An Investigation into a Conceptual Framework for Corporate Environmental Reporting Aris ...

421 Pages·2010·16.51 MB·English

An Investigation into a Conceptual Framework
for Corporate Environmental Reporting
Aris Solomon
PhD
Sheffield University Management School
Department of Accounting & Finance
June 1997
October 1998
Abstract
The objective of this thesis is to develop a way forward for voluntary corporate
environmental reporting in Britain, given the absence of any new legislation requiring
mandatory corporate environmental disclosure, with the principal aims of beginning the
process of making the implicit reporting framework explicit, investigating user needs,
and identifying the level of consensus between three groups. These are a normative,
interested party and company group. The thesis develops a theoretical conceptual
framework model, with a disclosure and reporting component, and investigates the model
empirically in relation to the level of consensus between the normative, interested party,
and company respondent groups, using a mail questionnaire. The approach adopted uses
.
the financial reporting conceptual framewor,k, which represents the status quo, as a basis
.--
for developing a conceptual framewer~ fo~ corporate environmental reporting. The
empirical evidence suggests there is comparability between financial and environmental
reporting, on a fundamental basis. Further, the findings reveal that there are disclosure,
reporting and attitude gaps between the requirements of the normative and interested
party groups, and the practices (and attitudes) of the company group, within the current
voluntary corporate environmental reporting framework. Indeed, the normative and
interested party groups appear to require more "ambitious" and "mature" corporate
environmental disclosure, rather than the unambitious and perhaps "immature"
information currently provided by companies. Two policy recommendations, aimed at
reducing the gaps between what is required and what is produced, arise from the thesis.
First, a dissemination with education strategy, and second, a regulation with education
strategy. However, the empirical evidence suggests that the latter is the preferred and
more appropriate route.
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Acknowledgements
Firstly, I would like to thank my family for all the support they have given me over the
years, namely, my wife, Jill Frances Solomon, my mother, Gloria Papadopoulos, my
sister and brother-in-law, Jocelyn and Stephano Esposito, and my mother and father-in
law, Brenda and Derek Thompson, for putting up with me, and helping me.
Special thanks to Linda Lewis, my supervisor, who has become a very good friend and
who has helped advance the ideas behind the thesis, at all stages. Linda also provided
a great deal of support for the funding of the PhD, from Manchester and Sheffield, and
organised teaching which did not interfere unnecessarily with the research. I would also
like to thank David Owen for his help and advice with the thesis, and for his kind
support. I am also extremely grateful to my external examiner, Clare Roberts, for her
clear guidance in preparing the thesis for resubmission.
From the University of Sheffield, I am extremely grateful to Wendy Rodgerson,
Michelle Gleadall, Pauline Barringer and Elaine Callery, for the excellent secretarial
support that they have given to me. Thanks also to Rebecca Boden for her comments
at PhD Committee meetings, as well as for the financial support which she provided for
the questionnaire survey.
From the University of Manchester, I am grateful to Stuart Turley for his helpful
comments at PhD Committees, and particularly for his clarification of the importance
of decision usefulness. I would also like to express my thanks to Nathan Joseph, for
responding patiently to queries on nonparametric statistics. Thanks also to Martin
Walker, for helping with the teaching assistantship at Manchester, as well as to Hilary
Garraway, Catherine Dodd, April Pepper, Carol Lucas and Irene Kelly for their
secretarial and administrative support.
I also wish to express my gratitude to the large number of respondents who made the
questionnaire survey possible. Very special thanks to my wife, for typing and editing the
thesis, and to my mother-in-law, for proof reading the thesis. Finally, I want to thank
Gareth Wilson, my very long-time friend, Derek, my father-in-law, and my friends, Julie
Froud and Karel Williams, for their support throughout the PhD.
Finally, I acknowledge gratefully the financial support from the University of
Manchester and the University of Sheffield.
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Chapter One
Introduction
Page
1.1 Rationale and Objectives 19
1.2 Thesis Layout 25
Chapter Two
Conceptual Frameworks
2.1 Introduction 27
2.2 The Application of the Conceptual Framework Methodology Across
Disciplines 28
2.2.1 Conceptual Frameworks Across Disciplines 28
2.2.2 An Evaluation of the Use of Conceptual Frameworks Across Disciplines 49
2.3 The Application of the Conceptual Framework Methodology in
Corporate Financial Reporting 51
2.3.1 Conceptual Frameworks in Corporate Financial Reporting 54
2.3.2 An Evaluation of the Use of Conceptual Frameworks in Corporate
Financial Reporting 73
2.4 The Application of the Conceptual Framework Methodology in
Environmental Reporting 78
2.4.1 Conceptual Frameworks in Environmental Reporting 79
2.4.2 An Evaluation of the Use of Conceptual Frameworks in
Environmental Reporting 81
2.5 The Present Conceptual Framework for Corporate Financial Reporting in
Relation to Environmental Reporting 82
2.6 Conclusion 88
Chapter Three
A Survey of Corporate Environmental Reporting in
Theory and in Practice
90
3.1 Introduction
92
3.2 Reality
93
3.2.1 A Theory of Reality
97
3.2.2 Reality in a Corporate Environmental Reporting Context
100
3.2.3 Summary
100
3.3 The Current State of Corporate Environmental Reporting
3.3.1 Survey of Current Practice in Corporate Environmental Reporting 101
119
3.3.2 Wish Lists: Normative Parties
4
3.3.3 Wish Lists: Interested Parties 132
3.3.4 Summary 137
3.4 Survey of Issues in Corporate Environmental Reporting 138
(i) The Motives for Corporate Environmental Disclosure 138
(ii) The Usefulness of Corporate Environmental Disclosure 153
(iii) Assessing and Reporting Environmental Incidents 155
(iv) The Time Period and Communication of Corporate
Environmental Reporting 156
(v) The Users of Corporate Environmental Information 160
(vi) Bearing the Cost of Corporate Environmental Reporting 163
(vii) Possible Qualitative Characteristics of Corporate
Environmental Disclosure 166
(viii) Recognition and Measurement in Corporate
Environmental Reporting 167
(ix) The Verification of Corporate Environmental Disclosure 172
(x) Interested Party Access to Corporate Environmental Disclosure 177
(xi) The Obj ectives of Corporate Environmental Reporting 179
(xii) The Inadequacies of Corporate Environmental Reporting 182
3.5 A Rationale for Developing an Explicit Conceptual Framework for
Corporate Environmental Reporting 186
3.5.1 The Need for an Explicit Conceptual Framework for Corporate
Environmental Reporting 187
3.5.2 Potential for an Explicit Conceptual Framework for Corporate
Environmental Reporting 192
3.5.3 Problems with Establishing an Explicit Conceptual Framework for
Corporate Environmental Reporting 193
196
3.6 Conclusion
Chapter Four
Modelling a Conceptual Framework for
Corporate Environmental Reporting
198
4.1 Introduction
199
4.2 Disclosure Component: An Accountability Approach
200
4.2.1 Forces Driving Corporate Environmental Disclosure
202
(i) Ethical Rationale
203
(ii) Marketing Rationale
204
(iii) Legal Rationale
205
(iv) Political Rationale
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4.2.2 The Inadequacy of Corporate Environmental Disclosure 206
4.2.3 Summary 206
4.3 Reporting Component: An Accountability, and Economic Decision
Usefulness Approach 207
4.3.1 Corporate Financial Reporting: The Conceptual Framework 208
(i) Foundation of the Image of Reality 208
(ii) Current Image of Reality 210
(iii) Conceptual Framework 211
(iv) Stewardship and Decision-Making 212
4.3.2 Corporate Environmental Reporting: A Conceptual Framework 213
4.3.3 The Commonality between Financial and Environmental
Corporate Accountability 213
4.3.4 The Preliminary Corporate Environmental Reporting Research Questions 217
4.4 Conclusion 221
Chapter Five
Research Design
5.1 Introduction 223
5.2 Research Methodology 224
5.2.1 Rationale for Selecting a Mail Questionnaire 224
5.2.2 Response Maximisation Techniques 228
5.2.3 Suggested Provisions for a Mail Questionnaire Survey 230
5.2.4 Summary 231
5.3 Statistical Tools for Analysis 231
5.3.1 A Need for Non-parametric Statistics 231
5.3.2 Statistical Tests used to Analyse the Questionnaire Responses 234
238
5.3.3 Summary
239
5.4 Preliminary Investigation
239
5.4.1 Literature Review
5.4.2 Telephone Interviews 240
5.4.3 A Discussion of Group Development and Group Meaning for the
Questionnaire Survey 242
243
(i) The Normative Group
245
(ii) The Interested Party Group
246
(iii) The Company Group
247
5.4.4 Summary
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5.5 Pilot Questionnaire Survey 248
5.5.1 Pilot Questionnaire Design 248
(i) Question Content and Construction 249
(ii) Questionnaire Logistics and Response Maximisation Techniques 251
5.5.2 Sample Specification, Response Rates and Response Themes 253
(i) The Normative Sample for the Pilot Questionnaire 253
(ii) The Interested Party Sample for the Pilot Questionnaire 254
(iii) The Company Sample for the Pilot Questionnaire 254
(iv) A Discussion of the Response Themes Arising from the
Pilot Questionnaire 255
(v) Comparison of Response Themes 260
5.5.3 Summary 261
5.6 Final Questionnaire Survey 261
5.6.1 Final Questionnaire Design 261
(i) Content and Construction of Questions in the Final Questionnaire 262
(ii) Questionnaire Logistics and Response Maximisation Techniques 263
5.6.2 Sample Specification for the Final Questionnaire 264
(i) The Normative Sample for the Final Questionnaire 264
(ii) The Interested Party Sample for the Final Questionnaire 271
(iii) The Company Sample for the Final Questionnaire 275
5.6.3 Summary 281
5.7 Limitations to the Methodology Adopted 281
5.7.1 Combining Normative and Positive Approaches 282
5.7.2 Combining Different Realities and Attempting to Obtain a Consensus
from Different Realities 284
5.7.3 The Limitations to Sample Selection and Data Analysis 285
(i) Are the Respondents Representative of their Populations? 283
(ii) Homogeneity or Heterogeneity of Sub-Samples 288
5.7.5 Summary 310
311
5.8 Conclusion
Chapter Six
The Attitudes of the Normative Group towards a
Conceptual Framework for Corporate Environmental Reporting
312
6.1 Introduction
312
6.2 The Empirical Findings
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6.2.1 Attitudes Towards Corporate Environmental Information,
in Relation to Financial, Quantitative and Qualitative Disclosure 312
(i) The Usefulness of Corporate Environmental Information 313
(ii) Corporate Environmental Resource Information 317
(iii) Corporate Environmental Risk Information 320
(iv) Quantifiable Corporate Environmental Information 324
(v) Benchmarking Corporate Environmental Performance Information 327
(vi) Corporate Environmental Financial Information 330
(vii) Corporate Environmental Management Information 333
6.2.2 Attitudes Towards Corporate Environmental Reporting 336
(i) Assessing and Reporting Environmental Incidents 336
(ii) Time Period and Communication of Corporate
Environmental Reporting 339
6.2.3 Attitudes Towards the Current Framework of Corporate
Environmental Disclosure 343
(i) Users of Corporate Environmental Disclosure 343
(ii) Bearing the Cost of Corporate Environmental Disclosure 347
(iii) Possible Qualitative Characteristics of Corporate
Environmental Disclosure 349
(iv) Proposed Elements of a Conceptual Framework for Corporate
Environmental Reporting 353
(v) Verification of Corporate Environmental Disclosure 355
(vi) Suggested Motives For Corporate Environmental Disclosure 357
(vii) Possible Reasons For the Inadequacy of Corporate
Environmental Disclosure 359
(viii) Interested Party Access to Corporate Environmental Disclosure 363
(ix) Accountability, Decision-Making and Corporate
364
Environmental Disclosure
366
6.2.4 Further Points
368
6.3 Conclusion
Chapter Seven
The Attitudes of the Interested Party Group towards a
Conceptual Framework for Corporate Environmental Reporting
369
7.1 Introduction
370
7.2 The Empirical Findings
7.2.1 Attitudes Towards Corporate Environmental Information,
370
in Relation to Financial, Quantitative and Qualitative Disclosure
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(i) The Usefulness of Corporate Environmental Information 370
(ii) Corporate Environmental Resource Information 374
(iii) Corporate Environmental Risk Information 377
(iv) Quantifiable Corporate Environmental Information 381
(v) Benchmarking Corporate Environmental Performance Information 384
(vi) Corporate Environmental Financial Information 387
(vii) Corporate Environmental Management Information 390
7.2.2 Attitudes Towards Corporate Environmental Reporting 394
(i) Assessing and Reporting Environmental Incidents 394
(ii) Time Period and Communication of Corporate
Environmental Reporting 396
7.2.3 Attitudes Towards the Current Framework of Corporate
Environmental Disclosure 399
(i) Users of Corporate Environmental Disclosure 399
(ii) Bearing the Cost of Corporate Environmental Disclosure 403
(iii) Possible Qualitative Characteristics of Corporate
Environmental Disclosure 404
(iv) Proposed Elements of a Conceptual Framework for Corporate
Environmental Reporting 407
(v) Verification of Corporate Environmental Disclosure 409
(vi) Suggested Motives For Corporate Environmental Disclosure 411
(vii) Possible Reasons For the Inadequacy of Corporate
Environmental Disclosure 414
(viii) Interested Party Access to Corporate Environmental Disclosure 417
(ix) Accountability, Decision-Making and Corporate
418
Environmental Disclosure
419
7.2.4 Further Points
421
7.3 Conclusion
Chapter Eight
The Attitudes of the Company Group towards a
Conceptual Framework for Corporate Environmental Reporting
422
8.1 Introduction
423
8.2 Empirical Findings
8.2.1 Corporate Environmental Information, in Relation to Financial,
423
Quantitative and Qualitative Disclosure: Practice
423
(i) The Usefulness of Corporate Environmental Information
428
(ii) Corporate Environmental Resource Information
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(iii) Corporate Environmental Risk Information 431
(iv) Quantifiable Corporate Environmental Information 435
(v) Benchmarking Corporate Environmental Performance Information 439
(vi) Corporate Environmental Financial Information 442
(vii) Corporate Environmental Management Information 446
8.2.2 Attitudes Towards Corporate Environmental Reporting: Practice 449
(i) Reflections on the Progress of Corporate Environmental Reporting 449
(ii) Proj ections on the Progress of Corporate Environmental Reporting 455
(iii) Assessing and Reporting Environmental Incidents 458
(iv) Accounting Information and Corporate Environmental Reporting 460
(v) Consultation and Corporate Environmental Reporting 462
(vi) Time Period and Communication of Corporate
Environmental Reporting 464
8.2.3 Attitudes Towards the Current Framework of Corporate 467
Environmental Disclosure
(i) Users of Corporate Environmental Disclosure 468
(ii) Bearing the Cost of Corporate Environmental Disclosure 471
(iii) Possible Qualitative Characteristics of Corporate
Environmental Disclosure 472
(iv) Proposed Elements of a Conceptual Framework for Corporate
Environmental Reporting 476
(v) Verification of Corporate Environmental Disclosure 478
(vi) Suggested Motives For Corporate Environmental Disclosure 479
(vii) Possible Reasons For the Inadequacy of Corporate
482
Environmental Disclosure
(viii) Interested Party Access to Corporate Environmental Disclosure 486
(ix) Accountability, Decision-Making and Corporate
488
Environmental Disclosure
489
8.2.4 Further Points
491
8.3 Conclusion
Chapter Nine
A Comparison of Attitudes between the Respondent Groups
492
9.1 Introduction
494
9.2 Methodology
9.3 Two and Three Sample Tests of Attitude Intersection between the
501
Normative, Interested Party and Company Groups
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