following the Jones (1991) Model. Using a panel regression analysis, the study applied the Variance inflation factor to test for multicollinearity among the predictors and also employed the fixed effect estimator, as suggested by our Hausman test result, in analyzing the observed data. Our findings revealed that environmental disclosures do not impair the quality of their financial reports. Such impracticability could have resulted from the use of strict environmental regulations by the government and its agencies. However, opportunistic managers could use social disclosure information to dilute the quality of financial reporting. We also found that the profitability performance of manufacturing firm is highly susceptible to impairing the quality of financial reports. We suggest that auditors should be provided with a full-fledge understanding of sustainability reporting to unveil managements' practice of earnings management; the financial reporting council should mandatorily impose the disclosure of sustainability information either as a stand-alone report or as part of the annual reports to allow stakeholders to make relevant economic decisions about the firm; and adequate internal control systems should be in place and should be assessed on yearly basis, as firms continue to operate.

CORPORATE GOVERNANCE AND ENVIRONMENTAL MANAGEMENT: A STUDY OF QUOTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

This study examined relationship between board size and environmental management of quoted industrial goods companies in Nigeria. The Ex post-facto research design was employed. A sample of twelve (12) industrial goods companies which formed the population of the study was used. Data were obtained from the sampled public quoted industrial goods companies in Nigeria for the period 2010-2019. The data extracted were analyzed using descriptive statistics, and Ordinary Least Square (OLS), statistical technique was used to test the data. Findings from the statistics revealed that board size have positive effect but this was not statistically significant on the environmental disclosure index. On the basis of the findings, it was recommended among others that governance measure of board size which was found to have positive association with environmental management need to be increased to accommodate highly experienced board members on environmental-related matters in order to make products and services of industrial goods companies more environmentally friendly.

The Effect of Corporate Governance on Environmental Disclosure by Listed Nigerian Consumer Goods Firms

In recent times, companies improve corporate communication with stakeholders by providing information on measures taking to protect the environment through environmental disclosures. The main objective of the study is to examine how corporate governance affects environmental disclosures listed Nigerian consumer goods firms. The ex-post facto research design was used and regression analysis was used to analyzed data derived from seventeen consumer goods firms. The findings revealed that the presence of environmental sustainability committee, number of meetings held by the board of directors, and firm size have significant positive impact on the quantity of environmental information disclosure (EDI). However, the size of the board of directors (BSIZE) and board independence have an insignificant inverse influence on the Environmental Disclosure Index (EDI) of the sampled companies. It was concluded that corporate governance affects environment disclosure. Based on the findings it was recommended that companies should constitute environmental committee on the board of directors to improve environmental disclosure.

Exploring the relationship between board characteristics and environmental disclosure: Empirical evidence for European firms

Research Question: Does the effect of selected board characteristics is contingent on the level of environmental disclosure by European firms. Motivation: Sustainable development is based on a vision where the protection of the environment, social progress and economic efficiency are indispensable. Idea: This research aims to investigate the effect of selected board characteristics on the level of environmental disclosure by European firms. Data: This study used a sample of 220 European companies under the context of a new dataset, namely, DataStream ASSET database. Corporate environmental disclosure index (CEDI) is developed to measure the level of environmental information. Tools: This index is calculated based on the CEDI-related items provided by DataStream ASSET4. Findings: The multiple linear regression analyses were used to verify the effect of the board of directors’ characteristics on the level of environmental disclosure. The results indicate that the board size and board independence have a statistically significant and positive impact on the level of environmental disclosure. Contribution: The findings have important implications for different policymakers; It helps inform regulatory regulators of the importance of good corporate governance to lay the foundation for comprehensive environmental disclosure by establishing valuable relationships with different stakeholders.

Environmental Accounting Disclosure and Financial Performance of Listed Multinational Firms in Nigeria

The study investigated environmental accounting disclosure and financial performance of listed multinational companies in Nigeria. This study was conducted by firstly assessing the level of compliance, and then exploring the effect of environmental disclosure on financial performance with a focus on multinational companies in the face of continued environmental abuse witnessed in the Nigerian business space owing to the non-availability of sustainability reporting legal framework. The study used secondary data obtained from the published annual reports of the companies from 2011 to 2020. Data collected (Environmental disclosure index, return on asset, earnings per share), were analyzed using descriptive statistics and panel regression analysis. It was discovered that in assessing level of compliance, out of the three sectors assessed, oil and gas was the least compliant. Also, results showed that environmental accounting disclosure had a significant and positive effect on earnings per share (EAPS) but a negative and insignificant effect on return on asset (RETA). The study, therefore, concluded that the extent of responsiveness of companies to environmental accounting disclosure influences how the company is valued.The study, therefore, recommended that multinational companies and other Nigerian firms, should make effort to disclose their environmental-related activities even though it is not required by law, as it has shown evidence of its influence on earnings on shares of companies.

Corporate Environmental Disclosures of Oil and Gas Companies in India: An Analysis of Executives’ Perceptions

Environmental and sustainability issues have assumed significance, leading to social and legal pressures on the companies across the world to take steps to reduce and prevent adverse impact of their activities on the environment and to disclose this information to the concerned stakeholders. The present study aims at investigating the perceptions of executives from 26 listed Indian oil and gas companies on Corporate Environment Disclosures (CEDs)in the annual reports using a structured questionnaire.The questionnaire was constructed on the basis of eleven environmental indicators provided in international oil and gas industry guidelines for voluntary sustainability reporting framework. An attempt was made to determine whether the extent and type of environmental disclosures have correlation with executives’ position in the organization, their knowledge about the annual reports, their stock holdings in the company and the value stream to which the companies belonged. It was found thatthe responding executives were well aware of the environmental issues associated with activities across the value chain in the oil and gas industry. They agreed that these issues are material and must be disclosed in the annual reports, but had different perceptions on the importance of four environmental issues given in the questionnaire for disclosure in the reports. A significant statistical relationship was found between perceived corporate environmental disclosure index (PCEDI) and respondents’ positions in the company and their knowledge on the annual reports. It is suggested that a greater role to knowledgeable senior executives at key positions should be assigned to deal with sustainability disclosure affairs.

Environmental disclosure practices and Firm performance; evidence from Sri Lanka

The main objective of this study was to identify the impact of environmental disclosure practices on firm performance which is an emerging issue around the globe. This research relies on secondary data which was collected from published annual reports of listed companies in the Colombo Stock Exchange (CSE). Data was collected from a sample of 50 companies listed under 5 sectors over consecutive four financial years from 2015 to 2018. The technique of content analysis was occupied when measuring the level of environmental disclosures. Environmental Disclosure Index (EDI) was prepared based on the Global Reporting Initiative (GRI) Standards 2019. This study employed a regression analysis for the data analysis. The findings of this study revealed that there is a significant positive relationship between environmental disclosures and firm financial performance. However, there is no significant relationship between environmental disclosures and firm market performance. The findings of this study will accommodate annual report preparers and regulators of highly environmentally sensitive industries in creating the grounds of environmental disclosures practice to achieve higher performance.

Environmental disclosure practice in the Serbian banking sector

This paper aims to: a) analyse the environmental disclosure practice in the Serbian banking sector, b) determine whether the degree of disclosure is higher in the case of big, i.e. systemically important banks, and c) examine if there is a positive relationship between the banks' CSR practice and their financial performance. The environmental disclosure index (EDI) based on 15 variables was employed to measure environmental disclosure performance for the Serbian banking industry. The data were generated through content analysis of the annual and sustainability reports of a total of 10 banks, five of which were classified as systemically important banks for the period 2015-2019. The sample was determined by the availability of reports for the analysed period and the bank establishment year. The results show that the majority of Serbian banks discloses their environmental policy (74%), the undertaken environmental activities with the local community (51%), and the utilization efficiency of water, energy, and paper (48%). Although the findings indicate that the environmental disclosure practice among all banks in Serbia is growing, the reports are not standardized. In addition, the systemically important banks in Serbia do not have a better disclosure practice. The econometric analysis implies that the bank's status does not influence the level of environmental disclosure and that there is no positive relationship between financial performance (ROA and ROE) and EDI. This study has implications for policymakers and accounting bodies in Serbia in standardizing non-financial reporting and creating certain green and sustainable banking guidelines.

Environmental Disclosure Practices and Firm Performance; Evidence from Sri Lanka

The main objective of this study was to identify the impact of environmental disclosure practices on firm performance which is an emerging issue around the globe. This research relies on secondary data which was collected from published annual reports of listed companies in the Colombo Stock Exchange (CSE). Data was collected from a sample of 50 companies listed under 5 sectors over consecutive four financial years from 2015 to 2018. The technique of content analysis was occupied when measuring the level of environmental disclosures. Environmental Disclosure Index (EDI) was prepared based on the Global Reporting Initiative (GRI) Standards 2019. This study employed a regression analysis for the data analysis. The findings of this study revealed that there is a significant positive relationship between environmental disclosures and firm financial performance. However, there is no significant relationship between environmental disclosures and firm market performance. The findings of this study will accommodate annual report preparers and regulators of highly environmentally sensitive industries in creating the grounds of environmental disclosures practice to achieve higher performance.
 Keywords: Environmental Disclosure, Global Reporting Initiatives, Firm performance, Content Analysis

Corporate governance and environmental disclosure through integrated reporting

PurposeIn recent years, integrated reporting has emerged as a tool to provide environmental information in an interconnected way. However, in the academic literature, the amount of environmental information contained in integrated reports has never been analysed. This study, through the stakeholder-agency theory, aims to fill this important gap by examining the impact of the corporate governance mechanisms on the level of environmental information disseminated by the firms through integrated reports.Design/methodology/approachA manual content analysis based on an environmental disclosure index consisting of 30 items was performed to measure the amount of environmental information. In addition, a regression analysis was performed on a sample of 129 international firms to examine the impact of the corporate governance mechanisms on the level of environmental information disseminated through integrated reports.FindingsThe results show a positive effect of the board size, board gender diversity and corporate social responsibility committee existence on the level of environmental disclosure. Furthermore, they show a non-significant impact of board independence.Originality/valueThis study enriches the literature in several ways. First, it extends the field of application of the stakeholder-agency theory. Second, this study extends the analysis of environmental disclosure to another document – the integrated report – still unexplored by academic literature. Finally, it shed light on the determinants of environmental disclosure.

Determinants of Corporate Environmental Accounting Disclosure of Oil and Gas Firms in Nigeria

This study examines the cognitive factors that determine corporate environmental accounting disclosures (CEAD). The population consists of all the fourteen (14) listed oil and gas firms in Nigeria. Panel data were obtained from the annual reports and accounts of the firms for the period of 2010 to 2019. A correlational research design was used and the data were analyzed using the Generalized Least Square regression (random model). The study found that firm size; leverage and multi-national companies have positive significant influence on the CEAD of listed oil and gas firms in Nigeria. Whilst firm growth has a negative significant relationship with the CEAD of listed oil and gas firms in Nigeria. It is concluded that larger firms and multi-national companies in the Nigerian oil and gas sector have high likelihood of disclosing environmental accounting information. Thus, it is recommended that the management of listed oil and gas firms in Nigeria should expand their size by acquiring more assets, maintain a consistent growth by exploring more opportunities while improving their gearing ratio to ensure a stable balance between the proportion of debt and assets. It therefore, highlighted the need for Securities and Exchange Commission (SEC) to come up with enabling laws geared towards ensuring that listed oil and gas firms in Nigeria embrace CEAD. Furthermore, Global Environmental Disclosure Index (GEI) should be considered as the most acceptable yardstick for measuring environmental accounting by the listed oil and gas firms in Nigeria.