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Environmental reporting in the UK, Australia, and South African multinational companies

Author

Listed:
  • Omar Al Farooque
  • Helena Ahulu

    (University of New England, Australia
    University of Professional Studies, Ghana)

Abstract

Disclosure is an important communication channel that can enhance corporate transparency and accountability and improve engagement with numerous stakeholders. Corporate environmental disclosure has garnered attention globally in recent years across multiple stakeholders groups including businesses, investors, watch groups and legislative branches of governments etc. for its far-reaching social and economic implications. It has become a major challenge for business organizations to address and deal with environmental issues, in particular for multinational enterprises as part of their legitimacy and meeting stakeholders’ expectations. Again, the need for stakeholders’ response to corporate environmental reports has been reiterated in extant literature; however there remains lack of adequate response from stakeholders for the inability for corporations to identify specific environmental issues that stakeholders expect companies to disclose to assure them of corporate legitimacy. To respond to this gap, this study contributes to knowledge by highlighting specific areas of importance which companies in both developed and emerging economies can address in order to encourage report users and stakeholders to positively respond to their assured environmental reports. This study, therefore, focuses on environmental disclosure in multinational companies in both developed (Australia and United Kingdom) and emerging (South Africa) economies. Building on both legitimacy and stakeholders’ theories and Global Reporting initiative (GRI) disclosure guidelines (G3), the study applies hierarchical regression modelling to examine the influences of stakeholder, legitimacy, financial and demographic variables on the ‘preservation’, ‘responsibility’ and ‘initiatives’ aspects of environmental disclose of 67 companies operating in these three countries over a period of two years from 2008 to 2009. Empirical results indicated that return on assets and industry sector were significantly predictive of both preservation and responsibility components. Again, firm age was predictive of preservation and initiatives components, while assurance was predictive of initiatives and responsibility components. On the other hand, firm size and board structure were predictive of only the initiatives component and not the preservation and responsibility components. However, diversification, ownership, internal policy, other financial variables appear to have no influence on any environmental components. These findings have implications for companies, investors, policy makers and stakeholders at large. Environmentally sensitive companies could be encouraged to allocate more resources in order to increase their environmental activities and disclosure. From a policy perspective, the results could form part of the inputs to be considered in the future GRI guidelines. Similarly, policy makers also can take note in formulating environmental policies to address both social and economic implications.

Suggested Citation

  • Omar Al Farooque & Helena Ahulu, 2015. "Environmental reporting in the UK, Australia, and South African multinational companies," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(6), pages 103-118, Special I.
  • Handle: RePEc:jda:journl:vol.49:year:2015:issue6:pp:103-118
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    Citations

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    Cited by:

    1. Iván Andrés Ordóñez-Castaño & Edila Eudemia Herrera-Rodríguez & Angélica María Franco Ricaurte & Luis Enrique Perdomo Mejía, 2021. "Voluntary Disclosure of GRI and CSR Environmental Criteria in Colombian Companies," Sustainability, MDPI, vol. 13(10), pages 1-18, May.

    More about this item

    Keywords

    Environmental Reporting; Stakeholder Theory; Legitimacy Theory; Global Reporting Initiative Guidelines (GRI);
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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