Climate change-related corporate governance disclosure practices: evidence from Australia

Haque, S 2011, Climate change-related corporate governance disclosure practices: evidence from Australia, Doctor of Philosophy (PhD), Accounting, RMIT University.


Document type: Thesis
Collection: Theses

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Title Climate change-related corporate governance disclosure practices: evidence from Australia
Author(s) Haque, S
Year 2011
Abstract This research is comprised of three interrelated stages of a broader study of the climate change-related corporate governance disclosure practices of Australian companies. The first stage of the study investigates the climate change-related corporate governance disclosure practices of five major Australian energy-intensive companies over a 16-year period (from 1992 to 2007). The five companies are BHP Billiton, Caltex, Origin Energy, Rio Tinto and Santos Limited. A content analysis research method was adopted to investigate disclosures within annual reports and standalone social and environmental (or sustainability) reports. In doing so, a disclosure index has been developed, consisting of 25 specific climate change-related corporate governance issues under eight general categories, to classify climate change-related governance disclosures provided by the respective companies. The result of this stage shows that although there was an increasing disclosure trend over the years, there was minimal reporting by major Australian companies in relation to climate change-related corporate governance practices.

Whilst the first stage of the study focuses on what information companies are disclosing, the second stage investigates what different groups of stakeholders believe companies should disclose. Using an online survey tool called survey-monkey, this stage asked a group of stakeholders (users of information with expertise in relation to what information should be disclosed) including institutional investors, government bodies, environmental NGOs, environmental consultancies, researchers and accounting professionals, to rank the 25 specific climate change-related corporate governance disclosure issues developed in stage one of the study. All 25 issues received mean scores between 3.5 and 4.5 showing that the respondents unanimously considered the issues in the index to be at least ‘important’ in assessing organisations’ climate change-related corporate governance practices. Stage two also found six additional issues recommended by the respondents that led to the development a final index of 31 issues under eight general categories. Thus the second stage of the study effectively utilised the disclosure index developed in stage one to build a ‘best practice disclosure index’ by using experts’ opinions.

Taken together, the results of the previous two stages indicate that Australian companies’ climate change-related corporate governance disclosure practices fall well short of the best practice disclosures recommended by the sample of expert users. Therefore the aim of the third and final stage of the study is to explain the reasons for the low level of climate change-related corporate governance disclosures by Australian companies. By interviewing senior executives of the sample companies identified in stage one, stage three finds the following issues appear to contribute to the apparent lack of disclosure: the existence of an expectations gap; the costs of providing information outweigh perceived benefits; the cost of providing commercially sensitive information; the limited accountability held by the companies; and a lack of demand for information from powerful stakeholder groups, either singly or in combination.

The three research stages together provide us with a comprehensive, but not exhaustive, picture to understand the current disclosure practices of Australian companies in relation to climate change-related corporate governance practices.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Accounting
Keyword(s) Climate change
corporate governance
climate change-related disclosure
corporate environmental responsibility
stakeholders
decision-usefulness
expectations gap
cost-benefit
accountability
stakeholder power
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