Are your ready to disclose environmental information? International sustainability initiatives can help.
The impacts that companies have on the natural environment are gaining interest from the general public. But if, as a consequence, companies are publishing increasing quantities of environmental information (i.e. greenhouse gas (GHG) emissions, water consumption, volumes of waste generated, biodiversity), there is still unclarity about the factors that contribute to the decision for corporations to disclose this information.
For example, Life Cycle Assessment (LCA) is one of the most widely used methods to measure the environmental impacts of products or services holistically but it is costly and time consuming. Therefore, only a certain number of companies disclose LCA information and we don’t know why they decide to do so.
Are international sustainability initiatives playing a role ?
Actually, several international sustainability initiatives, such as the Global Reporting Initiative (GRI) guidelines, the Global Compact (GC) principles, and the Carbon Disclosure Project (CDP), indirectly encourage companies to disclose LCA information. It is then tempting to imagine that a company adopting such initiatives is more likely to disclose environmental information than a firm that does not adopt them. We can even suppose that the adoption of several of those initiatives should also have an influence on the decision to disclose information on Life Cycle Assessment (LCA) and on the quantity of information disclosed.
Well, let’s look at this influence on the sustainability reporting of 36 companies listed on the French CAC40 index over a long period of 13 years.
Yes, they do!
Results show that the adoption of the Global Reporting Initiative (GRI) sustainability guidelines, of the United Nations Global Compact (GC) principles, and of the Carbon Disclosure Project (CDP) are positively and significantly associated with the tendency of CAC40 companies to disclose LCA information. So, the voluntary decision to adhere to sustainability initiatives has an influence on the decision to disclose environmental information.
Actually, companies decide to disclose LCA information to emphasize their superior environmental performance. It is a way for them to manage their legitimacy.
And the more initiatives you adopt, the more information you are likely to disclose.
This research also demonstrates the usefulness of having multiple voluntary initiatives promoting sustainability, since the cumulative number of initiatives adopted leads to an increase in disclosure. From a managerial perspective, it is therefore useful to adhere to multiple initiatives promoting sustainability, since it leads to an increase in disclosure.
This research provides evidence that voluntary environmental frameworks can excert different normative pressures towards environmental reporting. Adhering to the GRI guidelines, the GC principles, and responding to the CDP questionnaires is well associated with the decision to disclose LCA information. The adoption of a cumulative number of those international initiatives is also associated to the decision of disclosure and the quantity of information disclosed.
Specifically, the GRI can be considered the initiative that exerts the strongest pressure on CAC40 companies to disclose LCA information in their reports.
This article was published in Journal of Cleaner Production.
For more information, please visit the following link: https://www.sciencedirect.com/science/article/abs/pii/S0959652620345005