ABSTRACT
This study used content analysis to elicit data from the 2019 annual reports and accounts of a sample of firms to explore the current state of environmental disclosure among Nigerian firms as proxy by environmental disclosure index. It also examined the influence of a number of factors on the current environmental disclosure levels of firms, particularly the non-financial firm, operating in Nigeria. The factors examined include the following: firm’s age, firm’s size, board size, profitability, female board membership and industry environmental sensitivity. To test the hypotheses for the relationships between the explanatory variables and the dependent variables, simple ordinary least square regression analysis was conducted. A sample of 58 firms of 109 non-financial firms listed on the Nigerian Exchange Group as at 2019 was used for this study.
The study revealed that the environmental disclosure in Nigeria is still at a low level as only 32.8% of the sample firms made above average disclosure of environmental information in their annual reports and accounts for the period under observation. It was also found that firms in the industrial goods, consumer goods and agriculture sectors of the economy have embraced the environmental disclosure as part of annual reports. Firms in the services and oil and gas sectors made the least disclosure of their environmental information in their annual reports of accounts. The study found firm’s size and industry environmental sensitivity to have significant and positive relationship with environmental disclosure among the sampled firms, while firm’s profitability was found to have an inverse relationship with environmental disclosure among non-financial firms listed in the Nigerian Exchange Group for the period of observation. Firm’s age, board size and female board membership were found not to be good explanatory variables for environmental disclosure among non-financial firms in Nigeria.
It therefore recommended that government and best practices creators should set up minimum standard or level of disclosure expected from all Nigerian firms in relation to their size irrespective of their level of profitability. Also, attention should shift from concentrating on gender spread to the institution of a balance board that is driving by experience and sound policy initiatives rather than sex. In addition, government should institute incentive driven policies to motivate all firms to be environmentally responsible irrespective of their age. Also, environmental disclosure should be included as one of the listing requirements for Nigerian Exchange Group listing. Finally, firms operating in high environmentally sensitive industries should be adequately regulated and mandated to give full disclosure of the impact of their business activities on the environment.
Following the current poor state of environmental disclosure among non-financial firms operating in Nigeria as revealed by this study, it is time government and best practice creators consider making environmental disclosure mandatory for all firms operating in Nigeria in order to make the environment sustainable for future generations.
