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Journal of Business Ethics (2007) 72:307–321 Springer 2006 DOI 10.1007/s10551-006-9172-8 Environmental Reporting of Global Corporations: A Content Analysis based Anita Jose on Website Disclosures Shang-Mei Lee ABSTRACT. Today, more corporations disclose infor- KEY WORDS: environmental disclosures, environ- mation about their environmental performance in re- mental management practices, global corporations, con- sponse to stakeholder demands of environmental tent analysis, business ethics, corporate citizenship responsibility and accountability. What information do corporations disclose on their websites? This paper investigates the environmental management policies and practices of the 200 largest corporations in the world. Introduction Based on a content analysis of the environmental reports of Fortune’s Global 200 companies, this research analyzes the content of corporate environmental disclosures with Over the years, societal expectations of corporate respect to the following seven areas: environmental performance have changed considerably. At the planning considerations, top management support to the heart of this change is the call for greater environ- institutionalization of environmental concerns, environ- mental sustainability. Different stakeholder groups, mental structures and organizing specifics, environmental especially the regulatory and corporate watchdog leadership activities, environmental control, external groups, are putting great pressure on corporations to validations or certifications of environmental programs, become more environmentally responsible. There and forms of corporate environmental disclosures. has been an increase in the number of countries that have passed regulations requiring some sort of public disclosure of corporate environmental information. Examples of such countries include Japan, Denmark, Anita Jose is an associate professor of Management and director of New Zealand, and The Netherlands (Kolk, 2003). the MBA program at Hood College, Maryland. Her current Asenvironmental sustainability became an important research interests include business ethics, corporate social concern for organizations and environmental dis- responsibility, and international management. Her articles closure became a stakeholder requirement, organi- have appeared in such publications as the Journal of Busi- zations tried to institutionalize environmental ness Ethics, Southern Law Journal, Business Intelli- concerns through policies, procedures, and systems gence, and Advances in Industrial and Labor Relations. (Jones et al., 1998; Russo and Fouts, 1997). She received her MBA and MMGT from the University of The corporate environmental movement is Dallas and her Ph.D. from the University of North Texas. comprised of two distinct stages characterized by Shang-Mei Lee, Ph.D., CFA, is currently an assistant professor different driving forces. During the early stage, the of finance at St. Edward’s University, Texas. Dr. Lee re- movement was driven by the compliance-based ceived her Ph.D. in finance from the George Washington paradigm in which legal and regulatory consider- University and was awarded with the Chartered Financial ations were the primary driving forces behind Analyst (CFA) designation by the Association of Investment corporate environmental responses (Li, 2001; Management and Research. Her research interests include international investments, business ethics, socially responsible Rosen, 2001). This phase was characterized by law- investing, and personal financial planning. Her publications obedience behavior, driven by command and con- have appeared in The Southern Business and Economic trol or regulatory regime-based considerations, and Journal, as well as Proceedings of several Conferences. internally justified by cost considerations. During 308 Anita Jose and Shang-Mei Lee this phase, corporate environmental responses were problems. The problem of content standardization more reactive to external pressures, primarily regu- and uniformity was addressed by a number of asso- latory pressures (Hart, 1995; Li, 2001). ciations and NGOs. International Standards Orga- The second stage is driven by the competitive nization’s ISO 14001 guidelines and European advantage-based view, which argues that economics Union’s Eco-Management and Audit Scheme and ecology are compatible and superior environ- (EMAS) were introduced as a way to standardize mental performance leads to above-average industry corporate environmental practices. In order to profits (Rosen, 2001; Russo and Fouts, 1997). provide a consistent guideline to disseminate envi- According to this view, corporations with proactive ronmental information, some standards for envi- environmental programs have a competitive advan- ronmental reporting were created. Such popular tage because their better reputation resonates standards include the Public Environmental favorably with stakeholder groups such as customers, Reporting Initiative (PERI), the CERES Report employees, and the public in general (Dechant and from the Coalition for Environmentally Responsible Altman, 1994; Russo and Fouts, 1997; Starik and Economics (CERES), the ICC Business Charter for Rands, 1995). Other factors that contribute to the Sustainable Development (ICC), and the Global competitive advantage based on environmental sus- Reporting Initiative (GRI) (Buchholz, 1998; Skillius tainability are better technology (Groenewegen and and Wennberg, 1998). Vergragt, 1991; Shrivastava, 1995a) and sharper It is beyond the scope of this paper to elaborate on political acumen to influence public policy (Starik all the principles set for these standards. However, and Rands, 1995). The underlying premise of the there are many common denominators in terms of second stage is that stakeholders expect companies to their recommendations for corporate environmental be environmentally responsible and hence there is a management. These commonalities include having market premium for this improved environmental an environmental policy to govern operations, an performance. environmental system to translate the policy into Stakeholder pressure acts upon companies in two practice by integrating environmental concerns different forms – not only are companies expected to throughout the different organizational and func- effectively manage their environmental perfor- tional area processes, a commitment to improve mance, but they are also to be accountable for this environmental performance by continuously performance (Schaltegger and Burritt, 2000). As a researching best practices and reassessing operations, result, there has been an increase in the number of a requirement that contractors and suppliers conform companies providing environmental disclosures to environmental standards, and an open commu- (Deegan and Gordon, 1996) and many of these nication channel to foster dialog with different disclosures have been in the form of environmental stakeholder groups (ISO 14001, CERES, ICC, reports (Koehler and Chang, 1999). However, two GRI). major problems have plagued these reports in the The issue of dissemination has been resolved as past. One, there was no ‘‘standardization or unifor- the Internet and the World Wide Web provided mity’’ in terms of what various companies reported. organizations with a cheap, fast, and easy informa- Hence, these reports varied widely from company to tion dissemination tool (Jones et al.1998; Marken, company in terms of their content (MacLean and 1998). Given the ever-increasing number of Internet Gottfrid, 2000; Wright, 1995). Two, as corporations users, companies have turned to it from more tra- started to use environmental reports to communicate ditional mass media as their preferred communica- to stakeholder groups regarding their environmental tion channel (Snider et al., 2003). The 2002 KPMG performance, the dissemination of these reports be- Survey of Corporate Sustainability Reporting also cameanissueas it was not practical to distribute hard shows that more and more companies are using the copies to all interested parties (Jones et al., 1998). Internet as a tool to communicate their environ- While organizations grappled with the above- mental performance. mentioned problems, non-governmental organiza- The purpose of this paper is to investigate the tions (NGOs) and technological advances seemed to environmental management policies and practices of offer them innovative solutions to solve these the world’s 200 largest companies as disclosed on Environmental Disclosures of Multinational Corporations 309 their corporate websites. More specifically, this study TABLEI analyzes the content of corporate environmental Categories of environmental communication disclosures with respect to the following seven areas: environmental planning considerations, top man- Categories Measuresa agement support to the institutionalization of envi- ronmental concerns, environmental structures and Environmental planning considerations organizing specifics, environmental leadership Policy Presence of environmental activities, environmental control, external valida- policy tions or certifications of environmental programs, Philosophical Sustainable development and forms of corporate environmental disclosures. underpinnings Life-cycle approach This paper contributes to the literature on cor- Integrated management Strategic rationale Compliance porate environmental reporting in two unique ways. and driving forces Competitive advantage First is its comprehensiveness; we investigated seven Openness to stakeholder areas comprising of 34 specific environmental concerns parameters, which are derived from a number of Proactive approach environmental reporting guidelines, including the or strategy ICC and GRI guidelines. Table I in the research Contributing to global methodology section presents the variables that we sustainability use in this study. Second is our large sample size, Planning approach Risk management which consists of a cross-section of the world’s Corporate priority or not largest companies. Unlike many studies that have a Continuous process limited sample size or are industry or country spe- improvement cific, we have a relatively large sample size of 200 Pre-determined targets and objectives companies from different industries and different Environmental research countries. and development Top management Foreword (of environmental commitment reports) by a top-level Literature on environmental reporting to the institutionalization executive, such as the CEO of environmental Over the last decade, there has been an increase in practices the number of companies providing environmental Environmental structures information (Deegan and Gordon, 1996; Kolk, and organizing specifics 2003; KPMG,1999,2002; Peck and Sinding, 2003). A literature review of corporate environmental dis- Departmental affiliation Separate (Independent) closures shows four major streams of research. The of corporate function environmental function Combined with other first stream deals with who reports environmental departments, such as HR information and how this reporting has benefited the and safety & health reporters (e.g., Meek and Roberts, 1995; Nieminen Management priority Top-level executive and Niskanen, 2001; Russo and Fouts, 1997). In in charge other words, the emphasis here is on the character- Structural integration Presence of environmental istics of the companies that report environmental of environmental management systems information and the relationship between such concerns reporting and financial performance. Prevalence of Office and site practices The next stream of research is about the content environmental practices of the reporting, or what is actually being reported Stakeholder involvement Employee training (e.g., Guthrie and Parker, 1990; Niskala and Pretes, Customer training 1995). The third stream, which is relatively new, Supplier or contractor training deals with the ‘‘how’’ or the medium of reporting. Community involvement Most of the studies under this stream look at the 310 Anita Jose and Shang-Mei Lee TABLE I Gordon, 1996; Nieminen and Niskanen, 2001). In Continued contrast to the past, where voluntary environmental reporting was mostly restricted to firms from high Environmental Promotion of environmental environmental impact industries in industrialized leadership issues at the micro countries, the recent reporting practices show that activities (industry) level environmental communication is becoming com- Promotion of environmental mon in non-industrial sectors and different regions issues at the macro in the world (KPMG, 2002). However, environ- (national) level mental reporting still continues to be the highest in Partnerships with NGOs countries, such as U.S.A., Japan, Germany, and U.K. Environmental control and in industries, such as chemicals, pharmaceuticals, Control measures Compliance data electronics, and automotive (KPMG, 2002). Simi- Historical trends larly, company size is also found to be a determinant Progress towards goals of environmental disclosure (Nieminen and Niska- Explanation of variances nen, 2001). Explanation of corrective In terms of what is being reported and how this actions has changed over the years, perhaps the best source is Audits Internal audits the various reports of KPMG, which has undertaken External or independent periodic surveys of the environmental and sustain- audits ability practices of multinational corporations since External certifications EMAS, ISO 14001 1993. The KPMG International Surveys show that Environmental communications companies report the details of their environmental Medium of environmental General external report policies, future plans and targets, and features of their disclosure Environmental annual environmental management systems (EMS). The report number of companies providing such information a has increased steadily over the years (KPMG, 1999, The 16 components of the ICC Business Charter are 2002). Kolk’s (1999) meta-analytic review of envi- incorporated into the measurement variables and surro- ronmental reports yields similar results in terms of gates.3 the common denominators of corporate environ- mental reports. In its survey of 88 corporate envi- issues relating to the use of Internet as a medium of ronmental reports of Japanese companies, the environmental reporting (e.g., Jones et al., 1998). Investor Research Responsibility Center (IRRC) The final stream deals with the assessment of envi- found that approximately 90% of the companies ronmental performance, mostly for the benefit of the provide information about environmental objec- investment community, to rank/rate such perfor- tives, achievements, and costs (Metrick, 2001). mance (e.g., Dow-Jones Sustainability index; For- Business Today (Anonymous, 2001) conducted a tune Environmental Scorecard; ECCO-Check comprehensive survey of the environmental prac- Index; Investor Responsibility Research rating; and tices of India’s largest companies. They found that Morhardt et al., 2002). 42% of the companies had ISO 14001 certifications, One question that must be addressed is which 60% had separate environment departments, 94% companies report environmental information and had environmental targets in place, 70% had internal what characteristics they share with other companies environmental audit systems, and 60% had facility that do the same. Empirical studies show that char- level environmental reporting systems. In 40% of the acteristics, such as company size, industry type, and companies, the senior environmental officers reported geographic location are the three variables that have directly to the chief executive officers. the greatest impact on voluntary environmental Corporations have changed how they report disclosures (Meek and Roberts, 1995). There is a environmental information. Although in the past, strong relationship between corporate environmen- corporations used annual reports to impart such tal disclosure and industry type (Deegan and information (Nieminen and Niskanen, 2001), now
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