Environmental Disclosures in Annual Reports: the Nigerian Perspective

Abstract

The Niger Delta area of Nigeria has been plagued with serious oil prospecting and production related environmental hazards with its attendant protest(involving armed struggle against the Nigerian state and Oil Companies). The social, political and security implication of corporate environmental neglect is thus a common knowledge in Nigeria. This study investigates the degree of lessons learnt by companies in Nigeria with regards to their attitude towards the environment. The study examines annual report disclosures of environmental information of 20 companies from 10 sectors( out of the 27 listed on the Nigerian Stock Exchange) that represent industries widely recognized to have environmental problems, and these are Breweries; Chemical and Paints; Conglomerate; Construction; Food/Beverages and Tobacco; Health Care; Industrial/Domestic Products; Packaging; Petroleum Product Marketing; and Textile. The period of investigation covers the five – year ended December, 2006. Of the 100 annual accounts examined; 27 have short qualitative discussion of less than a page on environmental disclosures; 5 have extended qualitative discussion of a page and above; none has a footnote discussion; 17 articulate the environmental policies adopted; 10 have had improvement since adoption of policy; and 22 claimed positive response to environmental related government policies. Analysis also reveals that only 7 out of the 20 companies spread over 6 out of the 10 sectors examined provided one form of disclosure or the other. The companies are also mainly multinationals operating in Nigeria with their action more likely to be parent company policy driven because environmental information disclosure is not mandatory in Nigeria. This present study is considered a marked improvement over an earlier study for the five – year ended December, 1999 where the overall disclosure rate was 11%.