Corporate environmental disclosure : the medium and the message

• Main Author: Jones, Kathryn Louise
• Published: University of Sunderland 2002
• Subjects: 658; Utility sector
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.247310

Companies have been providing information on their interactions with the environment since the 1880s however there has been an upsurge in the amount of information they provide over the last three decades. This has been driven by a variety of legislative, internal, social drivers. These corporate environmental disclosures appear within three key channels and media: via the Internet, in their AnnuaVFinancial Report and in a stand alone Environmental Report. The USA was the fIrst country to introduce statutory requirements relating to the disclosure of environmental information in the AnnuaVFinancial Report - Securities Release 5235 and 5386. Many other countries, including the UK, are now considering making environmental disclosure, in some shape or form, mandatory. Benchmarking studies are frequently applied identify the leading companies in terms of Environmental Reports; companies within the utility sector are repeatedly cited as leaders. However most research and benchmarking studies compare what themes have been disclosed in a single channel or media, for example, emissions, waste, energy, and do not examine the quality of the disclosures or compare those disclosures in the different channels and media. Recently, qualitative characteristics relating to the quality of environmental disclosures have been developed including, inter alia, accessibility, credibility and inclusivity. This thesis therefore aims to (1) assess whether utility companies are also leaders in environmental disclosure via the Internet and in their AnnuaVFinancial Reports, (2) compare the effects of a voluntary and mandatory disclosure requirements on the environmental themes and qualitative characteristics disclosed in the AnnuaVFinancial Reports and Environmental Reports of electric power utilities based in the UK and USA and applies Lasswell's model as an integrating framework for (1) and (2) in order to assess what, if any, inferences can be made from a direct content analysis relating to 'why' and 'with what effect' environmental disclosures are made. Content analysis is applied to meet the three main aims of this thesis. First, a basic appearance or nonappearance form of content analysis is applied on 275 (utility and non-utility) companies to assess whether utility companies are also leaders in environmental disclosure via the Internet. The amount location and type of environmental themes that were disclosed within the AnnuaVFinancial Reports of 100 (utility and non-utility) companies were then identifIed via content analysis to assess whether utility companies are also leaders in environmental disclosure in their Annual Report and Financial Report. A more complex frequency content analysis was applied to assess the environmental themes and the qualitative characteristics disclosed by 20 electric power companies based in the UK and USA in their AnnuaVFinancial Reports and Environmental Reports to evaluate the affect of voluntary and mandatory disclosure requirements. The research shows that no companies are fully exploiting the capabilities of the Internet for environmental disclosure and that no one sector stands out as a leader. The oil, gas, coal and related services sector, not the utility sector, are leaders in terms of environmental disclosure within the AnnuaVFinancial Report, indeed there does not appear to be any consensus within the utility sector regarding the environmental themes that should be disclosed. Mandatory disclosure requirements heavily influence the amount, themes, balance, character and specifIcity of environmental disclosures made by of electric power companies based in the USA who appeared to target their disclosures in the AnnuaVFinancial Report and Environmental Report at different audiences. Electric power companies based in the UK, where there are no mandatory disclosure requirements, disclosed double the amount of information in their Environmental Report than companies based in the USA but disclosed less information in their AnnuaVFinancial Report which was virtually a subset of those in their Environmental Report in terms of the amount, themes, balance, character and specifIcity. It can be concluded from the application of Lasswell's model that environmental disclosures are made due to a combination of drivers, the types and qualitative characteristics of those disclosures depend on the relative importance of those drivers. More importantly the environmental disclosures have little effect due to their lack of credibility, and environmental disclosures, in particular, via the Internet were found to be unduly burdensome in terms of their accessibility. Stakeholders will fmd it difficult to create an informed image until there are generally accepted or mandatory standardised data collection methods, measurements and presentation for collating the environmental information itself and for the verifIcation statement therefore they need to be aware of the limitations of corporate environmental disclosures, be critical of the information and go back to the company for more details on any area of specific interest. Although companies may not want to allow stakeholders to create an informed image, guidelines are presented that can be used by companies to improve the accessibility and credibility of their environmental disclosures.