The Extent Of Environmental Disclosures In Listed Oil And Gas Companies In Nigeria

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The Extent Of Environmental Disclosures In Listed Oil And Gas Companies In Nigeria


Abstract


There is an increased awareness of the impact of organizational activities on the environment. Companies are facing pressures to demonstrate responsibility towards the environment; in responding to these pressures companies make disclosures on environmental impact of their activities. This studyaimed at using a disclosure index tailored to assess what is disclosed, the form in which it is disclosed, where it is disclosed in the annual report and whether the disclosure is seen as voluntary or compulsory information. The study is unique as it assesses environmental disclosures in the oil and gas industry in Nigeria using annual reports alone as it is the chief information document of any company that can be used to communicate to it stakeholders. The findings from the study points to the fact that Oil and Gas companies operating in Nigeria pays little or no attention to the disclosure of information relating to the environmental impact of their operations in their annual reports. The information reported are mostly general in nature usually relating to the companies stands on health, safety and environment which are not useful to stakeholders.


Chapter One


Introduction

1.1 Background of the Study

Environmental disclosure by corporations has been increasing steadily in both size and complexity over the last two decades (Smith, 2003). Research attention over the years has attempted to understand and explain this area of corporate reporting which appears to lie outside the conventional domains of accounting disclosures. The evolving challenge in contemporary business firms is the need to reconfigure their performance indices to incorporate societal and environmental concerns as part of the overall objective of business. Environmental and social reporting provides a strategic framework for achieving this holistic re-appraisal of corporate performance. Although it is not a new concept, environmental disclosures remain an interesting area of discourse for academics and an intensely debatable issue for business managers and their stakeholders. According to Deegan and Rankin (1996) corporate environmental reporting refers to the way and manner by which a company communicates the environmental effects of its activities to particular interest groups within society and to society at large. Companies through the process of environmental communication may seek to influence the public’s perception towards their operations. They attempt to create a good image (Deegan and Rankin, 1999). The increasing demand for companies to be socially responsible seems to have witnessed considerable perceptual divergences especially within the context of the stakeholder-shareholder debate. The idea which underlies the “shareholder perspective” is that the only responsibility of managers is to serve the interests of shareholders in the best possible way, using corporate resources to increase the wealth of the latter by seeking profits. In contrast, the “stakeholder perspective” suggests that besides shareholders, other groups or constituents are affected by a company’s activities (such as employees or the local community), and have to be considered in managers’ decisions, possibly equally with shareholders. By reporting environmental information, a firm addresses the information needs of stakeholders and provides a basis for dialogue between the firm and its stakeholders. As a critical avenue of stakeholder management, environmental reporting shapes external perceptions of the firm, helps relevant stakeholders assess whether the firm is a good corporate citizen, and ultimately justifies the firm’s continued existence to its stakeholders.However, environmental reporting has developed rather voluntarily and this implies that companies can choose what to disclose and may even decide not to. Research attention (Sharfman and Fernandoi 2008; Schneider 2010; Roberts 1992; Mgbame 2012) in this regard has been focused largely on why and what factors could influence a company to engage in environmental disclosures voluntarily. Studies (Hackson and Milne 1996; Adams and Hart, 1998) highlighted the importance of the company size. Connors and Gao (2009), Sharfman and Fernandoi (2008), Schneider (2010) examines the role of leverage. Dye and Sridha (1995). Holthausen and Leftwich (1983) have considered the role of industry type. Roberts (1992), Mgbame (2012) have also examined the role of profitability. However, the research evidence in this regards has been inconclusive and the role of the firm specific factors have been vacillating indicating that the issues are still quite unresolved in the literature and this defines the contribution and relevance of the study. Furthermore, there is also a knowledge gap about how corporate characteristics will influence voluntary reporting for developed and developing economies as the magnitude, level of awareness and implications of environmental cost differs considerably. The focus of the study is to examine the environmental disclosures in Nigeria using companies in the oil and gas sector.


1.2 Statement of the Problem

The evolving challenge in contemporary business firms is the need to reconfigure their performance indices to incorporate societal and environmental concerns as part of the overall objective of business. Environmental and social reporting provides a strategic framework for achieving this holistic re-appraisal of corporate performance. Although it is not a new concept, environmental disclosures remain an interesting area of discourse for academics and an intensely debatable issue for business managers and their stakeholders. On this background the researcher wants to investigate the extent of environmental disclosure in listed oil and gas companies in Nigeria


1.3 Objective of the Study

The objectives of the study are;

  1. To identify the level of environmental disclosure practices by national oil and gas corporations in Nigeria
  2. To evaluate the level of environmental disclosure relating to annual reporting in oil and gas companies in Nigeria
  3. To ascertain whether environmental disclosure in oil and gas companies differs from other companies
  4. To ascertain the nature of environmental disclosure in oil and gas companies in Nigeria

1.5 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: there is no level of environmental disclosure practices by national oil and gas corporations in Nigeria
    H1: there is level of environmental disclosure practices by national oil and gas corporations in Nigeria
  2. H02: environmental disclosure in oil and gas companies do not differs from other companies
    H2: environmental disclosure in oil and gas companies differs from other companies

1.5 Significance of the Study

This study will give clear insight on the extent of environmental disclosures in listed oil and gas companies in Nigeria. The study will be beneficial to students, oil and gas companies and the general companies. The study will serve as a reference to other researchers that want to embark on this topic


1.6 Scope and Limitation of the Study

The scope of the study covers the extent of environmental disclosures in listed oil and gas companies in Nigeria. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities


1.7 Definition of Terms

Environmental Disclosure:

Environmental Disclosure Makes Companies Look Greener. … Researchers also compared each firm’s environmental scores using data from Trucost, which rates an organization’s environmental impact, by calculating their emissions of greenhouse gases, water, waste and air pollutants, as well as their use of natural resources.

Oil and Gas Companies:

The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transporting, and marketing of petroleum products


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain the extent of environmental disclosures in listed oil and gas companies in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of environmental disclosures in listed oil and gas companies in Nigeria


5.2 Summary

This study was on the extent of environmental disclosures in listed oil and gas companies in Nigeria. Four objectives were raised which included: To identify the level of environmental disclosure practices by national oil and gas corporations in Nigeria, to evaluate the level of environmental disclosure relating to annual reporting in oil and gas companies in Nigeria, to ascertain whether environmental disclosure in oil and gas companies differs from other companies, to ascertain the nature of environmental disclosure in oil and gas companies in Nigeria. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected oil and gas companies in Nigeria. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made accountants, procurement officers, engineersand junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


5.3 Conclusion

Corporate social and environmental responsibility is a company’s commitment to operating in an economically, socially and environmentally sustainable manner whilst balancing the interests of diverse stakeholders. Corporate social and environmental reporting represents the private sector’s way of integrating the economic, social, and environmental imperatives of its activities. Corporate social and environmental reporting has attracted much attention over the past three decades. However, Managers tend to weigh the benefits and costs of disclosing environmental information. The study provides insight into the determinants of corporate social reporting decision. In this regards firm size impacts negatively and significantly on the decision to disclose corporate social responsibility by quoted companies and the result is also significant


5.4 Recommendation

It is recommended that further studies should evaluate the influence of other firm’s attributes on environmental reporting quality. Finally, the results of the study should be interpreted in the light of certain limitations. First, the study is limited to the Nigerian oil and gas companies and therefore does not provide a generalized view for other sectors in Nigeria.


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