Environmental Disclosure and Financial Performance of Europe’s Largest Industrial Groups: A Research Note

By Voicu D. Dragomir.

Published by The Social Sciences Collection

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Article: Print $US10.00
Article: Electronic $US5.00

Is the natural environment a stakeholder of the firm? And is there a business case for achieving sustainability? The three aspects of stakeholder theory (descriptive, instrumental and normative) lie at the core of the empirical contribution of this study. A sample of 60 of the largest European industrial business groups, extracted from the FTSEuroFirst 300 Index, and an environmental disclosure index inspired by the GRI Guidelines, form the basis for the content analysis of the most recent sustainability reports published before the end of 2008. We find a significant association between contemporaneous environmental performance and disclosure, in that bigger polluters tend to disclose more on their activities, but only to a moderate statistical effect. However, we find no association between environmental performance and financial performance, as well as between environmental disclosure and contemporaneous firm performance. This may suggest two complementary things: firstly, that the relationship between sustainability commitment and financial performance may be so weak that it is barely detectable; and secondly, that cross-sectional studies might fail in capturing a relationship that is normally shaped over longer periods of time.

Keywords: Sustainability Reporting, Environmental Performance, Disclosure Index, Financial Performance, Self-Regulatory Initiatives

International Journal of Interdisciplinary Social Sciences, Volume 4, Issue 1, pp.213-228. Article: Print (Spiral Bound). Article: Electronic (PDF File; 1.245MB).

Prof. Voicu D. Dragomir

Professor, The Department of International Accounting, The Faculty of Accounting and Management Information Systems, The Academy of Economic Studies of Bucharest, Bucharest, Romania

I became a member of the faculty of the Academy of Economic Studies of Bucharest, Romania, in 2006 – at the same time being admitted in the doctoral programme. My thesis and field of interest are centered on corporate governance in conjunction with business ethics, accountability and corporate social responsibility. My philosophical formation has led me to thoroughly investigate areas concerning European regulatory instruments and non-binding legislation, such as corporate governance codes and other codes of conduct. Although very young, only 24 years old, I have already presented papers at five international conferences, both in and outside Romania, and have had four articles published in national journals.


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