The level of environmental disclosures in annual reports and firm-specific attributes of Sri Lankan listed companies

Abstract

Since this is an era of environmental degradation in the wake of continually depleting the ozone layer, climate change & global warming, environmental consciousness in entities’ activities has risen in recent years, promoting environmental communication. Thus, environmental disclosures entail informing the public on how successful a firm is in minimizing its negative impacts on the environment. This study aims to examine the association between firm-specific attributes & environmental disclosures of Sri Lankan listed companies. These objectives are addressed through investigating the compliance with environmental aspects of GRI G.4.0 guidelines employing content analysis in the annual reports of 254 companies covering 20 sectors for the year 2018. Moreover, the association between firm-specific attributes and environmental disclosure level are analyzed through the Ordinary Least Square regression model. The study found that the overall level of environmental disclosures is lower in Sri Lankan listed firms. Also, of the 20 sectors analysed, the plantation sector depicts the highest level (19%), while the Investment trust sector depicts the lowest environmental disclosure level (1%). Further, regression results imply that size & ISO 14001 were found to be as significant in determining the level of environmental disclosures. At the same time, there was no significant association between shareholder power, creditor power, financial performance, firm age and environmental disclosure level. The study will add value to the existing body of literature on environmental disclosures, regulators, policymakers & stakeholders highly involved in, interested in and affected by the environmental disclosures.