CHAPTER V

CORPORATE ENVIRONMENTAL REPORTING PRACTICES

In this chapter an attempt has been made to study

the extent of disclosure of environmental information, both
voluntary and statutory, in the annual reports of selected
Indian private sector companies. The disclosure of environ-
mental information has been the subject of substantial
interest among the intellectuals in the field of accountancy
in recent times. A number of research projects have been
taken up by the academicians, researchers and accounting
organisations. These studies provide a detailed insight
about the trends of disclosure of environmental information
over time. Gray (1990) and Guthrie and Parker (1989) in
their studies on corporate social and environment disclosure
reported a little or no social and environmental information
in the annual reports beyond what was required under the
law. Coopers and Lybrand Deloitte (1990), Institute of
Business Ethics (1990) and Roberts (1991) in their studies
found that there was a little disclosure of environmental
information in the annual reports of companies. Harte (1991)
pointed out that the disclosure of environmental information
was at a very general level and the detail was very less.

* DATA AND INIEIORMATION PRESENTED IN THIS CHAPTER ARE PRIMARY

COLLECTED BY THE RESEARCHER DURING THE FIELD VISIT
 133

Much of the literature available to date relates

to the level of disclosure of environmental information in
the industrialised and developed countries of the world,
i.e. United States, United Kingdom, Canada and Australia
etc. This study deals with the level of disclosure of
environmental information by the companies in the rapidly
developing economy of India. An effort has been made to
study not only the quantity but also the quality of
disclosure of environmental information. The extent of
disclosure was studied in the following areas:
- Itemwlse disclosure of Voluntary Environmental Information
- Companywise disclosure of Voluntary Environmental Informa-
tion.
- Length of disclosure of Voluntary Environmental Informa-
tlon.
- Place of disclosure of Voluntary Environmental Information
- Industrywise disclosure of Voluntary Environmental Infor-
mation.
- Disclosure of Statutory Environmental Information.
- Length of disclosure of Statutory Environmental Informa-
tion.
 134

STATUS OF DISCLOSURE OF VOLUNTARY ENVIRONMENTAL

DISCLOSURE VARIABLES
In this section an attempt has been made tostudy
the disclosure of voluntary items of environmental informa-
tion. The status of disclosure of twenty voluntary environ-
mental variables was examined. These voluntary items were
selected on the basis of previous studies, study of annual
reports, consultation with environmentalists and Environment
Protection Act, 1986. These twenty items of voluntary
environmental information were classified into three
categories, as given below, for the purpose of rating:
- Regulatory information
- Accounting information
- General Information
Regulatory Environmental Information
Here, regulatory information does not mean legal
information but that information, which tries to regulate
the environmental activities of the organisation through
some sort of rewards, incentives and penalties etc. The
following seven items of environmental disclosure were
included in this category of environmental information:
- Environmental Audit
- Compliance with law
- Awards
 135

- Environment Management system

- Penalities
- ISO 14001
- Proceedings Under environmental laws

Accounting Environmental Information

This category includes the disclosure of following
voluntary items of environmental information:
- Capital Environmental Expenditure
- Revenue Environmental Expenditure
- Accounting Policy
- Environmental Contingent Liabilities
General Environmental Information
In this category, the following items of environ-
mental information were included:
- Emissions to air, water and land
- Clean Technology
- Product Design
- Environment Research and Development
- Training
- Natural Resources Conservation
- Waste Management
- Corporate Environment policy
- Plantation

* * WITH TABLE SHOWS ARE PRIMARY DATA COLLECTED BY THE

RESEARCHER
 135.1

CONTENT ANALYSIS

Regulatory Information

Table 1 presents the s t a t u s of d i s c l o s u r e of the

regulatory items of environmental information.
TABLE 1*

STATUS OF DISCLOSURE OF REGULATORY ENVIRONMENTAL INFORMATION

_ , Number of companies (Percentage) Total

Monetary Quantitative Descriptive Total score *
Environment
Audit 0 0 18 18 18
(9)
Compliance
with law 0 0 37 :"37 37
(18.5)
Environmental
Awards 0 0 21 21 21
(10.5)

Environment
Management
System 0 0 21 21 21
(10.5)
Penalties
under
Environmental
Laws 0 0 1 1 1
(0.5)
ISO lAOOl 0 0 31 31 31
(15.5)
Proceedings
under
Environmental
Laws 0 0 2 2 2
(1)
Note: * Monetary disclosure is multiplied by 3, quantiative
by 2 and descriptive by 1 and then added to arrive at
the total score.
Figures in the brackets indicate percentage
 136

Environmental Audit
Environmental audit, having its origin in the
United States, is a series of activities undertaken by an
organisation with a view to assess its environmental
performance and also to assess compliance with corporate
environmental policy and other regulatory requirements. This
activity helps the organisation to identify deficiencies,
take relevant steps to correct Identified deficiencies and
also to reduce risk posed by the organisational activities
to natural resources as well as to human health and safety.
As a system, the environmental audit comprises the following
dimensions (i)The compliance audit to verify the compliance
with the statutory requirements, (ii)The management audit to
find out the management's perception in delaing with
environmental issues, (iii)The performance audit to assess
the impact of products and processes on the environment and
steps to minimise the wastes etc. and (iv)The financial
audit to appraise the funds utilised, the possible risks
with the associated costs and the impact of pollution
control measures over the products acceptability and
corporate reputation (Paliwal, 1999).

It can be seen from table 1 that only 18 (9 per

cent) companies made disclosure regarding the environmental
audit in their annual reports. Further it was found that
 137

some companies reported that they have got environmental

audit of their accounts conducted from some reputed inter-
national audit concerns. However, no company reported the
results or reports of environmental audit in their annual
reports. All the 18 companies made only the descriptive
disclosure of environmental audit.
Compliance with Law
With the recognition of the fact that the
existence of unpolluted environment and natural resources is
inevitable if the mankind is to survive on this earth.
Seeing the haphazrd use of these resources by industry, the
Government of India has promulgated various legislations for
the protection of these resources. The important pollution
control legislations enacted by the Indian government are as
follows:
- The Motor Vehicle Act, 1939
- The Factories Act, 19A7
- The Water (prevention and control of pollution) Act 1974
- The Air (prevention and control of pollution) Act 1981
- The water (prevention and control of pollution) Cess Act
1981
- The Environment Protection Act, 1986
- The Public Liability Insurance Act, 1991
 138

Under these Acts, the various environmental

performance reports are to be prepared by the Industrial
concerns to ensure their compliance with these laws. Awards,
fines and penalties are also awarded under these acts for
their compliance and noncompliance respectively.
It can be seen from table 1 that only 37(18.5 per
cent) companies reported about environmental compliance in
their annual reports. It was further found that the informa-
tion available in the annual reports about the compliance
with the environmental laws was not in detail. Mostly, a
brief reference was made about the compliance of various
laws related to the pollution of environment.
Environmental Performance Analysis
Various international and national governmental
and non-governmental environmental agencies are giving
environmental awards to encourage the industry to work for
the protection and development of natural and environmental
resources. In our study, we made efforts to see whether the
companies provided information about environmental awards
obtained by them in their annual reports. It was found that
only 21 (10.5 per cent) companies disclosed in their annual
reports that they have obtained some kind of environmental
awards. It was further found that some companies gave even
photographs of the awards and the certificates obtained by
 139

them. Some of these companies reported that they have

obtained awards from international organisations.
Environment Management System
For the protection of natural and environmental
resources, the industrial organisations have developed their
own environment management systems. In our study it was
found that only 21 (10.5 per cent) companies reported that
they were using environment management system. Further, it
was found that no company provided any detailed information
about the type/structure of the environment management
system being used.
Penalities under Environmental Laws
The government, for the protection of natural and
environmental resources has enacted various acts. It can be
seen from table 1 that only 1 (0.5 per cent) company
reported about the penalities levied under the environment
protection acts. The main reasons for this low level of
disclosure about this factor may be the adverse impact on
the reputation of the company if information about it is
disclosed. The other reason can be that a very few companies
were imposed fines and penalties because of the poor
implementation of pollution control laws due to inactivity
of theenforcement agencies.
 140

ISO 14001
ISO 14001 is the standard imparted by the Inter-
national Standards Organisation to the environmental
conscious and caring companies. In our survey of annual
reports of the Indian companies, it was found that only 31
(15.5 per cent) companies reported about this item. It was
further found that only 19 of the reporting companies
obtained this standard, while the remaining 12 companies
stated that they are working to get the ISO 14001
certificate.
Proceedings under Environmental Law

The government, for the protection of natural and

environmental resources, has enacted various acts. Suits are
filed under these acts against those who violate these acts
by the NGOs or by the Government agencies. In our survey of
annual reports, it was found that only 2 (1 per cent)
companies provided the information about the proceedings
going on against them under these environmental laws. It was
further found that the detailed information regarding the
kind of proceedings and their stage in the court of law was
not available in the annual reports.
ACCOUNTING ENVIRONMENTAL INFORMATION
These days, huge expenditure is incurred by the
industry for the protection of natural and environmental
 140.1

resources. This expenditure is incurred either compulsorily

under the environmental protection laws or voluntarily. In
our study of annual reports of the Indian companies we tried
to examine that what type of accounting treatment is given
to this expenditure. Whether expenditure on environment
protection was disclosed separately as revenue item, capital
item or was clubbed with other heads. The status of
disclosure of the items belonging to this category is
presented in table 2.
 140.2

TABLE 2

STATUS OF DISCLOSURE OF ACCOUNTING ENVIRONMENTAL INFORMATION

Disclosure Nuniber of companies (percentage) Total

variables Monetary Quantitative Descriptive Total score

Environmental
Capital 12 0 6 18 42
expenditure (6) (3) (9)

Environmental
Revenue 8 0 0 8 24
Expenditure (A) (A)

Environmental
Accounting 0 0 2 2
policies (1) (1)
Environmental
contigent 2 0 0 0
Liability (1)

Capital Environmental Expenditure

Huge capital expenditure is incurred by the

industrial concerns for the protection of natural and

environmental resources because they are required to invest

on fixed assets such as water treatment plants, solid waste

treatment plants etc. But it can be seen from table 2 that

only 18 (9 per cent) companies reported about this item in

their annual reports. Further out of 18 reporting companies

12 companies stated in monetary terms the capital environ-

ment expenditure incurred by them, while 6 companies

reported it only in descriptive terms. Total score of this

item was found to be 42.

 1A0.3

Revenue Environmental Expenditure

So far as the revenue expenditure on environmental
protection is concerned, it can be seen from table 2 that
only 8 (A per cent) companies provided separate information
about this item in their annual reports. It was further
found that all the 8 reporting companies provided this
information in monetary terms.
Environmental Accounting Policy
What type of accounting policy was adopted by the
industrial concerns for the treatment of environmental
expenditure incurred by them and how the disclosure of these
policies in the annual reports was done? It was found that
only 2 (1 per cent) companies reported about the accounting
policy adopted for the treatment of environment expenditure.
Further, it was found that no company reported in detail its
accounting policy for environmental expenditure.
Environmental Contingent Liability
So far as the disclosure of contingent environ-
mental liabilities is concerned the level of disclosure was
found to be very discouraging. It can be seen from table 2
that only 2(1 per cent) companies disclosed in their annual
reports the existence of environmental contingent
liabilities. Further it was found that both the companies
reported this information in monetary terms.
 140.4

GENERAL ENVIRONMENTAL INFORMATION

This category Includes the reporting practices
regarding the measures, other than regulatory and
accounting, taken by the industrial concerns for the
protection of natural and environmental resources. The
status of disclosure of the items included in this category
is presented in table 3.
Emissions to Water, Air and Land
It can be seen from the table that the total score
of this item was 43. Further, it was found that 39 (19.5 per
cent) companies reported in their annual reports the
information about the emission to water, air and land. It
was further found that only 4 (2 per cent) companies
provided the quantity of waste particles emitted by them
into air, water and land. No company reported in monetary
terms the value of water,air and land resources polluted by
it.
Clean Technology
The technology used by the industry for the
production of goods and services should be environmental
friendly. An effort was made to see whether the industry was
reporting about the impact on environmental and natural
resources of their technology in their annual reports or
not. It was found that only 42 (21 per cent) companies
 140.5

TABLE 3*

STATUS OF DISCLOSURE OF GENERAL ENVIRONMENTAL INFORMATION

Disclosure Number of companies (percentage) Total

variables Monetary Quantitative Descriptive Total score

Emission to
air, water 0 4 35 39 43
and land (2) (17.5) (19.5)

Clean 0 0 42 42 42
Technology (21) (21)

Product 0 0 27 27 27
Design (13.5) (13.5)

Environmental
Research and 0 0 51 51 51
Developnent (25.5) (25.5)

Training 0 2 24 26 28
(1) (12) (13)

Natural
resoiirce 0 3 27 30 33
Conservation (1.5) (13.5) (15)
Waste 5 4 61 70 83
Management (2.5) (2) (30.5) (35)

Corporate
Environmental 0 1 17 18 19
Policy (0.5) (8.5) (9)

Plantation 0 14 16 30 44
(7) (8) (15)

Note: Figures in the brackets indicate percentage

 141

provided the Information about this item in their annual

reports. Further it was found that no company reported the
adverse impact of their technology on the environmental and
natural resources. Also nothing was mentioned about the
expenditure incurred by these industries to make their
technology environment friendly.
Product Design
An effort was made to see whether the companies
were reporting in their annual reports the impact of their
products on the environmental and natural resources. It was
found that only 27 (13.5 per cent) companies provided the
information about this item in their annual reports.
Further, it was found that no company reported the adverse
environmental impacts of their products. It was also found
that all the companies in automobile sector reported for
this item in their annual reports. It may be due to the
implementation of Euro I, II and III norms in this Industry.
No company reported about the amount invested by it to make
their products environment friendly.
Environmental Research and Development

A lot of research activities are being undertaken

by the industries to make their process and products
environment friendly. It was examined whether the companies
were reporting about this activity in the annual reports or
 142

not. It was found that only 51 (25.5 per cent) companies

reported for this item in their annual reports. Further it
was found that no company reported about either the capital
or revenue expenditure incurred by it on its activity.
Training
Some organisations conduct environmental awareness
seminars and also provide training to their employees so
that they can carry on their activities in a manner friendly
to the environmental and natural resources. An effort was
made to examine whether the selected companies were
reporting about these activities in the annual reports or
not. It can be seen from table 3 that the total score of
this factor was 28. It was found that only 26 (13 per cent)
companies provided information about this item in their
annual reports. Further it was found that 2 (1 per cent)
companies provided information about the number of persons
trained by them. No company reported about the expenditure
incurred by it on this activity.
Natural Resource Conservation

Natural Resources play a vital role in the

development of a nation. Their existence is inevitable for
the survival of mankind on this planet. But during the past
several years, there has been a haphazard use of these
precious resources mainly by the industrial sector. It was
 143

examined whether the selected companies were providing

information about the activities undertaken by them for the
conservation of natural and environmental resources in their
annual reports or not. It can be seen that the total score
of this factor was 33, Only 30 (15 per cent) companies
reported about this item in their annual reports, 3 (1.5 per
cent) companies provided the information in quantitative
terms about the natural resources protected by them.
Further, it was found that no company provided information
about the amount spent by it on the protection of natural
and environmental resources. Also no company provided
information about the value of natural and environmental
resources protected by it.
Waste Management

The huge amount of waste generated by industrial

and other activities is posing great threat to the environ-
ment. Huge amount is spent by the industry for the
management of this waste. We examined the status of
disclosure of this activity in their annual reports. It can
be seen from table 3 that the total score of this factor was
83. It was found that only 70 (35 per cent) companies
reported for this item in their annual reports. Further, it
was found that only 5 (2.5 per cent) companies presented
this information in monetary terms and 4(2 per cent)
 14A

companies provided this information in quantitative terms.

No company reported the quantity of waste emitted by it into
water, air and land.
Corporate Environment Policy
Taking into consideration the dangers of environ-
mental degradation and the dimensions of the problem, to
tackle it the companies were developing their own environ-
mental policies to deal with environmental problems. It was
examined whether the industrial concerns were disclosing
their environment policies in the annual report or not. It
can be seen in table 3 that only 18(9 per cent) companies
reported for this item in their annual reports, out of these
18 companies, 3 companies reported in detail their corporate
environmental policy, while the remaining 15 (7.5 per cent)
companies didn't provide any detail about their environ-
mental policy. No company reported in their environment
policy the amount it desires to spend for the protection of
environmental and natural resources. The total score of this
item was 19.
Plantation

Plantation activity, which is very important to

check the further degradation of environment, is resorted to
by industrial concerns on a large scale. We know that the
life cannot exist on earth without plants. Whether
 145

Industrial concerns were reporting this activity In the

annual reports or not, was examined. It can be seen from
table 3 that only 30 (15 per cent) companies reported for
this Item In their annual reports. Further, It was found
that only 14 (7 per cent) companies provided this informa-
tion in quantitative terms. No company provided this
Information In monetary terms. The total score of this
factor was 44.
CATEGORYWISE DISCLOSURE
All the items of environmental information, which
were included in this study, were divided into three
categories as discussed earlier. So far as, the categorywlse
level of disclosure of environmental information is
concerned, it can be seen from table 4 that the total score
of each of the three categories i.e. regulatory Information
accounting information and the general Information was 127,
74 and 364 respectively.
 145.1

TABLE 4*
CATEGORYWISE DISCLOSURE STATUS

Category Total Score Average per factor Score

Regulatory 127 18.7

Accounting 74 18.5
General 364 41.3

The highest score amongst these three categories

was of the general information category followed by the
regulatory information and the accounting information. This
was on the basis of the total score of the categories. If we
look into the average per factor score for each of the three
categories, it comes out to be 18.7, 18.5 and 41.3 for the
regulatory information, the accounting information and the
general information respectively. The importance of
categorywise level of disclosure of environmental informa-
tion was the same on average basis and the total basis. This
conveyed that the corporate sector of India considered the
general information as the most important one to be
disclosed in the annual reports. The accounting information
for environment was considered the least important. The
 146

management of the organisations may be of the view that the

accounting for environment does not give any benefit to the
company,

Companywise Disclosure
Table 5 presents the companywise level of
disclosure of voluntary environment information. It presents
the number and percentage of companies falling in different
percentage score categories. It can be seen from the table
that there were 89 (44.5 per cent) non-disclosure companies
and 111 (55.5 per cent) are disclosure companies. Among the
disclosure companies, no single company could get even 50
per cent of the maximum assigned score.
 146.1

TABLE 5*
COMPANYWISE DISCLOSURE STATUS

Percentage Score No. of companies % of companies

0-10 57 28.5
11 - 20 38 19.0
21 - 30 10 5.0
31-40 5 2.5
41-50 1 0.5
Total 111

It can be seen from the table that the companywise

level of disclosure of voluntary environmental information
turned out to be very discouraging. Firstly, very small
numbers of companies were reporting for this information in
their annual reports. Secondly, even for the disclosure
companies, the level of disclosure was very poor with almost
50 per cent of the disclosure companies falling in the
lowest percentage score category and only 1 company falling
in the highest percentage score category. However, good
environmental disclosure was found in the annual reports of
BSES, Hindalco, Hero Honda Motors, Reliance Industries,
 147

Indian Aluminum and the Tata Iron and Steel companies. These
companies could respectively score 42.52, 38.30, 38.30,
36.17, 34.04 and 31.91 per cent of the maximum assigned
score.
Length of Disclosure of Voluntary Environmental Information

This study was not restricted only to the contents

of disclosure of environmental Information In the annual
reports. The length I.e. quantity of disclosure of environ-
mental Information was also studied. In some earlier
studies,the unit of measurement of the length of disclosure
per company was the number of pages, paragraphs etc. In our
study since the sample disclosure firms disclosed very
little amount of voluntary environmental Information, the
number of lines was considered appropriate to study the
length of disclosure. Table 6 presents the companywise
length of disclosure of environmental Information.
 147.1

TABLE 6*
LENGTH OF VOLUNTARY ENVIRONMENTAL DISCLOSURE

Number of Lines Number of companies

1-5 60
(30)
6-10 13
(6.5)
11-15 15
(7.5)
.16-20 6
(3)
21-25 4
(2)
25-30 1
(0.5)
Above 30 12
(6)

Note: Figures in the bracket indicate percentage

It can be seen from the table that 60 (30 per

cent) companies devoted one to five lines, 13 (6.5 per cent)
companies devoted six to ten, 15 (7.5 per cent) companies
devoted eleven to fifteen lines, 6(3 per cent) devoted
sixteen to twenty lines for environmental disclosure. Only
1 (0.5 per cent) companies devoted above 30 lines for the
disclosure of environmental information. However, the total
 1A8

number of lines of disclosure was found to be 375. Average

number of lines of disclosure per company came out to be
almost 1.7 only.
Place of Disclosure of Voluntary Environmental Information
The place at which an item of information is
disclosed in the annual reports indicates the degree of
importance that item carries. Generally annual reports are
divided into following sections.
- Chairman's Speech
- Managing Director's Speech
- Management Discussion and Analysis
- Management Review
- Separate Section for some specific information
- Corporate Governance
- Profit and Loss Account
- Balance sheet
- Notes to accounts
- Schedules to account
- Others
In our survey of annual reports of the Indian
companies, the most favoured place for the disclosure of
voluntary environmental information was found to be the
Directors' Report. Amongst the 111 disclosure companies 106
i.e almost 95 per cent of the disclosure companies provided
 148.1

this information In the Directors' Report. The place used by

the companies for the disclosure of environmental informa-
tion is presented in table 7.
TABLE 7*
PLACE OF ENVIRONMENTAL DISCLOSURE

Place of Disclosure Number of companies

Separate Section 12
Chairman's Speech 6
Directors' Report 106
Management Review 4
Managing Director's Speech 1
Management discussion and analysis 9
Corporate Governance 1
Profit and Loss Account 5
Notes to Accounts 16
Schedules to accounts 1
Multiple sections 37
Others 10
 149

It can be seen from table 7 that 12 (6 per cent)

companies provided environmental information in separate
section on environment, 6(3 per cent) companies provided
information in Chairman's Speech, 106 (53 per cent)
companies provided this information in the Directors'
Report, A(2 per cent) companies provided this information in
the Management Review Section, only 1 (0.5 per cent) company
provided this information in the Managing Director's Speech,
9 (4,5 per cent) companies provided this information in the
section on management discussion and analysis, 1 (0.5 per
cent) company used the section of corporate governance to
disclose this information, 5(2,5 per cent) companies
provided information about environmental activities in the
profit and loss account, 6 (3 per cent) companies used the
section of notes to accounts to disclose this information,
10 (5 per cent) companies provided the information in other
sections, 37(18,5 per cent) companies provided this informa-
tion in multiple sections i.e, in more than one section of
the annual reports. On overall, there is no uniformity among
the disclosure companies as far as the place for the
disclosure of environmental information is concerned. The
main reason for such a result may be the non-availability of
the disclosure guidelines.
 150

Industrywlse Disclosure of Voluntary Environmental Information

The industryeise level of disclosure of voluntary
environmental information is presented in table 8. In this
table, not only the total score of each industry is given
but the categorywise score i.e. regulatory information,
accounting information and general information scores are
also given. Besides the scores, the space devoted by the
concerned industry in the annual reports for environmental
information is also presented. Further, along with the total
score and the lines of disclosure, the table also presents
the average total score, the average categorywise score and
the average number of lines of disclosure.

It can be seen from the table that there were llA

companies in the high polluting category and 86 companies in
the low polluting category. Both the scorewise as well as
the lengthwise, the high polluting industries performed
better to disclose the environmental information. Whereas
the average total environmental disclosure score in the case
of high polluting industries was found to be 3.89, it was
only 1.5 in the low polluting industries. Similarly, whereas
high polluting industries devoted on an average 9.28 line,
low polluting industries devoted only 3.65 lines for
environmental disclosure in their annual reports. Also the
proportion of disclosure companies was high in the polluting
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 150.3

category as compared to the low polluting category. Where

as 85 high polluting companies out of a total 114 i.e.
almost 75 per cent companies were providing this information
in their annual reports, only 26 out of a total of 86 i.e.
almost 30 per cent low polluting companies were providing
this information. So, it can be concluded that there was a
high degree of relationship between the level of disclosure
of voluntary environmental information and the degree of
environmental pollution caused by the activities of the
organisation. This was consistent with the stakeholder
theory and the earlier studies of Dierkes and Preston
(1977), Singh and Ahuja (1983), Cowen (1987), Freedman and
Jaggi (1988), Roberts (1990), Zehgal and Ahmed (1990) and
Hackston and Milne (1996). Secondly, the status of environ-
mental disclosure was found better in the Aluminium, Paper
and Pulp, Textile (except dying). Electricity and Multi-
products industries as compared to the other industries. The
average total environmental disclosure scores in these
industries were respectively 13.33, 8, 7.5, 7.1 and 7.
Thirdly, the regulatory and the general environmental
disclosure were found better in the Aluminum industry with
average scores of 4 and 8.33 respectively. The accounting
environmental disclosure was found better in the Iron and
Steel industry with an average 1.5. Further, it can be seen
 150.4

from the table that no environmental disclosure was found in

the annual reports of the media, the telecommunication and
the finance industries.
So far as the length of disclosure of information
is concerned, it was also greater in case of high polluting
industries. The Electricity generating industry had the
total number of lines of disclosure of 222. On the basis of
average number of lines of disclosure, the Aluminum industry
was leading with a score of 62 lines. On an average, the
high polluting industries devoted 10 lines in the annual
reports for the disclosure of environmental information and
the low polluting industries devoted 4 lines only.
Disclosure of Statutory Environmental Information

An amendment was made in the Companies Act 1956 in

the year 1988 relating to the statutory disclosure of
information regarding energy conservation with the insertion
of section 217(1)(e) in the Act. Introduction of this
section has made it mandatory for the companies to disclose
information regarding energy conservation in their annual
reports. An effort was made to examine the compliance of
this section by the companies.
Table 9 presents the quality as well as the
quantity of disclosure of statutory environmental informa-
tion in the annual reports of companies. Out of a sample of
 150.5

TABLE 9*
STATUS OF DISCLOSURE OF STATUTORY ENVIRONMENTAL INFORMATION

Number of Number of companies

Item Disclosures (percentage)
Percentage Monetary Quantitative Descriptive

Energy
Conser- 150 84 13 53
vation (75) (42) (6.5) (26.5)

Note: Figures in the brackets indicate percentage

200 companies only 150 i.e. 75 per cent companies reported

this information in their annual reports. The companies that
didn't report this information in their annual reports were
in the fields of computers and finance. Among the disclosure
companies, 84 (42 per cent) companies reported this informa-
tion in monetary terms, 13 (6.5 per cent) companies reported
this information in quantitative terms and 53 (26.5 per
cent) companies reported this information in descriptive
terms.
 150.6

TABLE 10*
LENGTH OF STATUTORY ENVIRONMENTAL DISCLOSURE

„ , J- T • Companxes
Number of lines AT,„„K«-^ r.«^« •--,
Number Percentage
1-5 46 23.0
6-10 21 10.5
11 - 15 11 5.5
16-20 15 7.5
21 - 25 20 10.0
25 - 30 13 6.5
Above 30 2A 12.0

So far as the length of disclosure of this

information is concerned, it varied from as high as 121
lines to as low as only 1 line. Most of the companies
provided this information in terms of energy generated by
them from their own sources and the energy purchased from
outside. This information was given both in quantitative as
well as monetary terms. These companies also gave informa-
tion about the energy consumed by them in terms of per unit
of the product being produced by them. In addition to this,
the companies were also reporting about the efforts made by
them for the conservation of energy.
 151

On the basis of foregoing analysis of environ-

mental disclosure practice of the Indian companies, the
following conclusions can be drawn:
(1) So far as, the status of disclosure of
variables was concerned, waste management, environmentla
research and development, clean technology, emission to air,
water and land and compliance with the environmental laws
were found to be the most frequently reported disclosure
variables. The least reported disclosure variables were
found to be the penalities under the environmental laws,
proceedings under the environmental laws and the environ-
mental contingent liabilities. The reasons for this poor
disclosure status of these disclosure variables may the
adverse impact, if disclosed, on the goodwill of the
company.

(2)The companywise status of voluntary environ-

mental disclosure was found to be very discouraging. No
company could score even fifty per cent of the maximum
assigned score. Only 111 (55.5 per cent) companies reported
for environmental matters in their annual reports. However,
the status of environmental disclosure was found better in
the annual reports of the Hindalco, the BSES, the Indian
Alumi num, the Reliance Industries and the Tata Iron and
Steel companies.
 152

(3)The status of voluntary environmental

disclosure was found to be better in the high polluting
industries than in the low polluting industries. The status
of voluntary environmental disclosure was found better in
the aluminum, paper and pulp, electricity and multiproducts
industries. However, no disclosure of environmental informa-
tion was found in the annual reports of the media, tele-
communication and the finance industries.
On the whole, the status of voluntary environ-
mental disclosure in the annual reports of the Indian
companies was not good. It could rather be termed as poor.
Moreover, the environmental information in the annual
reports of the Indian companies was found to be inaccurate
and was not self-explanatory. The main reasons for this poor
disclosure status of environmental information may be its
being voluntary in nature. Secondly, the collection and
diseemination of environmental information is a costly
affair. Thirdly, the lack of awareness and/or commitment on
the part of the company management about the social respon-
sibilities of the company. Fourth, the poor environmental
performance of the company. Fifth, poor enforcement of the
environment protection acts.