The Impact of Mandatory Reporting Requirements on Discretionary Environmental Disclosure: The Case of the National Greenhouse and Energy Reporting (NGER) Act 2007 and the Clean Energy Act 2011

摘要

There is broad scientific agreement (IPCC, 2013) that climate change poses a serious threat to the health of every living organisms on our planet. Greenhouse gas (GHG) emissions are primarily responsible for climate change (Canadell et.al., 2007), and economic activities have led to the rapid growth of GHG emissions (Downie and Stubbs, 2013). Kyoto Protocol was introduced in 1997 to reduce this emission and following the introduction of this protocol, multinational corporations began to increase the volume of environmental disclosures in their annual reports (Kolk, 2008; KPMG, 2008). According to legitimacy theory, companies provide more environmental information when their legitimacy is under threat (Lindblom 1994; Deegan 2002). In order to test legitimacy theory, this study asks: “What is the impact of mandatory GHG reporting requirements on discretionary corporate environmental and GHG disclosure practices?” To answer the central question, a comparative case study was undertaken on the impact of the mandatory reporting requirements of the National Greenhouse and Energy Reporting [NGER] Act 2007 and the Clean Energy Act 2011 on discretionary corporate annual reporting practices, by utilising a quantitative content analysis methodology and paired t-tests. Study measured the number of environmental and GHG-specific words in the corporate annual reports of sampled companies before and after the NGER Act and Clean Energy Act, and found that environmental and GHG-related information increased significantly after each piece of legislation. Moreover, a disclosure index was developed, which shows that the number of companies providing GHG-specific disclosures increased following both pieces of legislation. Therefore, this study finds that mandatory GHG reporting requirements increased the volume of discretionary corporate environmental and carbon-related disclosures. This does not necessarily translate into a reduction in carbon emissions, but it does add weight to the theory that companies will legitimate their activities by increasing their discretionary environmental disclosures in a shifting regulatory policy context. The findings of this study provide new evidence on the impact of GHG regulatory legislation on accounting disclosure behaviour. Moreover, this research contributes to the limited research literature on carbon emission reporting, to date, as no prior study of this kind has been undertaken in Australia.