Voluntary Environmental Reporting Practices: A Further Study of 'Poor' Environmental Performers
40 Pages Posted: 21 Sep 2004
Date Written: July 2004
Abstract
We investigate the relationship between 'poor' environmental performance and voluntary environmental disclosures in annual reports of Australian listed companies. 'Poor' environmental performance is defined as those instances where companies have been subject to a successful Environmental Protection Agency (EPA) prosecution at any time between 1994 and 1998. This area of research is important as the Parliamentary Joint Statutory Committee for Corporations and Securities (PJSC) recently concluded that a voluntary system of environmental disclosure would encourage 'better' companies to achieve 'best practice' in this area. Consequently this study investigates what disclosure is in fact made in the period leading up to the mandatory requirements. Results reveal that violating firms' annual reports are limited to copious amounts of positive environmental disclosures of a general nature, with virtually no disclosure about the actual EPA violations. We conclude there has been no improvement in environmental disclosures since the previous study of Deegan and Rankin (1996). Accordingly, it is unlikely that voluntary environmental reporting creates a situation of adequate and appropriate disclosure for poor environmental performers let alone encouraging 'better' firms to achieve 'best practice'.
Keywords: Environmental performance, environmental reporting, voluntary disclosure
JEL Classification: M14, M41, M44, M47
Suggested Citation: Suggested Citation
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