Abstract
The study examines the effect of environmental reporting on financial performance of listed manufacturing companies in Nigeria for a ten year period between 2011 and 2020. The study employed an ex-post facto research design where secondary data were collected from 26 manufacturing companies listed on the Nigerian Exchange Group. Environmental reporting was measured using; biodiversity, pollution, Greenhouse gas emission, energy and waste management while share price was used as a metric of financial performance. Firm size represented the control variable. Panel multiple regression technique was conducted on the data and the result of the analysis showed that; biodiversity and pollution management have a negative but significant connection with share price while waste and energy management are negatively and insignificantly related to share price. Meanwhile, share price is positively and significantly affected by Greenhouse gas emissions. The study recommends that management of manufacturing companies in Nigeria should make biodiversity, pollution and greenhouse gas emission reporting a thing of concern because, they have significant influence on share price. This can be achieved by encouraging companies to engage in corporate responsibilities and as well discourage activities that would adversely affect the environment.
Keywords: Environmental Disclosure, Financial Performance, Biodiversity Loss, Pollution, Waste Management, Energy, Greenhouse Gas Emission.
- Introduction
The environment where a company is located has significant impact on the performance especially where it activities have influence on the host community. Most of these companies’ activities result to negative impact such as; pollution, biodiversity loss, waste and effluents, occupational health and safety, energy usage and greenhouse gas emissions. The adverse impact of these activities on the environment have led to increased concern by stakeholders towards the need to protect the environment worldwide. Stakeholders such as environmentalists, shareholders, government, consumers, employees, creditors and the general public are affected in one way or the other by the activities of companies and need to know the measures companies take to address these negative effect of their operations on the environment. In line with these growing concern, companies are faced with pressure to carry out their activities in an environmentally friendly way and provide information regarding their efforts to sustain the environment to all stakeholders. Responding to these pressures, companies all over the world are not just making efforts to sustain the environment by their activities on the environment but also ensuring they voluntarily capture these information in their annual reports for public consumption (Ahmad 2012). In this regard, companies are expected to take into cognizance the environmental and societal impact of their activities, hence, the need to disclose complete information relating to such activities to their stakeholders. This implies that companies need to make efforts by responding to issues of environmental degradation in a positive direction and report to stakeholders accordingly. In line with the above, companies are expected to maintain a good relationship with her stakeholders by providing a conducive business environment to enable it thrive or else may loose investors’ confidence and patronage which is capable of negatively affecting companies’ financial performance.
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