1. The extent and determinants of greenhouse gas reporting in the United Kingdom
- Author
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Chithambo, Lyton Chiyembekezo W.
- Subjects
658 ,Business, Management and Marketing - Abstract
The study investigates the extent and determinants of greenhouse gas voluntary disclosures by FTSE350 United Kingdom (UK) listed companies from both theory and practitioners’ views. In accomplishing the aim, the study has the following objectives: (1) to analyse the extent of voluntary disclosure of GHG information in annual and sustainability reports of FTSE350 companies over a four year period i.e. 2008-2011; (2) to establish whether voluntary GHG disclosures are influenced by corporate governance characteristics (board size, non-executive directors, environmental committee, audit committee, ownership concentration and director ownership) and firm characteristics (company size, profitability, gearing, liquidity and industry); and (3) To investigate whether practitioners consider the determinants (as in objective two above) motivates the extent of voluntary GHG disclosures. To accomplish the objectives, the study uses a mixed-method approach on data derived from a sample of 215 FTSE 350 companies listed on London Stock Exchange. Firstly, an econometric model was developed based on a set of explanatory factors i.e. the governance and company characteristics and a dependent variable of disclosure index drawn from a multiple GHG voluntary reporting frameworks. Panel regression was then employed to examine the relationship between the explanatory factors and the actual disclosures. Secondly, through survey questionnaire, company executives were asked to rate their perception of the extent to which a list of determinants derived from largely secondary data literature influenced voluntary GHG disclosure. The results indicate an increasing trend in GHG disclosures from 2008 to 2011 perhaps suggesting positive impact of the government initiatives on GHG disclosures in the UK. Overall there is more disclosure of qualitative information in particular information on company action on GHG and climate change rather than actual emission disclosures. Companies have also not been proactive in disclosing quantified estimates of all forms of risks emanating from climate change. Results of the econometric model show that there is no support for the influence of traditional board characteristics such as Non-executive Directors, board size, and audit committee whereas both forms of ownership had a significant negative influence. The presence of an environmental committee was only significant in enhancing qualitative information and not quantitative information. In addition, as in other voluntary disclosures, size plays a vital role in determining the extent of the disclosures and that highly geared companies disclose less GHG information than less geared firms. Liquidity and profitability have no significant influence. The survey results suggest that according to the practitioners, board environmental committee and firm size are the only determining factors to have received wide support by the respondents while all other factors were firmly rejected. The findings that other determinants do not influence disclosure of GHG from a practitioner point of view suggests the need for an in-depth investigation into the determinants of voluntary disclosures beyond the evidence as derived from secondary data based studies. The study contributes knowledge to the voluntary disclosure studies in a number of ways. First, through mixed data approach, it has brought additional insights into the determinants of GHG disclosures. For example, through the primary survey data approach, evidence is documented that confirm and also contradict the secondary data approach findings in respect of both some governance and company variables. This suggests the need for more research using the mixed-method approach in an attempt to reveal why the results contradict. Secondly the results enrich voluntary disclosure literature by bringing disclosure determinants evidence through longitudinal data. Insights obtained from both the data triangulation and longitudinal study setting will help inform existing debate on policy options with regard to GHG emission disclosure. Finally the study contributes to the GHG disclosure literature by developing a comprehensive GHG voluntary disclosure index drawn from a various reporting guidelines. Such a comprehensive index will help ensure that adequacy of company GHG disclosures is assessed based on robust instrument.
- Published
- 2013