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Journal of Business Ethics (2007) 72:307–321 Springer 2006
DOI 10.1007/s10551-006-9172-8
Environmental Reporting of Global
Corporations: A Content Analysis based Anita Jose
on Website Disclosures Shang-Mei Lee
ABSTRACT. Today, more corporations disclose infor- KEY WORDS: environmental disclosures, environ-
mation about their environmental performance in re- mental management practices, global corporations, con-
sponse to stakeholder demands of environmental tent analysis, business ethics, corporate citizenship
responsibility and accountability. What information do
corporations disclose on their websites? This paper
investigates the environmental management policies and
practices of the 200 largest corporations in the world. Introduction
Based on a content analysis of the environmental reports
of Fortune’s Global 200 companies, this research analyzes
the content of corporate environmental disclosures with Over the years, societal expectations of corporate
respect to the following seven areas: environmental performance have changed considerably. At the
planning considerations, top management support to the heart of this change is the call for greater environ-
institutionalization of environmental concerns, environ- mental sustainability. Different stakeholder groups,
mental structures and organizing specifics, environmental especially the regulatory and corporate watchdog
leadership activities, environmental control, external groups, are putting great pressure on corporations to
validations or certifications of environmental programs, become more environmentally responsible. There
and forms of corporate environmental disclosures. has been an increase in the number of countries that
have passed regulations requiring some sort of public
disclosure of corporate environmental information.
Examples of such countries include Japan, Denmark,
Anita Jose is an associate professor of Management and director of New Zealand, and The Netherlands (Kolk, 2003).
the MBA program at Hood College, Maryland. Her current Asenvironmental sustainability became an important
research interests include business ethics, corporate social concern for organizations and environmental dis-
responsibility, and international management. Her articles closure became a stakeholder requirement, organi-
have appeared in such publications as the Journal of Busi- zations tried to institutionalize environmental
ness Ethics, Southern Law Journal, Business Intelli- concerns through policies, procedures, and systems
gence, and Advances in Industrial and Labor Relations. (Jones et al., 1998; Russo and Fouts, 1997).
She received her MBA and MMGT from the University of The corporate environmental movement is
Dallas and her Ph.D. from the University of North Texas. comprised of two distinct stages characterized by
Shang-Mei Lee, Ph.D., CFA, is currently an assistant professor different driving forces. During the early stage, the
of finance at St. Edward’s University, Texas. Dr. Lee re- movement was driven by the compliance-based
ceived her Ph.D. in finance from the George Washington paradigm in which legal and regulatory consider-
University and was awarded with the Chartered Financial ations were the primary driving forces behind
Analyst (CFA) designation by the Association of Investment corporate environmental responses (Li, 2001;
Management and Research. Her research interests include
international investments, business ethics, socially responsible Rosen, 2001). This phase was characterized by law-
investing, and personal financial planning. Her publications obedience behavior, driven by command and con-
have appeared in The Southern Business and Economic trol or regulatory regime-based considerations, and
Journal, as well as Proceedings of several Conferences. internally justified by cost considerations. During
308 Anita Jose and Shang-Mei Lee
this phase, corporate environmental responses were problems. The problem of content standardization
more reactive to external pressures, primarily regu- and uniformity was addressed by a number of asso-
latory pressures (Hart, 1995; Li, 2001). ciations and NGOs. International Standards Orga-
The second stage is driven by the competitive nization’s ISO 14001 guidelines and European
advantage-based view, which argues that economics Union’s Eco-Management and Audit Scheme
and ecology are compatible and superior environ- (EMAS) were introduced as a way to standardize
mental performance leads to above-average industry corporate environmental practices. In order to
profits (Rosen, 2001; Russo and Fouts, 1997). provide a consistent guideline to disseminate envi-
According to this view, corporations with proactive ronmental information, some standards for envi-
environmental programs have a competitive advan- ronmental reporting were created. Such popular
tage because their better reputation resonates standards include the Public Environmental
favorably with stakeholder groups such as customers, Reporting Initiative (PERI), the CERES Report
employees, and the public in general (Dechant and from the Coalition for Environmentally Responsible
Altman, 1994; Russo and Fouts, 1997; Starik and Economics (CERES), the ICC Business Charter for
Rands, 1995). Other factors that contribute to the Sustainable Development (ICC), and the Global
competitive advantage based on environmental sus- Reporting Initiative (GRI) (Buchholz, 1998; Skillius
tainability are better technology (Groenewegen and and Wennberg, 1998).
Vergragt, 1991; Shrivastava, 1995a) and sharper It is beyond the scope of this paper to elaborate on
political acumen to influence public policy (Starik all the principles set for these standards. However,
and Rands, 1995). The underlying premise of the there are many common denominators in terms of
second stage is that stakeholders expect companies to their recommendations for corporate environmental
be environmentally responsible and hence there is a management. These commonalities include having
market premium for this improved environmental an environmental policy to govern operations, an
performance. environmental system to translate the policy into
Stakeholder pressure acts upon companies in two practice by integrating environmental concerns
different forms – not only are companies expected to throughout the different organizational and func-
effectively manage their environmental perfor- tional area processes, a commitment to improve
mance, but they are also to be accountable for this environmental performance by continuously
performance (Schaltegger and Burritt, 2000). As a researching best practices and reassessing operations,
result, there has been an increase in the number of a requirement that contractors and suppliers conform
companies providing environmental disclosures to environmental standards, and an open commu-
(Deegan and Gordon, 1996) and many of these nication channel to foster dialog with different
disclosures have been in the form of environmental stakeholder groups (ISO 14001, CERES, ICC,
reports (Koehler and Chang, 1999). However, two GRI).
major problems have plagued these reports in the The issue of dissemination has been resolved as
past. One, there was no ‘‘standardization or unifor- the Internet and the World Wide Web provided
mity’’ in terms of what various companies reported. organizations with a cheap, fast, and easy informa-
Hence, these reports varied widely from company to tion dissemination tool (Jones et al.1998; Marken,
company in terms of their content (MacLean and 1998). Given the ever-increasing number of Internet
Gottfrid, 2000; Wright, 1995). Two, as corporations users, companies have turned to it from more tra-
started to use environmental reports to communicate ditional mass media as their preferred communica-
to stakeholder groups regarding their environmental tion channel (Snider et al., 2003). The 2002 KPMG
performance, the dissemination of these reports be- Survey of Corporate Sustainability Reporting also
cameanissueas it was not practical to distribute hard shows that more and more companies are using the
copies to all interested parties (Jones et al., 1998). Internet as a tool to communicate their environ-
While organizations grappled with the above- mental performance.
mentioned problems, non-governmental organiza- The purpose of this paper is to investigate the
tions (NGOs) and technological advances seemed to environmental management policies and practices of
offer them innovative solutions to solve these the world’s 200 largest companies as disclosed on
Environmental Disclosures of Multinational Corporations 309
their corporate websites. More specifically, this study TABLEI
analyzes the content of corporate environmental Categories of environmental communication
disclosures with respect to the following seven areas:
environmental planning considerations, top man- Categories Measuresa
agement support to the institutionalization of envi-
ronmental concerns, environmental structures and Environmental planning considerations
organizing specifics, environmental leadership Policy Presence of environmental
activities, environmental control, external valida- policy
tions or certifications of environmental programs, Philosophical Sustainable development
and forms of corporate environmental disclosures. underpinnings Life-cycle approach
This paper contributes to the literature on cor- Integrated management
Strategic rationale Compliance
porate environmental reporting in two unique ways. and driving forces Competitive advantage
First is its comprehensiveness; we investigated seven Openness to stakeholder
areas comprising of 34 specific environmental concerns
parameters, which are derived from a number of Proactive approach
environmental reporting guidelines, including the or strategy
ICC and GRI guidelines. Table I in the research Contributing to global
methodology section presents the variables that we sustainability
use in this study. Second is our large sample size, Planning approach Risk management
which consists of a cross-section of the world’s Corporate priority or not
largest companies. Unlike many studies that have a Continuous process
limited sample size or are industry or country spe- improvement
cific, we have a relatively large sample size of 200 Pre-determined targets
and objectives
companies from different industries and different Environmental research
countries. and development
Top management Foreword (of environmental
commitment reports) by a top-level
Literature on environmental reporting to the institutionalization executive, such as the CEO
of environmental
Over the last decade, there has been an increase in practices
the number of companies providing environmental Environmental structures
information (Deegan and Gordon, 1996; Kolk, and organizing specifics
2003; KPMG,1999,2002; Peck and Sinding, 2003).
A literature review of corporate environmental dis- Departmental affiliation Separate (Independent)
closures shows four major streams of research. The of corporate function
environmental function Combined with other
first stream deals with who reports environmental departments, such as HR
information and how this reporting has benefited the and safety & health
reporters (e.g., Meek and Roberts, 1995; Nieminen Management priority Top-level executive
and Niskanen, 2001; Russo and Fouts, 1997). In in charge
other words, the emphasis here is on the character- Structural integration Presence of environmental
istics of the companies that report environmental of environmental management systems
information and the relationship between such concerns
reporting and financial performance. Prevalence of Office and site practices
The next stream of research is about the content environmental practices
of the reporting, or what is actually being reported Stakeholder involvement Employee training
(e.g., Guthrie and Parker, 1990; Niskala and Pretes, Customer training
1995). The third stream, which is relatively new, Supplier or contractor
training
deals with the ‘‘how’’ or the medium of reporting. Community involvement
Most of the studies under this stream look at the
310 Anita Jose and Shang-Mei Lee
TABLE I Gordon, 1996; Nieminen and Niskanen, 2001). In
Continued contrast to the past, where voluntary environmental
reporting was mostly restricted to firms from high
Environmental Promotion of environmental environmental impact industries in industrialized
leadership issues at the micro countries, the recent reporting practices show that
activities (industry) level environmental communication is becoming com-
Promotion of environmental mon in non-industrial sectors and different regions
issues at the macro in the world (KPMG, 2002). However, environ-
(national) level mental reporting still continues to be the highest in
Partnerships with NGOs countries, such as U.S.A., Japan, Germany, and U.K.
Environmental control and in industries, such as chemicals, pharmaceuticals,
Control measures Compliance data electronics, and automotive (KPMG, 2002). Simi-
Historical trends larly, company size is also found to be a determinant
Progress towards goals of environmental disclosure (Nieminen and Niska-
Explanation of variances nen, 2001).
Explanation of corrective In terms of what is being reported and how this
actions has changed over the years, perhaps the best source is
Audits Internal audits the various reports of KPMG, which has undertaken
External or independent periodic surveys of the environmental and sustain-
audits ability practices of multinational corporations since
External certifications EMAS, ISO 14001 1993. The KPMG International Surveys show that
Environmental communications companies report the details of their environmental
Medium of environmental General external report policies, future plans and targets, and features of their
disclosure Environmental annual environmental management systems (EMS). The
report number of companies providing such information
a has increased steadily over the years (KPMG, 1999,
The 16 components of the ICC Business Charter are 2002). Kolk’s (1999) meta-analytic review of envi-
incorporated into the measurement variables and surro- ronmental reports yields similar results in terms of
gates.3
the common denominators of corporate environ-
mental reports. In its survey of 88 corporate envi-
issues relating to the use of Internet as a medium of ronmental reports of Japanese companies, the
environmental reporting (e.g., Jones et al., 1998). Investor Research Responsibility Center (IRRC)
The final stream deals with the assessment of envi- found that approximately 90% of the companies
ronmental performance, mostly for the benefit of the provide information about environmental objec-
investment community, to rank/rate such perfor- tives, achievements, and costs (Metrick, 2001).
mance (e.g., Dow-Jones Sustainability index; For- Business Today (Anonymous, 2001) conducted a
tune Environmental Scorecard; ECCO-Check comprehensive survey of the environmental prac-
Index; Investor Responsibility Research rating; and tices of India’s largest companies. They found that
Morhardt et al., 2002). 42% of the companies had ISO 14001 certifications,
One question that must be addressed is which 60% had separate environment departments, 94%
companies report environmental information and had environmental targets in place, 70% had internal
what characteristics they share with other companies environmental audit systems, and 60% had facility
that do the same. Empirical studies show that char- level environmental reporting systems. In 40% of the
acteristics, such as company size, industry type, and companies, the senior environmental officers reported
geographic location are the three variables that have directly to the chief executive officers.
the greatest impact on voluntary environmental Corporations have changed how they report
disclosures (Meek and Roberts, 1995). There is a environmental information. Although in the past,
strong relationship between corporate environmen- corporations used annual reports to impart such
tal disclosure and industry type (Deegan and information (Nieminen and Niskanen, 2001), now
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