Environmental incidents in a developing country and corporate environmental disclosures

Abstract

Purpose ? The purpose of this paper is to examine the environmental disclosure initiatives of Niko Resources Ltd ? a Canada?based multinational oil and gas company ? following the two major environmental blowouts at a gas field in Bangladesh in 2005. As part of the examination, the authors particularly focus on whether Niko's disclosure strategy was associated with public concern pertaining to the blowouts.Design/methodology/approach ? The authors reviewed news articles about Niko's environmental incidents in Bangladesh and Niko's communication media, including annual reports, press releases and stand?alone social responsibility report over the period 2004?2007, to understand whether news media attention as proxy for public concern has an impact on Niko's disclosure practices in relation to the affected local community in Bangladesh.Findings ? The findings show that Niko did not provide any non?financial environmental information within its annual reports and press releases as a part of its responsibility to the local community which was affected by the blowouts, but it did produce a stand?alone report to address the issue. However, financial environmental disclosures, such as the environmental contingent liability disclosure, were adequately provided through annual reports to meet the regulatory requirements concerning environmental persecutions. The findings also suggest that Niko's non?financial disclosure within a stand?alone report was associated with the public pressures as measured by negative media coverage towards the Niko blowouts.Research limitations/implications ? This paper concludes that the motive for Niko's non?financial environmental disclosure, via a stand?alone report, reflected survival considerations: the company's reaction did not suggest any real attempt to hold broader accountability for its activities in a developing country.Originality/value ? This is the first known paper that investigates a multinational company's disclosure behavior in relation to environmental incidents which occurred in a local community.