The Extent of Environmental Disclosures in Listed Oil and Gas Companies in Nigeria

Abstract

There is an increased awareness of the impact of organizational activities on the environment. Companies are facing pressures to demonstrate responsibility towards the environment; in responding to these pressures companies make disclosures on environmental impact of their activities. This study aimed at using a disclosure index tailored to assess what is disclosed, the form in which it is disclosed, where it is disclosed in the annual report and whether the disclosure is seen as voluntary or compulsory information. The study is unique as it assesses environmental disclosures in the oil and gas industry in Nigeria using annual reports alone as it is the chief information document of any company that can be used to communicate to it stakeholders. The findings from the study points to the fact that Oil and Gas companies operating in Nigeria pays little or no attention to the disclosure of information relating to the environmental impact of their operations in their annual reports. The information reported are mostly general in nature usually relating to the companies stands on health, safety and environment which are not useful to stakeholders. The study recommends among others that the stock market regulator should state as part of listing requirement, the disclosure in annual reports of environmental information relating to a company’s operation. As the whole world is going green, enlightened investors feel morally bound to only invest in companies with green initiatives.

Keywords: Environmental disclosures, oil and gas, financial reporting, annual report, environmental disclosure index, environmental information in Nigeria

JEL Classification: Q56