Effect of Environmental and Social Accounting on Survival of Non-financial Institutions in Nigeria (Case Studies of Consumer Goods Industries)
CHAPTER ONE
Objective of the Study
The main objective of this study is to appraise the effect of environmental and social accounting on survival of non-financial institutions in Nigeria (case studies of consumer goods industries). The specific objectives of the study are:
- To determine if there is a significant difference in the environmental and social disclosure themes of consumer goods manufacturing firms.
- To ascertain the effect of environmental and social disclosure theme on total asset turnover of consumer goods manufacturing companies in Nigeria.
- To determine the effect of environmental and social disclosure theme on cash flow ratio of consumer goods manufacturing companies in Nigeria.
- To ascertain the effect of environmental and social disclosure theme on current ratio of consumer goods manufacturing companies in Nigeria.
- To determine the effect of environmental and social disclosure theme on return on equity of consumer goods manufacturing companies in Nigeria.
- To evaluate the effect of environmental and social disclosure theme on return on assets of consumer goods manufacturing companies in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Conceptual Review
Historical Development of Environmental Accounting
The awareness of the environment and man’s ability to cause damage to it could be traced back to the fifties of the 19th century (Asuquo, 2012). This concern had been repeatedly expressed in series of international summits and consensus right from the sixties. The starting point that comprised an organized thought proves on a large scale the celebrated public action of the club of Rome entitled “Limits to Growth” that initiated a worldwide debate of economic growth at the expense of natural environment (Shil & Iqbal, 2005). The world conference held in Stockholm on global environment in 1972 (June), where the heads of the states all over the world came together for the first time, was the pivotal event in the growth of the global environment movement (Asuquo, 2012).
In the mid-eighties, on the basis of changing situation and becoming the environmental issues, a world-wide phenomenon on the developed and developing countries, “World Commission on Environment and Development (WCED), known as “Bruntland Commission” headed by Norway’s Prime Minister, Mrs. Gro Haslem Bruntland, was established by the UN. The commission published a report called “Our Common Future,” in 1987, with the proposed concept of “sustainable Development.” The concept received worldwide acceptance and led to the convening of the UN conference on “Earth and Development (UNCED), in Rio de Janerio, Brazil known as Earth Summit. In this conference, heads of different states signed four documents including the “Agenda 21.”
The Agenda – 21 contains a checklist of do’s and don’ts to protect the environment throughout the next century. Particularly, the role of corporate entities in respect of overall management of the environment has been duly recognized in the conference (Touche, 1996).
Definition of Environmental Accounting
The importance of environmental accounting is increasing because of increasing of environment problems, economic, social and technological developments (Hassan & Hakan, 2012). Several authors and institutions, have defined the term ‘Environmental Accounting [EA]’ in a variety of ways.
According to UK Environmental Agency (2006), EA is defined as “the collection, analysis and assessment of environmental and financial performance data obtained from business management and financial accounting systems”. Environmental accounting can support national income accounting, financial accounting, or internal business managerial accounting (US EPA, 1995).
According to Graff, Reiskin, White, & Bidwell (1998) EA is defined as a broad based term that refers to the incorporation of environmental costs and information into variety of accounting practices. EA is a broad term which can be used in various contexts such as (International Federation of Accountants [IFAC], 2005):
CHAPTER THREE
METHODOLOGY
Research Design
The design of this study is descriptive research design. Descriptive design seeks to find out the conditions and relationship that exist, opinions that are held, processes that are going on, effects that are evident or trends that are developing (Akuezuilo & Agu, 2003). The descriptive design is suitable for this study because we are interested in appraising environmental accounting disclosure by Consumer Goods Manufacturing Firms.
Population of the Study
The population of the study was drawn from companies in the Consumer Goods Section of the Nigerian Stock Exchange (NSE) as shown in the NSE Fact Book 2012/2013-2014. A total of Twenty eight Companies were shown in that category.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Financial information of various consumer goods manufacturing firms over a 4 year period from 2011 to 2014 was obtained (subject to its availability). The Financial information derived can be seen in Appendix1. Below is the descriptive statistic of the data
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
Summary of Findings
With the increasing trend in the demand from stakeholders for environmental accountability and transparency, this study, investigates the extent of environmental accounting disclosure among Nigerian firms. This research has also seen environmental accounting practices as a contributor to financial performance.
From the study, it was specifically revealed that;
1.There is a significant difference in the environmental disclosure themes of consumer goods manufacturing firms.
2.There is a significant effect of environmental disclosure on Total Asset Turnover of consumer goods manufacturing companies in Nigeria.
- There is no significant effect of environmental disclosure on Cash Flow Ratio of consumer goods manufacturing companies in Nigeria.
- There is a significant effect of environmental disclosure on Current Ratio of consumer goods manufacturing companies in Nigeria.
- There is a significant effect of environmental disclosure on Return on Equity of consumer goods manufacturing companies in Nigeria.
- There is no significant effect of environmental disclosure on Return on Assets of consumer goods manufacturing companies in Nigeria.
Conclusion
This study was carried out to appraise environmental disclosure themes in the financial statements of consumer goods manufacturing companies in Nigeria. The study also determines the effect of the disclosure theme on selected ratios of the companies. The study finds a positive relationship between some of the ratios, while others exhibit a negative relationship. Therefore from the above analysis, it is possible to conclude that environmental accounting disclosure practice in developing countries like Nigeria is still very ad-hoc, general, self-laudatory and voluntary in nature.
Besides, there are no existing corporate environmental sustainability reporting standards as far as corporate environmental disclosure practice is concerned in Nigeria. Moreover, there is no mandatory requirement for companies to undergo environmental audit, and there are no generally- accepted standards regulating the nature of audit work. This therefore provides some preliminary evidence of the possibility that corporate environmental reporting practice in Nigeria represents attempts by companies to improve their corporate image be seen as responsible corporate citizens. Consequently, it implies that without some form of regulatory intervention, reliance on voluntary corporate environmental disclosure alone is unlikely to result in either a high quality of disclosure or sufficient levels of disclosure among firms in Nigeria.
Recommendations
Based on the findings of this study, the following recommendations are hereby given:
- A detailed and well spelt out environmental disclosure theme and evidence must be established to provide firm foundation for corporate social and environmental disclosures among companies. Also there is need for standard setting bodies to set up guidelines or principles or accounting standards in other to improve the financial and non-financial environmental disclosures of companies in Nigeria
- The study also calls for more efforts to be taken on the part of government to encourage managers on the need to embrace environmentally friendly practices in order to restore and guarantee a conflict free corporate atmosphere needed by managers and workers for maximum productivity. More so, funds expended in settling disputes could be applied to enhance corporate liquidity while management is able to plan better and make decisions when it is not engrossed in disputes.
- More so, adequate measures should be put in place to encourage companies to imbibe the culture of corporate environmental audit. This process (corporate environmental audits) systematically assesses how well a company’s environmental management practices conforms to green production goals and help diffuse green production practices throughout the organization.
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