Advances in Environmental Accounting & Management: Volume 1

The growth in environmental accounting research and interest in the last few years has been little short of phenomenal. For those of us with a long-standing interest in such issues, it is easy to get swept along in the euphoria of seeing environmental issues brought to centre stage in business and accounting debates. Despite wishing to encourage this growth in interest, this chapter is by way of a cautionary tale that, within this burgeoning, enthusiastic and often excellent research, there is a very real danger that environmental accounting may well end up doing more harm than good. This chapter, works from the premises that: (a) accounting (and accounting research) typically adopts a set of implicit assumptions about the primacy and desirability of the conventional business agenda — and is thus ‘managerialist’ in focus; and (b) that the conventional business agenda and environmental protection — and, especially, the pursuit of sustainability — are in fundamental conflict. If this is so then accounting is contributing to environmental degradation — not environmental protection. The chapter seeks to provide a review of the current state of the art in environmental accounting research through this ‘managerialist’ lens and then goes on to illustrate the essence of the problem through the reporting of a new analysis of data from an international study of accounting, sustainability and transnational corporations. The chapter concludes with a call for more explicit examination of the implicit assumptions held in accounting research generally and environmental accounting research in particular.

In this chapter, a legitimacy theory framework for corporate environmental disclosure is empirically investigated, using a multi-case research design. Legitimation strategies in the 1991 to 1995 annual reports of two Canadian-owned pulp and paper companies are explored. The findings support legitimacy theory as an explanation for voluntary environmental disclosure in annual reports.

Global concern for the environment places the accountant, as a professional, in a position of ethical responsibility. Accountants must understand their own ethical position, as well as their definition of the environment. This understanding can help them extend accounting practice to meet current social needs, and maintain professional legitimacy.

This study examines whether increased pressure on U.S. firms relative to Superfund exposures in the late 1980s and early 1990s impacted on the provision of environmental information in 10K reports. Based on a sample of 95 companies, the study finds that both Superfund-related and non-Superfund-related environmental information disclosures are more extensive in the 1994 10K reports than they had been in 1986 10Ks. Regression analysis, controlling for other potential impact variables, supports the argument that cross-sectional differences in the change in non-Superfund information provision is related to changes in Superfund disclosure. The study provides additional evidence, therefore, that social disclosure appears to be a function of the exposure companies face to the social/political environment.

Environmental outlays are significantly increasing and will continue to increase as the world becomes more environmentally conscious and countries issue more extensive environmental laws and regulations. This chapter discusses the new global environmental initiatives (ISO 14000 environmental standards) and presents the results of a survey of a sample of Chief Financial Officers and Corporate Environmental Officers that provided information on environmental matters including corporate environmental costs, the use and importance of environmental audits, and the adoption of ISO 14000 environmental standards and their perceived benefits. The results of this study may provide insight to business, academia, government regulatory agencies, and accounting standard setters regarding environmental matters. The concepts and issues discussed herein may provide guidance to other countries that are considering addressing the challenges and opportunities of their own environmental regulations, laws, accounting standards, and environmental auditing.

This study investigates the relationship between environmental disclosures made within the various sections of the 1992 annual reports of the 20 U.S. firms named by Fortune (Rice, 1993) as the ten leaders and ten laggards in environmental performance. We compared the disclosures made by the companies identified as leaders with the disclosures made by the companies identified as laggards, to determine if there was a relationship between companies' environmental performances and their environmental disclosures. We found that laggards made significantly more mandatory disclosures than did the leaders; however, there was little difference in the voluntary disclosures of the two groups. The leaders' disclosures were positively correlated between the mandatory and voluntary sections; there was virtually no correlation within the laggards. Leaders and laggards could be properly classified on the basis of their environmental disclosures.

This study investigates the patterns of social responsibility disclosures (SRDs) by the U.S. Fortune 500 firms. Content analysis is used to measure the extent of monetary, quantitative, and narrative disclosure in the areas of community, human resources, environment, and product safety. The relations between a number of corporate characteristics and these areas and types of SRDs are tested. The findings of this study contrast sharply with those of Cowen et al. (1987), who found that corporate profitability is an insignificant factor influencing social disclosure and that corporate size is negatively correlated with total disclosure. This research found evidence of a highly significant effect of profitability on total disclosure and that total disclosure is a function of corporate size. Size is also found to correlate with major areas and types of disclosures. These findings have direct implications for accounting and financial reporting policy and for future research on SRDs.

This chapter empirically examines factors associated with the environmental disclosures made by Canadian manufacturing firms in their 1993 annual reports. Existing studies suggest that corporate environmental information is value-relevant and that firms may disclose such information in a strategic fashion. This study examines the extent to which voluntary disclosure theory can explain corporate disclosure of general and financial environmental information. We find that firms with more news media coverage of their environmental exposure, higher pollution propensity, and more political exposure are more likely to disclose general environmental information. These findings are consistent with the predictions of the voluntary disclosure literature. We also find that disclosure of financial information about corporate environmental impact is influenced less by voluntary disclosure factors than is general disclosure.