Environmental Disclosure Trend Among Malaysian Plantation Companies

Abstract

Motivated by the growing concern for environmental, social, and governance (ESG) performance and behaviours among corporations, this study descriptively explores the voluntary environmental disclosures among public-listed plantation companies in Malaysia. As one of the most polluting industries, the plantation offers an interesting setting for a study on corporate environmental disclosure practices. Using a content analysis of the audited annual reports of these plantation companies, we categorized the plantation firms’ environmental disclosure into fourteen categories, with each category having distinct pre-identified items. We then employed binary coding for each disclosure item, assigning a score of 1 if the item is disclosed and 0 otherwise. Overall, this study documents an upward trend of environmental disclosure over the sample years (i.e., 2015 – 2019). Environmental Policy appears to be the most prevalent type of disclosure among the fourteen categories, while the least disclosed environmental category is Financial Data. Further analysis of our data according to the ‘hard’ and ‘soft’ classifications reveals that the environmental reporting among listed plantation firms in Malaysia is still very much dominated by soft information. Hard disclosure items (i.e., governance structure and management systems related to environmental protection, the credibility of the environmental disclosure, environmental performance indicators, and environmental spending) are difficult to be mimicked by the poor environmental performing firms. They hence are usually disclosed only by good environmental performers. On the other hand, soft items cover vision and environmental strategy claims, environmental profiles, and environmental initiatives. Our results suggest that most of the listed plantation firms in Malaysia are still at the early stage of their strategic move toward environmental protection.

Keywords: ESG; Plantation Companies; Environmental Disclosure