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Faculty of Accounting and Informatics

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Subject: search.filters.subject.Environmental reporting

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    A longitudinal analysis of environmental reporting practices of listed manufacturing firms in South Africa
    (CSRC Publishing, Center for Sustainability Research and Consultancy, 2023-03) Mgilane, Nolwando; Maama, Haruna; Marimuthu, Ferina
    Purpose: Environmental reporting has become a buzzword in the corporate reporting ecosystem, prompting questions about how firms practise it. This study aims to assess the environmental reporting practices of manufacturing firms listed on the JSE in South Africa. Design/methodology/approach: The data collection involved using a content analysis method to extract environmental information from the annual reports of 50 manufacturing firms from 2016 to 2020. Descriptive analysis and Wilcoxon signed ranked test were used to present the trend results and significance level in the changes of environmental reporting over the years. Findings: The results demonstrated an increasing trend in environmental reporting amongst the firms. Notably, the firms disclosed more information about their social and environmental activities, with little reporting emphasis on environmental degradation. The evidence further showed a significant increase in environmental reporting practices over the years. These findings complement the arguments of the legitimacy disclosure theory, suggesting that a quality environmental disclosure portrays firms as environmentally accountable and responsible, resulting in a competitive advantage and winning the trust of the public. Implications/ Originality/value: The study solidifies the existing definitions of legitimacy and stakeholder theory. It also provides consolidated evidence on the movements and trends amongst the social and environmental practices from JSE-listed manufacturing firms' perspectives.
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    The role of environmental disclosures in enhancing firm value : evidence from listed manufacturing firms
    (International Institute for Science, Technology and Education, 2023-01) Mgilane, Nolwando L.; Maama, Haruna; Marimuthu, Ferina
    The traditional approach to financial performance reporting has experienced a significant shift as stakeholders increasingly demand greater transparency regarding firms' environmental and social impact. This has elevated the importance of environmental reporting due to its potential influence on firms' financial strength. This study investigates the relationship between environmental reporting and the value of manufacturing firms listed on the Johannesburg Stock Exchange (JSE) in South Africa. The study conducted a content analysis on 250 annual integrated reports from 50 manufacturing firms listed on the JSE between 2016 and 2020 and utilized a multiple regression analysis. The findings revealed a negative relationship between environmental reporting and firm value, suggesting that adopting environmental reporting may involve additional financial resources, which are perceived as an outflow of funds in an economic context. Consequently, this study recommends that manufacturing companies analyse their stakeholders' characteristics and information needs to present relevant environmental reporting in their annual integrated reports. By doing so, companies can enhance their legitimacy with stakeholders, maximise shareholder value, and ultimately increase firm value. This research contributes to the existing literature on environmental, social, and financial reporting, particularly in South Africa, by focusing specifically on manufacturing firms listed on the JSE.
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    Impact of environmental disclosure on financial health of manufacturing firms
    (Cosmos S.A., 2023) Marimuthu, Ferina; Mgilane, Nolwando; Maama, Haruna
    Environmental reporting can help firms stay in compliance with environmental regulations and manage environmental risks. By proactively addressing and disclosing their environmental impact, manufacturing firms can mitigate potential legal and regulatory penalties, fines, and reputation damage, thereby safeguarding their financial performance. In addition to the latter perspective, cost savings and operational efficiency, enhanced reputation and stakeholder engagement, as well as access to capital and investment opportunities, are critical factors to ensure that firms disclose information about their environmental performance, including its impact on the environment, sustainability initiatives, and environmental risks and opportunities to ensure that they maximise their financial performance. Hence, the aim of this study is to explore the relationship between environmental reporting and financial performance of South African listed manufacturing firms. A multiple regression analysis was adopted to achieve the aim by testing the relationship between the variables amongst a sample of 50 manufacturing firms listed on the Johannesburg Stock Exchange (JSE). A content analysis was utilized to attain environmental reporting information themes from the integrated annual reports retrieved from the JSE for the period 2016 to 2020. The results indicate a negative association between environmental reporting responsibility and financial performance, measured by return on equity (ROE) when the components of environmental reporting are tested individually. However, when these components namely: environmental reporting, social reporting and environmental degradation are combined the findings reveal a positive and statistically significant relationship. These results imply that the adoption of environmental reporting, specifically an increase on the quality of environmental reporting results in an increase in the manufacturing firm performance.
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    The impact of environmental reporting on the value of listed manufacturing firms in South Africa
    (2023-03-07) Mgilane, Nolwando L.; Maama, Haruna; Marimuthu, Ferina
    Environmental reporting is a recent novelty in both corporate and academic fields around the globe. As a result, an increase in environmental pollution and degradation has raised many concerns from the stakeholders. Equally, the firms addressed these concerns through a proper disclosure in a form of annual integrated reporting which addressed how firm’s day-to-day operations and production activities affect the environment, especially the environment of the location where firms operate, this reporting included the measurements implemented to mitigate the impact. On the 1st of March 2010, the JSE has passed a listing requirement which compelled all the listed firms and companies to also report on non-compliance and compliance of environmental and social aspects. This JSE listing requirement was prompted by the assumption that the annual financial statements, also referred to as traditional reporting, only served the interest of investors with financial interest. However, the question of whether the disclosure of environmental reporting impacts firm value remains unanswered. Therefore, this study aims to investigate the impact of environmental reporting on the value of South African manufacturing firms listed on the Johannesburg Stock Exchange (JSE). A content analysis was utilized to attain the environmental reporting information from the integrated annual reports of listed manufacturing firms from 2016 to 2020. These reports were retrieved from the companies' websites. Both descriptive and Wilcoxon-signed ranked test was used to test the extent and the movement of environmental reporting practices of South African listed manufacturing. Furthermore, this study adopts regression techniques to test the association between environmental reporting and firms’ profitability. The findings of this study further indicated that the environmental reporting practices implemented by manufacturing firms increased gradually over time. The evidence further showed a significant negative relationship between environmental reporting and return on equity (ROE) and a positive but insignificant relationship with ROA. Lastly, this study documents that environmental reporting negatively affects firm value. The study further demonstrated that environmental reporting is mainly adopted to conform with JSE listing requirements and not for accountability purposes. As a result, it is recommended that South African listed manufacturing firms must develop a technique that will assist in knowing and understanding the desires of primary and prominent stakeholders to disclose relevant environmental reporting information to the relevant stakeholders, as this can increase the trust between stakeholders and manufacturing firms.