Environmental Reporting and Operational Performance: A Study of Listed Manufacturing Firms in Nigeria

Abstract

The study investigates how environmental reporting/disclosure by listed firms operating within the manufacturing sector in Nigeria affects their operational performance. The study employs the panel research design to ascertain how environmental reporting (surrogated by dummy variable) enhances firms’ operational performance (surrogated by Return on total assets) in Nigeria. The study also employs the Hausman test to select the appropriate model (that is, the fixed-effect model). The study covers ten years (2009-2018) for both environmental disclosure and operational performance of firms in the manufacturing sector. Secondary data was obtained from the annual reports of the listed manufacturing firms in Nigeria. From the empirical results, the study concludes that there is a positive relationship between environmental disclosure and firms’ operational performance. The study, therefore, recommends amongst others that as a matter of necessity, firms should engage more in sustainable environmental-related activities that are within the acceptable norms of the society, and embrace more innovative ways of business operations in order to save the biosphere and enhance operational performance. Also, such activities should be disclosed in line with the Global Reporting Initiative (GRI) G4 reporting guidelines or at best the GRI standards despite the permitted voluntary disclosure in Nigeria. Finally, the government should authorize the GRI framework as a mandatory guide, and also make it a listing requirement for firms who intend to go public.