environmental reporting in mauritian listed companies

International Research Symposium in Service Management ISSN 1694-0938

Environmental Reporting in Mauritian Listed Companies

Dineshwar Ramdhony University of Mauritius

Reduit Email: [email protected]

Tel: (230) 7523023

Kesseven Padachi University of Technology (Mauritius)

La Tour Koenig Pte-aux-sable

Email: [email protected] Tel: (230) 7876403

Laury Giroffle Email: [email protected]

Tel: (230) 7385017

Environmental Reporting in Mauritian Listed Companies

Abstract Le Meridien Hotel, Mauritius, 24-27 August 2010


Over the past decades concern about the environment has become a worldwide phenomenon. Mauritius being no exception, the government recently launched several initiatives for a ‘Green’ island. The rising concern for environmental issues has triggered an increasing number of companies to bring out their environmental contribution through environmental reporting.

Purpose: The paper investigates the motives for and obstacles faced by firms in environmental reporting and further examines whether firms are in favour of mandatory environmental reporting.

Methodology: A survey of firms listed on the official market of the Stock Exchange of Mauritius was carried out.

Findings: Results show that the annual report is the main reporting medium. The cost of reporting in terms of time, money and other resources used and problems in measuring the environmental performance are among the major obstacles in reporting environmental information. The majority of companies are opposed to mandatory reporting of environmental information and respondents believe that reporting on environmental aspects can contribute towards sustainable development of the country.

Research limitation: The study was conducted on companies listed on the official market of the stock exchange of Mauritius and owing to the small size of the sample, results are not necessarily representative of all companies operating in Mauritius.

Originality/value: The paper adds to the scarce literature on environmental reporting in Mauritius.

Key words: Environmental reporting, CSR reporting, Sustainability reporting.

Introduction Over the past decades there has been increasing pressure on businesses to report on the social and

environmental impact of their activities. Public bodies and companies are now more aware and

responsive to sustainability issues (ACCA, 2009:3). This practice has developed from almost nothing

to turn into one of the most significant manifestations of business-environment interactions and is

Le Meridien Hotel, Mauritius, 24-27 August 2010


now a major instrument in discharging accountability to a wide range of audiences. A myriad of

names is used to qualify reporting in this area; Corporate Reporting (CR), Corporate Social

Responsibility Reporting (CSR), triple bottom line reporting, sustainability reporting, environmental

reporting (ER) among others. The subject is of prime importance for a small island state like

Mauritius which is not gifted by nature with rewarding resources. Various initiatives and recently the

‘Maurice ile durable’ project are clear indications that the Mauritian government has placed concerns

about the environment high on its agenda.

Traditional accounting suffers from limitations in dealing with environmental issues (Fortes,

2001) thus the main reason for the non-existence of a fully fledged accounting standard on

environmental accounting and reporting. Consequently, reporting of environmental information has

been embedded in the field of corporate social responsibility (CSR). Nowadays, the term corporate

social and environmental reporting is widely used by researchers and common people to refer to the

disclosure of information relating to human resources, ethics, health and safety and various other

fields.

Mauritius is one of the rare countries which has given a statutory status to CSR. CSR has

been embodied in the Finance Act 2009 which requires all onshore companies to contribute 2% of

their book profit of the preceding year to a CSR fund (Ng Ping Chen, 2009:1). Environmental

reporting is mandatory for public interest entities (which includes listed companies) after the

amendment of the Financial Reporting Act (2004) in July 2009 but in the absence of clear guidelines

as regards what and how to report, this paper seeks the opinion of respondents as to whether

environmental reporting should be voluntary or mandatory. It further explores the drivers and barriers

to environmental reporting in Mauritius.

Literature review Environmental reporting relates to the collection, measurement and publication of ‘green’ information

to the community. Edu et al. (2009) defines such practice as:

“the use of environmental information to disclose the impact of corporate activities on the natural

environment to stakeholders of the corporate entity or organisation.”

Theoretical framework Over time, several theories have emerged to explain the reasons behind environmental reporting.

Some of them are: legitimacy theory, stakeholder theory, media agenda setting theory and

accountability.

Drivers for environmental reporting



Economic performance Most businesses operate with a view to yield profits. Al-Tuwaijiri et al., (2004) observed that good

environmental performance and/or environmental disclosures were, in fact, related to good economic

performance. Yet, it seems that the findings obtained have been diverse for different researchers and

some studies have shown that the correlation between environmental reporting and good economic

performance is very immaterial (Balbanis et al., 1998).

Compliance with environmental regulations According to Cordano (1993) rising penalties, fines, and other legal costs instituted the importance of

acting in accordance with legislation. Businesses are increasingly aware of the need to conform to

green regulations in order to avoid the threat of environmental liabilities. Thus, through environmental

reporting companies are able to show their compliance with regulations that are imposed by relevant

authorities. Yet, acting in accordance with legal requirements is unlikely going to be the primary

motive, given the scarcity of requirements regarding environmental disclosures and related

verifications (Deegan et al., 2000).

Ethical duty Companies also have an ethical duty to behave in a socially responsible manner. Research has

revealed that businesses that feel concerned for the environment and demonstrate good CR practices

enjoy increased consumer purchase preference (Gildea, 1994 ; Zaman, 1996).

Attract ethical investors The growth in ethical investment has persuaded corporations to give attention to CR (Lydenberg and

Grace, 2008). As a matter of fact, various stock exchanges such as the Johannesburg Stock Exchange

and the Paris Stock Exchange require listed companies to disseminate CSR information in their

annual report. Such initiative aims at capturing more ethical investors who usually look for companies

with positive reputation.

Improve or maintain good reputation CSR reporting is a way for firms to improve their image and maintain their licence to operate. Indeed,

it can be considered as a promotional campaign to enhance corporate reputation and public relations

(KPMG, 2005).

Research demonstrated that the majority of information available in the reports is more of a

positive nature. For instance, in a study conducted by Deegan et al. (1996), it was found that the

average amount of positive environmental disclosures made by their sample firms totalled to 270

words out of which negative disclosures amounted to 6 words.

Increase competitive advantage Competitive advantage can be achieved through environmental accountability (Bansal and Roth,

2000). Through reporting, firms are able to show their commitment towards the environment and as

such gain a real advantage in terms of market share over competitors that do not exhibit any such

practice.

Stakeholder activism



Pressure groups such as customers, environmental groups, investors, and employees are said to be

well aware of the environmental performance of different firms; they are interested in knowing how

natural resources are being used and, if need be, take action against organisations which they believe

are environmentally irresponsible (Dechant et al., 1994).

Cost savings As part of CR reporting, companies have to assess their environmental performance. This process

allows management to identify inefficiencies in operations and spot areas to improve. In doing so,

they may identify opportunities for cost savings (UNDSD, 2001).

Attract personnel Environmentally-aware corporations are more able to attract quality staff. The workforce usually

demonstrates greater loyalty and job satisfaction in a business which is embracing environmental

protection. An annual study of the top management graduates in European countries has graphed the

increase of green criteria over the past decade. The environment is currently positioned among the

four most significant factors for these former students (Management Development Review, 1997).

Similarly, a study conducted by Simms (2002) found that 88 percent of British businesses believe that

social responsibility of the enterprise will be more important in the future in the recruitment and

retention of employees.

Good corporate governance Corporate governance is the mechanism by which organisations are directed and controlled. Good

governance makes sure that the business environment is reasonable and transparent and that

corporations can be held accountable for their activities. Disclosure of green information forms part of

sound corporate governance. For instance in section 7 of the Code of corporate governance (2004)

which deals with Integrated Sustainability Reporting, it is stated that:

“Every company should regularly report to its stakeholders on its policies and practices as regards to

ethics, environment, health and safety and social issues.”

The importance of the environment is highlighted as it states that:

“Mauritius’ smallness brings with it a fragile ecosystem. This means that corporations need to pay

special attention to the environmental aspects of corporate governance.”

Contribute to sustainable development Sustainability or sustainable development highlights environmental and society stewardship (Porter

and Kramer, 2006). It is concerned with meeting the present needs of the community without

compromising future generations to do so (WCED, 1987). Indexes, such as the Dow Jones

Sustainability Indexes, help to assess sustainable performance of companies by ranking them on the

basis of their economic, environmental and social performance.

Medium for environmental reporting Various medium are used by companies to convey social and environmental information to

stakeholders. The annual report remains the most widely used corporate communication tool and

probably the most important document in terms of the way an organization constructs its own social



imagery to all stakeholders (Grey et al., 1995). The importance of the annual report in disseminating

environmental information is reinforced by the research of Deegan and Rankin (1997) who revealed

that 68 percent of the target population in Australia looked for environmental data from the annual

report in the first place compared to 43 percent from other sources. This can be explained by the fact

that the annual report holds a degree of credibility which other sources do not possess (Neu et al.,

1998). Miles et al., (2002) identified two key drivers for deciding to include social issues in the

annual report, namely: Corporate governance pressure to show how environmental risk is being

managed and transparency (reporting on CSR issues in an open and honest fashion). The location of

green disclosures in the annual report has also been subject to various researches. The common place

for environmental disclosures, within the annual report are the financial statements, notes to the

financial statements, corporate governance and director’s report (Gray et al., 1995). Studies by

Roberts (1992), Feedman and Jagi (1986) concluded that the main communication medium is the

annual report. Disclosure of environmental information is mainly qualitative and so will not be found

in the financial statements section of annual report but in other parts of the annual report (Gray et al.

1995).

Recently the internet has gained popularity as medium to communicate with stakeholders and

disclose social and environmental information (Cooper, 2003) but firms have not yet taken advantage

of its full potential as a communication tool (Bronn, 2004). Benefits of using the internet over

traditional communication methods include cost, the timely and interactive nature of the information.

Additionally, companies can disseminate information to various stakeholders and receive feedback

from them (Branco and Rodriguez, 2006). A variety of media including employment brochures,

advertisements and product labelling are also used to disclose social and environmental information

(Spence and Gray, 2007; Fallan and fallan 2009). Zehgal and Ahmed (1990) studied the use of other

media by analyzing advertisements and company brochures used by banks and petroleum companies.

They concluded that brochures are not widely used to disclose social information while advertisement

is ‘not a major means’.

Barriers to environmental reporting Measurement problem KPMG (2005) argue that the measurement of social and environmental performance is rather a

complex task. Besides, it has been observed that there is difficulty in measuring environmental costs

and benefits objectively. Conventional accounting system allocates many of the green costs to general

overhead accounts and thus, some less tangible environmental costs remain hidden from management

(UNDSD, 2001). This problem is particularly due to the fact that to date, no specific accounting

standard has been developed to deal with environmental matters but there are provisions made such as

those in the IAS 37- Provisions, Contingent Liabilities and Contingent Assets that provide some

guidelines relating to the subject. Le Meridien Hotel, Mauritius, 24-27 August 2010


Lack of consistency and comparability There is actually no disclosure technique or proper standardisation of environmental reports and this

usually result in diverse reports from different corporations (Souther,1999). In other words, it

produces a lack of consistency and comparability. Such ‘lacuna’ has restricted the ability of the

stakeholders to use the information for decision making purposes (O’Rourke, 2004).

Expose to criticism Companies that publish environmental information are expected to face criticism which represents

potential cost in terms of public reactions to firms’ disclosures. Costs also seem to rise as reporting

becomes more thorough and comprehensive (O’Rourke, 2004). These costs generate considerable

incentives for organisations to release CR reports that are purely public relation tools or simply to

avoid reporting. In addition, firms may be unwilling to disclose environmental information if it is

confidential data which can be used by their competitors.

Lack of government policy on the issue Environmental reporting is basically a voluntary disclosure (Shivaji and Subramaniam, 2008).

Governments of different countries are trying to bring their contribution by inducing businesses to

disclose environmental information, legal requirements on the issue being relatively limited.

Profit motive Corporations usually have profit maximisation at the top of their objectives. In fact, Friedman (1970)

stated that a firm’s sole responsibility is to increase returns. As such the natural environment is not

always relevant to management except if influential stakeholders use their power to back it or if the

company is embracing a green orientation (Driscoll and Starik, 2004).

Cost v benefits Disclosure of information involves a cost so the benefits of doing so must outweigh the cost (Ness and

Mirza, 1991). A study by Turner (2004) conducted in Australia concluded that additional cost and

resources is the greatest barrier to sustainability reporting.

Voluntary v/s mandatory reporting There have been various debates on whether the decision to disclose the firms’ environmental impacts

should be left in the hands of businesses or be put in those of the government. Would it be wiser or

imprudent to let companies decide on such an issue? For a long time disclosure of environmental

information has been voluntary, recently a wave towards mandatory reporting has started blowing. In

Denmark disclosure of CSR information is mandatory in the annual report for certain companies as

from beginning of 2010. French companies have had to include social and environmental information

since 2001 while similar reporting requirements have been in place since late 2007 for UK companies

(Business and the Environment, 2009).

Voluntary disclosure



The voluntary approach to environmental reporting asserts that corporations will meet the requests of

their stakeholders without any legislative instructions (Maltby, 1997). It is argued that this system

would persuade better corporations to attain best practice and that market pressure will induce

companies to disclose environmental information (Mitchell et al., 2006). In the same line, research

undertaken by Fallan and Fallan (2009) indicates that Norwegian companies will voluntarily satisfy

the stakeholders’ requirements regarding environmental information. Besides, it has been argued that

firms will make sure that their environmental disclosures and performances are sufficient to supply

appropriate information to relevant audiences (Wilmhurst and Frost, 2000). Organisations favour

voluntarism because it is believed that environmental regulations inflate costs (Porter and van der

Linde, 1995). For instance, mandatory disclosure may expose firms to environmental costs like those

incurred when not complying with environmental laws.

Mandatory disclosure Advocates of regulated environmental information declare that a minimum of information needs to be

‘compulsory’ (Fallan and Fallan, 2009). This will provide a basic standard for reporting as voluntary

disclosures tend to create diverse reporting practices which lead to difficulty in comparisons.

Mandatory reporting requirements contribute in increasing corporate environmental disclosures. A

review of annual reports after the introduction of mandatory environmental reporting guidelines in

Australia showed a significant increase in the number of companies reporting and the level of

information provided on environmental performance compared to the pre-introduction period (Frost,

2007). Moreover, the quality of environmental information published is also positively affected by

mandatory reporting and this was evidenced through research undertaken by Bebbington (1999) in

Denmark.

Statutory environmental disclosures usually motivate companies to comply with regulatory

regimes (Mobus, 2005) as these forms of publication place reporting firms under increased scrutiny

(Cowan and Gardenne, 2005). As such, compulsory reporting permits stakeholders to obtain a more

objective view of corporate environmental performance compared to voluntary reporting, which

depends largely on the discretion of the managers. Thus, more mandatory disclosures will probably

result in more transparent reports (Shivaji and Subramaniam, 2008).

Nevertheless, mandatory reporting cannot prevent the tactical use of voluntary corporate

disclosures to disseminate information aimed at promoting the firm’s image (Larrinaga et al., 2002).

Thus, it can be said that statutory environmental disclosure can act as a potential tool for counter-

balancing the voluntary disclosure system.

Doane (2002) states that the market does not provide sufficient incentives for companies to

report CSR information on a voluntary basis. She puts forward the following reasons for the

introduction of mandatory social and environmental reporting: the market does not reward transparent

companies and penalize those who are not; there is no way of enforcing voluntary codes; if all



companies are required to report on social and environmental issues this will lead to a level playing

field in terms of cost.

Methodology In our research, unlike previous studies (Gray et al. 1995, Snider et al. 2003) the methodology did not

involve content analysis but a survey. This approach is justified by the need to explore the incentives

and barriers for environmental reporting and to obtain the opinion of respondents about mandatory

and voluntary reporting. The survey was carried on companies listed on the official market of the

Stock Exchange of Mauritius (SEM). The main reasons for targeting companies listed on the stock

exchange are: firstly, they are required to follow the Code of Corporate governance for Mauritius

which states that they should report on their policies and practices concerning issues such as ethics,

environment, health and safety and social issues and secondly Section 75 of the Financial Reporting

Act (2004) amended in 2009 requires listed companies to present a corporate governance section in

the annual report. Out of 46 companies listed on the SEM, mutual funds (8) were excluded as their

activities were judged as having (seemingly) no impact on the environment.

A questionnaire was sent to the remainder 38 companies via the internet. Despite several

reminder telephone calls only 22 companies responded positively giving a response rate of around 58

percent. The questionnaire was pre-tested with a few people either working in the field of CSR or

accountants responsible for CSR reporting to ensure that the wording, length, format and sequencing

were appropriate so as to increase the validity of the data. It included 4 sections. The first section was

used for reporting the business profile. The second section reported the medium used for

environmental reporting. The third part reported the motives and obstacles of environmental

reporting and the last one considered the perception of respondents about voluntary and mandatory

environmental reporting. Questions were adopted from previous researches O’Rouke (2004); KPMG

(2005); Fallan and Fallan (2009).

Analysis and findings

Sector of operation and respondents The highest proportion of respondents came from Investments and Banking and financial services

sectors followed by Commerce. It is worth mentioning that all firms surveyed in the Banking and

financial services sector responded positively. Sugar and Transport are the least represented with 4.5

percent each. None of the Hotel and Leisure and Construction firms responded to the survey and will

therefore not be considered for the analysis.

Take in Figure 1 about here Figure 1: Response rate in the different sectors



Reporting on the Environment Figure 2 shows that more than half of the sample taken (63.6%) is involved in reporting

environmental information but 36.4% of the firms still do not engage in such activity. The results

demonstrate that most listed companies in Mauritius are conscious of the importance of green issues.

Hence, this supports what Diner et al., (2006) stated; that the rising concern for environmental matters

around the world induced organisations to focus on socially responsible behaviours.

Take in Figure 2 about here

Figure 2: Reporting Environmental Information

Medium used to disclose Environmental Information As depicted in figure 3, 78.6% of the listed companies use the annual report as a means for green

disclosures, 64.3% use stand alone report, 57.1% rely on internet web pages, 50% adopt company

brochures, 50% choose advertisements and 14.3% use other modes for environmental reporting. The

diagram confirms that annual report is still regarded as the main communication means for

corporations and, this is consistent with the findings of Gray et al., (1995). However, as regards the

use of stand alone reports the findings are in contradiction with the results of a survey conducted by

CorporateRegister.com which found that stand alone environmental reports account for less than 15%

of the total number of reports published in the UK in 2006 (ACCA, 2007).


Figure 3: Medium used to disclose Environmental Information

Section of the annual report used for reporting Environmental Information As shown in Figure 4, 70% of the respondents replied that environmental information appears in the

corporate governance section of the annual report, 20% said that they disclose it in the section of

notes to the accounts, 10% declared that it is recorded in the financial statements and another 10%

stated that the company publishes it in the director’s report.

Gray et al. (1995) mentioned that in earlier studies, most of the data about the environment

were found in sections other than in the financial statements; the above findings somehow approved

what was observed in previous researches. It is worth mentioning that there are no strict rules as to

which part of the annual report should contain environmental information, the preference for the

corporate governance section might be due to the requirement of the Financial Reporting Act (2004)

amended in 2009 which requires all listed companies to follow the Code of corporate governance on a

comply or explain basis. As per Section 8.4 of the Code, there should be a separate corporate

governance section in the annual report.





Motivations for Environmental Reporting Motivations for environmental reporting are many and vary across countries. The findings of our

survey show that the most important motivations for listed firms to engage in environmental reporting

are: it can contribute towards sustainable development of the country; to be more transparent and it is

the ethical duty of the company to behave in a socially responsible manner. The least motivating

factors were found to be: cost savings which can result by identifying inefficiencies in assessing

environmental performance, attracting personnel which might be explained by the fact that ‘green’

behaviour is not yet instilled in the Mauritian culture and finally risk management.

Take in Table 1 about here

Table 1: Medium used to disclose Environmental Information

Using the Principal Component Analysis (PCA), the number of variables used to capture the

respondents’ motivation to ER was reduced to three components, as named in Table 2. After a number

of runs, three clear factors emerged based on their individual communalities and factor loadings. The

main drivers to ER were grouped as improve company image, competitive edge and compliance. The

consistency of the items included under each component were verified using the Cronbach’s alpha

reliability test and the values obtained confirmed same and it was therefore safe to used the factor

scores in future analysis. Initial statistics (showed below the table) suggested that the variables would

factor well. The varimax rotated factor loadings show variables clustering as predicted.

Take in Table 2 about here Table 2: RCM of Respondents’ Motivations for Environmental Reporting

They accounted for 78 percent of total variance and with eigen values greater than 1. One

variable, namely economic performance had to be eliminated in the final model since it was not

loaded adequately into one of the components. Each variable had its highest loading on the

component it conceptually belongs to and variables with side-loadings of .40 or less were suppressed.

The final model was found to be an appropriate factor-analytic model as indicated by Barlett’s Test of

Sphericity, the test for communality and except for the Kaiser-Meyer-Olkin measure of sampling

adequacy showing only a low statistic (.373). However, this is explained by the small sample size.

Barriers to Environmental Reporting As observed in Table 3, lack of government policy as regards environmental reporting, lack of

consistency and comparability of environmental information and cost in terms of time, money and

other resources are considered to be the main barriers to environmental reporting. This is consistent

with the findings of Turner (2004). On the other hand, issues pertaining to disclosure of confidential

information and being exposed to criticism were found to be the least disturbing factors in disclosing

environmental information.

Le Meridien Hotel, Mauritius, 24-27 August 2010 Take in Table 3 and 4 about here


Table 3: Barriers to Environmental Reporting

Table 4: RCM of Respondents’ Barriers to Environmental Reporting

These variables were grouped into three components using the PCA and are labeled as

Confidentiality, Lack of guidelines and Usefulness of the report. Table 4 shows the variables falling

under each component with their respective factor loadings. The various statistics demonstrate the

adequacy and reliability of the model. The confidentiality component includes disclosure of

confidential data and exposure to criticism. The internal consistency of the individual variables falling

onto one component was performed using the Cronbach’s alpha reliability test. All the three

components have a value of .7 and above, thus confirming the validity of the model.

Reporting- Voluntary or mandatory?

From table 5, it can be seen that voluntary disclosure is mainly favoured compared to mandatory

disclosure despite the fact that environmental reporting is mandatory for listed companies.

Proponents of mandatory reporting come from the financial services and investment sectors. These

are sectors which are highly regulated whereby the regulating authorities can impose additional

guidelines in addition to legal requirements which might be the reason for a preference for mandatory

reporting. All other sectors are for reporting on a voluntary basis. A significant statistical difference

between the sectors in which firms operate and the preference for mandatory/voluntary reporting has

been noted.


Table 5: Voluntary or Mandatory*Sectors of Operation cross tabulation

Reasons for favouring Voluntary reporting or Mandatory reporting It can be observed from table 6 that the main reasons behind the choice of voluntary disclosures are:

costs not being inflated and the belief that reporting should stay under the entire discretion of the

company. Cronbach’s alpha equals 0.843 producing in this way a high reliability index. The main

reasons put forward for favouring mandatory reporting are: it provides a basic standard for reporting

and it motivates companies to comply with regulatory regimes. On the other hand issues like

enhancing the quality of environmental information and objectivity in providing a clear view of

corporate environmental performance are the least favoured arguments for environmental information

to be mandatory. The Cronbach’s alpha reliability test is high enough to support this inference.

Take in Table 6 and 7 about here

Table 6: Reasons for favouring Voluntary Reporting



Table 7: Reasons for favouring Mandatory Reporting

Can Environmental Reporting contribute to sustainable development of Mauritius? Table 8 shows that the majority of respondents admit that environmental reporting can positively

contribute to sustainable development. All the CSR managers surveyed and a great majority of

accountants (90.1%) find a link between environmental reporting and sustainable development. The

fact that these people are involved in either the management of CSR funds or reporting of CSR related

activities could be a possible explanation for this response. However, 16.7% of ‘other’ is unsure of the

contribution of environmental reporting towards sustainable development while 9.1% of accountants

totally disagree that environmental reporting can help towards sustainable development of the

country. It should be noted however, that the results are not statistically significant.


Table 8: Contribute to sustainable development of Mauritius * Position in firm cross tabulation

Conclusion and Future research

The overall purpose of the study was to gain an understanding of the motives and obstacles faced by

listed companies in the reporting of environmental information. Now that all listed companies have to

include a corporate governance section in their annual report whereby environmental information is

most likely to find its way, the paper sought the opinion of respondents as to whether they are

agreeable to disclose environmental information on a voluntary or mandatory basis?

The annual report was found to be the most common medium amongst listed companies, used

to disclose environmental information followed by stand alone report and internet web pages. The

corporate governance section is the main repository for environmental information within the annual

report. The key motivations to report environmental information are the ability to contribute to

sustainable development and to be more transparent while the main barriers identified are lack of

consistency and comparability of environmental information and lack of government policy regarding

the issue. Voluntary reporting is favoured to Mandatory reporting by the majority of respondents.

The results must, however, be interpreted with caution keeping in mind the limited sample

size and response rate. Further research could compare the level of disclosures in the pre and post

periods of the implementation of the Finance Act 2009 regarding mandatory contribution of profitable

local companies towards CSR.



References

Abreu, R., David, F. and Crowther, D. (2005), "Corporate social responsibility in Portugal: empirical evidence of corporate behaviour", Corporate Governance, Vol. 5 No. 5, pp.3 – 18.

ACCA, (2007), “Stand alone reports on their way out”, Available at:

http://www.accaglobal.com/general/activities/library/sustainability/accounting_sustainability/archive/2007/25/news/report/2972468 (accessed 12 May 2010).

ACCA, (2009), “ Reporting-Sustainability Briefing”, Available at:

www.accaglobal.com/students/student_accountant/archive/2009/93/3182423 (accessed 12 May 2010). Al-Tuwaijiri, Sulaeman, A., Theodore, E., Christensen, K.E. and Hughes II (2004), “The Relations

among Environmental Disclosure, Environmental performance, and economic performance: A Simultaneous Equation Approach”, Accounting, Organizations and Society, Vol 29 No. 5-6, pp. 447-471.

Balbanis, G., Philips, C. and Lyall, J. (1998), “Corporate Social Responsibility and economic performance in the

top British companies: are they linked?”, European Business Review, Vol 98 No.1, pp. 25-44. Bansal, P. and Roth, K. (2000), “Why Companies Go Green: A Model of Ecological Responsiveness”,

The Academy of Management Journal, Vol 43 No4, pp. 717-736. Bebbington, J. (1999), “ Compulsory environmental reporting in Denmark: an evaluation”, Social and

Environmental Accounting, Vol19 No.2, pp. 2-4. Branco, C.M. and Rodrigues, L. (2006), “Communication of corporate social responsibility information by

Portuguese banks”, Corporate communications: an international journal, Vol 11 No. 3, pp.232-248. Bronn, P. (2004), “Corporate governance: is your communication hurting you?”, Journal of Communication

Management, Vol 7 No. 4, pp.291-303. Business and the Environment (2009). Denmark mandates CSR reporting. Available from:

www.greenbiz.com/news/2009/01/08mandatory-csr-reporting-denmarks-largest-companies (accessed 10 May 2010).

Case, D.W. (2000), “Legal considerations in Voluntary Corporate Environmental reporting”, ERL news and

analysis. Available at: http://ssrn.com/abstract=1019098 [Accessed on 04 Feb 2010]. Cooper, S. (2003), “Stakeholder communication and the Internet in UK electricity companies”, Managerial

Auditing Journal, Vol 18 No. 3, pp. 232-243. Cordano, M. (1993), “Making the natural connection: Justifying investment in environmental innovation”,

Proceedings of the International Association for Business and Society, pp. 530-537. Cowan, S. and Gadenne, D. (2005), “Australian corporate environmental reporting: a comparative analysis of

disclosure practices across voluntary and mandatory disclosure systems”, Journal of Accounting & Organizational Change, Vol 1 No. 2, pp. 165-179.

Dechant, K., Altman, B., Downing, R.M., Keeney, T., Mahoney, M., Swaine, A., Miller, R. A. and


http://www.accaglobal.com/general/activities/library/sustainability/accounting_sustainability/archive/2007/25/news/report/2972468

http://www.accaglobal.com/general/activities/library/sustainability/accounting_sustainability/archive/2007/25/news/report/2972468

http://www.greenbiz.com/news/2009/01/08mandatory-csr-reporting-denmarks-largest-companies

http://ssrn.com/abstract=1019098


Post, J. (1994), “Environmental Leadership: From Compliance to Competitive Advantage”, The Academy of Management Executive, Vol 8 No. 3, pp. 7-27.

Deegan, C. and Rankin, M. (1996), “ Do Australian companies objectively report environmental news? An

analysis of environmental disclosures by firms successfully prosecuted by the Environmental Protection Authority”, Accounting, Auditing and Accountability Journal, Vol 9 No. 2, pp. 50-67.

Deegan, C. and Rankin, M. (1997), “The materiality of environmental information to users of annual reports”,

Accounting, Auditing and Accountability Journal, Vol 10 No.4, pp.65-69. Deegan, C., Rankin, M. and Voght, P. (2000), "Firms’ disclosure reactions to major social incidents: Australian

evidence", Accounting Forum, Vol. 24 No.1, pp.101-30. Doane, D. (2002), “Market failure - The case for mandatory social and environmental reporting”, available at

:http://www.hapinternational.org/pool/files/doane paper1.pdf (acessed:20 Feb 2010). Driscoll, C. and Starik, M. (2004), “The Primordial Stakeholder: Advancing the Conceptual Consideration of

Stakeholder Status for the Natural Environment”, Journal of Business Ethics 49 (1), 55-73. Edu, B. E., Esang, A. E. and Otonkue, A.D.O. (2009), “Environmental Financial Reporting” Available at:

http://ssrn.com/abstract=1435237 [Accessed 05 March 2010]. Fallan, E. and Fallan, L. (2009), “Voluntarism versus regulation, Lessons from public disclosure of

environmental performance information in Norwegian companies”, Journal of Accounting & Organisational Change, Vol 5 No. 4, pp. 472-489.

Fortes, H. (2002), “The need for environmental reporting by companies”, Greener Management International,

winter, pp.77-92. Freedman, M. and Jaggi, B. (1986), “An analysis of the impact of corporate pollution disclosures included in

financial statements on investors’ decisions”, Advances in public interest/ accounting, Vol 1, pp. 192-212.

Friedman, M. (1970), “A Friedman Doctrine: The social responsibility of the business is to increase its profits”,

The New York Times Magazine, September 13, 1970. Available at: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html [Accessed: 8 Aug 09].

Frost, G. (2007), “The introduction of mandatory environmental reporting guidelines”, Abacus, Vol 43 No. 2,

pp190-216. Gildea, R.L. (1994), “Consumer survey confirms corporate social responsibility affects buying decisions”,

Public Relations Quarterly, Vol 39 No. 4, pp. 20-21. Gray, R., Kouhy, R. and Lavers, S. (1995), “Methodological themes: Constructing a research database of social

and environmental reporting by UK companies”, Accounting, Auditing and Accountability Journal, Vol 8 No.2, pp.78-101.

KPMG, (2005), “International survey of Corporate Responsibility Reporting”, Available at:

http://www.kpmg.com.au/Portals/0/KPMG%20Survey%202005_3.pdf (accessed on 13 June 2010). Lydenberg, S. and Grace, K. (2008), “Innovations in Social and Environmental Disclosure Outside the United

States”, Available at: http://www.domini.com/common/pdf/Innovations_in_Disclosure.pdf (accessed on 22 June 2010).

Larrinaga, C., Carracasco, F., Correa, C., Llena, F. and Moneva, J.M. (2002), “Accountability and accounting

regulation: the case of the Spanish environmental disclosure standard”, The European Accounting Review, Vol 11 No.4, pp.723-724.



http://www.kpmg.com.au/Portals/0/KPMG%20Survey%202005_3.pdf

http://www.domini.com/common/pdf/Innovations_in_Disclosure.pdf


Maltby, J. (1997), “Setting its own standards and meeting those standards: voluntarism versus regulation in environmental reporting”, Business Strategy and the Environment, Vol 6, pp. 83-92.

Management Development Review (1997), “Going green is good for business … and for HR staff ”, Vol 10,

No. 1, pp30–31. Miles, S., Hammond, K. and Friedman, A. (2002), “Social and environmental reporting and ethical

investment”, ACCA Research Report, No 77, Available at: www.acca.org.uk/research [Accessed: 15 May 2010].

Mitchell, J., Percy, M., and McKinlay, B. (2006), “Voluntary Environmental Reporting Practices: A Further

Study of ‘Poor’ Environmental Performers”, Australian Journal of Corporate Law, Vol 19(2), pp. 182-215.

Mobus, J.L. (2005), “Mandatory environmental disclosures in a legitimacy theory context”, Accounting,

Auditing and Accountability Journal, Vol 18 No. 4, pp.492-517. Ness, K.E. and Mirza, A.M. (1991), “Corporate social disclosure: A note on test of agency theory”, British

Accounting Review, Vol 23 No.3, pp.211-218. Neu, D., Warsame, H. and Pedwell, K. (1998), “Managing public impressions: Environmental disclosures in

annual reports”, Accounting, Organizations and Society, Vol.23, No. 3, pp. 265-282. Ng Ping Cheun, E. (2009), “Analysis of Business as unusual” Available at:

http://www.lexpress.mu/services/epaper-55642-b-analysis-business-as-unusual-b.html [accessed: 18 Feb 2010].

O’Rourke, D. (2004). Opportunities and obstacles for corporate social responsibility reporting in developing

countries. Available from: http://nature.berkeley.edu/orourke/PDF/CSR-Reporting.pdf [accessed: 22 June 2010].

Panwar, R., Rinne, T., Hansen, E. and Juslin, H. (2006), “Corporate Responsibility Balancing Economic,

Environmental, and Social Issues in the Forest Products Industry”, Forest Products Journal, Vol 56 No.2 pp. 4-12.

Porter, M.E. and Kramer, M.R. (2006), “The link between competitive advantage and Corporate Social

Responsibility”, Harvard Business Review, December, pp. 78-92. Porter, M. and Van Der Linde, C. (1995), “Green and competitive”, Harvard Business Review,

September/October, pp. 120-34. Roberts, R. (1992), “Determinants of corporate social responsibility disclosure: an application of stakeholder

theory”, Accounting Organizations and Society, Vol 17 No.6, pp. 595-612. Shivaji,E and Subramaniam, S. (2008), “Green Reporting- need for standards and legalization” Available at:

http://ssrn.com/abstract=1440833 (accessed 01 March 2010). Simms, J.(2002), “Business: corporate social responsibility- you know it makes sense”, Accountancy, Vol 130

No11, pp.48-50. Snider, J., Hill, RP. and Martin, D. (2003), Corporate social responsibility in the 21st century: a view from the

world’s most successful firms, Journal of business ethics, Vol 15 No.2, pp.199-206. Souther, S. D. B. a. C. C. (1999), “Corporate Environmental Reports: The Need for Standards and an

Environmental Assurance Service” Accounting Horizons, Vol 13 No.2, pp.129-145. Spence, C. and Gray, R. (2007), “Social and environmental reporting and the business case”, ACCA Research

Report, No. 98. Available at: www.accaglobal.com/general/activities/research/.../rr-098 (accessed: 22 January 2010).


http://www.acca.org.uk/research

http://www.lexpress.mu/services/epaper-55642-b-analysis-business-as-unusual-b.html

http://nature.berkeley.edu/orourke/PDF/CSR-Reporting.pdf


http://www.accaglobal.com/general/activities/research/.../rr-098


The Report on Corporate Governance for Mauritius (2004). Ministry of Economic Development, Financial Services and Corporate Affairs.

Turner, R. J. (2004), “Corporate Social Responsibility: Should disclosure of social considerations be

mandatory?”, available at: http://wopared.parl.net/Senate/committee/corporations_ctte/completed_inquiries/2004-07/corporate_responsibility/submissions/sub05.pdf (accessed: 15 Feb 2010).

United Nations Division for Sustainable Development (2001), “Environmental Management Accounting

Procedures and Principles”, available at: www.un.org/esa/sustdev/publications/proceduresandprinciples.pdf (accessed:22 june 2010).

WCED (World Commission on Environment and Development (1987), “Our common future”, available at:

http://www.un-documents.net/wced-ocf.htm (accessed:15 July 2010). Wilmhurst, T.D. and Frost, G.R. (2000), Corporate environmental reporting: a test of legitimacy theory,

Accounting, Auditing & Accountability Journal, Vol 13 No.1, pp.10-21. Zaman, M., S. Yamin and F. Wong. (1996), “Environmental consumerism and buying preference for green

products” In Procedings of the Australian Marketing Educators’ Conference in Marketing Science Centre, Univ. of South Australia, Adelaide, Australia, 1996, C. Riquier and B. Sharp, eds, pp.613-626.

Zehgal, D. and Ahmed, S.A. (1999), “Comparison of social responsibility information disclosure media used by

Canadian firms”, Accounting, Auditing & Accountability Journal, Vol 3 No1, pp.38-53.


http://wopared.parl.net/Senate/committee/corporations_ctte/completed_inquiries/2004-07/corporate_responsibility/submissions/sub05.pdf%20%20(accessed

http://wopared.parl.net/Senate/committee/corporations_ctte/completed_inquiries/2004-07/corporate_responsibility/submissions/sub05.pdf%20%20(accessed

http://www.un.org/esa/sustdev/publications/proceduresandprinciples.pdf

http://www.un-documents.net/wced-ocf.htm


List of Figures

Figure 1: Response rate in the different sectors

Figure 2: Reporting Environmental Information




Figure 4: Section of annual report used for reporting Environmental Information



List of Tables

Table 1: Motivations for Environmental Reporting Mean Std. Deviation Economic performance 1.79 .579Compliance with environmental regulation 1.57 .852

Ethical duty 1.21 .426Improve or maintain good reputation 1.64 1.082Attract ethical investors 2.00 .784Increase competitive advantage 1.86 .770Stakeholders activism 1.71 .611Cost savings 2.93 1.072Attract personnel 2.64 .929Preserve legitimacy of the company 1.64 .633Manage relationship with stakeholders 1.71 .611To be more transparent 1.36 .633Risk management 2.57 .938Contribute to sustainable development 1.07 .458

Table 2: Rotated Component Matrix of Respondents’ Motivations for ER

Component

Motivation to ER Improve Co.

Image Competitive

Edge Compliance

H2

Compliance with environmental regulation .893

.831

Ethical duty .915 .848 Improve or maintain good reputation .812

.733

Increase competitive advantage .435 .664

.649

Stakeholders activism .862 .850 Cost savings .810 .812 Attract personnel .798 .749 Preserve legitimacy of the company .790 -.407

.831

Manage relationship with stakeholders .899

.846

To be more transparent .886 .808 Risk management .786 .636

Eigenvalue 4.177 2.518 1.897

% of Variance explained 37.97 22.90 17.24

Cronbach’s Alpha .884 .784 .716

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Percentage of variance explained 78; Factor loadings with values less than 0.4 are suppressed.



Kaiser-Meyer-Oklin Measure of Sampling adequacy = .373; Barlett’s Test of Sphericity = 97.223 (.000)

Table 3: Barriers to Environmental Reporting


Mean

Std.

Deviation

Measurement problem 1.59 .796 Lack of consistency and comparability 1.55 .739 Expose to criticism 2.36 1.432 Confidential data 2.64 1.093 Lack of government's policy on the issue 1.45 .671 Cost in terms of time, money and other resources 1.59 .734 Not enough demand for environmental information 1.73 1.032 No convincing proof to show that benefits of producing environmental reports exceed their costs

1.73 .767


Table 4: Rotated Component Matrix of Respondents’ Barriers to Environmental Reporting

Component Communalities H Barriers to Environmental Confident

iality Lack of

guidelines Usefulness

Expose to criticism .895 .840

Confidential data .804 .764

Lack of consistency and comparability .834 ,811

Lack of government's policy on the issue

.914 .858

Not enough demand for environmental information

.921

.863

Benefits of producing environmental reports not clear .777 .802

Usefulness of environmental report remains unclear

.809 .831

Eigenvalue 1.195 .896 3.768

% of Variance explained 17.08 12.81 52.54

Cronbach’s Alpha .737 .770 .871

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Percentage of variance explained 82; Factor loadings with values less than 0.4 are suppressed. Kaiser-Meyer-Oklin Measure of Sampling adequacy = .691 Barlett’s Test of Sphericity = 67.669 (.000)



Table 5: Voluntary or Mandatory*Sectors of Operation cross tabulation

Sectors organisations are operating in

Total

Banking,

insurance

and other

financial

services Commerce Investments Manufacturing Sugar Transport

Voluntary

or

mandatory

reporting

Voluntary

reporting

33.3% 100.0% 33.3% 100.0% 100.0% 100.0% 63.6%

Mandatory

reporting

66.7% .0% 66.7% .0% .0% .0% 36.4%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Pearson Chi-Square Value = 10.476; df = 5; Sig. Level = .063

Table 6: Reasons for favouring Voluntary Reporting

Statements Strongly

Agree (Freq)

Agree (Freq)

No opinion (Freq)

Disagree (Freq)

Strongly Disagree

(Freq) Mean

Costs are not inflated 7 6 2 4 3 2.55Reporting should remain under discretion of the company

7 8 3 2 2 2.27

Voluntary disclosures persuades better companies to achieve best practices

5 8 3 3 3 2.59

Market pressure will force lagging firms to disclose environmental information

3 6 7 4 2 2.82




Table 7: Reasons for favouring Mandatory Reporting

Strongly agree (Freq)

Agree (Freq)

No opinion (Freq)

Disagree (Freq)

Strongly disagree (Freq)

Mean (Freq)

Stakeholders have the “right to know” 7 3 4 5 3 2.73Provide basic standard for reporting 5 4 8 3 2 2.68Allow assessment and benchmarking of business’s performance

3 6 8 3 2 2.77

Quality of environmental information is enhanced

4 6 6 2 4 2.82

Motivate companies to comply with regulatory regimes

9 5 4 2 2 2.23

Obtain more objective view of corporate environmental performance

7 2 6 2 5 2.82

Table 8: Contribute to sustainable development of Mauritius * Position in firm

Contribute to sustainable development of Mauritius * Position in firm Position in firm

Total Accountant CSR manager Accounts clerk Other

Contribute to sustainable development

Strongly agree

% Position 54.5% 100.0% .0% 66.7% 63.6%

Agree % Position 36.4% .0% 100.0% 16.7% 27.3%

No opinion % Position .0% .0% .0% 16.7% 4.5%

% Position 9.1% .0% .0% .0% 4.5%

Total 100.0% 100.0% 100.0% 100.0% 100.0% Pearson Chi-square value = 8.897; DF = 9 ; Sig. Level = .447

environmental reporting in mauritian listed companies

Documents