Implementation of the Environmental Disclosure Requirement in Australian Service Industry
The issue of environmental conservation has been the main subject in the many countries across the world. Concerns raised in respect to the subject in question develop due to the negative effects environmental pollution has displayed in the entire world. Over the previous decades, a series of literature has been put forward in the social accounting sector indicating that there has been a continuous growth in the extent of social disclosure seeming in corporation yearly reports. Specifically the level of environmental disclosures has indicated an increase as compared to the past decades. In Australia for instance, services industries have been noted accepting the idea of disclosing information regarding their operations to see to it that they comply with environmental preservations Acts defined by the Environmental Protection Agency for insuring that the environment maintains its purity. In response to the rising cases of service industry, different theories have been put forward to explain why the service companies disclose such information.
To be in a position of providing the requirements that service industries in Australia need for them to implement their environmental disclosures,, it serves great importance mentioning that service industries is made up companies that earn their revenue through offering intangible products and services to their clients. Good examples of companies falling under service industries are retail companies, transport companies, mining industries among others. Considering the wide scope for service industries, it is not possible to provide the requirement of implementation of environmental disclosure of all types of companies in the service industry however, a representation of a single sector within the service industry will be considered a case study in this research( O’Donovan, 2002).. Specifically, mining industry will provide an exemplary example of service industry in Australia. Important to mention is that it is fact clear that environmental disclosure activities employed by mining industry (presenting a sample company of service in Australia) are self-laudatory.
The self-laudatory nature trait displayed by service industries in Australia implies that business enterprises in the region under scrutiny promote constructive features of their environmental presentation but disclose the undesirable aspects. Despite the fact that many service companies do not feel comfortable with the idea of disclosing their operating practices harming the environment, a study conducted on the service industries between 1980 and 1991 indicated a significant increase across time. Various factors have been connected to an apparent upsurge in the community in societal distress connecting to environmental disputes. Making use of questionnaire the research was conducted with an aim of finding the right requirement of implementation of environmental disclosures to the community.
According to O’Donovan, (2002), before explaining the required implementation procedures of the environmental disclosures, it serves great importance mentioning that the extent of the positive improvement noted in service companies disclosing their operations that affect the environment is positively associated with the environmental foyer group’s distress about the environmental performance of business entities within a specific field. The primary reason why mining industries has caught the attention of this discussion is because past studies carried out service industries disclosure of their information is that mining industries unveil more statistics than other businesses falling under the classification of service industries. The response that service industries have shown in regard to disclosing their activities to the Australians is attributed to the fact that the industries present the bigger percentage of industries in Australia. Even though the service industries have shown positive nature in the call of disclosing their activities to the community, it is not clear the exact information that the companies reveal.
Having developed an insight of facts of service industries and the facts regarding environmental disclosures, the essay can provide detailed information concerning the legal requirement of implementing environment disclosure. The commitment that the service industries have shown in disclosing their activities is due to urge of proving their concerns in ensuring a safe environment. It should however be noted that the disclosure displayed by service industries is not influenced by craving of being environmentally conscious but by a resultant benefits the services companies from incorporating the disclosure to the in their annual accounts. As mentioned earlier before implementing a disclosure, service companies or any other company should put inconsideration some issues. According to Trotman & Bradle (1981), a link exists among the levels of communal disclosure and different aspects or innovations.
The most beneficial requirement factors put forward by the two authors in the quest of implement environmental disclosures are the size of the firm, systematic jeopardy associated with the implementation of the environmental disclosures and lastly administration decision perspective. Among the noted factors, Trotman and Bradle identified that systematic risk and size factors affect the level of disclosure positively. Taking a scrutiny of the identified features, the risk associated with disclosing a company??™s information bears some might present negative implication in that by exposing critical information concerning a company’s activities, the information may lead to termination of the company in question. Irrespective of Trotman and Bradley outlining the factors noted above the authors did not provide a distinction of various types of environmental disclosures. From the facts provided in the latter sections, of the essay it is fact clear that for service industries need to put inconsideration certain factors before releasing information regarding their operations to the society.
The factors to put in consideration present the requirements for implementation of such companies. The most vital requirement that the companies need to put in consideration and see to it that it is promptly followed is weather the company has meet the requirement of the environmental protection agency. In case the service companies have not complied with the requirements of the agency, it should ensure it has followed all the requirements to prevent its closure by the branch of government responsible with environmental protection. Secondly, the media to be utilized to disseminate the disclosures should be though wisely. It is thus a requirement that before making known its operations the company should see to it that the media utilized reaches a good number of interested parties. As a method of alleviating political pressure and community concern, environmental disclosures should be disseminated in an honesty manner (Deegan, 2002).
The requirement of making environmental disclosures in an honest manner implies that organization should relay all their practices to the community. In summary Australian corporations are reluctant to disclosure on environmental issue and the service companies that do disclose their environmental issues reveal only the positive information. The main reason that makes these industries loath to disclose their information is because they bear both positive and adverse effect to the community. Below section discusses the negative and positive implications to the society. Companies or corporations in Australian services industry are notably behind other developed countries on issues pertaining environmental happenings, and hence there is always the big difference that exists amongst the content of their corporate conservational strategies and their consequent environmental pilling and disclosure in their annual information or report. This one of many reasons why there is a need for implementation of various environmental disclosure requirements in order to have companies in the service industry propelling toward the right direction in the present and future (Deegan & Gordon, 2012).
Companies need to be enlightened on issues to do with the environmental disclosure since many companies seem to be reporting on the environmental matters internally where they place a low priority on providing useful environmental presentation data to outsides parties which should not be the case. The awareness of the requirement of implementation of the environmental disclosure in Australian service industry helps those companies in politically sensitive sectors to be able to provide most positive disclosure outcomes. Therefore, it is important to note that environmental disclosure is potentially one of the means that can be used to alleviate political pressure and the community concern at a whole. In fact, most Australian corporations are reluctant in general to deliver disclosure on environmental concerns and if they happen mostly report on the positive information. Even though there exist incentives such as reputation effects and litigation to release wicked news rather than better ones the incentives in most situations seems strong enough to cause disclosure of EPA trials or other related environmental data and their unpopularity publicity.
According to Tilt, (2012), in disparity, the document upsurge in such disclosure over a given period shows a growing consciousness of corporate social accountabilities in the country. Following the recent research done in Australia by the likes of Rankin and Deegan, they advocate the importance and the work of legality theory in expounding the extent and nature of public and environmental facts disclosure in some of the numerous yearly reports. Most argues that the measure at which various organizations operates and reports is swayed to a large extent by various social values of the society in which it occurs. Thus, implementing a legitimate viewpoint, various companies employ specific social disclosure to validate their existence. This only means that corporations will unveil information to legitimize their current maneuvers that are happening in a particular society (Ford & Verreynne, 2014).The company is expected to conform to guidelines of this contract and clearly showed that these terms are not static.
In the course of breach of these guidelines (through incapability to validate its ongoing procedure) the agreement may be revoked. In most cases, these take various forms different from that of embargoing merchandizes to the abolition of the supply of labor, investment, and supplies while also increasing the levies and finally the laws and fine levied by the government using the lobbying of constituents. The altering natures of these terms interfere with the disclosure practices and policies of companies that work within the society. Concerning the implementation of the environmental disclosure requirement, there is no adequate notification of Environmental Protection Authority in Australian actions in most of the annual reports. Therefore, if this is perceived desirable, there is need of it being regulated for better result in future.
Following the present evidence, it is problematic to see how disclosure controlled by a charitable regime would appear better bearing in mind that voluntary disclosure is ineffective regarding the standards of revealing enough notification of adverse environmental impact information while also allowing others users of financial statements to sufficiently differentiate weak, moderate and pleasant environment. Furthermore, as noted above inherent uncertainty about the materiality of environmental liabilities and the failure of formal reporting requirement leaves many firms with pleasure concerning the kind and the degree of environmental disclosure. Furthermore, these parties are viewed as being external to the firm distribute information relating to firm environmental performance through the (EPA Prosecutions) where there is always the creation of public awareness information that was previously regarded as being part of manager’s private endowment in many firms.
Hence, through these various situations, there is an often incentive and they accordingly increase the environmental disclosure of many firms in the Australian service industry. Furthermore, detailed explanations of the factors that interfere with the general level of voluntary environmental disclosure as outlined by firms have reduced environmental performances as showed that the level of voluntary environmental disclosure is harmfully connected to the extent of various exclusive costs and are positively associated with the firm size in the service industry. Thus, there is a close connection where the smaller the magnitude of the proprietary cost as revealed by the degree of product market competitions in the service industry, the larger the quantity of voluntary environmental disclosures persists.
According to views of various researchers, the environmental disclosure in its present form is merely a way of giving managers in a firm the chance of sending the appropriate message to others financial stakeholders. The essential thing is the fact that managers are involving themselves in impression management of convincing the government, commercial stakeholders to a slighter extent to environmentalists that the firm is an excellent corporate citizen. Therefore, most firm managers involve themselves in selecting reporting of environmental facts and information that in most cases dictate which items they may be willing to release to the public while at the same time obscuring and parodying the negative environmental performances and impact the firm in the service industry. In conclusion, most companies that have been put on trial by the environmental protection authority have a slight disclosure that is mostly meant for pursuing itself or the one involved with environmental facts with a negative impression.
Thus, there is a need of improvement in the environment sector among many firms since there has been no improvement in the environmental disclosure following fact argued earlier by researchers such as Ranking and Deegan. According to Tilt (2007), most detailed facts and evidence reveal that the issue to do with the environmental disclosure is actually very low, and henceforth something needs to be done. This is because many firms submission on matters relating to demonstration of the environmental disclosure are actually incorrect most of the time. As it should be the case, voluntary disclosure does not offer an adequate means of notification of the prosecutions as also shown in this discussion. Also, it is a known fact that voluntary reporting does not entertain poor performance of many firms in relation with releasing information containing negative biased connotation. Firms in Australian service industry should be encouraged to implement the various requirement of environmental disclosure as this would ensure the future success of multiple parties involved in the country.
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