The Implication of NESREA Act and Financial Performance on Environmental Disclosure in Nigeria

Abstract

The study assesses the implication of compliance and enforcement of the NESREA Act, profitability, and Growth on environmental disclosure of cement companies in Nigeria. Secondary data comprising financial and non-financial information were source from annual accounts and reports of the sample companies, spanning a period of five years (2015 – 2019). Panel regression models were considered in assessing the implication of the variables under study. The findings reveal that NDI has a significant P-value which signifies that compliance with NESREA Act increases environmental disclosure by 2.9%. ROA also exerts a significant impact on environmental disclosure. This implies that a 1% increase in the profitability of the sample companies will increase environmental disclosure by 1.4%. Firm Size is also positive and exerts significant impact, by implication, the result suggested that an increase in the total revenue will lead to about 9% increase in environmental disclosure. Hence the study recommends among others that measuring, treatment, disclosure, and reporting of environmental activities need to be standardized and mandated to give a true and fair view of environmental management practices. These will not only protect the environment but will also enhance the firm's competitiveness and subsequently lead to high corporate performance.

Corporate Governance Mechanisms and the Practice of Sustainability Activities in Nigeria

“…This revelation indicated that there is significant overlap in the drivers of non-financial reporting and traditional financial reporting practices. Babangida, [6] Abdulsalam and Babangida, [1] Abdulrahaman, et al [2] Abdullahi and Auwal, [3] stated that firms' size, industry type, board meetings and shareholders engagement are correlated with firms' economic activities. Obviously, firms operating insensitive (polluting) industries tend to have higher levels of environmental protection and development [14].…”

“…Additionally, there is attention directed to the contribution of improved quantity and quality of socio-environmental disclosure in reducing information asymmetries between investors, managers, and other stakeholders. Lastly, another attention was directed towards the implication of mandatory SR practices [3].…”

“…The expectations from the businesses to disclose their organizational impact into the public domain through Sustainability Reporting (SR) cannot be overemphasised. It has been internationally recognized that SR leads to improvement in business performance via communicating internal information with stakeholder groups like customers, suppliers, employees, financial institutions, regulators and communities for proper decision making [2,3]. It has been established that SR enhances transparency, accountability, and above all propel firms' performance.…”

“…Furthermore, stakeholders other than investors such as societies, non-governmental organizations, environmentalists, government agencies, UN national assembly can shift the focus of organizations from the traditional system of operations and reporting practices to more robust and comprehensive methods of organizational activities and reporting practices; in line and conformity with the requirements of the latest GRI G4 [3]. In addition, managers may use SRP to pursue personal goals for their private benefit, in such cases, SRP may give rise to an agency problem [9].…”

Mandatory environmental sustainability in Nigeria: A comparative study between environmentally sensitive and less environmentally sensitive sectors

“…The establishment of regulatory, voluntary, incentive-based, informational, and cooperative instruments of policy that are directed at promoting environmental sustainability has been a primary focus of government activity for quite some time. (Abdullahi & Auwal, 2021) [1] . These policies trend has increase global awareness about environmental sustainability (ES) worldwide.…”