Academic journal article IUP Journal of Management Research

Disclosure of Environmental Reporting Practices: A Study of Select Industries in Rajasthan

Academic journal article IUP Journal of Management Research

Disclosure of Environmental Reporting Practices: A Study of Select Industries in Rajasthan

Article excerpt

Introduction

One of the significant buzzwords that emerged out of the globalization and privatization paradigms of the 1990s has been corporate social responsibility. Responsibility towards environment has become one of the most crucial areas of social responsibility. Recent years have observed rising concern for environmental degradation, which is taking place mainly in the form of soil erosion, deforestation and pollution of various types, including air, water, sound, etc. At the same time, there has been a growing awareness internationally on the disclosure and reporting of environmental performance, particularly from those firms that have a direct and substantial influence on the environment like manufacturing, power generation, mining, etc., to provide information regarding the environmental implications of their operations. There is a growing pressure on the corporate enterprises to consider environmental effects of their operation. As a result, accounting and disclosure of environmental matters have rapidly been emerging as an important dimension of environment management (Rao et al., 2012).

Developing countries like India are facing the twin problem of protecting the environment and promoting economic development. A careful assessment of the benefits and costs of environmental damages is necessary to find the safe limits of environmental degradation and the required level of development. The Indian corporate sector has started realizing the need for adequate corporate environment and social disclosures in order to repose the confidence of the stakeholders in the working of their enterprises and performance.

Consumers in recent times expect firms to meet high health and safety standards for workers, respect human rights, protect the interests of consumers and meet environmental standards regardless of where they operate (Smith et al., 2007). Therefore, it is expected that companies provide relevant information about their environmental performance and policies, together with management systems in operation to support them, commonly known as triple bottom line reporting. Environmental accounting is a process of identification of measurement and communication of information on the environmentally responsible activities for a business entity. Environmental reporting is commonly used for presenting environmentally-related data regarding environmental risks, environmental impacts and policies (Qureshi et al., 2012).

Despite increasing awareness on environmental protection, there is very little reporting and disclosing practices adopted by companies. Managements seldom try to make proper arrangement to save the environment unless it is required as per law, as there is no direct relationship between investment and benefits (Anand and Srineevasa, 2014). This paper attempts to identify the current state of reporting and disclosure practices by sample companies in the southern part of the State of Rajasthan. The study considers Rajasthan because of its contribution to mining industries in India. Mining is one of the most environmentally hazardous industries. Rajasthan accounted for about 12% of the total number of mines in the country in 2012-13. The value of mineral production in Rajasthan during 2011-12 was 22,506.77 cr, which increased by 20.61% as compared to the previous year (Annual Report, 2012-13). The growth in industrialization is always attributed to the increase in environmental pollution particularly to that related to inland water, air and noise because sustainable development is not possible when environmental concerns are overlooked.

Literature Review

With increasing emphasis on social and environmental concerns with respect to investment policies, the financial community is becoming increasingly interested in Environmental Reporting (Descano and Gentry, 1998). However, due to the voluntary nature of disclosures, this field is far from standardization (Monaghan, 1999). Denmark was the first country to introduce the requirement for public environmental reporting for companies, followed by Norway, Sweden and the Netherlands in 1996 (Scott and Brown, 2003). …

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