Diversity-of-Board and Environmental Reporting of Listed Manufacturing Companies in Nigeria: The Moderating Effect of Audit Committee

Abstract

The 2018 Nigerian Code of Corporate Governance demands responsible behaviour and environmental sensitivity from all companies in Nigeria. However, the extent of environmental reporting amongst firms in Nigeria is still low and not a listing requirement despite the trend of disclosure practices by firms around the world. As a step towards addressing this shortcoming, the objective of this paper is to examine the effect of diversity-of-board on environmental reporting of listed manufacturing companies in Nigeria, and further explores the moderating effect of audit committee. Board size, Board independence and directors share ownership was used as a composite index to proxy for Diversity-of-board and Environmental reporting was graded using ISO14031 index. The study has a population of 61 listed manufacturing firms and a sample size of 36 firms which was arrived at using stratified sampling criteria. Through content analysis, secondary data was collected from the annual report of the sampled companies from the period 2002 to 2019. Using descriptive statistics and linear multiple regression, findings from this study revealed that before moderation, diversity-of-board has no significant effect on environmental reporting (t= -1.80, P˂ 0.001). However, the study found that audit committee significantly moderates the effect of diversity-of-board on environmental reporting (t= -3.67, P˂ 0.001). Since the moderating effect of audit committee on diversity-of-board and environmental reporting is negative the study concludes that both diversity-of-board and audit committee do not strengthen environmental reporting. The study recommended that the financial reporting council of Nigeria should include environmental committee as one of the mandatory committee in the code of corporate governance who will specifically handle environmental issues.

Sustainability reporting: Current state and challenges

“…In wider sense it deals with information relating to environmental, social, economic and governance issues. Environmental reporting-Generally shared as a separate report or part of annual report for providing information on environmental issues related to resources used/damaged/restored wildlife habitat and on air, water or land pollution emissions (Selven et al, 2022).…”

Board Characteristics and Integrated Reporting of Listed Oil and Gas Companies in Nigeria: Moderating Role of Profitability

“…While the content parts also cover the governance, business model, risk and opportunity, strategy and resource allocation, performance, outlook, company overview, and external environment, as well as the foundation for preparation and presentation 2015 (Schorger & Sewchurran).Companies, particularly those in the oil and gas sector, contribute significantly to economic growth and development, but they also to air, water, and land pollution. Selven et al (2022) backed the notion that because numerous parties, such as the Environmental Protection Agency (EPA), NNPC, had taken steps to solve the issue, environmental issues brought on by industrial activities could no longer be ignored. However, corporate disclosure and transparency are a major concern for company boards in emerging countries.In Nigeria, corporate organizations seek to ensure consistency in reporting environmental operations while disclosing environmental information.…”

“…In order to align with industry best practices, the agency provides corporations with environmental policy and suggested initiatives. According to Selven et al (2021), integrated reporting is more of a voluntary endeavor, and it is yet unclear what factors businesses use to decide whether or not to participate.According to the code of corporate governance, one of the variables that might be used to gauge the degree of integrated reporting is board characteristics, which involve the combination of individuals with various qualities that connect them together. According to Musa et al (2020), the features of a board…”

“…Companies, particularly those in the oil and gas sector, contribute significantly to economic growth and development, but they also to air, water, and land pollution. Selven et al (2022) backed the notion that because numerous parties, such as the Environmental Protection Agency (EPA), NNPC, had taken steps to solve the issue, environmental issues brought on by industrial activities could no longer be ignored. However, corporate disclosure and transparency are a major concern for company boards in emerging countries.…”

“…In order to align with industry best practices, the agency provides corporations with environmental policy and suggested initiatives. According to Selven et al (2021), integrated reporting is more of a voluntary endeavor, and it is yet unclear what factors businesses use to decide whether or not to participate.…”