Implementation of the Environmental Disclosure requirement in Australian Service Industry

 

 

 

Implementation of the Environmental Disclosure requirement in Australian Service Industry

 

Abstract

During the recent decades, the local, national and global effects of human activities on the physical environment have increased immensely. Consequently, comprehensive policies have been developed and implemented to ensure that companies outlay a high level of social responsibility to the environment. Equally, research literature and international policies have subjected a full angle of interest in providing that corporations can disclose their annual activities that have an impact on the wellbeing of the physical environment. According to research, companies have increased their environmental responsibility by providing voluntary yearly ecological reports that outlay the company’s financial and non-financial, quantitative and qualitative social activities on an annual base.

For long scholars have addressed environmental disclosure as a broad topic that evaluates the responsible nature of these companies. However, the study aims to identify the extent that the annual report coincides with the actual responsibility that these companies deliver. Without a doubt, companies around the globe may provide clear and consistent environmental disclosures; regardless recent interest in the area has suggested that these revelations are only delivered to suit the wellbeing of the company. For instance, mining companies are profoundly affected by the social environment. In fact, mining companies form a substantial basis of the Australian economy.

The study aims at performing a content analysis on 75 annual reports on companies from different industry groups in the country. The purpose of the study is to identify whether environment disclosures serve as social or financial rehabilitation attempts by these companies, or they fulfil the required function. The study analyses the consequence of the environmental disclosure requirement in the corporate field of the country and will look to evaluate how companies have integrated the condition either as self-beneficial or social responsibility.

 

 

Contents

1    Introduction. 4

1.1     Background of the Study. 4

1.2     Research Justification. 5

1.3     Purpose of the Research. 8

1.4     Research Questions: 8

1.5     Research Methodology. 9

1.6     Outline of the Research. 9

1.7     Summary. 9

2    Literature Review.. 11

2.1     Introduction. 11

2.2     Previous Studies in the Field. 11

2.3     GRI Guidelines of Environmental reporting  13

2.4     Environmental Performance Indicators  14

2.4.1    Indicators related to the management 14

2.4.2    Indicators of Business operations  14

2.4.3    Transportation. 15

2.4.4    Stock pollution. 15

2.4.5    Land Alteration. 16

2.5     Theories in Environmental Reporting  16

2.5.1    Legitimacy theory and Agenda Setting Theory. 16

2.5.2    Stakeholder Theory. 16

2.5.3    Signaling Theory. 17

2.6     Theoretical Arguments for Disclosing Financial Information. 17

2.6.1    Accountability. 17

2.6.2    Stakeholder Theory. 18

2.6.3    Environmental sensitivity. 18

2.6.4    Financial Performance. 18

2.6.5    Environmental Certification, 18

2.7     Determinants of Social Environmental reporting. 18

2.7.1    Financial performance and size of the company. 19

2.7.2    Social and Environmental Performance  20

2.7.3    Ownership Structure. 20

2.7.4    Corporate Visibility. 20

2.7.5    Legal requirements within The country of origin and the sector of affiliation  21

2.8     Criteria for Measuring the Environmental report 21

2.8.1    Credibility. 21

2.8.2    Completeness. 21

2.8.3    Transparency. 21

2.9     Language Used in Environmental Disclosure  22

2.10      The State of Public Environmental reporting in Australia. 23

2.11      Gaps within Literature. 24

2.11.1    Governance and regulation. 24

3    Methodology. 25

3.1     Introduction. 25

3.2     Content Analysis. 25

3.3     Research Design. 27

3.3.1    Epistemology – Positivism.. 27

3.3.2    Quantitative research. 27

3.3.3    Secondary data. 28

3.3.4    Quality of data – reliability, validity, and generalizability. 28

3.3.5    Time Dimension- Longitudinal 29

3.3.6    Measurement of Variables. 29

3.4     Study Design. 32

3.5     Study Population. 32

3.6     Privacy and Ethics. 33

3.7     Method of Data Collection. 33

3.7.1    Environmental reporting. 33

3.7.2    Company capability for environmental reporting. 34

3.7.3    Company interest towards environmental awareness. 34

3.7.4    Environmental Activities. 34

3.8     Data Management 34

3.9     Data Analysis. 34

3.10      Data Presentation. 35

. 35

4    Data Analysis and Findings. 37

4.1     Results. 37

4.2     H1 Variable:  Institutional Expectations  38

4.2.1    United Nations Sustainable Development Goals. 38

4.2.2    Legal Obligations. 39

4.2.3    Previous Incidents or Accidents  39

4.2.4    The trend of Environmental Audits  39

4.2.5    Cost Saving. 40

4.2.6    Stakeholder Expectations. 40

4.3     H2 Variable: Institutional Environmental Capacity. 41

4.4     H3 Variable: Institutional Environmental Interest 44

4.4.1    Introduction of Environment Sustainability in the Learning process. 44

4.4.2    Creation of Environmental Goals  44

4.4.3    Starting of projects. 44

4.4.4    Engagement of Staff in Processes of Sustainability. 45

4.4.5    Funding Environmental Sustainability  45

4.5     H4 Variable: Environmental Disclosure Strategy. 45

4.5.1    Notable points on environmental Reporting. 52

4.6     H5: Environmental Actions. 52

4.6.1    Energy. 52

4.6.2    Water 52

4.6.3    Biodiversity. 53

4.6.4    Land. 53

4.6.5    Contribution to the Scientific knowledge  54

4.6.6    Rehabilitation. 54

5    Discussion of results. 54

5.1     RQ1-Concerning annual report disclosures relating to environmental exposures, how do Australian service Industry, in control of remediation sites, perceive the institutional expectations exerted by institutional constituents?. 55

5.1.1    Independent Constituents. 55

5.1.2    Dependent Constituents. 56

5.2     RQ2    In responding to institutional expectations, do Australian service industries have the capacity to conform to their perceived institutional expectations and requirements?  57

5.3     RQ3-In is responding to institutional pressures, do Australian service industries have the interest to conform to their perceived institutional expectations and requirements?  57

5.4     RQ4- Concerning annual report environmental disclosures, what is the strategy that Australian service industries seem to adopt in their reporting decisions?. 58

5.5     RQ5 what are the actions taken by the Australian companies in response to the environmental expectations and pressures?. 58

6    Conclusion. 59

6.1     Limitations of the Study. 59

6.2     Areas for Further research. 59

 References. 60

 

 

 

 

 

Implementation of the Environmental Disclosure requirement in Australian Service Industry

1         Introduction

The chapter introduces a background into the research, identifying the origin of the environment disclosure report requirement for companies in different sectors. It defines the reasons that led to the introduction of the conditions and how they have applied so far within companies and organizations in Australia. Due to the increased environmental detrimental effects caused by organizations, scrutiny towards the emissions and the activities that pose a threat to the environment has also increased. In the analysis of these reports, much emphasis has previously been on the rehabilitation of the financial and social aspects of the company and the resulting sustainability. The study introduces a new viewpoint to the whole issue; it analyses the research based on the benefits that the environment accrues by the introduction of environmental disclosure reports.

1.1        Background of the Study

There has been a call for the increase in the accounting standards in the world of today due to the financial markets interdependence that results from globalization in the industry. The origin of the environmental disclosure requirements was with the IAS/IFRS in the bid to institute financial compatibility between firms (Mitchell, Percy & McKinlay, 2004). There is still flexibility of the reporting standards within companies depending on the differences they have regarding their traditions, and legal and taxation systems in different countries.  It is essential to start by analyzing the interpretations of the IFRS standards of environmental reporting to know the effect of the environmental reporting habits from each of the firms in every country.

There is least interest in the scholarly world regarding the way environmental reporting occurs. Barker and Barbu (2007) went over more than 200 articles within the period of implementation of IFRS standards in Europe (1960-2005), and there was, however, no piece of information related to the environmental reporting within these articles and journals. While it is a very important issue within the accounting procedures, no much attention had got paid to it. The need for environmental disclosure, however, became evident in the 1980s (Gray, 2007; Brennan & Solomon, 2008). After the 1980’s, investors began attaching importance to the sustainability and environmental reporting. Patterns in the USA, New Zealand and Australia since then have shown a positive relationship between environmental disclosure and the size of the firm; the more prominent firms thence were the ones that proved more responsible in their corporate duty (Jones & Slack, 2010; Chaklader & Gulati, 2015).  Discoveries have shown further that the industries that are environmentally critical were the ones most sensitive to environmental information.

In Australia, the environmental reporting started in 1998 with the introduction of the Corporations Law that took effect on 1st July (Centre for Australian Ethical Research, 2003).  The law stipulated a requirement for company’s reporting concerning their performance in environmental legislation. Therefore in the yearly director’s report, companies were to present the environmental performance as long as the company was under the significant environmental law under the Australian government or the Commonwealth-state or territory. The legislation faced a lot of ambiguity in interpretation and proceeded therefore to submission and examination by the Parliamentary Joint Committee on Corporations and Securities (PJSC). The committee interpreted the law to introduce a voluntary system of reporting environmental appropriations. The idea behind it was that voluntary reporting would help companies to try their best to achieve the environmental best practice and therefore those that do not adhere would face a lag. Moreover, they proposed that the quantity of disclosure within a voluntary regime is more than that of a compulsory system.

Later, in the year, the government came forth with amendments to the Corporations Law under the guise of the New Company Law Review Act and made the environmental reporting a requirement for the director’s report. The changes depended on the lack of evidence of better reporting in the voluntary system (Cobert et al., 2003). There was also insufficient evidence to support the fact that mandatory reporting did not produce better results.

The environmental disclosure requirement demands that companies should provide a list of activities that pose a risk to the external environment. Similarly, companies are expected to disclose information on gas emissions including the greenhouse gas effect and the information on environmental management initiatives, which uncover the critical ecological risk, entailed in debt exposure and cost management. Significantly, the materials and energy industry accompanied by the utilities, transportation and media sectors disclose the highest level of environmental risk in Australia. Companies with a high profile of environmental risk are expected to provide clear reports that express their financial, environmental risk or other ecological related impacts that is useful to investors and the community.

Most countries have adopted the importance of environmental disclosure as a measurement of the company’s impact on the environment as well as risk and performance. Also, health initiative programs including the Greenhouse Challenge and the National Packaging Convent have contributed to the increased demand for environmental reporting (Barakat, 2016). Under international commitments regarding the nature of biodiversity and level of climate change, local and national initiatives have reinforced the importance of voluntary disclosure as a way of companies to nullify their impacts on the physical environment (Nyide, 2013). Similarly, investors and company stakeholders have increased their demand for information on product producing firms. The amount of information disclosed by companies is useful in analyzing where to invest and the total amount of risk and environmental performance.

According to the Financial Services Reform Act (FSRA) of March Australia 2002, companies from the service sector are expected to show their investment decisions based on their environmental impact (BurgwalI & Vieira, 2014). However, the report assumes that businesses have diverted the purpose of the disclosure requirement to rehabilitate the financial and social appearance of these companies. Frequently, research has analyzed disclosure reports based on their size and amount of writing. For the most part, the story aims at a content analysis of the disclosure reports provided by some companies in Australia.

1.2        Research Justification

The environmental trajectory of a country is shaped mainly by the organizations running their activities within the jurisdiction. In the bid to increase the environmental compliance, it is a prominent step to integrate environmental cost-benefit analysis in the decision making of companies. Corporate methods of environmental reporting give information about the companies’ decisions and the impact they have on land use, the proper use of renewable resources such as fisheries, soil, and timber,  clean air (emissions of greenhouse gases), proper use of fresh water and the degradation of marine and coastal habitats (Chaklader & Gulati, 2015). For the past few years, the context of reporting has expanded for many companies even on the global scale although the decisions to disclose has primarily associated with the content and depth of the reports instead of the real impact the companies were making to the environment.

The existing parameters of reporting analysis are limited, and therefore this research brings forth the new outlook of these reports. The reports by companies face a limitation of inconsistency in the standards used for their reporting and the sections of their indicators. They, therefore, make it difficult to rate the exact sustainability created. Environmental and Social Governance (ESG) data from the reports are cannot be compared from company to company due to lack of the standard of measure (Chaklader & Gulati, 2015). It is not possible to know the performance of a company compared to its mates in the same field. Introducing the method of measuring the real environmental impact of the company within the reports will introduce a standardized approach in the measurement and indicators of environmental impact.

Analysis of environmental reports based upon their depth does not relay the portrait of the real environmental value of the efforts made by the company. There are companies within the market whose primary task is delivering a sustainability analysis for companies based on their activities. Ironically, these companies’ services have however failed because they operate according to the tailored interests of the companies they asses. They, therefore, end up providing information that would bring the company in the light of sustainability; even when it is not true (Mitchell, Percy & McKinlay, 2004.  The type of objective analysis is therefore not enough to bring confidence to the investors and other stakeholders. In contrast, this research is instrumental in introducing a new way of using environmental reporting in the analysis of the real impact the companies have towards the environment through creating a relationship between the environmental reporting and the actual responsibility to the environment.

Many researchers in the accounting field neglect environmental analysis as a form of social accounting. The basis of them assuming the study would rather be flimsy that supported by back up evidence.  There is, however, increasing pressure from the mainstream and the society, in particular, those poised and conservationists (Mitchell, Percy & McKinlay, 2004).  Therefore, the opportunity presented by this research will challenge the status quo and introduce the research area of social, environmental reporting as a potential field for more research.  The important notion behind environmental reporting is holding companies accountable for their actions whether towards conservation or degradation.  The right for the reporting information gets derived from the quasi, legal and moral platform of the society.  It gives the public the capability to match up the power that the organizations have in the running of the business sphere.  Therefore even the information it is upon the stakeholders and the public to make good muse of it in judging if the moral and legal docket is matched up by the organizations. It is the only democratic power vested to the public within the capitalistic business environment.

The responsibility of the organizations can be viewed in the three dimensions of economic, social and legal.  Financial statements of the firms, released annually are usually mainly directed towards the discharge of financial statements for the economic/financial accountability; it is what the law requires it for monitoring, tax and, regulation purposes. The financial reporting had been the centre of focus for many centuries now, and with much covered in that field in the form of continued research, there is exhaustion in using it as a stand-alone piece of information to direct the course of decision making within the company.  The other new vital parts of these reports are the social, sustainability and environmental report.  This is the part that has received very patchy analysis is but projections of the future prove this trend otherwise. There is new interest towards this information, and it is what captured my attention towards the topic.

Another point that comes out vividly is if there is any relation created between the reporting and the action committed. While the new focus shifts towards the form of reporting, the question that should boggle everyone looking to examine these reports is if they reflect the real situation of the company. There are expectations bestowed towards the company in the business activities that should ensure they work towards sustainability for the future generations both for the firm and for the community around. Although the obligation to give financial and environmental reporting makes them succumb to the pressure and provide the information, are they also in the same ways succumbing to the pressure and introducing sustainable methods in the everyday activities? ((Chaklader & Gulati, 2015))

It is the expectation of every Australian registered company to match every economic activity with the resulting conflicts, consequences, and trade-offs that would fall through to the common people’s side.  The state takes a back seat in the monitoring to ensure that the policy is adhered to and in most cases, there is a commission to follow up in the case of an adverse situation. Most of the void is filled with Environmental NGO’s, and it would be a good starting point to introduce a method of analysis such that the void is filled by the society in general, who should be the main watchdogs of these companies.  Within the void created by the government and the society, many companies have produced weak and partial environmental reports that are not a true or complete reflection of the environmental related responsibility.  They have done that to avoid the regulatory efforts that would face them in the case when they have all their information out in the limelight.  Suggesting tying the formal accountability with significant impact would change the reporting strategies used by the companies in their environmental and social reporting. However, the situation at hand within the Australian setting stipulates for the voluntary reporting, and thus there is leeway to unscrupulous disclosure strategies. In the case where the latter inference stands,  the strategies used in the environmental reporting blur the whole process, and it is the place where then the government should introduce strict measures towards the social, environmental reporting as a method of assessment of the fulfillment of their responsibility according to the legal and moral expectations.  In the case where there is effective reporting, then it would bring an end to the corporate propaganda, the false monolithic image that companies create for themselves and thus give power back to the society in the form of the government-run corporations to control the whole economic agenda of the corporations (BurgwalI & Vieira, 2014).

Companies within Australia that are ASX certified have been fuelled by pressures and expectations by several entities within their stakeholder framework to ensure they are environmentally sustainable.  The communities, the government, and the legal framework further are on the lookout to ensure that these companies are compliant with the current expectations they bestow upon them regarding the environmental protection and conservation. Therefore, there is tendance of these companies to react to the expectations and pressure, and this is the basis of the analysis. The paper will, therefore, analyze the extent to which the expectations drive their conservation efforts and the reporting in their annual director’s reports. It is obvious that in the process of profit venturing, there is an obvious pitfall to the ecosystem; that is why it would be frank to suggest that disclosure would not be in the self-interest of the company.  The accountability in the reporting is solely towards the interest of the community served and surrounded by the organizations.  It is therefore proper to examine the relationship between the company interests, their inbuilt capacity to conform to environmental protection and the strategies in the environmental disclosures (BurgwalI & Vieira, 2014).

The above reasons prove the importance of the social accounting and why it would be a starting point for a greater reveal within the field of accounting and reporting. It will help the society relate with the actual responsibility that the companies have towards them and stop the whole corporate propaganda.  It will expose the extent of care the company has towards their employees, the community, the environment and the last respect to the human life. They will, therefore, be forced to act in their best behavior, make honest efforts towards sustainability. Eventually, there will be a power shift, and it will no longer be the corporations running the world, but the knowledge will give the society back the control of their living space and their sources of livelihood. Capitalism will be the control of the public say and not deliver the utopia projected in the present world situation.

 

1.3        Purpose of the Research

The goals of environment reporting stipulated by the IFRS and the legal contexts of countries are to increase the case for sustainability in the wake of environmental concerns raised over companies. The standards that were behind the reporting required direct and indirect recognition, disclosure and measurement of environmental liabilities, assets, and expenses. When the reporting took effect since the 1960s’ there wasn’t much analysis of the reporting for the direct relationship between the reporting the responsibility that the companies had in the practical context (BurgwalI & Vieira, 2014). Several kinds of research before into the topic have been instrumental in introducing the reasons for the law, the relationship between voluntary reporting and compliance and the effect of the financial size of the firms to the level of disclosures. A gap exists within the information structure, and therefore this research covers the topic.   The study is therefore in place to bring forth the relationship between these two parameters.

The study should support the validity of inferences developed based on the evidence from annual disclosures from organizations from different industries and their real relation to the physical environment. The study will analyze any material regarded as a disclosure in the annual reports of these companies. Furthermore, the study will code the declaration as either rehabilitation or a responsible stride by companies, in regards to the level of expressed dominance in the financial, management and social realms of the company.

1.4        Research Questions:

RQ1 Concerning annual report disclosures relating to environmental exposures, how do Australian service Industry, in control of remediation sites, perceive the institutional expectations exerted by institutional constituents?

Hypothesis Variable:  institutional expectations

RQ2    In responding to institutional expectations, do Australian service industries have the capacity to conform to their perceived institutional expectations and requirements?

Hypothesis Variable: institutional environmental capacity

RQ3    In responding to institutional pressures, do Australian service industries have the interest to conform to their perceived institutional expectations and requirements?

Hypothesis Variable: institutional environmental interests

RQ4 Concerning annual report environmental disclosures, what is the strategy that Australian service industries seem to adopt in their reporting decisions?

Hypothesis Variable: environmental disclosures strategy

RQ5 what are the actions taken by the Australian companies in response to the environmental expectations and pressures?

Hypothesis variable: environmental actions.

1.5        Research Methodology

The research method taken for this study is context analysis. Annual reports from twenty-five companies in different sectors within Australia will get used for the review. The seventy-five reports would feature environmental disclosures for the years 2014, 2015, 2016. Based on the reports, a comparison would occur on their practical approach towards environmental conservation. All this would be to find a significant relationship between the reporting of these companies and their real work towards conservation.

1.6        Outline of the Research

The purpose of this study is to establish if there is a significant relationship between company environmental reporting and their functional responsibility in the field of environmental conservation. The structure used in arranging the dissertation is as follows. Chapter 2 discusses the literature regarding the implementation of environmental reporting, and the responsibilities that companies have towards conservation of the environment. It also identifies the gasp within the field of research, the research questions, the hypothesis and the theoretical framework that will be the basis of the analysis.  Chapter 3 represents the methodologies used following the hypotheses present in chapter 2.  The findings of the research get described in section 4 followed by the conclusions in chapter 5.

1.7        Summary

The first chapter introduced the topic of environmental requirements for companies within Australia according to the voluntary legal obligation and according to the world standards introduced by IFRS and the ISO 140001. Stakeholders have become reliant on the director’s reports for information they base their decisions. The increased demand for accountability and transparency in the wake of environmental degradation by companies has resulted in more scrutiny with the activities of the company. Therefore, to maintain an image of good practice before the stakeholders and the public, companies have had an obligation to release the information.  The information has previously been used only in the analysis of depth and left out a vital point that is the basis of the research. Therefore, the research aims at investigating the relationship that exists between the environmental reporting and the practical responsibility that the company takes towards the conservation efforts. The guiding research questions in the investigation are analyzed the remaining sections of the chapter.

 

 

2         Literature Review

2.1        Introduction

Companies originating from different realms of the service sector provide annual reports defining their position on the disclosure requirement. The study looks forward to proposing a means of evaluating the relevance of the information they provide, by analyzing the similarity of these disclosures and the actual occurrence in the environment (Foerster, 2016). The study will focus on developing a coding instrument that evaluates the value of information provided in the annual reports. In particular, specified literature has been produced addressing the concept of implementing environmental disclosure in the Australian commercial industry. Although research has equated Australia as a growing country in regards to the application of the requirement, much research has supported the assimilation of disclosure reports as ambiguous as presented by many corporations in the industry.

2.2        Previous Studies in the Field

The first studies on Australian environmental disclosures were by Cho and Roberts(2008) and Guthrie and Abeysekera (2006) where they examined the documentation of company disclosures related to social responsibility. A narrower study was however carried out by Degan and Rankin focussing on the companies that had had prosecutions with the by the Environmental Protection Authority (EPA). The information provided information on the incentives for the disclosures and the benefits of the revelations to the community and the investors.

The study by Granada University outlays an exciting outlook on the complicated relationship between environmental performance and environmental disclosure by twenty-five companies in Australia (Barakat, (2016). Through quantitative and qualitative approaches the study conveys an incomplete connection between what gets provided as the environmental disclosure and what’s happening in the environment. The study argues that the level of environmental impacts that these companies have does not relate to the actual level of disclosure provided annually. The study supports that most corporations disclose information selectively to suit their base of shareholder demand for information as well as their costs in management. The report identified that most companies provide a relevantly low value of disclosure as compared to the actual data that they should contribute to the public. Significantly the company size and the capital ability of companies affect the length and value of disclosure (Barakat, 2016). Highly polluting firms were identified to vary a tremendous amount of revelation in the sense of attaining financial cuts and reducing the length of tax benefits subjected to them.

In this research, environmental disclosures are perceived as limited since most companies may evaluate the targeted costs to be higher than the standard benefits that they acquire. To a further length, the study divided the factors that influence environmental disclosure into four categories; basing the argument on the level of performance of a company and the level of exposure portrayed. The analysis found that a high level of disclosure got attained from Green companies (excellent performance and high disclosure) and green-washing enterprises (poor performance and high exposure) (Barakat, 2016). These companies provide an upper length of disclosure due to high demand for disclosure in the financial market. Similarly, consumers have exhibited a high need for social responsibility in the different period of demand for the product. On the other hand, Silent Con-companies (poor performance and low disclosure) and silent Achiever firms (good performance and small exposure), expressed a low level of environmental declaration due to the low level of stakeholder demand for information.

The study presents the Stakeholder theory as an acute presentation of why most Australian companies disclose information selectively. Not only does the report provide a basis for evidence in the implementation of the environmental requirement, but goes forward to show how Australian corporations have taken the implications of the element. As far as ecological disclosure is concerned, Anita Foerster assumes a new angel in evaluating the environmental effects of firms about carbon risk (Foerster, 2016). The author conveys a significant level of research on the use of renewable and diverse technologies, and its implications for Australian companies especially those that reside in the Industry. Most businesses that emit gases in the country are expected to outline the exposure to material industry risk (Foerster, 2016). However, regardless of some emissions as the changes instigated, research showed that energy firms do not report these threats, which puts them in a viable position for potential financial risk.

On the other hand, the report analyses how companies in the U.S have failed to adhere to climate change policies that expect clear reports on carbon risk disclosure (Foerster, 2016). Organizations have been unable to disclose the financial impacts of the exposure to their investors, creating an economic risk that may emerge in the future. The author presents a well-authenticated argument that carbon risk disclosure may have positive impacts on the financial nature of these companies and to the environment as a whole (Foerster, 2016). As can be expected, most businesses are against change however the assimilation of full environmental disclosure could have positive impacts on the business and the Australian environment as a whole.

Environmental disclosure has been proven to make companies more responsible for ecological issues. Companies that disclose information regarding all their environmental implications and practices have been shown to lean towards the improvement of the environment. Karim and Rutledge did a study showed that ones the disclosure law got passed companies began changing their practices to make them environmental friendly (In Karim & In Rutledge, 2004). Many companies have been on an incentive to reduce the emission they produce which are hazardous to the environment. The following research questions will ask at the time of researching to collect and analyze the data to form an opinion.

Studies by Lu (2008) brought forth resounding evidence of a relationship between good environmental habits and the corporate environmental disclosure. Therefore good performers are more honest with their disclosures and the same follows for the moderate and poor environmental performers. The weakest performers were found to hide a great deal of information that came in from the management discussion and analysis section of the director’s report. The role of the accountants over the years however improved and they are getting more open in the release of information regarding environmental management, the environmental movement, and remedial liabilities (Agency, 2016).  Further, the decision makers of the companies, specifically the shareholders increased their interest in the matter as it was a vital point within the whole decision-making framework.

An analysis of the companies prosecuted by the EPS in Australia from 2004 through 2006 in the states of NSW and Victoria exposed significant information regarding the truths of the reporting and the real practical work done by the company Jones & Slack, 2010. The study used relative samples of the annual reports of the prosecuted companies and compared them to two other groups of reports; one from the companies reports in the previous years which they did not get indicted and two for those companies within the same year where they did not get prosecuted (Lehman & Yusoff, 2006). Matching was done compared to the financial size of the companies and the equivalent fiscal years. From the stud, it is evident that during the years that these firms got prosecuted, there is a tendency to release more positive information compared the annuals reports they got matched.  There is an increase in disclosure in the data published in the year of prosecution than in the previous years.

2.3        GRI Guidelines of Environmental reporting

Global reporting initiative (GRI) was set up to control the whole reporting procedure and to provide the guidelines directing the strategies. It is of many forms, but it has a stipulated category for the environmental reporting that deals conclusively with how it should take place. The environmental and sustainability concerns according to GRI are the impacts of organizations on the non-living and living systems within the environment such as air, water, and ecosystems.  The aspects dealt with under the GRI regulations include organization inputs and outputs. Materials that a company should report are the ones used in the production or packaging process including the renewable and the non-renewable ones. They should state in the total amount used in the production and the ones recycled and used back in the production and packaging process (BurgwalI & Vieira, 2014).  The second aspect that requires reporting is the energy consumption.  The fuel types (non-renewable) and their consumption, renewable fuels consumption, electricity, heating, cooling and steam use, power, heating, cooling and team sold, totals of energy consumed should include all feature within the environmental report.  In the energy aspects, sources of standards for conversions and the assumptions used in conversions should feature in the statement.  The energy report also includes a conclusive report on the energy rations, reductions in consumption over a period and the type of energy reductions and the energy requirements for each product sold. Water aspects report covers a report of water withdrawn from several sources (surface, ground rain, wastewater and municipal water supply). It should comprise the effect of removing water from the sources indicating the size of the source, importance of the source to the nearby community and biodiversity value of the water source.  If the company is involved in recycling of water, they require mentioning the total volumes and percentage of the recycled and that with is let out.

The other factor under the GRI guidelines is the biodiversity.  The property owned by an organization that is near to the biodiversity protected areas should get a mention, specifying the operations, location, and the characteristic of the biodiversity within site. The report should also describe the impact of the activities of the company within site including the construction, introduction of new animals, reduction of species,  and the effects that the events have directly and indirectly to the habitat (BurgwalI & Vieira, 2014). Emissions produced by the company covers a crucial parameter for the organization. The topic should include the greenhouse gases as well as those that deplete the O-zone.  There are several scopes denied in the emissions. Scope 1 covers the direct emissions of GHG gases, scope two the indirect energy emissions and scope three the other indirect emissions. The GRI guidelines require reporting on scope 1 and two while the third one is optional. The gases covered in scope 1 are CH4, N2O, CO2, PFCs, HFCs SF6 and NF3 (BurgwalI & Vieira, 2014). The scope tow should cover the excreted carbon dioxide from the energy systems of the company. In a bid to prove the progress of the company in their emissions, the reductions and by percentage should feature.

The waste and effluents of the company are part of the environmental reporting.  Water discharges by the company and the destinations, treatment or reuse should appear in the report. The report should also contain the disposal methods such as reuse, recycling, composting, deep well disposal, incineration, landfill or recovery. Spill made by the company such as oil spills, waste, fuel, and chemical spills are essential in the environmental reports. It should contain the effect that the waste has towards the biodiversity (BurgwalI & Vieira, 2014).  The products and services sold by the company have a significant impact on the environment. Therefore the company should report the effects of their products to the environment and the products that they have reclaimed. Other aspects that should also feature in the reports are the transportation and the compliance with the environmental regulations of the land.

The information on the GRI guidelines provides a basis of the analysis in the research. Companies contrast with the way that they do their financial reporting. It is the contrasting opinion to the GRI guidelines by companies opposed to the depth of the reporting.  not However, with a standard such as the GRI, which is conventional to all companies would provide a good basis for the analysis of the company reports. (BurgwalI & Vieira, 2014) Therefore compliance would be measured by the extent to which the GRI regulations are followed.

2.4        Environmental Performance Indicators

These are the indicators that define the efforts the organizations make towards improving the environment around it. It is the basis of environmental reporting and establishes the relationship between the organization and the environment. They include;

2.4.1       Indicators related to the management

These are factors within the organization that promote the environmental management system. While there are several defined financial functions of organizations, some activities are carried out within the organization mainly to improve the public relations and stay on the safe side on the legal and the moral constraints(Mitchell, Percy & McKinlay, 2004). Therefore the environmental management system is involved in the creation of activities, and ventures that increase the efficiency of the operations carried out by the company to reduce the impact they have towards the environment. Technology is also a factor that increases the working rationale and decreases on the wastes released to the atmosphere. Therefore an increase in the uses of technology by the management shows significant strides towards environmental consciousness.  Environmental accounting in the form of reporting within the director’s yearly reporting also is an indicator of steps taken by the management to increase environment management activities (Mitchell, Percy & McKinlay, 2004). Reporting induces efforts in the reduction of wastes, effluents, emissions and conservation of biodiversity in the attempt to paint the image of the management in good faith. Constant and two-way communication between the organization and the society indicates a good relationship between it and the environment. The connection aims at reassuring the community of the efforts taken by the company towards environment conservation, and it also encourages the community to take a front row role in the monitoring if the company activities.

2.4.2       Indicators of Business operations

Companies are involved in the processing of raw materials and production of goods and services as the products. The sources of the raw materials used in the production are the environment such as; water, minerals, forests, energy, fossil fuels, and other substances poured into the business. The extraction of these materials from the environment results in an imbalance in the ecosystem in the form of land degradation and depletion of the resources.  Therefore the extent to which a company uses the natural resources within their production process is an indicator of their position in environmental conservation. Some companies also take right steps into reclamation of the destroyed lands and in the regeneration of the renewable resources; in this case, it gives them better performance in environmental conservation. During and at the end of the production process, there are by [products such as effluents, wastes, and emissions released back into the ecosystem.  They are a cause of a burden to the environment causing air, water, and land pollution. Therefore, the level of wastes coming from a company and the methods used for the disposal of these by-products determines the performance of the company in environmental aspects.

The behavior adopted by organizations in the purchase of products that are environmentally friendly increases their environmental performance.  These products reduce the burden exposed back to the environment. On the other hand, purchases of products that increase the environmental load is an indicator of a poor performing company. The gauge gets mostly used in the organizations that are not directly involved in production but offer services; they include banking industry, healthcare industry, and the education industry. Therefore, in the analyses of such kinds of business, as in the case of this research, the indirect burdens to the environment such as in the case of the purchases and products they use, is assessed.  In the same note, products released by production companies that increase the burden towards the environment show poor performance of the company.  The difficulty caused by the product manifests itself in the form of degradation caused by its use and disposal. Overall, the indicators of the environmental performance associated with the products and services analyze the whole process of production, utilization, distribution and the disposal of the product. The two parameters form the direct and the indirect relationship between the products and the environment.

2.4.3           Transportation

Factors of transportation posing a burden to the environment are the emissions causing air pollution due to the burning of the fuel for energy.  There is also noise pollution caused by the vehicles or means of transportation such as trains and ships.  In the evaluation of the activities of an organization, therefore, there is consideration of the means of transport used for the ferrying of their products from the extraction points and to the suppliers and the waste to the point of disposal. Moreover, in organizations that are not involved in the production process, the transportation used in getting the services to the consumer is analyzed for environmental performance.

2.4.4           Stock pollution

Stock pollution is the accumulated pollution over the years and would, therefore, pass over to the next generation. It is an important indicator especially in the wake of the new statistics on global warming around the world. Stock pollution exhibits itself in the poor handling of waste products by a company, but because the effects of the menace are not felt effectively, it carries forward to a later date when the accumulation is enough to cause a hazard. It happened within the soil with release of effluents and contaminated water, it also happens to the underground water with sipping of chemicals in effluent and wastewater and is also seen as the cause of global warming as a result of emission of greenhouse gases that accumulate over the years, destroy the Ozone and cause temperature inversion in the planet. Therefore when analyzing the environmental performance of an organization, it is a vital parameter to measure.

2.4.5       Land Alteration

There is a large part of the ecosystem supported by the land. Activities of companies such as construction, mining, waste disposal in the form of landfills destroy the habitat of the ecosystem. Therefore in the analysis of the environmental performance of a company about land, a review of the nearby areas, the location for construction and other activities are necessary to reveal the extent of the impact caused to the biodiversity. Events such as mining destroy the land, take off the topsoil leaving it derelict and exposed to agents of soil erosion. These are the organization’s activities that determine their environmental performance.

2.5        Theories in Environmental Reporting

2.5.1       Legitimacy theory and Agenda Setting Theory

Legitimacy theory has been used before in recent Australian research to explain the extent to which companies release environmental information’s and how much they take seriously the responsibility they have towards the environment. The results show that the reasons for the legitimacy practices are for the social values of the community within which the organization exists.  Therefore environmental reporting is viewed to be more of social legitimacy to justify its existence.  The layman description would be that “firms disclose information to the community to prove why they should operate within that specific society.” The legitimacy theory, therefore, suggests the creation of a social contract between the company and the people who are directly or indirectly affected by seven the operations (Barbu, Dumontier, Feleagă & Feleagă, 2014).  The legislation and international environmental standards directly or indirectly confirm the terms of the agreements; the companies, therefore, have to abide by these standards. In the event of breaches, the contract is supposed to get revoked.  The revocation process takes many forms such as lawsuits, boycotts such as the elimination of labor supply or market and fines by the people’s governments.

In a further Analysis regarding the use of the financial information, researchers have identified two groups to be the beneficiaries of the data. They are the stakeholders and the individuals within the organization who seek environmental information to aid in later decision making within the organizations. The annual reports, therefore, got identified as the sole source of the interaction between the company and the external environment. The groups outside the organization such as the stockbrokers and analysts, however, downplayed the importance of the information.

2.5.2       Stakeholder Theory

Freeman (1984) proposed the stakeholder theory that analyses the interests of the stakeholder of an organization.  Freeman defines a stakeholder and the groups or individual internal and external of the organizations that are influenced or can influence the organization. He also suggests as integration thesis for stakeholders which is the idea of integration of the business with ethics for successful running. Over the years, the definition of the word stakeholder got expanded to those who have an ownership claim or a claim in the form of rights, or legal and moral interests to the organization. According to Clarkson (1995), there is a further division of the stakeholders to the secondary and primary ones. The primary stakeholders have a direct influence on the activities of the organization, and they are essential for its survival. The secondary shareholders, on the other hand, are the people influencing or get influenced by the firm, but their input is not essential to the survival of the company. However, the opinions of the secondary stakeholder possess a significant implication for the company.  The stakeholder theory, therefore, conceptualizes the balance of the shareholders in the efforts to retain their positive impact on the organization. Thus the company should consider the stakeholders within their decision making. The process of managing stakeholders involves acts of continued communication, contraction, motivation and negotiation. Another factor that keeps the stakeholders interested in the company is the acts of social responsibility, environmental protection, and sustainability. These activities improve the image of the company and thus keep the stakeholder interested.

2.5.3       Signaling Theory

Signaling is a form of transfer of information between the sender and the receiver (two parties or more.  The signaling theory is significant in the study of environmental reporting to explain the phenomenon where two parties possess a different kind of information yet they are in a direct communication line.  There is a reduction in the symmetry between the two parties especially because most people rely on public sources of information which is in most cases not accessible to all. Therefore in the case where the reporting is efficient, there is an increase in the access of private information for the public, and there it increases transparency and the transaction costs involved in the access of data from private sources. The access allows the stakeholders in the process of decision making.  The signaling theory further proposes the notion that good news gets easily transferred or disclosed as they are an indicator of good performance.  Therefore, the disclosure level of any organization in the environmental reports increases when they have achieved more significant strides. Taking Active strides towards environmental efficiency increase the level of environmental reporting of an organization.

2.6        Theoretical Arguments for Disclosing Financial Information

2.6.1       Accountability

It gets defined as the right to supply information and the duty to supply it.  It is an essential two-way relationship between two parties where one provides the news, and the other one supplies it. It is the primary pillars behind the idea of social responsibility between business stakeholders and the business itself.  Accountability is supposed to create a closer relationship and increase transparency (Jones & Slack, 2010). Environmental issues, therefore, require disclosure to achieve these goals; it opens up to the extent of corporate consciousness and exposes the company on a moral discourse. Consequently, this study would provide insight into the relationship between accountability and the improvement of the honest conversation in the environmental context.

2.6.2       Stakeholder Theory

The stakeholder theory affirms that operations within corporations require support from the stakeholders who base their decisions on the activities that make the company gain approval. The approval comes up in the today world through adaptation to fit into the market structure.  Social disclosure is, therefore, a strong point to convince the stakeholders. Stakeholders, therefore, have a right to information regarding the company which in this case includes the environmental report. The stakeholders can control the assets of the company including the labor, financial assets, and media (Jones & Slack, 2010). Their control over the resources places them at a position that would require constant updates and information. According to the stakeholder theory, therefore the company is obliged to provide environmental reporting even on a voluntary basis.

2.6.3       Environmental sensitivity

When a company is more environmentally sensitive, there is much interest in its environmental information. Companies that operate on a high environmental impact such as the mining industries, there is more pressure on their disclosure than the rest of the companies. Halme and Huse (1997) found that the most influencing factor in the declaration of environmental information the type of industry; they went further to divide the industries within Malaysia and Australia into environmentally sensitive and the environmental non-sensitive.

2.6.4       Financial Performance

From previous research, there are mixed feelings regarding the relationship between the two variables: financial performance and environmental disclosures.  Alnajar found a significant positive correlation between the two parameters and thus came to a conclusion that the bigger the company, the more likely they are to disclose environmental information and the vice versa also applies.

2.6.5       Environmental Certification,

The Environmental Management Standards, founds within the ISO 14001 criteria represents internationally accepted principles for a definition of best practices by companies and energy management systems. The standards aim at improving the performance of businesses and their impact on the market. Therefore it requires that business organizations develop their policies, mission, and procedures and monitor the effects of their activities on the environment. For ISO 14001 accredited companies, it is a voluntary measure to expose their environmental compliance without the litigation from the stringent action.  A study by Cobert et al. (2003) proved that the factors that motivate compliance to the ISO 14001 certified companies to their disclosures are the creation of a better corporate image, better viewpoint from authorities, better community relations, and an increase in the opportunities for trade in the market.

2.7         Determinants of Social Environmental reporting

Several factors increase the likelihood of the company engaged in the voluntary environmental reporting. Studies by Rudriger Han introduced the main elements that are the determinants of the reporting (2013). The analysis used for the components was based on reports of 108 Australian companies and analyzed the extent of the reporting in various companies within the market.  Other factors considered in the research included the quality of the information released in the reports and was compared to characteristics of the firms to bring forth a comparison. According to Rudriger (2013), the following were the major internal factors behind the reporting of a company;

2.7.1       Financial performance and size of the company

The total volume of a firm gets measured according to the assets owned by the company, some employees within, turnover regarding revenue and profits and the total capitalization within the market.  There is a significant pattern established with bigger companies according to the latter definition of the company size. The bigger the company, the better visibility within the market, and the more significant the impact it, therefore, has to the society and thus would also face more substantial influence and scrutiny of its activities.  The reverse is true for smaller companies, and they are further described to have higher marginal costs if they are involved in the disclosure. Companies with a more significant financial turn over can deal with the top, minimal costs associated with exposure and therefore can also deal with the consequences that result from the disclosure of possible damaging information (BurgwalI & Vieira, 2014). Other factors examined in the research such as indebt=ness, gearing or leverage prove that they reduced the likelihood of the company involved in environmental disclosures because they placed the company at a disadvantage of handling the marginal costs associated with it. However,  while the idea of reporting as a way of legitimizing the company activities towards the stakeholders and shareholders seems to be an incentive towards reporting for the bigger companies, empirical research prove the notion otherwise.

There are also four other factors that are characteristic to the size of the firm that are determinants of the level of reporting of a company. One is the size of the market-to-book-value of a company.  While it could imply the increased asymmetry between the investors and the company regarding the growth and the current assets which reduced capital costs, it is also a positive determinant to the level of reporting.  The other factor is the high capital intensity that is used to create a positive relationship with the with sustainability reporting. When a company is involved in high intensive investment into newer methods of production, new technology, and more current assets, there is an assumption that these actions get aimed at improving the environmental impact they create in their activities as related with pollution. There are however mixed results towards the support or denial of the ideology.  However, most of the scholarly articles towards this field show an inclination to the positive relationship.

Financial activities within the capital markets as the third factor associated with the Social and environmental performance reporting.  Companies looking to raise their capital would result to methods of improving their reporting in the bid to woe investors. They further lower their capital Costs.  The two factors are ironically intermingled but result in a positive relationship with SER and thus make the company better placed to handle the annual environmental reporting.  The last of the four factors is the systematic risk related to the volatility of the stock or beta prices.  When a company has a higher systematic risk, it means that it has an unstable performance within the economic platform and thus reduces the company’s capability to handle the marginal costs associated with the reporting.  Consequently, there is a negative relationship with the reporting.

2.7.2       Social and Environmental Performance

 

The performance of the company in their environmental and social efforts determines the level of reporting.  The fines measure the activities it gets due to the transgressions towards the environment, the pollution discharge information, and the sustainability index. Companies with a good performance on these scales would feel more confident in their reporting and would thus use it as a method to woe shareholders.  On the other hand, the companies having a poor performance would also face the exact pressure from their shareholders and stakeholders regarding their environmental performance. In the bid to create reassurance on their threat of legitimacy, they will try to improve their engagements in the Social, environmental performance reporting. Studies prove a positive relationship between good performance and the extent of reporting and the frequency of reporting. The age of the assets within the company is a factor to be considered in relations to the sustainability performance.  The older the assets the company has, the weaker it will be involved in releasing the sustainability reports.

2.7.3       Ownership Structure

Companies listed within the public stock market show a great interest in disclosure since they have more pressure to comply with the legal framework and regulations, cope with shareholder pressure and adopt good competition within the market.  The research further proves that the extent and quality of sustainability information they release are more compared to the privately owned companies.  Government-owned companies, on the other hand, are also interested in the reporting given that they are at the center of scrutiny and are subject to stringent regulations as they are the market leaders. In a company where the shareholders own the little percentage of the whole company, there is less information in the reporting using the assumption that the relevant owners of the companies already have the relevant information. Foreign investors within the market also have difficulties with obtaining information from other sources apart from those of the company. Therefore a company having foreign investors tend to release more information in their environmental reports to keep the investors in check with what is going on.

The other determinants of the environmental reporting are the external determinants. They include the following.

2.7.4           Corporate Visibility

Corporate visibility is defined in several scholarly articles as the trait of the company as seen by the media exposure, aspects related to the brand and the position of the company within the supply chain.  Media exposure for example; measured by the articles the company appears in the newspaper and the number of viewership hours it receives, eventually determines the amount of corporate disclosure that they would engage.  Therefore, for a company gaining much visibility within all those platforms mentioned above will increase the depth of the information within their financial reports in the hope of preventing any reputational risks that may arise that would get exploited by the media, competitors and other players within the supply chain. Another factor that determines the corporate visibility is the interactions with the consumers; directly or indirectly. A more direct approach to customer interaction increases the corporate visibility and therefore requires that the company becomes more in-depth in their disclosures. Moreover, when the brand of the company is favorite; like in the case where the brand name is the same as the company name, visibility is imminent and thus requires better environmental reporting.

2.7.5       Legal requirements within The country of origin and the sector of affiliation

Companies operate in different areas of the economy. It is a proven characteristic that for companies that work within a social and environmental framework that would require more sustainability reporting will increase the depth and quality of their social and environmental performance reports. Companies within a sector that gets associated with environmental degradation effects such as the manufacturing and the mining industry will get faced with more pressure to prove the legitimacy of their waste disposal and community responsibility through SERs. The volume of reporting is also dependent on the country of origin, which defines it in the regulations that should get followed in the cases of the reporting. For example countries like Sweden, Norway, Denmark, and Australia require that the environmental reporting should focus on the environmental impact itself while others such as Britain and France need the reporting to take more of a sustainability approach.

2.8        Criteria for Measuring the Environmental report

2.8.1       Credibility

The credibility of the environmental report refers to the expertise used in writing and the level of trustworthiness attached to it.  Accuracy is important, and that is the strong point that investors and stakeholders look for; they also require that the reporting should take a fair and truthful approach.  Therefore when the company produces a report that would satisfy the social and the stakeholders to be an accurate account of the environmental events associated with the company, then the statement would add value to the company. Credibility is tested using external auditors who are accredited with professional competence and to be independent of the company. The GRI guidelines for global reporting have a clause for the assurance provision within the reports.  The assurance gets ensured through third parties.

2.8.2       Completeness

Auditing defines the integrity of a report to contain all the records of the events and the materials within the reports. Therefore all environmental information should get releases regardless of it getting considered not as relevant to the firm. It is a significant aspect that allows for inclusivity of every stakeholder into the reporting by providing information beneficial to them even if it is not of benefit to the company (BurgwalI & Vieira, 2014). GRI guidelines require for completeness of the reporting indicating the definition of the completeness as the inclusion of all relevant information or materials regarding the environmental, economic and social activities of the firm to enable the stakeholders of the company to have enough at hand in the analysis of the performance of the firm.

2.8.3       Transparency

Transparency is the capability of the firm to release information specific to t it to the outside public.  It consists of timeless, relevance and reliability characteristics. There are constant pressures and expectation from the external parties of the organization such as stakeholders, investors, employees, and consumers to get the information.  The transparency in the release of the data is the method of improving the trust between the company and these stakeholders. SER information enhances the relationship with investors and the society within which the company operates. Constant communication builds confidence; the best communication tool for an organization is the annual reporting, it, therefore, builds confidence and assurance to the public because it reveals that the company is acting in accordance to the legal and moral environmental obligations.

These three factors determine the impact of the sustainability reports. There are also some factors that affect the quality of the environmental reports. One is the volume; it gets achieved by the release of all significant information on all issues regarding the environmental impacts. Amounts are a measure of completeness of the report. Compliance with the GRI guidelines within the report adds substantial value to the overall report. The GRI guidelines are a convincing standard of reporting and thus when used effectively ensure that the report is complete, credible and accurate.  There are some mandatory and voluntary requirements within the GRI guidelines and therefore guide the company on the legal and most relevant requirements within their reports.  Using the GRI guidelines further proves the consciousness of the quality of the report and thus demonstrates the compliance with the legal and societal environmental and sustainability obligation. Assurance of the reporting using external parties assures the quality of the reporting.

 

 

2.9        Language Used in Environmental Disclosure

Research by Charles and Robin (2008) introduced a new perspective of analyzing the environmental disclosure and relating it to the real impact the companies make within the field. As communication is an essential tool in legitimizing a company, the primary information tools are therefore used to create a better impression of the company; this is according to the legitimization theory.  The environmental reporting is one of the best communication tools of the company and therefore it is tailored in a way that would describe the company in good faith. Business communication focuses on avoiding hedging and presenting things as the average eye sees them. The shaping of information in the reports is, therefore, more important than the depth of the content. In most companies within USA, Sweden, and Australia, there is the use of language bias in the presentation of the environmental information. For example, higher levels of optimism in the reporting and a lower degree of certainty in the expression signify the reduced level of environmental performance. It is a form of language bias that is used to fool the impression of the civil society. Moreover, the even poorer performers present more extensive information and tend towards bias in their social and political environment language.

Further research by Jones et al. (2010) introduced new ideas into the languages used within the environmental disclosure. The study proved the presence of increased use of targets in the environmental reports rather the achievements. In the research by Jones, 267 goals got found among the 100 firms studied. Moreover, the companies that have a direct impact on the environment especially those in mining and manufacturing are the ones most prevent with the use of targets at a high of 2.9 goals per company. The low impact companies had a target average of 2.4.  Within the specification of objectives, there are language uses that give undefined, untimed or less precise targets. In most of the companies, the periods of the specified goals do not get defined. For the high impact companies, however, the targets are more precise than with those of low impact companies. While companies determine the targets, they rarely expose those that have not already met within their environment reports. There is more insistence in what has occurred. High impact companies would, however, get better placed to releasing the missed targets. The above information coincides with the legitimacy theory which states that companies would like all means to signal their commitment and prove their legitimacy.

 

 

 

 

2.10     The State of Public Environmental reporting in Australia

The number of Public Environmental Reports is increasing over the years because of a great deal of attention redirected towards the environment and the role the companies play in its conservation. The Asia Pacific region has also shown an increase in the rates of corporate environmental reporting and is now the leading region in the world.  In Australia alone, the frequency or disclosure in the year 2017 was at 82 percent for the top 100 companies; it an increase of 25% from the year 2011. The other companies also follow suit, and the rate of disclosure for the whole country stands at 75% which is an increase of 111% from the year 2011.    The World Business Council for Sustainable development and the Environment Australia identified the benefits of the domestic application of GRI in Australia is common, and the Australian Council of Superannuation Investors defined it as the best reporting framework in the case of comparative analysis of information domestically and internationally. The benefits of environmental reporting get given as;

  1. Ability to benchmark performance
  2. Management and operations development
  3. Enhancing reputation
  4. Increasing capacity to recruit and retain staff
  5. Improved risk management
  6. Creation of Employment opportunities
  7. Creating new market opportunities
  8. Greater control of environment disclosure
  9. Satisfying a signatory or mandatory need
  10. Improving stakeholder’s confidence

Another new practice coming up within the Australian corporate sector is the integrated reporting.  It is the combination of the sustainability and the financial reporting into one document. Investors took note of the concerns raised over viability in the recent years and are therefore keen to monitor the sustainability index of the companies.  Companies with poor environmental performance are thus placing their stakeholders at risk, and consequently, proper screening is currently done by investors before creating an affiliation with the company or organization. United nation’s principle for Responsible Investment has already recruited 124 Australian Companies to become their signatories. More evidence is forthcoming to support the relationship between sustainability performance and the profitability (BurgwalI & Vieira, 2014). Therefore taking note of them, the investors have become aware and are no longer investing in financial performance but rather the environmental performance and disclosures.

2.11     Gaps within Literature

2.11.1    Governance and regulation

The concept of sustainability reporting facing a shift because management does not get widely discussed. There are however several conceptual frameworks that introduce the idea that since environmental reporting is a voluntary initiative, it would actualize corporate accountability (Hess, 2007). There are further hints to a low level of company governance in the world of Dibbinks et al. (2008). He attributes the low level, of self-governance results from insufficient information fed to the stakeholders and investors, lack of proper transparency in the reporting and that the sustainability reports are not standard and therefore are not comparable. Thus there is a call for the institution of a legal framework within the companies that would institute a sophisticated system in the sustainability reporting that is comparable to a system that uses mandatory reporting.  Much has however not been covered to show how this approach would effectively work in improving the level of disclosure.

Strategic disclosure is a phenomenon present in the company environmental reporting; yet is undesirable. Suggestions by Hess and Dunfee (2008) bring the idea of a mandatory reporting under the same GRI guidelines to reduce the effect of strategic reporting. Further, Levi at la (2010) is against the use of the GRI guidelines used in disclosure claiming that they are too generic and do not have a standard for measurements, therefore, would be useful to stakeholders to satisfy a comparison.  All these scholars question the nature of the reporting to help the civil society.  Their ideology is the introduction of a mandatory reporting system, or a framework close to compulsory and introduction of quantifiable measurements for each category of the disclosure to wipe out the smooth system that encourages deviancy and unscrupulous reporting.  Financial reporting over the years has taken the trend towards a mandatory reporting, and even though the environmental reporting is still in its baby steps, it should develop further at the pace of the financial reporting. Some instances have already appeared in South Africa where the stock market makes it a requirement for companies to provide their disclosure in a standard TLB report and case of omissions, explain them conclusively (BurgwalI & Vieira, 2014). The effectiveness of the system does not get well researched, and thus it provides a void for more study into the topic.

Another research gap existing in the field of internal corporate governance and reporting is the effect of the governance structures that the company possesses.   The governance systems include the committees in charge of the audit, sustainable management and non-executive directors who influence the disclosure.  The presence of these people within the system could potentially improve the pressure for better reporting and thus make the company more committed to environmental protection.  Research on their actual effect of these individuals within the whole reporting framework is debatable and brought different results for different scholars  (BurgwalI & Vieira, 2014).  There is room for more investigation on the matter.

3          Methodology

3.1        Introduction

To achieve the research objective and prove that environmental disclosure has indeed led to the improvement of environmental practices and reduction in emission of greenhouse gases. An empirical study will be used to research this area through content analysis. This study will analyze 75 annual reports of companies from five industry groups, all of which had Corporate Environmental Policy in place (Miller, 2015). Once obtained, the annual reports were analyzed using content analysis. Krippendorff (1980, p21) explains that content analysis is a research technique that gets used for making replicable and accurate deductions from data according to their context.

3.2        Content Analysis

Content analysis has proven to be a valuable tool when it comes to research, especially in organizations and companies. Content analysis as a research method also allows researchers to cover the different aspects of an organization. Content analysis is also a good research design as it acts as a bridge between the qualitative and quantitative review (Barcus, 1976). Content analysis has become a standard research method because it incorporates both qualitative analysis and quantitative analysis. The content analysis looks at all aspect of the topic under study since it involves systematic analysis. Not only does the method analyze the written text but it also evaluates graphics, documents and oral communications in some instances (Barcus, 1976).

According to a book written by Drisco and Maschi content analysis as research, the method incorporates all aspects of study which include the qualitative research methods and the qualitative methods (Drisko & Maschi, 2016). The book also explains the importance of content analysis, especially where large sample sizes are required. Some areas are difficult to analyze using the traditional research methods. This method accrues to the fact that fields such as social-cognitive fields cannot be exhaustively investigated using the conventional analysis methods (Drisko & Maschi, 2016; Barcus, 1976)). Content analysis also allows the researcher to analyze large samples within a shorter time frame. Analysis of large samples of data becomes simplified when the content analysis is applied it brings in the combination of quantitative and qualitative analysis thus simplifying the analysis process (Drisko & Maschi, 2016).

The University of Illinois has also produced a handbook on content analysis as a research analysis method. The content analysis gets depicted as a highly productive method linked to its combination of the traditional characteristics of qualitative and quantitative analysis methods (Work Conference on Content Analysis & Pool, 1979). This research method is rigorous and explorative thus allowing researchers to venture in diverse areas such as organizational theory, technological development, organizational cognition and business strategies (Work Conference on Content Analysis & Pool, 1979). Content analysis also gets shown as a method that quantifies the patterns used in communication to bring a broad understanding which is inclusive of theoretical materials and the practical part. Content analysis is used to systematically observe the texts or documents provided in an organization for the area under study. The books and artifacts under analysis are arranged into codes to simplify the process. The systems get organized into patterns which are not only meaningful but also according to the different areas of research for a straightforward comparison and determination of results.

The introduction of coding and computerization of research enables the researchers analyzing to statistically provide a correlation between the different areas under study to form a comprehensive report (Drisko & Maschi, 2016). The researcher has to label the different patterns identified and their statistical estimates as part of the coding system before entering the data into a computerized system for further analysis. Content analysis is intertwined with information technology as it is reliant on such programs to provide qualitative analysis of the data under observation (Drisko & Maschi, 2016).

As has been expounded in the book content analysis consists of several techniques and thus referred to as a family analysis method. The content analysis aims at studying characters that are unambiguous and characterized by simplified frequencies (Drisko & Maschi, 2016). Content analysis gets based on the fact that the understanding of content gets based on reviewing a word in line with the surrounding content (Drisko & Maschi, 2016). Through reviews of the message by analysis of surrounding content, the researcher can place the material under observation in its right context and thus avoid disparities. Analysis of data through this method allows for the precise understanding of words used even where synonyms introduced can be confusing about the meaning. The technique uses dictionary-based means to find out the right purpose and then compares the findings to the frequency in the distribution of words to prevent ambiguity (Drisko & Maschi, 2016).

Different computation tools are involved where this method of analysis is applied. According to the article written by Vaismoradi, Turunen, & Bondas, the most critical aspect of this method are the tools used for computation of data. The most common tools in this analysis are interviews, written documents, graphs and images among others (Vaismoradi, Turunen, & Bondas, 2013). The systematic review of textual data has recently gotten simplified through the introduction of computerized systems and programs. These computer-based programs are growing in popularity where content analysis is employed as they have been shown to cut the time taken for research by more than 30% (Vaismoradi, Turunen, & Bondas, 2013). The use of computerized systems has also helped in cutting overall costs as fewer individuals get required for the research operation.

An essential element of research design in content analysis is the selection and development of categories into which content units can get classified. Holsti, (1969 p -69) states that “…content analysis stands or falls by its categories”.  For this study, the content units get defined as a sentence in the annual report that was considered to be an environmental disclosure.  The definition of an environmental disclosure that was developed and provided to the coders is any sentence that discusses or mentions any aspect of the natural environment and its relationship with the organization (Nyide, 2013).

A coding instrument will develop, which classified each environmental disclosure as either rehabilitation related or other environment-related (Nyide, 2013).  The non-rehabilitation environment associated sentences will be then classified further into categories so that the relative dominance of each group can get compared to rehabilitation.  In the few studies specifically on the environment, many sub-categories have appeared, these got adapted for use in this study and additional categories added that got developed from the literature (de Aguiar & Bebbington, 2014).  In four places such as director’s statement; the financial statements, notes on financial transactions, analysis regarding the environment among other parts of the annual report will be investigated to find the environmental disclosure (de Aguiar & Bebbington, 2014).

Reliability is also an important aspect when it comes to choice of a study method. Research done through content analysis is both consistent and reliable. It accrues to the fact that not only qualitative methods get used, but quantitative methods are used too to make the study comprehensive (Vourvachis & Woodward, 2015). For the research to be reliable, the coding has to get done in a similar way which will enhance uniformity and reliability. For the inter-code and intra-code used to form credible system research has to be done on the methodology to come up with universally acceptable coding systems (Vourvachis & Woodward, 2015). This is an issue that has been found to be persistent in the content analysis as a research method. To deal with the problems caused by disparities in coding scholars in the field have come up with guidelines to govern this area. The creation of codes used in the content analysis was based on coders’ creativity. However, with the increased popularity of this method, there has been a need for a centralized coding system which has led to the development of guidelines for the area (Kimberly, 2002).

The content analysis method aims at capturing cognitive modes and logic in research which can hardly be obtained through other means (Kimberly, 2002). While other methods solely rely on data the content analysis conclusions are based on an evaluation of experiences in combination with value statements. Because this research method has been proven as reliable, we have applied it as the research method in our analysis.

3.3        Research Design

3.3.1       Epistemology – Positivism

Epistemology is a parameter used to question what is accepted as the general truth and what is the real truth within the same sphere. In qualitative research then it takes an interpretive turn, and the researcher seeks to understand the networks created between the paradigms under study. Within a quantitative approach, the researcher checks for the relationship established between the research topic and him/her.  There is the debate about the process used in the research and one question an initial philosophical approach determined at the beginning of the study. There are four epistemologies, positivism, realism, interpretivism and pragmatism. The research will take a positivist approach. Positivism as research paradigm checks through data concerning knowledge gained from human experience (Barcus, 1976). It, therefore, suggests the relationship between variables or events and could be determined or observed in a regular manner and deductions made with knowledge from the previous observation. The paradigm assumes that the researcher maintains little contact with any of the parameters in question. The research, in this case, will use annual reports from 25 companies from different fields. The observations on their environmental reporting will tackle the years 2015, 2016 and 2017 and through the continuous coverage, an understanding of the real relationship between expectations, interest, capacity and strategies in the environmental reporting discussed.

3.3.2       Quantitative research

Quantitative research uses the empirical examination of the research variables and presents the information in differential forms rather than descriptive.  The basis of the quantitative analysis is to create a statistics relationship between the models and thus discuss the hypotheses and relation of the study to theories. It is a common phenomenon with positivist study paradigm in the creation of a relationship between design parameters.  Quantitative methods are advantageous because of the use of statistical and computational formulae s, and thus least bias is expected in the results. Moreover, other quantitative methods are used to verify the trueness of the data and thus prove the viability of the information projected by the research (BurgwalI & Vieira, 2014).

3.3.3       Secondary data

After the quantitative analysis of the research, the secondary is comparatively used for the study of the information. Secondary data is information from previously researched evidence, and the primary sources are the annual reports, peer-reviewed articles, and journals.  It is advantageous over the primary data as it is less consuming on time as it only involves the analysis of already researched work. In the research, secondary data will be used in the form of the annual reports from the companies; comparative articles used to create a relationship and the items in magazines and media regarding the expectation bestowed to companies regarding their environmental conduct. The secondary data is usually better analyzed and uses better sets of data and thus is generally better placed to provide reliable information. It is however disadvantaged by the redundancy of information presented in the different articles and journals (Miller, 2015).

3.3.4       Quality of data – reliability, validity, and generalizability

Data for the analysis should be considered for the variety of the investigation.  There are set standards for determining the quality of data as discussed within the literature review they include the; generalizability of the data, reliability, and accuracy. Security of the data is defined with the extent to which a process would yield the same result when the process is repeated severally.  Reliability is determined by elements such as stability, inter-observer consistency. Consistency in the measurement over a period is the measure of the stability of the data.  With consistent data, an index can be built that would be comparable with other data pieces.  Similar Subjective judgment in the case of data translation or the observation is related to the concept of inter-observability. In the case where two different people view the same process at different times or same time and can observe the same set of results, then the process is termed as inter-observable.

The second criterion for measurement o0f the quality of data is valid. Validity refers to ‘the extent to which the data collection method or research method describes or measures what it is supposed to describe or measure’ (Lancaster, 2005, p.71).validity is divided into concurrent validity, face validity, predictive validity, and convergent validity and construct validity. Validity is tested through the creation of statistical relationships such as a correlation coefficient. The third criterion used to check the quality of data is the generalizability. Generalizability is the ability of the research findings to be applied to another research with different settings and produce the same results.  Generalizability improves by increasing the population size of the first research.  Some tests are present that could test for the generalizability of the test results. Such criteria include the Kolmogorov-Smirnov test or normality tests (Jones et al., 2010)).

3.3.5       Time Dimension- Longitudinal

Research design incorporates another aspect of the time dimension, and their classification is either longitudinal or cross-sectional. The cross-sectional time dimension is used to analyze different data variable over a single point in time. It enables comparison of different data sets for the same period. Longitudinal studies checks for the same variable within a different period. It, therefore, exposes differences displayed on the variable with time. It mainly describes the cause and effect relationship. Within the study in this research, it will use both cross-sectional and longitudinal studies. The cross-sectional study will cover the environmental reporting for the different companies within different sectors of the Australian market. The longitudinal design of the study includes the same environmental reporting for the years 2015, 2016 and 2017.

3.3.6       Measurement of Variables

The section determines how the different variables identified in the research questions would be quantified. The dependent variables for the study are the environmental disclosures and the environmental protection actions. The dependent variables for the study include the institutional environmental expectations, institutional capacity to engage in environmental exposure and protection and the organization interest towards environmental protection.

3.3.6.1      Dependent Variables

3.3.6.1.1         Environmental Disclosures

Research by Hossain Islam and Andrew (2006) introduced investigation that brought forth an index that measures the ecological disclosure of a company. The index consists of the factors that are supposed to contain within the environmental disclosure. According to the GRI regulations, the elements that should appear within the index are; compliance, transportation, products and services, wastes and effluents, emissions from the company, biodiversity, water, energy, and materials. The use of the GRI index is because no other defines standard within the Australian market would define the contents of the environmental report. Numerically, the amount of environmental disclosure by a company is not achievable based on the available standards. Hossain et al. proposed however weighted indexes approach of weighing the disclosure by the company. It was defined as the extent of environmental information released to the public compared the amount of data that they ought to have released to the public. In the weighted average, all the items that should be contained within the disclosure are given the same weight to reduce on the insistence on specific parameters which are not defined with a universal standard Hossain, Islam & Andrew, 2006).

3.3.6.1.2     Environmental protection actions

 

Environmental protection actions are measured using the defined performance indicators. They are the business tool that determines the metrics for measuring the presence of the actions taken by the business in the effort towards conservation of the environment.  Therefore using the KPIs, the company can define the procedure for the operations and try to work towards its implementation.  Several reasons make the use of key performance indicators very vital for the case of the business.  They help to reduce the lengthy environmental reporting at the end of the actions committed. Moreover, several regulations within the market require that the industry report the actions using key performance indicators. The research will use the longitudinal approach in the measurement of the activities carried out by the company as projected in the aspirations made in the reports for the previous years. The key performance indicators that will be used include emissions to water and air, emissions to land, use of resources, supply chains, products, and biodiversity. Also in the analysis, a keen eye will be on the environmental expenditures created by the company, and in the cases of companies facing fines due to the reporting’s, it will indicate poor performance.

 

3.3.6.2      Dependent Variables

3.3.6.2.1         Environmental expectations

Environmental expectations asserted to the firm come from the public, legal systems, and the government. The level of relations created between the expectations and the reporting will be analyzed for comparison. There is no defined definition for the aspirations of environmental performance for any company, primarily because there no standard prescribing the level of environmental consciousness that should exist within a firm. The companies under analysis are also from different sectors within the market, and therefore they do not have same metrics of the expectations that people have towards their performance in the market. In this research, therefore, the expectation analyzed will include greatly the aspirations that companies have set within their previous years hoping to achieve in the following financial year. Moreover, there is an increasing call for a reduction of specific environmental performance indicators within each firm; they include the gas emissions, wastewater, land disposals,  and effluents. Therefore the standard expectations are that there is a decrease in these emissions with every year (Lancaster, 2005, p.71). Those two are the expectations that will be used for the study of the dependent variable.

3.3.6.2.2     Institutional capacity to deal with disclosure

 

The capacity of the company is measured by their financial performance, especially on the corporate scale.  Therefore the best measure for the company capacity to deal with disclosure will be based on two methods; market-based measure and accounting based test.  The accounting measures are defined by the internal control and efficiency in the use of money within the company and externally through the amount of profit that the company registers.  Companies with better profit margins have been proven to be more indulged in environmental protection and social responsibility. They are also capable of dealing with the margins associated with the environmental reporting and disclosures. The market-based measure, on the other hand, measures the position of the market within the trading environment (Lancaster, 2005, p.71) Companies placed at the top of the supply chain are more visible and are associated with better financial performance. There is a tendance then towards proper environmental disclosure. The companies better placed to deal with the revelation are therefore those defined as with the capability.

3.3.6.2.3     Interest towards environmental protection

Interest showed by a company towards the implementation of environmental efforts is expressed within their environmental reports. Content analysis will be vital in the study of this variable to determine the primary texts that show the interest of the company. Issues such as projections towards the decrease of emissions, less energy use, and other factors are indicators of interest by the firm to be involved in the improvement of their environmental consciousness.

3.3.6.3      Control variables

The annual reports used for the data panel are those from the years 2015-2017. The observations require a longitudinal study, and therefore the selected framework is of three years with an analysis of the environmental reporting in all the companies for the specific year.  It stems from the indication within the market for pressure towards environmental reporting increasing over the years and the need for a comparative study of the performance. It is also vital to use several years of reporting to show if the plans and aspirations projected by a company in a particular year were fulfilled within the timeframe set. The country of origin for all the companies is same, Australia, and therefore the parameter defined for the location is identical for all the organizations used for the study.

The companies, however, are sourced from different industries within the market. It is a control variable, and since it is different for every company, then there is the distinct influence on each company regarding their actions. Various industries are attributed to varying amounts of disclosures. The pressure exerted by stakeholders towards the release of financial information is different between the companies. Companies of more prominent profiles and in industries that cause a more significant environmental impact are known to have better reporting that those within the service industry (Cobert et al., 2003).  The companies in the high incidence and risky environmental business are also very adoptive of the GRI guidelines in the way they make their reporting and therefore there is difference eventually in the analysis. The industry should be a string variable, and thus each study within the research would be done correctly to the industry. The sectors that feature within the reporting are the banking industry, mining industry, health, education, and energy.

The size of the firm is another essential control variable that is significant in determining the reporting. From the literature review, it became clear that more prominent firms are better placed to handle the costs associated with reporting, they are more visible and would face a more significant blow in the case of reputational damage, and they also can do more regarding corporate responsibility towards the environment. Therefore in the analysis of firms of their environmental reporting, the size of the firm is a significant control variable. The economics of scale found with larger firms produce a better standing for them to do more regarding the environment; that is the reason why they are the ones at the forefront of the environmental activism. Incentives received by these larger firms reduce the litigation costs that would come about as a result of more indulgence in the environment rather than the formal business venture (Cobert et al., 2003). In this research, therefore, a standard approach was used in the selection of the firms for the analysis to reduce the greater disparities. Top companies within the different industries were used for the study standardize the expected results.

3.4        Study Design

The study design that will be used will be context analysis. The nature of the research topic makes it quite challenging to use qualification methods in the research. The research will mostly rely on theoretical approach as a source of research data. We will look at the academic books, journal, and articles that talk about the topic of research both earlier and recent. The issue of environmental disclosure has slowly been receiving focus from different scholars. We shall look into the works of these scholars and analyze their research findings. The selection of study material for the preparation of the analysis will be based on the previous researcher in the field of environmental reporting from different countries. The contents will be analyzed to bring forth a relationship between the levels of reporting displayed by companies in their reports and the actual work done within the field. The pressure and expectations exerted by the companies will also be analyzed and deductions made concerning the effect of the influence on the behavior of the companies towards the adoption of the environmentally friendly practices. The articles and journal used for the study will source from environmental and accounting databases using the keywords; environmental reporting, Australia, ecological disclosures, sustainability report and analysis of environmental reporting.  We shall also analyze the annual reports from the 25 companies’ 75 yearly reports that shall be used for the review.

3.5        Study Population

The Study population will include all the corporate companies from which the annual reports were submitted for analysis. The annual reports will be downloaded from company’s publicly available information. The population will consist of the top companies in the industries of banking, energy, mining, health, and education. The companies share several common characteristics apart from then identifiable the fact that they are all from Australia. The companies are among the top ten within their industries and therefore have thrived over a while to sustain the environmental reporting. The trait enables them to avail their annual information within their websites. The companies further have been in the market for an extended period; not less than ten years and thus can provide information for three years to aid in longitudinal comparative studies. Moreover, they are all registered by the ASX, and they are under the environmental regulations defined for Commonwealth countries and the GRI regulations.  The population selection is varied to ensure that the sample size is fit to represent the whole market within Australia. In the effort to find comparativeness between the industries, companies existing in high environmental impact industries such as energy and mining are involved in the research. Also, companies within the low ecological impact areas of the economy such as the banking and educational sector are included in the study. The neutral industry in all aspects is the healthcare industry to cover for other neutral sectors within the country. Stratified sampling was used in the selection of the firms about their sizes. Choosing only large firms for the study was, however, a disadvantage since it would cover the aspects dealing with sizes. Selection of the years of the financial reports was however not stratified and was based on the fact that the reports for the recent years were easily accessible through the web sources. All the data will be reorganized to fit into to fulfill the research questions. The participating will choose from ASIC website and all the annual reports been disclosed to the public after having an independent financial audit by the public auditor which gives us assurance for data accuracy.

3.6        Privacy and Ethics

This research respects the confidentiality of the companies involved in the study and will not disclose any information that could harm the business. This study will be based on the publicly available information. The University of Newcastle decides that there will be no ethics approval required for this research. Microdata released about a company especially on a longitudinal form of study would cause conflicting obligations and rights regarding the disclosure of the subjects, producers and the government which has to provide a structure for the resolution of the conflicts. There are lesser ethical issues associated with the use of annual financial information because they are released voluntarily and are meant for the public domain.  The sources of the data are mainly in company portfolios with their permission to download the information. The materials used for the study are moreover in good faith and wouldn’t be used in any way against them.  One major ethical issue that would arise would be the active use of all the financial information if there were no beneficial results from the study (Cobert et al., 2003). However, since the survey is instrumental in bringing new perspectives and concepts into the view of environmental reporting, then it is useful in the long run and thus uses of the material for the study is justified.

3.7        Method of Data Collection

The research is analytical in all aspects. Therefore, we needed to use an interactive approach that will cover all relevant areas. We also need to ensure we at the same time develop a rational theoretical background to support the research findings. Content analysis was carried out for the information within the annual reports with the focus on the environmental reports. Aspects of interest within the financial section were to reveal the financial capability of the company to deal with environmental issues. Therefore metrics that determine the financial ability of the firm such as stock returns, basic earnings per share, return on assets and return on sales were used.   The environmental reporting was the primary focus of the content analyses. The data from each company was analyzed and checked against the GRI guideline to ensure that they were complete. The data was then recorded into excel tables for comparative purposes either longitudinally or comparatively. Further, efforts made by the company towards the improvement of their environmental performance were analyzed to show the expectations and interest they have regarding the topic. The language of the financial reporting is key as seen from the review of previous literature and qualitative analysis of the language used within the report was a control variable to determine the accuracy and credibility of the information (Cobert et al., 2003). While the information in the reports was accredited by the external auditors, a qualitative analysis was used to decipher the depth and quality of the reporting conducted by the company. Effectively, attitudes of the firm towards the environmental concerns were vivid. The following methods were used for each of the specific parameter studies within the research

3.7.1       Environmental reporting

 

Reference numbers were accorded to the different aspects of the GRI guidelines for environmental reporting. There are ten aspects of environmental reporting including; water, emission, transport, compliance, products and services, effluents and waste, biodiversity and materials. Therefore for every annual report, there had to be an inclusion of all the ten aspects of the release to be deemed complete. The number of elements contained within the report was therefore counted with a maximum of ten signifying a comprehensive description and a zero to mean lack of reporting.  The information was used to measure the quality and depth of the information within the reporting. Therefore a company that contained all; the aspects within its report was deemed to have an in-depth and good quality report. The one with below three of the elements in their report was deemed to have a poor quality and a shallow environmental report (United States, & United States., 2004)

3.7.2       Company capability for environmental reporting

The data used in the determination of the capacity of the company to cater to the environmental efforts budget was the measure used market-based and accounting based parameters.  The factors used were the net sales, net income, total revenue, dividends, EPS and total assets owned by the company.  The information was within the financial reporting, within the company website, and within databases for active companies within the world.  The values of the values of the above parameter were analysed to check if the company had the capability to handle the environmental reporting. A good standing with the market based and accounting based parameters showed that the company had the right size and the capability to handle activities within the realm of environmental protection (Burgwall & Vieira, 2014).

3.7.3       Company interest towards environmental awareness

Curiosity is a qualitative aspect within the annual report. Therefore qualitative methods of data collection came in handy in the analysis of the information. The language used in the reporting was analyzed qualitatively to reveal the company’s interest towards improving their financial consciousness. More information on the prospects and the steps the company would take towards the reduction of emissions, waste, and pollution showed interest. Moreover, a longitudinal study of the company to show progressive growth in the efforts towards improvement of the company’s waste production and more corporate social responsibility would indicate an increase in the overall interest of the company.   The variable of company interest answers the third question within the research.  With much expectations bestowed by the stakeholders and other external organizations, companies have to prove their credibility by showing interest (United States, & United States., 2004). It is therefore why we measure this interest to prove that the companies have shown that they would work towards being compliant.

3.7.4       Environmental Activities

The environmental activities carried by each organization within the research sample were identified either directly from the annual reports or other online sources such as RepRisk AG. Analysis based on the

3.8        Data Management

After determination of the reports, they will be included in the study. The collected data will then be coded, and entered into the computer and analyzed using excel. This software will describe the data using mean, frequencies and percentages and summarize the data presented using frequency tables, pie charts, and graphs. The data table will provide the summarized the qualitative data into the quantitative information.

3.9        Data Analysis

All data will be analyzed using data display and conclusion drawing. Comparative analysis of the longitudinal comparison of the companies within the three study years will take precedence. Thereafter, cross-sectional analysis of the firms within the same industries would follow to draw comparative relationships between the variables presented and against the five hypotheses. Subsequently, a cross-sectional study took place between the all the twenty-five companies to identify the links and the difference in the results based on the control parameters. After having conducted the reviewing, transcription, and organization of data will be considered the first stages of analysis. This data organization also has to be analyzed systematically to assist in the interpretation of data and drawing of conclusions. From the general examination, the factors such as expectations of the firms will be compared to chock for the general trend within the market. Since all the firms are all of the same sizes and visibility within the market, the capability of each firm to handle the environmental reporting is deemed to be enough(Agency, 2016). Therefore a comparative analysis was carried out to identify if there are any retractions from the norm presented.

3.10     Data Presentation

The methods used to present research data vary widely. The data presentation will be on graphs, tables and pie charts. The following steps will follow to complete investigations:

Firstly, there are various types of services industries in Australia.  This research will choose five different types of services industry group, named Banks, Hospitals, Education, Energy, and Mining companies. Secondly, from each industry group, five different publicly listed leading companies will choose like – from the Banking industry, this research will select Westpac, ANZ Bank, National Australian Bank, and BOQ . Same way 5 companies from Hospitals it will feature Royal Children’s Hospital, NSW, Ramsay Hopsital, St. Vinvents Hospital, and Metro south Hospital. The companies from Education; University of Melbourne, University of Newcastle, Victoria University, University of Queensland and the Griffith University; 5 companies from Manufacturing it will feature Dulux LTD, Orora Groups LTD., Tassal Group LTD., Michael Hill, and Downer Group.; companies from Mining will be Gold Field LTD., Fortescue Metals group, Rio Tinto, Orica and BHP.   From each company, recent last three years publicly available Annual reports will be downloaded.  There will be total (25 companies * 3 annual report from each company) 75 yearly reports for analysis. The year will be 2015, 2016 and 2017.

Thirdly, a specific research paradigm will be developed, i.e., the checklist will expand to fit all data into that checklist (Zhou & Panbunyuen, 2008). This research will develop this checklist according to research questions factors to full fill research objectives. Each checklist item will have two response either compliance standards or non-compliance with the standard (Authority, 2001). According to the results, a deductive analysis will be applied. A deductive analysis will first aim to draw a conclusion from the various annual reports, the different requirements of the study and then use them to companies such as to gain relevant insights into the same. In the checklist, there will be a score between compliance standards and non-compliance.  This scoring system will use to conduct quantitative data analysis (Hahn & Kühnen, 2013).

 

 

 

 

.

 

 

 

Industry and Items compliance standards non-compliance
Words Sentences   Not at all Other section  
Banking Industry

Westpac

  1. RQ 1 Variable
       
  1. RQ 2 Variable
       
  1. RQ 3 Variable
       
  1. RQ 4 Variable
       
         
commonwealth bank

  1. RQ 1 Variable
       
  1. RQ 2 Variable
       
  1. RQ 3 Variable
       
  1. RQ 4 Variable
       
HSBC        
         
             
             
             
             

Table 1 Showing Analysis of Environmental Reports of Different Sectors in Australia

Fourthly, the data table will use NV Ivo software to conduct data analysis through quantitative techniques; results will be obtained regarding disclosure norms for these listed companies (Zhou & Panbunyuen, 2008).With these quantitative techniques, deduction concept will be applied. Post application of logical reasoning and deriving from the companies, findings, and analysis will be developed and obtained from the research. Deduction from these data can be obtained by means of quantitative analysis then subsequent qualitative content analysis. This findings and analysis will be in line with many researchers.

Limitations and findings: This step will describe this research limitation and what our desire findings are.

 

 

 

Read Annual reports (Units of Analysis)
Guidelines for scoring
      Awarding Scores
Guidelines for Content Analysis
Yes
            Ignore
No
nny ED
Guidelines for identifying items
Identify ED throughout text
Drawn inferences

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1 Research Design

4         Data Analysis and Findings

 

4.1         Results

The study conveyed a study on 75 annual reports presented in the years 2015, 2016 and 2017 accordingly. According to the survey, different organizations have exhibited different levels of environmental disclosure at every annual report. The difference between the lengths of exposure will suggest that the size of the company being investigated will vary the value and height of disclosure. Where hospitals and educational enterprises have evaluated a low level of exposure annually, firms from the tourism, banking and mining sector have contributed a high amount of disclosure annually. For the most part, the study suggests that businesses emerging from hospitals and education industries experience a low level of demand for annual environmental information. Shareholders of these companies do not have a high need for accountability from these firms; thereby these businesses may have a good performance but disclose a low note of environmental disclosure annually.

Hospitals and Education firms serve a general public; thereby the analysis on their level of environmental impact may be of a small quantity as compared to other businesses in the Australian industry. Qualitative research on the value of disclosure in the green companies shows that the size of hospitals and the education institutions accounts for the high range of disclosed data that is available through the years. On the other hand, banking firms have high shareholder expectancy. Corporations from the mining and banking realms of the industry make up much of the private sector industry in the country. In fact, mining companies are said to contribute a large percentage of the economy of Australia. These companies have exhibited a tremendous value of data regarding environmental disclosure.

The qualitative research reveals that mining, banking, and tourism firms have much effect on the environment. Mining companies have a particular relation to different impacts on the physical environmen. Similarly, banking and tourism companies are expected to attract investors, and a considerable value of shareholders expects these firms to account for the collective benefit of activities that these firms have encountered in the year. Mining, banking, and tourism companies will give the highest value of data to be examined; however, a quantitative analysis of the data shows that these companies disclose particular information that protects their financial well-being and stability. Mining companies exhibited the highest bit of a un-related relationship between the disclosures and the environmental performance. The results reflect that these corporations have disclosed specific lengths of information’s and failed to outline their overall performance.

Consequently, banks provide information that is only applicable to the eyes of their shareholders. On the most part, they have failed to impact the physical environment; they disclosures tend to lean on financial stability and cost management. With an excessive focus on economic figures, banks have been unable to impact positive initiatives that have positive changes in the environment.

Testing of Variables

4.2        H1 Variable:  Institutional Expectations

Educational institutions within Australia are accorded the expectations to adopt sustainability projects within their campuses. They are therefore expected to initiate environmental initiatives within their learning process, discoveries and research and in their engagement activities.

4.2.1       United Nations Sustainable Development Goals

One of the most important sources of environmental goals for the Universities, banking sector, mining, and healthcare is the United Nations Sustainable Development Goals. University of Griffith, Newcastle, and Melbourne are ascribing to the SDGs goals to increases sustainability is several aspects.  The SDGs are a collection of 17goals defined by the United Nations in 2015 to cover the areas of hunger, poverty, health, gender equality, sanitation, energy, climate change, urbanization, education, water and the environment (Sutantoputra, 2016). Two parameters within the goals define the expectations within the Universities ascribed to the SDGs. They are the Climate action and the biodiversity represented by life below water and life on land. Therefore in the realm of climate change, there are important factors that would change the processes within the institutions in the expectations that they would go “green” in their activities. Life below water is concerned mainly by the conservation of the water sources and the release of effluents to the rivers and the oceans (Sutantoputra, 2016). Therefore the expectations for the universities are to create projects that conserve or reclaim water sources, proper usage of the water they get through monitored usage, recycling and reusing.  It is all in the processes of preserving the marine life and the life of the other organisms that share the water sources with the humans. Moreover, the universities are supposed to play a role in developing the SDGs through educations; therefore they are to integrate the topics of sustainability or environmental studies within their curriculum (Sutantoputra, 2016).

In the function of energy within the SDG’s, there is the need for renewable sources of energy use within organizations. Some sectors are energy intensive such as the manufacturing, mining, and transport. Most of these organizations depend on non-clean energy sources such as fossil fuels, coal, nuclear power, and biomass (Sutantoputra, 2016). Therefore under the SDGs, these sectors are consequently encouraged to increase the environmental efficiency by using renewable energy. These sources include hydroelectric, biogas, solar and wind power. Thus it creates an increased expectation to see that the organizations move towards the better use of the energy. Within the industries that are not very intensive on the energy use such as the banking, healthcare and education sector, the transition is comfortable into the renewable energy sources.

4.2.2       Legal Obligations

The legal systems within Australia are another source of pressure as they have their expectations to organizations regarding environmental conservation and reporting. The law was set up to introduce reporting of the greenhouse gas emissions, greenhouse gas projects, company’s energy consumption, and the ultimate energy production. The definition of the greenhouses gases under the law is nitrous oxide, carbon dioxide, methane gas, hydrofluorocarbon, sulfur hexafluoride and perfluorocarbon.  Therefore for every company registered under the act, therefore they had to comply with the law. Within the institutional framework, the institutions had to set up operations policies, safety and health policies, and other environmental policies that geared the activities of the company towards environmental efficiency. Universities within Australia, especially the ones used within the study sample got registered under the act, and therefore it was within their obligation to report their emissions and indulge in projects that got geared towards environmental conservation (BurgwalI & Vieira, 2014).

4.2.3       Previous Incidents or Accidents

Earlier incidents within an institution that resulted in an environmental hazard are another source of pressure for compliance and reporting. Within the annual reports for every institution or organizations, they are obliged to indicate the activities of all the year concerning the environment. It, therefore, includes the incidents or events that had a detrimental effect on the environment. Consequently, there is need to create a reassurance to the stakeholders of the improvements made within their system and the activities that would result to prevent such an event from occurring. Therefore, there are increased expectations regarding the way they will act. The University of Queensland in 2016, faced tow sewage bursts incidents that cause an environmental hazard in the school according to the Queensland university annual Report (2017) They were therefore forced to release the result of the review within their financial report and create a measure that would prevent a future case of the same incidents.

4.2.4       The trend of Environmental Audits

There is also increase in pressure for companies within the country to get involved with environmental audits.  They are used to cover the areas of waste, biodiversity, procurement, transport, energy, carbon dioxide and greenhouse gases emissions and water.  The rising interest is because of the benefits of the audit.  The benefits of internal audits are compliance with the regulations, reduction of the impact of the organization activities to the environment, improving the company image and the relationship with the stakeholders,  and giving an excellent base for the environmental management systems (EMS).  For the organization itself, it accrues benefits from the actions such as finding areas that are potential cost savings such as in waste minimization and creation of efficient procedures and machinery. It allows for comparison between different plants within different regions and therefore benefits the company with finding a benchmark, it provides areas that require training and assists in the organization of training especially in environmental efficiency. It further identifies failures that may occur within a course of time and thus help the organizations to help in averting them. The primary function of the audit is to provide the company with an assessment of all their activities and the effect they have towards the environment. Tellingly, in the case of an emergency at the workplace that involves incidents, the audit gives an essential analysis of the event, causes, and ways to avert such a thing in the future (BurgwalI & Vieira, 2014). Tellingly, the auditors provide the organization with a proper gap analysis on areas which the company can improve on with the introduction of environmental management procedures.

4.2.5       Cost Saving

The primary driver for environmental conservancy for the 25 Companies within the study is the cost reductions associated with the environmental conservation. The finance departments and the management have therefore been keen on the cost-saving within the fight to protect the environment. One of the areas that increase the cost saving of a company is the reduction of wastes. Through efficient processes and processes such as reusing and recycling, the company gets to spend less on the waste disposal and in the procurement of new raw materials or amenities. Therefore, the activities of environmental protection get to save the company more. Use of renewable power within the organizations also reduces the cost of energy over time. The renewable sources such as cogeneration in industries, solar panels, and solar heaters have a high initial cost, but eventually, their operation costs are even less. Reusing of package materials, reusing and recycling water reduce the cost of operations in many industries and institutions. Ultimately, the institutions can save on the amounts used in the paying of energy bills (BurgwalI & Vieira, 2014).  Other environmental friendly activities that improve the expenditures of the company are re-engineering processes, working smart BNL and sharing resources.

4.2.6       Stakeholder Expectations

As revealed by the annual reports within the various industries of Australia, the stakeholders are the people affected directly or indirectly by the actions of the organization. For example in the educational institutions, the primary stakeholders include the alumnus, the students, the staff, the community around the school, the owners, sponsors and the government.  Therefore they all have a role to play in shaping the activities of the organization. Therefore their expectations are competent to drive actions from the organizations. In the firms analyzed for the study, the organizations developed their environmental activities for the benefit of the stakeholders. The government introduced regulations, and as a stakeholder, it enforced the ordinance. The customer preferences in the market are now tending towards the good that goes “green,” therefore to grasp the share of the market and increase in profits, the companies introduce green energy sources and packaging for their products. Top management is an internal stakeholder who has the mandate to make the most significant decisions about the firm.  Therefore their input into environmental investments is key in the director report for the University of Queensland, Orica Company and Goldfields mining, they had much to say on the need for sustainability within their firms (BurgwalI & Vieira, 2014). It is evident that their input was useful as the sustainability projects for the companies took a rise for the three years subject to the content analysis.

From the content analysis of an article by Lindblom and Ohlsson (2011), it also clear that the media and the public interest define another set of external stakeholders. They continuously monitor the activities of the organization and are the most prominent critics. Their role in establishing the environmental expectations for organizations, but they play a significant role in determining the actions to take place. The media for explain is keen to report on any ecological malfunctions within the firm and cases of poor handling of waste. They, therefore, carry the image of the company, and their opinion is essential to the public domain. Moreover, the public interest through NGOs, lobby groups and individuals are the active creators of idea regarding the expectations accorded to the companies concerning environmental conservation. Therefore they play a role too in the overall framework.

 

 

4.3        H2 Variable: Institutional Environmental Capacity

Company Year WITH CAPACITY WITHOUT CAPACITY
Educational sector      
Griffith University 2015 X  
  2016 X  
  2017 X  
University of Queesnland 2015    
  2016 X  
  2017 X  
Victoria university 2015 X  
  2016 X  
  2017 X  
Melbourne university 2015 X  
  2016 X  
  2017 X  
Newcastle university 2015 X  
  2016 X  
  2017 X  
Mining Industry

Orica

2015 X  
  2016 X  
  2017 X  
Gold Fields LTD 2015 X  
  2016 X  
  2017 X  
Fortescue metals 2015 X  
  2016 X  
  2017 X  
BHP 2015   X
  2016   X
  2017   X
Rio Tinto 2015 X  
  2016 X  
  2017 X  
Banking Industry

ANZ

2015   X
  2016   X
  2017   X
NAB 2015 X  
  2016 X  
  2017 X  
BOR 2015   X
  2016   X
  2017 X  
Westpac 2015   X
  2016   X
  2017   X
Manufacturing Industry

Dulux LTD.

2015 X  
  2016 X  
  2017 X  
Orora 2015 X  
  2016 X  
  2017 X  
Tassal 2015 X  
  2016 X  
  2017 X  
Michael Hill 2015 X  
  2016 X  
  2017 X  
Downer group 2015 X  
  2016 X  
  2017 X  
Health Industry

NSW

2015   X
  2016   X
  2017   X
Ramsay Hospital 2015   X
  2016   X
  2017   X
St. Vincent Hospital 2015   X
  2016   X
  2017   X
Royal Child Hospital 2015 X  
  2016 X  
  2017 X  
Metro south Hospital 2015   X
  2016   X
  2017   X

 

The companies selected for the study were the top companies within their fields, and this placed them at an advantage regarding the capacity to handle the environmental and sustainability. The capacity to handle sustainability gets first defined by the financial capability possessed by the company. The financial ability gets measured from the income generated by the company, return on assets (ROA), return on profit (ROI) and the sales per share. Therefore having the top companies for the studies means that all their accounting and market share parameters were up to standard and accordingly they could handle sustainability. The second factor considered for the capacity of the firm is the visibility within the market. The above-selected companies rank among the top visible companies by the number of articles they appear in the newspapers. Their increased media attention, therefore, affirms that they are within the scale where they hand to engage in efforts of environmental sustainability to protect their reputation. Only the health sector companies are the ones without the high visibility capacity. Therefore most of them cannot participate in ecological stability with significant investments. The third factor considered in the research for the environmental ability is the period of operation. Companies that have had a more extended period of activity and not broken cannot even engage in external efforts geared at the promotion of environmental conservation. However, with the selected companies within their specific industries, they have been in existence for more than ten years and are therefore market leaders. Their profitability is beyond their breakeven point, and consequently, they have appropriations for the sustainability projects (BurgwalI & Vieira, 2014).

Given that a company can participate in environmental conservation efforts, therefore it engages by acting directly or using other players in the market to work for them. When companies act directly in environmental initiatives, they create their internal processes that are environmentally friendly. These include the reduction of energy use, use of renewable energy sources, reduction of the emissions, recycling water, reusing water, treating of their chemical waste and promotion of biodiversity. The capacity also helps them to start internal programs and projects that aid in the making their processes efficient and reducing their footprint. When the companies decide to take an external effort towards environmental sustainability, they support other projects geared to the same endeavor. They encourage community conservation activities; they support research within other fields and also provide funding to significant organizations dealing with environmental change. The organizations include the national level and the international level such as the Commonwealth and the United Nations.

 

4.4        H3 Variable: Institutional Environmental Interest

There is no numerical measure to the level of interest that a company has shown towards the expectation of the public and stakeholder towards their environmental sustainability programs.  However, interest can get measured by the actions they initiate and the plans set up for the development. Therefore, the following were the methods used by the companies to show interest in the activities of environmental rehabilitation and protection;

4.4.1       Introduction of Environment Sustainability in the Learning process

The institutions in this section involved institutions of higher learning within Australia. The primary way of integrating their students and lecturers in the sustainability efforts was the integration of suitability in the curriculum in different ways. All the universities in the study have a department dealing with environmental programs and the management of sustainability. Through the departments, they create research and content analysis with students in an interdisciplinary affair. Therefore, there is the creation of a research niche within the university, and the students and lecturers are engaged in finding better ways to deal with the environmental problems. It also increases the consciousness and is a factor that promotes environmental awareness even to their alumnus in different fields after University. The University of Melbourne, Queensland University and the University of Newcastle have an ecological fund that receives applications for grants for people seeking to develop sustainability projects (University of Melbourne Annual Report, 2017; Queensland University Annual Report 2016; University of Newcastle Annual Report, 2017).  Because of the funds, there are running projects within the schools.  Moreover, these universities have created courses related to environmental sustainability to equip the students with the knowledge to create change within the society. The courses include bachelors in Environmental Science.

4.4.2       Creation of Environmental Goals

Within their annual reports, the organizations started departments and programs set out to increase environmental awareness, reduce their energy consumption, energy emissions and improve on their sustainable transport plan. Within the environmental DRI guidelines aspects such as emissions, biodiversity, water, materials, transport and energy management, the companies set out the target to reach within the following years. In the next annual report, they were able to show the extent to which they achieved their objectives. The organizations used targets to increase their efficiency, and while the reports did not signify the exact steps taken towards their achievement, it showed that they had interest in the whole process of environmental efficiency.

4.4.3       Starting of projects

Most of the organizations analyzed for the research within the banking, educational and health sector had introduced solar use for their systems. Griffith University introduced a 25kW solar plant for the MBA School. The University of Queensland increased their solar use each year to a total capacity of 410kW by the end of the 2017 financial year. Melbourne University increased its solar capacity in 2017 to 2.1MW. The organizations further started projects to collect rain and stormwater; while others reuse and recycled.

4.4.4       Engagement of Staff in Processes of Sustainability

Companies show interest in ensuring that the whole internal stakeholder framework is involved in the fight to ensure sustainability. Creation of departments that got geared towards monitoring effluents, biodiversity, and analysis of the environmental impacts gets witnessed across all the companies within the research.  The other employees were involved directly in projects geared towards the reclamation of the wastes and environmental research. Effectively, it is visible that there is the definite interest in the whole organization to ensure a sustainable future for the organization.

4.4.5       Funding Environmental Sustainability

Creating a budgetary allocation specifically for the goals of environmental sustainability speaks volumes about the company’s efforts. Companies of the high environmental impact such as the mining and manufacturing industries had the highest appropriation into environmental friendly projects and the processes of monitoring the water and effects to the environment. The other institutions also had their fund for environmental awareness projects and also provided funding in the form of grants to institutions, groups, and individuals involved in environmental research (Lindblom and Ohlsson, 2011).

 

4.5        H4 Variable: Environmental Disclosure Strategy

Different organizations took to different methods of disclosure strategy

 

 

Industry and Items compliance standards non-compliance
All aspects present Not all aspects present   Not at all

present

All aspects Present  
Education Industry:

Griffith University

RQ 1 Variable

X   X  
RQ 2 Variable X   X  
RQ 3 Variable X   X  
RQ 4 Variable X   X  
RQ 5 variable X   X  
University of Queensland

RQ 1 Variable

  X X  
RQ 2 Variable X   X  
RQ 3 Variable   X X  
RQ 4 Variable X   X  
RQ 5 variable X   X  
Victoria University

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable   X   X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Melbourne University

 

RQ 1 Variable

  X   X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Newcastle University

RQ 1 Variable

  X   X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable   X   X    
Mining Sector:

Orica LTD

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Gold Field LTD

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Fortescue Metals

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
BHP LTD.

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Rio Tinto LTD.

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Banking sector

ANZ Bank

RQ 1 Variable

  X   X    
RQ 2 Variable X     X    
RQ 3 Variable   X   X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
NAB Bank

RQ 1 Variable

  X   X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable   X   X    
BOQ bank

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable   X   X    
RQ 5 variable X     X    
Wetspac Bank

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable   X   X    
RQ 4 Variable   X   X    
RQ 5 variable   X   X    
Manufacturing Sector

Dulux Company

 

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Orora LTD.

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Tassal group

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Michael Hill Company

RQ 1 Variable

  X   X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable   X   X    
RQ 5 variable   X   X    
Downer Group

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
HEALTH INDUSTRY

NSW

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable X     X    
RQ 4 Variable   X   X    
RQ 5 variable X     X    
Ramsay Hospital

RQ 1 Variable

X     X    
RQ 2 Variable   X   X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable   X   X    
St. Vincent Hospital

RQ 1 Variable

X     X    
RQ 2 Variable X     X    
RQ 3 Variable   X   X    
RQ 4 Variable X     X    
RQ 5 variable X     X    
Royal Child Hospital

RQ 1 Variable

X     X    
RQ 2 Variable   X   X    
RQ 3 Variable X     X    
RQ 4 Variable   X   X    
RQ 5 variable X     X    
Metro South Hospital

RQ 1 Variable

X     X    
RQ 2 Variable   X   X    
RQ 3 Variable X     X    
RQ 4 Variable X     X    
RQ 5 variable X     X    

Table 2showing presence of the variable in the reports of every company

The environmental reports used for the study got judged by their completeness, credibility and the transparency. Completeness can be measured using the five variable introduced by the research questions; the variables were; institutions expectations, institutions environmental capacity, institutions of environmental interest and the environmental actions got taken. Most of the organizations were evident in the hopes that got directed to them, and their reporting got directed towards those expectations. For example, if the guidelines introduced by the reporting were according to the law, the reporting strategy used was about the law that gave the instructions.

Figure 2 trends for average water usage

 

Figure 3 Greenhouse gas emissions

Figure 4 trends for energy usage

 

Figure 5 Showing Environmental Performance for the Different companies

The organizations used statistical facts and figures in the form of bar graphs, charts, and line graphs to show their growth in improving the environmental conservation. For example, data were used to indicate the energy consumption reduction, water consumption reduction and the reductions in the emissions in the form of gases.  The trends shown in the companies are a positive trend from the years of 2015 to 2017. The companies have reduced their dependence on non-renewable sources of energy such as coal and diesel that also are the contributors to global warming through the production of greenhouse gases. Institutions such as banks, hospital, and universities are now starting projects of renewable sources of energy. The manufacturing and the mining industries are increasing their reliance on the hydro, wind and solar power; which are renewable sources of energy. The water usage by companies in the manufacturing mining, banking, and education industry has decreased their water usage. Reusing and recycling cited in most of the annual reports as ways of improving the water usage. Waste produced by the manufacturing industries is also taking a decelerating curve as shown from the illustrations in the yearly releases.

The trends of the environmental consciousness prove that there was progress in the companies’ behaviors towards conservation. For the energy usage by the companies, they reported a decrease in the energy usage. The manufacturing industry recorded the greatest decrease in their energy consumption; it was attributed to use of efficient processes in the production. The mining and the manufacturing industry used more of the renewable sources of energy such as the hydroelectric, solar and wind energy. Moreover, there was an increase in the use of renewable sources of energy within the institutions. Improvements also are visible within the other fields of environmental conservation except that of greenhouse gas emissions. The greenhouse gas emissions take a reverse trend on the increasing side for the manufacturing industry. It is also noticed that the level of reporting with regard to greenhouse emissions is inadequate for the companies within the manufacturing industry. It goes to show that there is poor performance in the field by the companies.

The companies in mining and manufacturing also show a trend of expressing more of their future aspirations in the reports that the events within the year. The language of communicating the changes using ambitions is an indicator of poor performance. These are the two major industries in Australia with the most significant environmental footprint. Considering that their productions processes are destructive by nature, much could be done by these two entities in their operations to ensure efficiency and also a reduction in wastages. The other trend noticed between these two industries is that there is depth in their reporting. While gravity can be used to signify quality environmental reporting, it is also an indicator of poor environmental performance especially when it involves a larger size of the company.

 

 

Company Year Report according to GRI guidelines Not according to GRI guidelines
Educational sector      
Griffith University 2015 X  
  2016 X  
  2017 X  
University of Queesnland 2015   X
  2016   X
  2017   X
Victoria university 2015   X
  2016 X  
  2017 X  
Melbourne university 2015 X  
  2016 X  
  2017 X  
Newcastle university 2015 X  
  2016 X  
  2017 X  
Mining Industry

Orica

2015 X  
  2016 X  
  2017 X  
Gold Fields LTD 2015 X  
  2016 X  
  2017 X  
Fortescue metals 2015 X  
  2016 X  
  2017 X  
BHP 2015 X  
  2016 X  
  2017 X  
Rio Tinto 2015 X  
  2016 X  
  2017 X  
Banking Industry

ANZ

2015   X
  2016   X
  2017   X
NAB 2015 X  
  2016 X  
  2017 X  
BOR 2015   X
  2016   X
  2017 X  
Westpac 2015   X
  2016   X
  2017   X
Manufacturing Industry

Dulux LTD.

2015 X  
  2016 X  
  2017 X  
Orora 2015 X  
  2016 X  
  2017 X  
Tassal 2015 X  
  2016 X  
  2017 X  
Michael Hill 2015 X  
  2016 X  
  2017 X  
Downer group 2015 X  
  2016 X  
  2017 X  
Health Industry

NSW

2015   X
  2016   X
  2017   X
Ramsay Hospital 2015   X
  2016   X
  2017   X
St. Vincent Hospital 2015   X
  2016   X
  2017   X
Royal Child Hospital 2015 X  
  2016 X  
  2017 X  
Metro south Hospital 2015   X
  2016   X
  2017   X

Table 3Showing Environmental reporting for each company

 

Figure 6shwoing environmental reporting for the various industries

4.5.1       Notable points on environmental Reporting

The guidelines used to assess the environmental reporting strategy used by the companies were the GRI guidelines. Companies within Australia that got picked for the study were ASX certified and also certified by the ISO 14001. Therefore with their entire endeavor in the reporting, they are obliged to use the GRI guidelines in their reporting.  While reporting of their expectations and past success was familiar with almost every company in every field, there was less reporting concerning the reporting of the noncompliance. History of disagreement within the financial year does not get recorded for almost all the companies.

 

4.6        H5: Environmental Actions

The actions set up by the companies in the research were in the aspects of the GRI guidelines. The annual reports revealed the activities carried out by the company during the year in the effort to ensure that they are sustainable. The information got disclosed with figures showing the positive changes in their processes to improve their efficiency. Moreover, it dealt with the new programs and activities started that introduced new methods of coping with their deficiencies. Reports in the Mining and manufacturing industry used a language that exposed more of their plans in the environmental sustainability fight more than a disclosure of their activities. Therefore, another way used to reveal the activities carried out by the company was through the future events projected and accomplished within the next finical year.

4.6.1       Energy

Energy consumption is a critical area of focus for the companies as it gets directly related with more than 30% of the Greenhouse gas emissions in the production and service industry.  The first way of decreasing the energy use within the companies was through reducing the energy intensity. The process involved using more energy efficient instruments, newer equipment and removing unnecessary material from the load line when not in use. Maintenance scheduling was more organized for Michael Hill and Tassal to reduce the water energy used unplanned maintenance. Downer group introduced more efficient Alternating Current motors to improve the processes and save on energy.  In the Mining industries, their annual reports revealed better milling, drilling and extraction methods to increase the efficiency of energy for. Manufacturing processes in Urora and Michael’s limited got enhanced in the three years of the research by the introduction of newer equipment and regulating the supply of electricity. In the banking, health and educational sector, energy efficiency was maintained through reduction of use of power during the daytime and using better conditioning systems. Energy efficiency for the whole year got recorded in percentages and projections made for the oncoming year. Overall, the energy management systems created in Gold fields, BHP and Dulux proved to be the best approach towards working for energy efficiency. The energy management systems involved continuous monitoring of each load within the company. Therefore any instability within the system that leads to more power consumption was recorded and thus worked on to revert the system back to normal. Moreover, the monitoring helped them to identify sectors with consumption rates more than projected and therefore the areas were maintained or the systems changed.

The organizations within the manufacturing, mining and education industries show immense knowledge in the uses of renewable sources of energy. The mining and manufacturing industries are supplied mainly by the hydro, wind and solar power which are efficient, do not cause pollution through greenhouse gases and are renewable. All the universities used for the survey are connected to the Australian grid but have started projects within their institutions related to solar power for electricity and water heating.

4.6.2       Water

Australia is tropical region and supports a wide range of biodiversity within the water sources. Organizations analyzed have shown a keen interest in the preservation of water and the water sources.  Water efficiency is the primary way that was followed by 20 of the 25 industries.  Due to the availability of rainfall, the companies harvested the water and store them in water tanks for use within the company.  It is a cheap method of creating water efficiency and is thus practiced even in the service industries such as banking, healthcare and the educational institutions. Water wastage gets propagated through leakages and slow response to them. it was a common trait with the University of Melbourne and Griffiths. The trend was to wait for the leakages to get to unbearable amounts or a disaster before taking action. Therefore, the companies introduced fast response for the leakages by installing several monitoring systems such as the NIER monitoring used for the University of Newcastle Water recycling was used in industrial and mining process that required use of much water; this way they get to save on the wastage and drying of the water sources they were using. Low-quality water was the result of the recycling and was used and reuse, but before release to the environment, it got treated and restored to its original form.

Monitoring of the water usage was another method used to promote sustainability. Comparisons between the amount of the water supplied and the water needed to be helped to detect the deficits and the excess to regulate the wastages in the processes. Overall, every company with water aspect in its report had many aspirations to their effective newer ways of handling the resource. The activities included; groundwater management, surface water management, stormwater management and water recycling. EMS

Environmental management systems got found in the companies within the mining and infrastructure industries of the study.  The systems were sent to align the mission and vision of the company to maintain environmental management procedures that minimize the impact to the environment.  Mining, for example, had the most effect to the environment by destroying the land, releasing emissions and destroying the water and biodiversity; all these happening ant substantial amounts. Orica Ltd, Gold Fields LTD., Fortescue Metals, BHP and Rio Tinto, therefore, all had integrated the Environmental management systems within their structures. The policies further enable the companies to align their reporting procedures to the GRI regulations and also align their activities with the guidelines provided by ISO 14001. Resultantly, the alignment ensured continues monitoring, evaluation review, and control; of their environmental impact activities. Extensive internal audits took place in the years 2015, 2016 and 2017 to review the activities and provide a way forward on how to continue with the events.

4.6.3       Biodiversity

Australia gets marked with extreme biodiversity in the form of flora and fauna, and within the wetland, there are unique ecological systems. Animal life and water animals are also within the ecosystem, and therefore within the activities of the company, they are deemed to collide. The mining companies, for example, had the most effect on the biodiversity due to their exposure to the land. Flora, fauna and animals species in existence in the area before mining processes began were therefore affected. The companies registered research to identify the unique species within the mining sites that were affected by the extraction processes and find other suitable locations to grow them to ensure sustainability. Rio Tinto is the largest company producing Iron ore in the world; through its vast resources it is directly involved in the processes for rehabilitation of the biodiversity within the regions that it carries out its mining activities.  According to their 2017 annual report, they started off a new project termed Embley Boyd where they would initiate rehabilitation of the mining areas immediately after covering a specific area. BHP Billiton has developed several strategies of rehabilitation of the land biodiversity by recreating the top soil to make the land arable again for the survival of the species that existed there previously.  In their 2016 annual report, they announced aspiration of pasture rehabilitation of several regions within their former mining areas including Mount Arthur Coal.   Endangered animal species affected were also transferred to wildlife orphanages where they provided continuity of their species. The universities put in effort in research and found newer ways of promoting the life of the almost extinct species. An activity shred by the banking sector, the education, and mining, manufacturing, and health sectors were that of tree planting. ANZ and Westpac have gone a step further to involve their employees and stakeholders in the biodiversity plan They have annual tree planting sessions within different regions that they operate in. Involvement of the employees and stakeholders make the campaign more extensive and thus would bear more fruits for environment and their reputation.  Royal Child hospital represents the health sector gracefully with their concurrent tree planting and rehabilitation programs.

4.6.4       Land

Land actions for sustainability were a pertinent issue with the mining industry. In addition to exposing the area, they added waste rock, tailings, chemical waste and hydrocarbon waste. The companies after every year released a new figure of the land print they had created. Therefore, all the companies involved in the study; Orica, Gold Fields, Fortescue metals, Rio Tinto and Billiton have shown interest towards land rehabilitation. Gold Field, Orica and Fortescue metals  initiated more modern methods of reducing the land-fills by planting of trees and introducing biodiversity into the derelict land and thus creating more modern life forms on the ground.   BHP has started meg projects into planting pasture in the land; left behind after extraction of their minerals. The projects would then extend to nearby locations where the mining was not carried out; the aim being improving the general land structure. Companies within the manufacturing industry also have a role to play in the process of land pollution through their wastes sipping into the ground. Tassal and Michael Hill have developed process of cleaning their water and wastes before releasing them to the land and rivers. The process removes the chemical and materials that would sip into the soil and cause an imbalance of the nutrients in the soil. Through the initiatives by Royal Children Hopsital, ANZ and Westpac Bank to plant trees, the land will therefore gain (Christ, 2013). Trees are important in holding the top soil particles and therefore eventually reduce the erosion effects. Therefore the efforts to plant trees are directly related to the land rehabilitation.

4.6.5       Contribution to the Scientific knowledge

Educational institutions were at the forefront of research to define the environmental print from the companies. The University of Newcastle has a running research on ocean plants and coral reefs conservation and the rehabilitation of the water sources. Through continued research, they developed better ways of managing water sources, managing the plant and animals and increasing their concentration in the country. Victoria University in 2017 kicked off concurrent research on reduction of water usage, energy and greenhouse gases, waste and recycling,  and sustainability in day to day activities. The universities have created educational degrees regarding environmental protection. Griffith University, Newcastle University and University of Melbourne have a running program for Environmental Science. The University of Melbourne is even ranked number 15 in the top universities providing the course.  University of Queensland offer several degrees within the department of Earth and Environmental Sciences. Moreover, they developed projects that aided in the reclamation of derelict land, extinct species. The other manufacturing, mining and banking industries provided the funding for the projects. Preference is for the projects that are related to their environmental print. Fortescue metals funds Climate Change, research, science and tertiary education in the field of extreme weather events risk.  Rio Tinto Supports the research carried out on the Great barrier Reefs, Weipa rehabilitation. It also Supports Foundation Sea-quence research on biodiversity.

4.6.6       Rehabilitation

Mining and manufacturing industries are the only type of sectors within the research that recorded the processed of improvement of the environment.  Mining claimed the land throughout the stages of the mining cycle.  After the area was devoid of the minerals, there is need to make it arable again for other purposes.  Before the rehabilitation process, the land gets reviewed for the nutrients remaining in the soil and the species still found within the region. After that trials for rehabilitation of the area take place followed by a rehabilitation process itself and monitoring. Rehabilitation monitoring does not get done by the same members of the organization but is done by external parties who are specific to the field of land rehabilitation (Christ, 2013).  Fortescue for example set up a waste rock dumb for trial in the year 2016 and continued to start recovery and monitoring in the year 2017. Rio Tinto started a land rehabilitation program in Weipa in north Queensland, Ranger Uranuim Mine and pasture rehabilitation in Pilbara.,

5         Discussion of results

 

The results of the study support the different theories suggested by previous scholars in the area of interest. The shareholder theory suggests that companies will tend to disclose information that will please the shareholders of the company, or otherwise outlay a subtle investing environment for potential shareholders. Service companies from the Australian industry have exhibited varied disclosure of information based on their size, industry, and audience (Christ, 2013). According to the study, companies disclose information that is useful for investment purposes. The study varied a survey across the comparison of market responsiveness of these businesses and their amount of disclosure to this field.

Hospitals and Education institutions have a legitimate responsibility of providing environmental disclosure. About the legitimacy theory, organizations will account for annual exposures to fulfill the political will of the state, thus protect their legitimacy and ensure that they retain a level of influence on public opinion and policy. These companies reflect a certain length of pressure emerging from social and political backgrounds. For instance, it is required by the government that public institutions provide a particular value of disclosure that focuses on a defined area (BurgwalI & Vieira, 2014). Thereby health care providers and educational institutions will disclose information in the expected areas. Mining and banks assume the shareholder theory, where the results of these agencies show that the length of disclosure depends on shareholder references. These companies have shown only to disclose information that protects their interest and fail to account for their full environmental influence.

Companies provide the annual disclosure to provide an assessment of the company’s environmental risk. The environmental risk of the company reflects on the relative and potential risks that may emerge due to the policies and initiatives adopted. Investors use the report to gain a better financial understanding of the company. Most Australian companies provide environmental disclosures that satisfy the urge of potential investors to invest in their organizations. However, the study suggests that companies can gain positively from full disclosures. In this particular case, mining companies that provide a comprehensive disclosure event of the impact of the firm to the environment may increase undoubtedly. Accurate exposures may cause the state to improve the policies that govern pollution and the environmental effect (Agency, 2016). Organizations should look forward to utilizing the information as a means of growth, rather than hide information that may affect the financial status of the company in the future. Various scholars have supported the use of transparent disclosures as stepping stones to better and socially responsible corporations with a healthy and developing environment in mind

5.1        RQ1-Concerning annual report disclosures relating to environmental exposures, how do Australian service Industry, in control of remediation sites, perceive the institutional expectations exerted by institutional constituents?

5.1.1       Independent Constituents

It is evident that from the results that several groups have their expectations within the industry and they are the primary drivers of the companies’ decision towards environmental sustainability. These institutional constituents have been found out to be the legal bodies and the government,  United Nations and the other international organizations and the case of past events such as accidents. These three factors are the independent factors (BurgwalI & Vieira, 2014). The companies have no control over them, and therefore they are obliged to follow them without questions.

The national parliament of the country is the one tasked with setting the regulations and making amendments as per the constitution. The parliament since the 1980’s in Australia has played a significant role in the introduction of environmental sustainability under the umbrella of Commonwealth. By setting up laws governing the reporting, the organizations had no input in the decisions. In the emissions amendments, which oversees the reporting of the emissions, the organizations had no say in the matter. Therefore the expectations that are set forth by the legal system within the country are independent of the organization. Thus, there are the compulsory expectations and have to get adhered to without question.

The United Nations is the umbrella body that governs the affairs of the member states of the world. In a political realm, it is superior to the input of smaller organizations. It has several bodies within it that gets tasked with monitoring the environmental activities within the world to ensure that the future of the world is safer for the coming generations  (Christ, 2013).  United Nations Environmental Program was set up in 1972 and was set out with the following missions;

  1. To assess the environmental conditions and trends within the national, regional and global scale
  2. To introduce international treaties and agreements that will be ecological instruments
  3. To strengthen the environmental management within institutions

Therefore within its mandate, several contracts got created within the global framework and are biding to the national and the regional level. In 2015, the UN further introduced the SDG that came to replace the Millennium development goals and the primary focus of the goals is sustainability. As the goals apply on the global scale, they also have a mandate on the local, national level. ISO (International Organization for standardization is another governing body that has set out its conditions that a company has to abide by if they are to be certified. The companies introduced in the study had gotten environmentally certified under the ISO 14001. Therefore they have an obligation to the certifications principles. All these are international bodies that work within a specified gauge of the parameter that is not adjustable  (Christ, 2013). Thus the organization has to follow these regulations as they are independent.

Whenever accidents occur within an organization and the effects are detrimental to the people, animals, plants and other organisms, there is cause for alarm. Such accidents include leakages in the sewer, water pipes, landfills and many more. Besides, whenever an organization is found to be non-compliant to the case of environmental conservation, it is hit by lawsuits and faces lots of scrutiny. It thence can be viewed as an accident within the legal framework of the company.  Another form of the accident within the environmental structure of an organization is when there is a failure in its apart in the monitoring, management and action planning of a conservative environmental measure (Christ, 2013). When such incidents are reported previously within a company, then there is constant scrutiny that gives the company management more pressure to perform better. For example an Accident in the mine of Majuere for Rio Tinto in 2017 placed the company under more scrutiny on its procedures and therefore they had to refine their processes to reduce fatalities in the future. According to Environmental Justice Australia statistics (Christ, 2013), more people in Australia die because of mining pollutants than they die from car accidents. Therefore with such statistics, the government would get keen to reduce the rates of accidents in the mines. Therefore in the case of an accident occurring that causes release of pollutants, the companies are questioned and they have to be on the lookout.  It, therefore, results to the company taking more initiative to complete batter to maintain its profile. It is an internal source of pressure, and thus the company cannot have control over it.

5.1.2       Dependent Constituents

The dependent constituents are the factors which the company or organization has influence over, and therefore it could readjust them to align them with the sources of expectations. Therefore the organizations perceive them as controllable variables.  One of the dependent variables that drive for environmental sustainability is the costs.  The company, management has control over the charges, and therefore they could appropriate them in ways they deem fit. A company that has survived the market for a while and has broken even has the power to allocate a section of the total profits into the social responsibility that includes environmental sustainability (Cobert et al., 2003). Therefore this factor is in the control of the organization itself. When an organization indulges in the process of environmental conservation, there are processes that it may select that increase efficiency of the production processes thus eventually reduces the cost of utility bills such as energy band eater and reduces the costs involves in transportation, packaging, purchasing the raw materials and processing. Therefore, within the dependent variable, the company may either spend or save on the costs.

The company stakeholders are another source that creates expectations regarding the sustainability index of a company. The merging trend since 1980 is that people would want to invest in sustainable companies. Therefore with companies aware of that, they can adjust their actions towards sustainable efforts to get the support from the stakeholder. Thus, they can change their actions towards sustainable efforts to get the support from the stakeholder. Environmental reporting another parameter that is adjustable and can improve the view of the company of the stakeholders. With in-depth reporting that sows progress towards sustainability and aspirations of projects that would lead to that, then the expectations of the stakeholders would have been met.

The trends within the market also create their expectations towards the companies. Increase in internal audits is a factor that the company can readjust itself to play along (Cobert et al., 2003). The management should take the necessary step to increase their accountability to improve their image and also their relationship with internal and external stakeholders. Several companies within the research such as Fortescue metals, BHP, Rio Tinto, Michael Hill, Orora Group, Downer group and Dulux ltd had carried out environmental audits for the three consecutive years. It came to confirm their environmental input and the reporting in the director’s report. The environmental audits are also prevalent in the companies that have a larger environmental print as in the case of the mining and manufacturing. Internal audits are one way of disclosing information to the public to create a better relationship.

5.2        RQ2    In responding to institutional expectations, do Australian service industries have the capacity to conform to their perceived institutional expectations and requirements?

The research analysis was carried out within a cross-sectional framework and a longitudinal one. The companies analyzed for the study were from different industries within the market, and the research took place during the annual report time frame of three years starting from 2015. From the financial analysis and the image of the companies, it is clear that they behave the capability to handle the sustainability projects (Mitchell, Percy & McKinlay, 2004). Within the budgetary allocation for every company in every year, there is an allocation of the total expenditure to the social responsibility. The assignment deals with environmental sustainability among other things. Therefore the companies in Australia can handle the processes involved in sustainability.

Environmental reporting further proves that environmental efficiency comes not only as a source of expenditure but as a cost-saving exercise. Reductions in emissions, energy use, water use and efficiency in the production processes ensure that the costs associated with the parameters got saved educational institutions such as the Griffiths, and Melbourne University had their emission and energy use statistics in their 2016 and 2017 annual reports. The procedures they used in the reduction of energy costs were the introduction of renewable energy sources and water use reduced because of reusing and recycling. The two processes effectively reduced their energy and water costs.  . Therefore looking at it from that perspective, it is clear that these companies can work towards environmental sustainability even without injection of costs to the processes.

5.3        RQ3-In is responding to institutional pressures, do Australian service industries have the interest to conform to their perceived institutional expectations and requirements?

The companies show interest for sustenance by the taking necessary steps within their capability to tackle degradation. There are many expectations driven towards the companies compared to their abilities. Since it is mostly from independent sources, the companies have to act to survive in the business and have the edge over their competition. From the study, how the companies express their interest is through participation through the processes involved in conservation, initiating environmental campaigns, setting goals and aspirations, starting projects, funding other projects and engaging the stakeholders within the environmental conservation processes (BurgwalI & Vieira, 2014). In this way, the organizations have confirmed to how the set expectations expect them to be. Without their interest, it is hard to get certification from the legal and the international organizations. Fore with, it would also be a deal breaker with the stakeholders of the company including the financiers and the customers.

5.4        RQ4- Concerning annual report environmental disclosures, what is the strategy that Australian service industries seem to adopt in their reporting decisions?

This research aimed to get the relationship between the reporting and the real activities that the company gets to do within the field of environmental sustainability. Therefore, in the analysis of the strategy used by the companies in reporting, the comparison is made with the real activities that the organization is involved in to create a relationship. The companies within the study, for instance, had much to mention about their progress in reduction of emissions and consumption of water energy; which got stated in numerical figures. The reporting here is one that signifies the real activity done by the companies concerning reducing the consumptions and emissions. It is a clear indication of the extent to which the company had progressed in the sustainability journey. Therefore it is a positive to the level of reporting

In reporting the noncompliance of the organizations, many of the companies within the study were either omitting information or giving fewer details about the events. While it creates a bad image for the company in question, it also promotes credibility and accountability (Mitchell, Percy & McKinlay, 2004). Therefore it is clear that most of the organizations are reluctant to report their noncompliance issues and therefore it makes the environmental reporting not a clear indication of the real events that the company is doing within the ground.

Another strategy used by the companies was an indication of the goals set regarding what it is they would achieve in the future. In the literature review, such a language in reporting that exposes more of what gets planned that what gets done already is an indicator of poor performance. Concerning the aim of the study, a plan of future events is not the real notation of the actual events that will occur (BurgwalI & Vieira, 2014).  A further revelation from the survey is that when propositions got made of the targets for the company in the coming year when the following year’s report was out, the objectives did not get fulfilled. All the companies had projections for their forthcoming year but few referred to those of the previous year indicating that they were achieved. For example, The University of Newcastle had it indicated in their 206 reports the plants to increase their solar energy contribution my several megawatts in the coming year; however, the report for the coming year did not indicate the additional solar power introduced within the university.  Therefore the reporting strategy of indicating the plans for future events does not fit as a perfect indication of the activities that the company is involved. The best way to determine the company’s environmental activities is by looking at the records of the past done activities and not the aspirations for the coming financial year.

Tellingly, the only sure way of knowing the actual activities of the company on the ground is through record reporting. , in this case, is what carries the information of the achievement and noncompliance issues that the companies have faced within the year. The records should be the central segment of the report and less about the future aspirations and the goals that the company is looking forward.

5.5        RQ5 what are the actions taken by the Australian companies in response to the environmental expectations and pressures?

Having determined that the best measure of the events carried out within the firm is through the record of the games already done, and then the Australian Companies have responded gracefully to the pressure and expectations exerted to them. The companies have shown that they are capable of introducing sustainability through internal and external systems (Suntantoputra, 2016). Internal systems are those of improving efficiency. According to the GRI guidelines followed in the reporting, they involve ten aspects. They are; transport, water, materials, energy, biodiversity, emissions, wastes and effluents, and products (Cobert et al., 2003). These are the internal processes that the company can improve to improve their environmental sustainability rating. There are also some external procedures that companies can initiate environmental campaigns. Through collaboration with other institutions, they can start community projects, they can fund research and other ongoing projects, and they can also carry out their research and external projects to the community. It has happened before when the Rio Tinto and Urora mining corporations worked with their community towards land rehabilitation. The part of the community involves even the employees; Royal Children Hospital involved their staff in their annual tree planting sessions.

6         Conclusion

The environmental disclosure requirement expects companies to have excellent transparency in reporting data. Corporations have integrated the demand to their advantage, however, disregarding the actual purpose of the provision. The study shows that the relationship between the information reported does not contrast with the actual performance that most companies deliver in the annual disclosures (Sutantoputra, 2016). The height of exposure is influenced by the size of the firm, decision usefulness and the social and political expectations of the state. Regardless of the point of influence, the study has exhibited a high note of manipulation to the information provided in annual reports by different companies.

Instead, the study supports the use of environmental performance as a measure for better growth and development (Agency, 2016). The report suggests that companies should outlay their overall performance not ejecting any information. This will improve the level of transparency in the networking industries and accomplish the primary goal of environmental sustainability.

 

6.1        Limitations of the Study

The study was carried out using companies that are high ranking in their industries to make ease the availability of annual reports. The bigger companies also had better performance because of their capability to finance environmental activities, unlike the smaller companies. Therefore eventually, the research would not work as a proper representation of the small businesses such as startups that cannot deal with environmental issues.

6.2        Areas for Further research

The study was conclusive in introducing the relationship between the reporting done by in the Director’s annual report and the real events occurring within the organization. It therefore leaves much to ask about the role of the management in the whole framework of sustainability and environmental conservation. The management of the company is the ones vested with the power or disseminating information to the outside world and the stakeholders of the company. While their role in environmental reporting is viewed as clerical, it hold much power since in the case of hoarding any information, they determine the way important decisions will be made. Therefore further research should be carried out to understand the active role of the management in the dissemination of information and the connection between environmental reporting and the activities carried out by the company.

 

 

 

 

7                                                         References

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Implementation of the Environmental Disclosure requirement in Australian Service Industry

Author’s Name

Institution Affiliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract

During the recent decades, the local, national and global effects of human activities on the physical environment have increased immensely. Consequently, comprehensive policies have been developed and implemented to ensure that companies outlay a high level of social responsibility to the environment. Equally, research literature and international policies have subjected a full angle of interest in providing that corporations can disclose their annual activities that have an impact on the wellbeing of the physical environment. According to research, companies have increased their environmental responsibility by providing voluntary yearly ecological reports that outlay the company’s financial and non-financial, quantitative and qualitative social activities on an annual base.

For long scholars have addressed environmental disclosure as a broad topic that evaluates the responsible nature of these companies. However, the study aims to identify the extent that the annual report coincides with the actual responsibility that these companies deliver. Without a doubt, companies around the globe may provide clear and consistent environmental disclosures; regardless recent interest in the area has suggested that these revelations are only delivered to suit the wellbeing of the company. For instance, mining companies are profoundly affected by the social environment. In fact, mining companies form a substantial basis of the Australian economy.

The study aims at performing a content analysis on 75 annual reports on companies from different industry groups in the country. The purpose of the study is to identify whether environment disclosures serve as social or financial rehabilitation attempts by these companies, or they fulfil the required function. The study analyses the consequence of the environmental disclosure requirement in the corporate field of the country and will look to evaluate how companies have integrated the condition either as self-beneficial or social responsibility.

 

 

Contents

1    Introduction. 4

1.1     Background of the Study. 4

1.2     Research Justification. 5

1.3     Purpose of the Research. 8

1.4     Research Questions: 8

1.5     Research Methodology. 9

1.6     Outline of the Research. 9

1.7     Summary. 9

2    Literature Review.. 11

2.1     Introduction. 11

2.2     Previous Studies in the Field. 11

2.3     GRI Guidelines of Environmental reporting  13

2.4     Environmental Performance Indicators  14

2.4.1    Indicators related to the management 14

2.4.2    Indicators of Business operations  14

2.4.3    Transportation. 15

2.4.4    Stock pollution. 15

2.4.5    Land Alteration. 16

2.5     Theories in Environmental Reporting  16

2.5.1    Legitimacy theory and Agenda Setting Theory. 16

2.5.2    Stakeholder Theory. 16

2.5.3    Signaling Theory. 17

2.6     Theoretical Arguments for Disclosing Financial Information. 17

2.6.1    Accountability. 17

2.6.2    Stakeholder Theory. 18

2.6.3    Environmental sensitivity. 18

2.6.4    Financial Performance. 18

2.6.5    Environmental Certification, 18

2.7     Determinants of Social Environmental reporting. 18

2.7.1    Financial performance and size of the company. 19

2.7.2    Social and Environmental Performance  20

2.7.3    Ownership Structure. 20

2.7.4    Corporate Visibility. 20

2.7.5    Legal requirements within The country of origin and the sector of affiliation  21

2.8     Criteria for Measuring the Environmental report 21

2.8.1    Credibility. 21

2.8.2    Completeness. 21

2.8.3    Transparency. 21

2.9     Language Used in Environmental Disclosure  22

2.10      The State of Public Environmental reporting in Australia. 23

2.11      Gaps within Literature. 24

2.11.1    Governance and regulation. 24

3    Methodology. 25

3.1     Introduction. 25

3.2     Content Analysis. 25

3.3     Research Design. 27

3.3.1    Epistemology – Positivism.. 27

3.3.2    Quantitative research. 27

3.3.3    Secondary data. 28

3.3.4    Quality of data – reliability, validity, and generalizability. 28

3.3.5    Time Dimension- Longitudinal 29

3.3.6    Measurement of Variables. 29

3.4     Study Design. 32

3.5     Study Population. 32

3.6     Privacy and Ethics. 33

3.7     Method of Data Collection. 33

3.7.1    Environmental reporting. 33

3.7.2    Company capability for environmental reporting. 34

3.7.3    Company interest towards environmental awareness. 34

3.7.4    Environmental Activities. 34

3.8     Data Management 34

3.9     Data Analysis. 34

3.10      Data Presentation. 35

. 35

4    Data Analysis and Findings. 37

4.1     Results. 37

4.2     H1 Variable:  Institutional Expectations  38

4.2.1    United Nations Sustainable Development Goals. 38

4.2.2    Legal Obligations. 39

4.2.3    Previous Incidents or Accidents  39

4.2.4    The trend of Environmental Audits  39

4.2.5    Cost Saving. 40

4.2.6    Stakeholder Expectations. 40

4.3     H2 Variable: Institutional Environmental Capacity. 41

4.4     H3 Variable: Institutional Environmental Interest 44

4.4.1    Introduction of Environment Sustainability in the Learning process. 44

4.4.2    Creation of Environmental Goals  44

4.4.3    Starting of projects. 44

4.4.4    Engagement of Staff in Processes of Sustainability. 45

4.4.5    Funding Environmental Sustainability  45

4.5     H4 Variable: Environmental Disclosure Strategy. 45

4.5.1    Notable points on environmental Reporting. 52

4.6     H5: Environmental Actions. 52

4.6.1    Energy. 52

4.6.2    Water 52

4.6.3    Biodiversity. 53

4.6.4    Land. 53

4.6.5    Contribution to the Scientific knowledge  54

4.6.6    Rehabilitation. 54

5    Discussion of results. 54

5.1     RQ1-Concerning annual report disclosures relating to environmental exposures, how do Australian service Industry, in control of remediation sites, perceive the institutional expectations exerted by institutional constituents?. 55

5.1.1    Independent Constituents. 55

5.1.2    Dependent Constituents. 56

5.2     RQ2    In responding to institutional expectations, do Australian service industries have the capacity to conform to their perceived institutional expectations and requirements?  57

5.3     RQ3-In is responding to institutional pressures, do Australian service industries have the interest to conform to their perceived institutional expectations and requirements?  57

5.4     RQ4- Concerning annual report environmental disclosures, what is the strategy that Australian service industries seem to adopt in their reporting decisions?. 58

5.5     RQ5 what are the actions taken by the Australian companies in response to the environmental expectations and pressures?. 58

6    Conclusion. 59

6.1     Limitations of the Study. 59

6.2     Areas for Further research. 59

 References. 60

 

 

 

 

 

 

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