Are companies walking the talk for disclosing as per GRI305? Evidence from India

Abstract

Introduction: Drawing upon the institutional theory, surging global concerns for carbon emission and other environmental issues have led the stakeholders to keep vigilance over a company’s activities on 3 pivots of sustainability namely, economic, environmental, and social along with its financial performance, to ensure its sustainable growth. As per stakeholder and agency theories, the company (Board of Directors) is the agent of its stakeholders so, it needs to fulfill its corporate social responsibility of environmental disclosure. The emission of various Greenhouse gases (GHGs) is a major environmental issue responsible for climate change and a threat to sustainability, therefore it is important to disclose and report the GHG emissions of the company in a standardized way as prescribed by the Global Reporting Initiatives norms for the understanding of the stakeholders.

Objectives: The current investigation proposes to find out the viability of nonobligatory emission disclosure by Indian companies claiming to be following Global Reporting Initiatives (GRI) standards in comparison with the information that ought to be disclosed under GRI 305 Emissions 2016 standards. In this regard, the threefold objectives of this research are as follows:

1. To highlight the gap in emission disclosure practices of Indian companies in comparison with GRI 305_ Emissions 2016 standards.


2. To find out the sectoral influence on reporting practices (RPs) of the companies.


3. To find out the disparity in emission reporting practices of public and private sector companies.

Methods: The companies are selected from the NIFTY 100 Index wherein the companies from the most polluting sectors as per the report of Intergovernmental Panel on Climate Change (IPCC) and UN Environmental Protection Agency (EPA) are sampled. The sustainability reports (SRs) or the integrated sustainability reports (IARs) of the sampled companies are content analyzed for mapping their environmental disclosure as per the GRI305 emission standards. For analyzing the data, one-sample t-test, one-way ANOVA, and independent t-test have been used in version 26.0 of the SPSS statistics. 

Results: Our findings showed that companies in India don’t completely comply with GRI standards even when they claim to do so, whilst a few companies like BPCL, IOCL, and United Spirits Ltd. disclose most of the emission parameters. Furthermore, it was analyzed that there is absence of influence of ownership or the industrial sector on the emission reporting practices (RPs).

Conclusions: The study is useful for policymakers to formulate stringent rules of compliance for sustainability disclosure as per the standards for most polluting companies to adhere to. It is also helpful for investors for acquainting themselves with the emission disclosure practices adopted by companies from various industrial and ownership sectors and taking better decisions while putting a stake in the company. Lastly, the society will be conversant with the companies who not only talk the walk but also walk the talk that is, the companies indeed follow the standards when they claim to be doing so and thus can decide whom they want to plunk for.