Analysing the Environmental Disclosure-Performance Relationship of Australian Mining Companies
Abstract
Environmental Sustainability disclosures have become an integral component to current company annual reporting. The innovation of companies choosing to produce publicly available has enabled companies to improve how they account and manage their environmental impacts resulting from their operational activities. The quality of company environmental disclosures can represent the current environmental-related risks that could affect their short and long-term success. Questions remain whether environmental disclosures genuinely represent environmental performance � rather than being a tool for impression management. This research explored the environmental-disclosure performance relationship of 17 selected metal and mining companies from the Australian Stock Exchange (ASX). Research questions focused on how the quality of sustainability disclosure reporting varies among Australian mining companies as well as material environmental sub-topics across the sampled metals and mining industry. Interpretive content analysis was undertaken using a 0-3 scoring criterion. 26 selected material environmental disclosure requirements from the GRI Standard were given a score between 0-3 based on the adherence of the company�s 2024 sustainability data. These were totaled and correlated with the company�s respective 2024 S&P Global Environmental Score. A positive strong relationship was evident between total environmental disclosure and environmental performance from the sample mining companies. An early adopter-laggard analysis uncovered key themes to showcase the difference in high and low disclosure quality evident for early adopter and laggard companies: i) Degree of External Framework Alignment ii) Degree of Quantitative Data iii) Degree of Site-Specific Data iv) Size of Market Capitalisation. Further linear regression analysis was conducted for four environmental sub-topics (Biodiversity; Climate, Energy and Emissions; Waste; and Water) with variability being seen in their disclosure adherence percentages and r-squared coefficients. The relatively low adherence for the biodiversity sub-topic prompted further examination. The complex and individualised nature of biodiversity reporting, together with varying company sustainability priorities, are drivers behind the reduced disclosure adherence. Therefore, this study demonstrated how mining companies that provide higher quality material environmental disclosures can be positively associated with having an overall environmental performance. Implications of the research suggest that disclosure-related theories support companies wanting to legitimise their environmental actions by providing voluntary disclosures. The ability for stakeholders and investors to analyse environmental disclosure quality by companies can help understand whether they are genuine or used for impression and neutralization purposes.