An investigation of reliability of corporate environmental reporting and its impact on environmental sustainability: an evidence from Sri Lanka

Abstract

Corporate Environmental Reporting (CER) has gained significant attention including government policy makers, researchers and business organizations. Several decision makers try to achieve sustainable development and place the environment at the top of their agendas. Many organizations are involved in reporting of their organization’s environmental impacts as an important aspect to be disclosed to the stakeholders. The CER prompts organizations to rethink and conserve the environment, minimizing the harm and to reach international standards and attract stakeholders. Though many organizations disclose a CER within their annual reports, the reliability of the disclosures often remain to be determined. This study attempts to identify the reliability and honesty of CERs and their impact on Environmental Sustainability (ES) within the Sri Lankan context. Reliability and honesty are addressed by investigating extent, accuracy and quality of CERs, managers’ perception of international standards in a CER, and their perception of the impacts of CERs on ES. The study reveals that Sri Lankan CERs are fairly accurate though it is a voluntary reporting. All most all the companies in the sample have described their environmental performances fairly accurately within their reports. More than 50% of the companies have already adopted international standards in their CER disclosures. It seems that reliable and honest CERs have positive effects on ensuring environmental sustainability. The environmental disclosure index served as an efficient tool to derive at this conclusion. Hopefully this study may contribute to the goal of sustainable development while giving insights in organizational CERs and environmental sustainability in Sri Lanka.