The Southeast Asian haze: The quality of environmental disclosures and firm performance

Abstract

Haze continues to affect the Southeast Asian region and causes a significant deterioration in air quality. The palm oil industry is blamed for causing the haze and is urged by stakeholders to improve its accountability and transparency. Despite the growing research in environmental accountability and transparency, to the best of our knowledge, none has scrutinised stakeholders' perspectives in relation to environmental disclosure by this controversial industry. This study aims to investigate stakeholders' needs and expectations regarding environmental disclosure by palm oil companies, and to examine the quality of disclosure and its impact on firm performance. This study conducted semi-structured interviews to ascertain stakeholders' needs and expectations regarding palm oil companies' environmental disclosure. Then, content analysis of 2013-2017 annual reports of publicly listed palm oil companies was undertaken to examine the quality of disclosures. Finally, the impact of environmental disclosure on firm performance was tested using a panel data approach. One of the novel contributions from this study is the identification of an additional environmental indicator requested by stakeholders, namely information on location of logging and forest clearance, which has not been previously identified in the literature or by the Global Reporting Initiative. The study also finds that Indonesian plantation companies showed a lack of accountability and transparency in relation to the haze and other environmental issues. Malaysian companies provided slightly better disclosures year by year, indicating improved accountability and transparency. The findings also show that environmental disclosure was associated with better firm performance, but only for Malaysian companies. The Malaysian government should give serious consideration to making environmental disclosure mandatory, not only for the sake of the environment but also for the economic sustainability of the palm oil industry. Disclosure has no association with the performance of Indonesian companies, and further research should seek to identify alternative actions to improve stakeholder confidence in the Indonesian palm oil industry.

Pengaruh Pemilikan Asing ke atas Pendedahan Maklumat Alam Sekitar dalam Industri Sawit di Indonesia

“…Pada tahun 2012, WWF meminta agar pelabur membuat pelaburan dalam industri sawit kerana dengan cara ini, pelabur dapat bertindak aktif sebagai agen pemantau aktiviti syarikat. Melalui pemilikan, pelabur juga mempunyai kuasa untuk mendesak syarikat kelapa sawit melaporkan maklumat alam sekitar dengan lebih telus (Abdullah et al 2020;Grayson & Stampe 2012;SPOTT & ZSL 2018). Berdasarkan teori legitimasi, kajian ini menjangka syarikat kelapa sawit cenderung untuk melaporkan lebih banyak maklumat apabila diminta oleh pelabur dari Kesatuan Eropah untuk menunjukkan kepatuhan dalam menjaga alam sekitar dan patuh menyediakan maklumat seperti diminta oleh pelabur supaya pelaburan dalam syarikat dikekalkan (Ong et al 2019).…”

“…Kebanyakan syarikat didapati hanya melaporkan maklumat di negara ia beroperasi manakala maklumat lokasi pembasmian hutan tidak dilaporkan. Ini mungkin untuk mengelak sebarang tindakan litigasi sekiranya pembakaran hutan didapati berlaku di kawasan ladang sawit milik syarikat (Abdullah et al 2020;Purnomo et al 2018).…”

“…Pada tahun 2014, syarikat didapati lebih berhati-hati dalam melaporkan maklumat mengenai inisiatif dan tadbir urus berkait alam sekitar. Bagi item ini, syarikat diminta melaporkan maklumat berkenaan: (1) program penjagaan alam sekitar yang diamalkan dalam syarikat, (2) tadbir urus yang wujud dalam syarikat bagi membendung pencemaran, (3) pelaksanaan ISO 14001 dan (4) anugerah yang diterima hasil daripada amalan terbaik penjagaan alam sekitar (Abdullah et al, 2020). Kejadian jerebu terburuk pada tahun 2013 menandakan kegagalan dan kelemahan tadbir urus dan inisiatif syarikat dalam membendung pencemaran.…”

The Pitfall of Selective Environmental Information Disclosure on Stock Price Crash Risk: Evidence From Polluting Listed Companies in China

“…For instance, when environmental disasters occur, companies with poor environmental records attract more media attention (Luo et al, 2012). Furthermore, investors have a preference for companies with good environmental performance (Abdullah et al, 2020). They may use environmental information disclosure to assess a company's risk, just like financial disclosure (Chang et al, 2020).…”

Poor Air Quality: A Dark Cloud of Filth Poisons

“…The air quality and pollution are not localized. However, a transboundary problem [14], the pollutant emitted in a country can transport through the wind in the atmosphere and thus need global attention and regional collaboration [15].…”