Environmental Disclosure: Critical Issues and New Trends

267 Pages·2022·10.817 MB·English

by  Luigi Lepore, Sabrina Pisano

ENVIRONMENTAL DISCLOSURE
This book provides a description of the state of the art on environmental disclo-
sure, illustrating the key theoretical issues, the regulatory frameworks, and the
main standards developed and reporting the results of an empirical analysis on
the environmental disclosure released by listed firms.
Luigi Lepore and Sabrina Pisano begin by analysing the origin and evolution of
environmental disclosure. They go on to provide a description of the main theoret-
ical frameworks used by scholars, explaining the conceptual basis of each theory and
describing how the specific theory has been used to explain the company’s decision
to release environmental disclosure. The second part of the book highlights the role
and evolution of the European regulatory frameworks, emphasising the transition
from voluntary to mandatory disclosure, and the major standards and guidance
developed. The book ends by providing a picture of the evolution of sustainability
reporting practices in European Union nations over the past two decades.
This book investigates the critical issues and new directions in environmental
disclosure, which are currently under examination by regulators and standard
setters. It will therefore be of great interest to academics and students working in
the areas of business and sustainability.
Luigi Lepore is Full Professor of Business Administration at Parthenope Uni-
versity. He has been visiting researcher at IE Business School and Institute for
Court Management. His research interests focus on corporate governance, ac-
counting, and public management. He has participated in several conferences
and has published numerous articles in international journals.
Sabrina Pisano is Associate Professor of Business Administration at Parthenope
University. She has been visiting researcher at Stern School of Business of New
York University. Her research interests focus on voluntary disclosure, corporate
social responsibility, and corporate governance. She has participated in several
conferences and published numerous articles in international journals.
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For more information about this series, please visit: www.routledge.com/ Routledge-
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ENVIRONMENTAL
DISCLOSURE
Critical Issues and New Trends
Luigi Lepore and Sabrina Pisano
First published 2023
by Routledge
4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
605 Third Avenue, New York, NY 10158
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2023 Luigi Lepore and Sabrina Pisano
The right of Luigi Lepore and Sabrina Pisano to be identified as authors
of this work has been asserted in accordance with sections 77 and 78 of
the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced
or utilised in any form or by any electronic, mechanical, or other
means, now known or hereafter invented, including photocopying and
recording, or in any information storage or retrieval system, without
permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks
or registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing- in- Publication Data
A catalogue record for this book is available from the British Library
ISBN: 978- 1- 032- 15848- 8 ( hbk)
ISBN: 978- 1- 032- 15850- 1 ( pbk)
ISBN: 978- 1- 003- 24593- 3 ( ebk)
DOI: 10.4324/ 9781003245933
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CONTENTS
Introduction 1
1 The role of environmental disclosure in the relationship
with stakeholders 6
1.1 Origin and evolution of environmental disclosure 6
1.1.1 Corporate social responsibility, sustainability, and
environmental disclosure 12
1.1.2 Environmental disclosure in European regulatory
frameworks and in the main standards and guidance 16
1.2 The role of disclosure as a mechanism of corporate governance 18
1.3 Environmental disclosure, relations, and stakeholder management 25
1.4 Environmental disclosure and relational capital 29
2 Theoretical frameworks for environmental disclosure 39
2.1 Agency theory 39
2.2 Stakeholder theory 47
2.3 Legitimacy theory 56
2.4 Institutional theory 65
2.5 Signalling theory 73
3 Determinants and effects of environmental disclosure 83
3.1 Determinants of disclosure 83
3.1.1 Internal or firm- specific factors 83
3.1.1.1 Company characteristics 84
3.1.1.2 Corporate governance characteristics 92
vi Contents
3.1.2 External or institutional factors 97
3.1.2.1 Media exposure 97
3.1.2.2 Institutional factors 98
3.2 Effects of disclosure 101
3.2.1 Company performance 102
3.2.2 Financial markets 103
4 Regulatory frameworks for environmental disclosure 113
4.1 The European Union’s attention to environmental issues 113
4.2 Modernisation Directive 2003/ 51/ EC 119
4.3 Non- Financial Reporting Directive 2014/ 95/ EU 122
4.3.1 Environmental disclosure requirements according to
Directive 2014/ 95/ EU 124
4.3.2 European Commission Guidelines 126
4.3.2.1 Guidelines on non- financial reporting
( methodology for reporting non- financial information) 127
4.3.2.2 Guidelines on non- financial reporting:
Supplement on reporting c limate- related information 130
4.3.3 Transposition of Directive 2014/ 95/ EU into the laws of
EU member states 131
4.4 The proposal Corporate Sustainability Reporting Directive 139
5 Main standards and guidance for environmental disclosure 149
5.1 Introduction 149
5.2 The GRI standards 150
5.3 The International IR Framework 166
5.4 The AA1000 AccountAbility principles 173
5.5 Similarities and differences, and strengths and weaknesses of
reporting frameworks 184
6 Empirical analysis of the determinants of the environmental
disclosures released by European listed companies 190
6.1 Aim, research model, and hypotheses development 190
6.2 Method 197
6.2.1 Sample selection and data source 197
6.2.2 Dependent, independent, moderating and control variables 217
6.2.2.1 Dependent variable 217
6.2.2.2 Independent variables 218
6.2.2.3 Moderating variables 218
6.2.2.4 Control variables 218
6.2.3 Regression analysis 222
Contents vii
6.3 Results 223
6.3.1 Descriptive statistics 223
6.3.2 Regression results 225
6.3.2.1 Direct effects 225
6.3.2.2 Interaction effects 236
6.4 Discussion and concluding remarks 238
Conclusions 248
Index 253

INTRODUCTION
This book discusses environmental disclosure and aims to describe both the cur-
rent state of the field and emerging trends. Over the last decade, increasing focus
has been placed on environmental issues, such as climate change, greenhouse gas
emissions, deforestation, and global warming. Policymakers around the world
have developed different rules and programs covering, among others, the matters
of pollution, waste management, and environmental protection, the objectives
of which are the preservation of natural capital, the fight against climate change,
and the creation of a low- carbon, green economy. Regarding European Union
( EU) member states, the European Commission released the European Green Deal
in December 2019 with the goal of making Europe the first continent in the
world to be climate- neutral. This statement outlined specific steps to increase
resource efficiency and achieve net- zero greenhouse gas emissions by 2050. For
this reason, it represents the reference point for other EU policies successively
issued to encourage the transition to clean energy and the development of green
technologies.
To respond to growing institutional pressure, companies have begun integrat-
ing environmental issues into their business model and operations and increasing
the environmental disclosure released to external stakeholders. According to the
2020 KPMG survey, in recent years, the number of companies that prepared
sustainability reports and disclosed environmental information has increased
considerably.
Because of the growing demand for sustainability responsibility and disclo-
sure from investors, policymakers, the media, people, and overall society, the
majority of companies have chosen to share environmental information on a
voluntary basis. In reality, the disclosure of information regarding a company’s
environmental operations and related performance provides a valuable way to
DOI: 10.4324/9781003245933-1