ENVIRONMENTAL REPORTING
AND THE IMPACTS OF
MANDATORY REPORTING
REQUIREMENTS
A thesis submitted in fulfilment of the requirements for the degree of Doctor of
Philosophy
Stacey Cowan
BBus(Acct) CQU
School of Accounting and Law
Business Portfolio
RMIT University
January 2007
(ii)
ii
Declaration
I certify that:
a) Except where due acknowledgement has been made, the work is that of the author
alone; and
b) The work has not been submitted previously, in whole or in part, to qualify for any
other academic award;
c) The content of the thesis is the result of work which has been carried out since the
official commencement date of the approved research program; and
d) Any editorial work, paid or unpaid, carried out by a third party is acknowledged.
Signed:
………………………….
Stacey Cowan
30 June 2007
(iii)
iii
Acknowledgements
As is the case with most theses, this one has not only impacted upon my life but also upon the
lives of those around me. Leigh, my friend and partner, tolerated the tears and frustrations
with a continuously loving, positive and supportive outlook. My children, Aedan and Niamh,
have spent their primary school years in co-existence with this strange adult phenomenon
known as a thesis. My newborn son Jacob spent the first nine months of his existence in front
of a laptop as Mum wrote and, racing his impending birth, finalised a PhD. And, of course,
my parents (Nev and Daph) and Leigh’s parents (Rod and Bev) who provided me with the
childcare and “free time” I needed to tackle those difficult moments without domestic and/or
parental distractions. Then there are those special friends who provided support in a variety
of mediums (in person, the end of the telephone or email) such as Lyn, Donna and Nicola who
listened patiently to my wins and losses and, as a consequence, shared my happiness and
tears. A big thanks to my colleagues (and friends) at work with whom there was many a
“football huddle” on the verandah or under the tree where the topic was PhD/research-related,
theirs and mine. Finally, to my supervisor Craig who during those moments of despair or
euphoria was often also perceived, in my exhausted mind, as the principal cause of such
despair or euphoria, but in reality taught me so much about research and writing and how to
be a fabulous supervisor.
(iv)
iv
CONTENTS
DECLARATION.................................................................................................................................................. II
ACKNOWLEDGEMENTS................................................................................................................................III
CONTENTS......................................................................................................................................................... IV
LIST OF TABLES ..............................................................................................................................................VI
ABSTRACT........................................................................................................................................................... 2
CHAPTER 1 .......................................................................................................................................................... 4
INTRODUCTION................................................................................................................................................. 4
1.1 BACKGROUND TO THE RESEARCH ................................................................................................................. 4
1.2 THEORETICAL PERSPECTIVE AND RESEARCH OBJECTIVES ............................................................................ 6
1.3 JUSTIFICATION FOR THE RESEARCH............................................................................................................. 10
1.4 RESEARCH METHOD.................................................................................................................................... 11
1.5 STRUCTURE OF THE THESIS ......................................................................................................................... 12
1.6 DEFINITIONS ............................................................................................................................................... 13
1.7 DELIMITATIONS OF SCOPE ........................................................................................................................... 13
1.8 CHAPTER SUMMARY ................................................................................................................................... 14
CHAPTER 2 ........................................................................................................................................................ 15
LITERATURE REVIEW................................................................................................................................... 15
2.1 INTRODUCTION............................................................................................................................................ 15
2.2 CHANGING ATTITUDES TOWARD ENVIRONMENTAL DISCLOSURES ............................................................. 16
2.3 ENVIRONMENTAL PERFORMANCE AND ENVIRONMENTAL DISCLOSURE...................................................... 22
2.4 EXTERNALLY PUBLISHED ENVIRONMENTAL DISCLOSURES, CORPORATE ENVIRONMENTAL DISCLOSURES
AND INFORMATION USEFULNESS TO INVESTORS ............................................................................................... 25
2.5 CONTENT AND QUALITY OF ENVIRONMENTAL DISCLOSURES ..................................................................... 29
2.6 THE NATIONAL POLLUTANT INVENTORY .................................................................................................... 32
2.7 BACKGROUND TO MANDATORY ENVIRONMENTAL REPORTING IN AUSTRALIA .......................................... 39
2.8 SECTION 299(1)(F) OF THE CORPORATIONS LAW ........................................................................................ 45
2.9 CHAPTER SUMMARY ................................................................................................................................... 55
CHAPTER 3 ........................................................................................................................................................ 59
THEORETICAL FRAMEWORK .................................................................................................................... 59
3.1 INTRODUCTION............................................................................................................................................ 59
3.2 THEORETICAL PERSPECTIVES OF CORPORATE ENVIRONMENTAL DISCLOSURES ......................................... 61
3.3 POLITICAL ECONOMY THEORY ................................................................................................................... 63
3.4 STAKEHOLDER THEORY .............................................................................................................................. 64
3.5 LEGITIMACY THEORY ................................................................................................................................. 70
3.5.1 Legitimacy techniques ........................................................................................................................ 73
3.5.2 Objectives for using legitimacy techniques......................................................................................... 74
3.5.3 Corporate strategies of legitimacy...................................................................................................... 76
3.6 STATEMENT OF THE RESEARCH OBJECTIVES RELATING TO THE NPI .......................................................... 78
3.7 PROPOSITION DEVELOPMENT OF THE RESEARCH OBJECTIVES RELATING TO THE NPI................................ 85
3.8 STATEMENT OF THE RESEARCH OBJECTIVE RELATING TO S. 299(1)(F) OF THE CORPORATIONS ACT ......... 87
3.9 PROPOSITION DEVELOPMENT OF THE RESEARCH OBJECTIVE RELATING TO S. 299(1)(F) OF THE
CORPORATIONS ACT ......................................................................................................................................... 97
(v)
v
3.10 CHAPTER SUMMARY ................................................................................................................................. 99
CHAPTER 4 ...................................................................................................................................................... 102
RESEARCH METHOD ................................................................................................................................... 102
4.1 INTRODUCTION.......................................................................................................................................... 102
4.2 SAMPLE..................................................................................................................................................... 102
4.3 ENVIRONMENTAL DISCLOSURE MEASUREMENT IN PREVIOUS RESEARCH ................................................ 106
4.4 CONTENT ANALYSIS ................................................................................................................................. 109
4.4.1 Disclosure medium ........................................................................................................................... 110
4.4.2 Units of analysis ............................................................................................................................... 112
4.4.3 Reliability in content analysis........................................................................................................... 118
4.5 VARIABLE MEASUREMENT........................................................................................................................ 122
4.5.1 Mandatory disclosures...................................................................................................................... 123
4.5.2 Voluntary environmental disclosures/voluntary emission disclosures/voluntary NPI Disclosures .. 123
4.5.3 Information content of NPI/pollution emission disclosures.............................................................. 124
4.5.4 NPI pollution emission quantities..................................................................................................... 125
4.5.5 Reported non-compliance with environmental regulations .............................................................. 129
4.6 STATISTICAL ANALYSES ........................................................................................................................... 129
4.7 CHAPTER SUMMARY ................................................................................................................................. 131
CHAPTER 5 ...................................................................................................................................................... 134
DATA ANALYSIS, RESULTS AND DISCUSSION ..................................................................................... 134
5.1 INTRODUCTION.......................................................................................................................................... 134
5.2 SIZE OF SAMPLE CORPORATIONS .............................................................................................................. 135
5.3 PROPOSITION TESTING .............................................................................................................................. 137
5.3.1 Results of the propositions relating to the NPI ................................................................................. 137
5.3.2 Summary of results for NPI propositions.......................................................................................... 147
5.3.3 Results of the propositions relating to s. 299(1)(f) ........................................................................... 147
5.3.4 Summary of results relating to s. 299(1)(f) propositions .................................................................. 154
5.4 CHAPTER SUMMARY ................................................................................................................................. 154
5.4.1 Discussion of analyses for propositions relating to the NPI............................................................. 154
5.4.2 Discussion of analyses for propositions relating to s. 299(1)(f) ....................................................... 158
CHAPTER 6 ...................................................................................................................................................... 161
SUMMARY AND CONCLUSIONS................................................................................................................ 161
6.1 INTRODUCTION.......................................................................................................................................... 162
6.2 RESEARCH OBJECTIVES............................................................................................................................. 162
6.3 SUMMARY OF RESULTS ............................................................................................................................. 164
6.3.1 Objectives 1 and 2 ............................................................................................................................ 164
6.3.2 Objective 3 ........................................................................................................................................ 165
6.4 IMPLICATIONS OF THE RESEARCH ............................................................................................................. 167
6.4.1 Theoretical implications ................................................................................................................... 167
6.4.2 Practical implications....................................................................................................................... 170
6.5 LIMITATIONS OF THIS STUDY..................................................................................................................... 173
6.6 FUTURE RESEARCH ................................................................................................................................... 175
REFERENCE LIST .......................................................................................................................................... 178
APPENDIX A: AUSTRALIAN ENVIRONMENTAL GROUPS ................................................................ 190
APPENDIX B: NPI REPORTABLE SUBSTANCE LIST - INITIAL THREE REPORTING PERIODS
............................................................................................................................................................................. 192
APPENDIX C: LISTING OF SAMPLE COMPANIES ............................................................................... 195
APPENDIX D: TESTS OF NORMALITY - STEM AND LEAF PLOTS .................................................. 196
APPENDIX E: TESTS OF NORMALITY - SHAPIRO-WILKS STATISTIC.......................................... 203
APPENDIX F: DESCRIPTIVE DISCUSSION OF NPI DISCLOSURES.................................................. 204
APPENDIX G: DESCRIPTIVE DISCUSSION OF S. 299(1)(F) DISCLOSURES .................................... 209