Sei sulla pagina 1di 7

INTRODUCTION

Currently environmental issues has been growing into a salient topic in business.
Accordingly the phenomenon of environmental disclosure program have attracted
many company to publish their environmental report. Environmental report is the
annual report that contain information about company environmental performance.
This report also become a source of information for stakeholders and give them
ability to monitor company environmental performance (Clarkson, Overell
&
Chapple, 2011).
There are several categories of environmental report. According to the intention to
publish the report there are voluntary and mandatory report, and according to the
reporting initiative, can be divide into government, non-government organization,
and Industrial association initiative(Lyon &
Maxwell, 1999). Government report
which will be the central issue of this research consist of two different categories,
which are the report who only published the data and the report who publish the
data and analysis including rank of the company who published.
Environmental report has become a valid and reliable company communication
channel that provide information for their stakeholder (Alonso-Almeida, Llach, &
Marimon, 2013). A company who produce environmental report will gain trust and
improve their image. Company might also building their reputation by reporting
their environmental performance.They also argue, that some evaluations or
judgment can be made according to this report (Alonso-Almeida et al, 2013). For
example some investors might use a company environmental report to calculate or
forecast their future rate of return and environmental risk which a company might
face before they make a further decision (Wheeler & Elkington, 2001). In other
words company image then can be converted into economic and financial benefit
(Zadek, 2001).
In business and management study, previous studies have found the relationship of
reporting toward company performance. For instance an evidence of the association
between environmental report and company higher reputation has been found by
Michelon (Michelon, 2011). Meanwhile Another research has found that
environmental disclosure can be used as company legitimacy tools ( Cho & Patten ,
2007). Building an effective communication channel through environmental report
has been known can increase stakeholders trust and loyalty (Khlif , Guidara &
Souissi , 2015) . Consumer might prefer to buy a product from a company which
has known having a concern to the environment. Company sustainability report
might create stronger demand.
Each company have their own motive and reason to publish environmental report,
but for sure those things must related to company performance. In another word the
company who published their environmental report believed that by doing so, they
will have benefit from it.
On the other hand some scholars also interested to study about environmental
report from the perspective of policy maker, which consider environmental report as
a regulation tool to reduce pollutant. The terminology of pollutant for this issue are

greenhouse gasses and waste that company produce as the residual of production
process. From the cases of Indonesia (PROPER) and China environmental reporting
program shows that environmental reports which initiated by government have
contribution to reduce the level of pollutant (Garca, Afsah & Sterner, 2009 ;
Dasgupta, Laplante, Mamingi & Wang 2001 ). The evidence has obtained through
pollutant observation which produce by companies who participated in the program.
Researchers than compared the amount of pollutant which produced before and
after the company publish their environmental report. In the case of Indonesian,
data shows that the amount of pollutant decrease significantly after environmental
report published (Garca et al , 2009) meanwhile in the case of China the amount of
pollutant only slightly decrease (Dasgupta et al, 2001). Another evidence the
impact of environmental report as government tool to control pollution is coming
from Konar and Cohen (1997) which conducting a research about United State
disclosure program TRI (Toxic Release Inventory). They found that after the
implementation of that program, air and water pollution has decreased significantly
(Konar & Cohen, 1997)
This phenomenon also can be seen from the organization perspective, which mean
the company who participating in environmental reporting program has obtained a
better environmental performance. They could reduce the amount of pollutant
either greenhouse gases or company waste. However according to Garca et al
(2009), they still have limited knowledge to explain how this program can motivate
companies to reduce their emission or waste.
An evidence about this phenomenon has been explained by Annandale, MorrisonSaunders, & Bouma, (2004). They conducted a research to find the relationship
between Government voluntary protection program and company environmental
performance, but they study did not address specifically to environmental report
since there are many others instruments might be used in Government voluntary
protection program beside environmental report. This study also did not explain how
Government voluntary instrument could make company successful in obtaining
better environmental performance.
Despite there are a lot of business and management scholars that can shows the
relationship of environmental disclosure to company performance as has been
describe above, meanwhile there are also a lot of policy maker scholars has found
that Government environmental report program
has contribution to reduce
pollutant, however as Garca et al (2009) mentioned, there is limited information
how the mechanism of environmental report can increase company environmental
performance. Especially for government reporting program.
Based on this reality, current research has intention to study more detail about this
phenomenon by answering the research question: How does the Government
environmental report program can influence company environmental performance?
Does the type of government reporting program have contribution?
This study will see the issue form the lens of institutional theory and resources
based view theory. Government environmental program can be considered as
external pressure for the company, and as respond to the pressured the company

will make an effort to reduce company greenhouse gases or waste. How the
manager behave according to the external pressure than will be asses in order the
see the impact of external pressure from the organizational perspective.
SUSTAINBILITY STRATEGY
It cannot be avoided that every production process which transform raw either
materials or services become valuable product must use resources from natural
environment and at the end has to left something in the form of waste. It is become
crucial to think about environment when the impact of the waste generated in the
production process has begun to disturb the environmental sustainability.
In business and economic area, this concern has been growing since the UN
conference about environment and development was conducted in 1992. The
outcome of this meeting was the agreement to make sure that economic
development has to considered social and environmental condition for future
generation. This concept knows as triple bottom line strategy which consist of
economics, social and environmental. (Elkington, 1998)
Triple bottom line is the concept which saying that the economic development has
to go together with social and environmental development. When the equilibrium of
economic, social and environment can be reached during development process,
than the condition can be said become sustainable development.(reference)
Sustainable enterprise is a company which able to obtain sustainable development,
it means they can generate profitability together while they keep active protecting
social and environment condition from getting worse. For example they do not use
resources excessively or they might reduce the amount of waste which can give bad
impact to environment. Another company might produce a product which do not
have any harmful implication to natural and social condition.
An effort to become sustainability company is believed part of the success factor
which can turn a company into competitive organization ( Toppinen & Hnninen,
2013). By introducing a new product which has minimum consequences to the
detrimental of natural and social environment, a company have created a new
market which has less competitor. Their new product has been differentiate them
self from the competitors and might improve customer loyalty (Toppinen &
Hnninen, 2013).
A Company might have several sustainability strategy besides developing a new
product. One of the strategy which can be taken is reducing waste or pollutant.
Because every company must produce waste or pollutant. Sometimes they do not
realize that they have created and release harmful gases to environment. If a
company could recognize the harmful substance that they produce as residual of
their main activity and know how to minimize it, they might enjoy additional profit.
For instance by reducing the usage of electricity that can produce greenhouse
gasses, company also can reduce their cost. This also means there is a direct
relationship between waste reduction and cost minimization and the result is
increasing profitability.

Almost the same as producing a new product, waste minimization also might turn a
company into a competitive organization because they could operate the
organization with minimum cost. They might sell their high quality product with
lower prices than their competitor and gain consumer loyalty. If this sustainability
strategy are being achieve using company own resources, from the perspective of
resource based view, it will create a strategy which not easy to imitate by their
competitor and in the end will help the company to obtain a competitive economic
petition among their competitor.
SUSTAINABILITY REPORT
Information disclosure has been used and widely recognized among finance and
accounting field of study. Accountant and financial analyst used this report to
analyze company performance which the report content mainly stating the
company financial condition. Now Days Company not only need to disclose their
financial performance, but they also need to disclose their social or environmental
performance.
Sustainability report is an information disclosure which involving a statement
related to triple bottom line issue, economic, environmental and social performance.
In this report a company should disclosed their activities related to the
environmental and social issues as well as financial condition. Form some reporting
program, financial condition is not necessary to disclosed. There are two different
type of sustainability report which usually published. First is type of report which
only provide data without further analysis. The other one, type of report which
provide detail analysis including information about environmental performance
(Dasgupta et al. 2007). Toxic Release Inventory (TRI) is type or report which only
gives information about the level of pollutant that produce by a particular industry
or company, meanwhile Evaluation of Rating Program (PERP) in Indonesia, Green
Rating Project (GRP) in India and Ecowatch program in Philippine are kind of
reporting program which disclosed not only regular information about pollutant that
produce by company, however they also provide information about evaluation of
performance as well.
There are several sustainability report initiative which provide a service for a
company that has desire to publish their environmental report. Each sustainability
report initiative has their own reporting format and standard. The one that the most
recognized is the Global Reporting Initiative (GRI) (Alonso-Almeida et al, 2013). GRI
is an independent international organization which provide a communication
channel that can be used by any government or organization to deliver an
information related to environment and sustainability issues (Li, Clarkson,
Richardson & Vasvari, 2008).
GRI is the first
organization that introduce sustainability reporting. Since 1997
collaborated with United Nation Environmental Program, GRI has been publishing a
lot of sustainability report from organizations around the world (Li et al , 2008).
According to GRI web site, 93% of 250 the world biggest companies publishing their
sustainability information (About GRI. n.d.). For a company who has desired to
produce a sustainability report, GRI has developed a reporting guideline that can be
followed. The objective of reporting guideline is helping a company to produce good
quality report which can comply to the GRI principles; transparency, inclusiveness,

auditability, completeness, relevance, sustainability context, accuracy, neutrality,


comparability, clarity, and timeliness (li et al , 2008).
Government Environment Report Program
Besides GRI which operate internationally, in several country such as China, US,
Indonesia and several other countries has their own national reporting initiative. In
China and Indonesia, the program was initiate by government which has objective
to maintain country environmental condition (Garca et al , 2009 ; Dasgupta et al ,
2001 ).
Program for Pollution Control Evaluation and Rating (PROPER )is an Indonesian
Government program which aim to reduce pollutant that produce by industrial
sector (Garca et al , 2009). The main concept of this program is asking companies
to publish their environmental performance to public. The government then will
monitored their environment report in order to control pollutant.
Every company who participate at this program will be given color code depend on
their environmental performance level. There are five different colors used, each
color represent the environmental performance. Black is for company who has the
poorest environmental performance, their performance is below the standard that
has been set by government. Red code is given to the company who already have
an effort, but the result is still below the standard. Blue is given for the company
who has achieve environmental performance standard, meanwhile green is for the
companies who has achieve high above environmental performance standard. Gold
is for outstanding environmental performance company who met not only national
standard but the international standard as well.
In China, there are another type of environment disclosure which used to reduce
pollutant. The concept of this report is not the same as PROPER, because this report
is related to the financial market, or also called as marked based information.
Government of China produce several financial instrument such as company
environmental disclosure or emission index which can be traded through financial
market (Huang & Chen , 2015). Every company who listed in China Stock Exchange
might produce environmental report which will be published as index. This index is
traded in China financial market.
United states also has environmental disclosure program called Toxic Release
Inventory (TRI) (Huang & Chen , 2015). TRI is non market based report. TRI is the
oldest environment report program and this program has become referenced for
Indonesian PROPER. The main purpose of TRI is to provide information about the
level of toxic release by organization. TRI do not give reporting company rank as
their performance. TRI only provide information regarding to the toxic release by a
particular company or organization.
Event there are several type of environmental report which launch by Government,
they still have the same objective. Mostly the objective of government program is to
control pollutant. Meanwhile for any voluntary report which initiate by nongovernment institution such as GRI and KPMG, their objective tend to be more
organizational. It means that, the program main objective is based on organizational

performance. These type of reporting program might have different mechanism in


influencing company environmental performance.
Environmental Report as Tools
Company sustainability disclosure usually being used by many stakeholder with
different interest including government as environmental policy maker. From
environmental policy maker perspective there are three different type of rules that
can be produce; legal regulation, economic incentives and voluntary agreement
(Bemelmans-Videc, Rist, & Vedung ,1998 in Huang, & Chen, 2015). According to
Tietenberg 1998 , environmental disclosure can be considered as one of the tool
that can constraint environmental degradation by encouraging companies to
disclosed their environmental performance. Government reporting program usually
also following with several government activities related to the program such as
monitoring and inspection (Garca et al , 2009). Government monitoring and
inspection have the objective to make sure that the company published the correct
data (Huang, & Chen, 2015). Company might manipulated their environmental
performance data if there is no system to control it.
As a tool in controlling the environmental condition to reduce the industrial
pollutant, sustainability report as government program usually is trying to influence
public behavior (Tietenberg, 1998). Base on the company environmental
performance which has been published, public than can make an assessment
related to risk that they might get from pollutant which produced. If they are
exposed by higher environmental risk, they might force the company to reduce
pollutant. Therefore, the motivation of company to improve their environmental
performance might also related to the external pressure beside the role of
government regulation.
Applying environmental report as tool, will give several benefit for government. One
of the benefit is an effective low cost regulation (Tietenberg, 1998). The rationale of
this assumption is because, government do not have to use their power to make
company to comply with environmental standard, because public also might force
the company to reduce pollutant. For instance public might have an action to stop
buying company product to push the company to reduce their waste (Tietenberg,
1998). Other benefit from this program because government do have to spend more
financial in data collecting process. The data are collecting and gathering by each
company that has desire to disclose their environmental performance. That is why
this program mostly used by developing countries to maintain their environmental
(Blackman et al, 2004 )
Company Location and Ownership
According to Garca et al ( 2009), the impact of public pressure for company
regarding to their environmental report is depend on several factors such as
company location and company ownership (Garca et al , 2009). If the company
located in a densely populated area, the pressure must be higher than the company
who located in the area which less dense. The reason is because there will be large
number of victim from company pollutant, and they will have more power to control
the company (Tietenberg, 1998).

Company ownership might be categorize in several different type, family own


company, government company, national or multinational company. Their reaction
to external pressure different to each other (Garca et al , 2009). Multinational
company as foreign direct investment company which their shares mostly belong to
investor from outside the country are more sensitive to public pressure (Garca et al
( 2009). Public perception is considered as the important factor that can build
company image and they use their image to compete with local competitor.
Furthermore according to Garca et al ( 2009),mostly the multinational company has
been operated in several countries, and the pressure form local public might
generate another action from their customer in other country (Garca et al, 2009),

Potrebbero piacerti anche