Environmental Performance and the Quality of Corporate Environmental Reports: The Role of Environmental Management Accounting

Abstract

This article analyses and discusses whether there is an association between environmental performance and corporate environmental reporting in the paper and electricity industries in Germany and the United Kingdom and what the influence of environmental management accounting is on this link. After discussing environmental performance measurement and environmental reporting in general, the chapter introduces a measurement framework for both as the basis of an empirical study. Subsequently, the major empirical findings from a cross-sectional survey of corporate environmental reports and environmental statements as well as environmental performance indicators for air and water emissions in the above industries and countries are reported. These findings suggest that consistency between environmental performance and environmental reporting (operationalised empirically in terms of statistical correlation) is relatively rare, although (as is argued in the article) future credibility of companies will most likely depend on it. The findings also reveal that environmental performance tend to be linked to country location whereas quality of corporate environmental reports tend to be associated to sector membership. The chapter attempts an explanation of this, relating the findings to differences in environmental legislation in both countries. It concludes with implications for the use of environmental reports by third parties as well as a number of recommendations, especially concerning the need for more standardised indicators and reporting procedures.