Accounting Forum 34 (2010) 32–45

Contents lists available at ScienceDirect

Accounting Forum
journal homepage: www.elsevier.com/locate/accfor

An examination of environmental reporting by Australian state

government departments
Barbara Lynch ∗
School of Accounting, Economics and Finance, Faculty of Business and Law, Deakin University, Warrnambool, Victoria, Australia

a r t i c l e i n f o a b s t r a c t

Keywords: This study provides an examination of environmental disclosure practices within the annual
Government environmental reporting reports produced by a sample of Australian state government departments. This entailed
Global Reporting Initiative
the examination of environmental disclosures using an environmental disclosure index
Annual reports
developed for the purposes of the study.
The study’s sample was 18 Australian state government departments, 12 of which were
responsible for environmentally sensitive areas. The period of analysis was from 2000-1
to 2007-8. The results of the analysis presented in the study found that, over the research
period, environmental disclosures, using the developed disclosure index, increased from
336 in 2000-1 to 449 in 2007-8. Disclosure practices varied between the departments in
terms of the coverage of disclosures. Reporting is not consistent over time making compar-
ison between departments difficult.
© 2009 Elsevier Ltd. All rights reserved.

1. Introduction

Whilst there has been prior research on environmental reporting in corporate annual reports,1 a review of the literature
has found little research on environmental reporting by government departments. Exceptions are Gibson and Guthrie (1995),
Burritt and Welsh (1997a) and Frost and Seamer (2002). Despite the limited research in this area, there is recognition that
government action and leadership is the most important driver of the adoption of sustainability reporting.2 Therefore this
study will add to the literature on environmental reporting, in particular, into the issue of environmental reporting in the
public sector.
Australia is a federation comprised of six states and two territories with local governments in each state. For this study,
state government departments responsible for environmentally sensitive areas were selected from each state as well as a
sample of other state government departments. The public sector is important, not least because of its size. According to
Ball and Grubnic (2007) internationally, the public sector accounts for some 40% of all economic activity. Society has an
expectation that governments will manage public resources in a sustainable manner. Ball and Grubnic also assert that public
sector organisations have far greater responsibilities for sustainable development than the corporate sector (Figs. 1 and 2).
Legislation in Australia requires Commonwealth and state government departments to include in their annual reports a
section detailing the environmental performance of the organisation as well as the organisation’s contribution to ecologically

∗ Tel.: +61 3 55633287; fax: +61 3 55633320.

E-mail address: blynch@deakin.edu.au.
1
See for example Harte and Owen (1991), Patten (1992), Deegan and Gordon (1996), Deegan and Rankin (1996), Cormier and Gordon (2001), Deegan,
Rankin, and Tobin (2002).
2
See February 2009, CPA Australia publication ‘In the Black’ article “Government support crucial to sustainability success’.

0155-9982/$ – see front matter © 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.accfor.2009.11.001
 B. Lynch / Accounting Forum 34 (2010) 32–45 33

Fig. 1. Average level of environmental disclosures from 2000 to 2007.

Fig. 2. Average level of GRI reporting.

sustainable development (ESD). In addition, some state governments have additional reporting requirements, for exam-
ple in Victoria, all government departments, are required to report on waste, energy, water use as well as and other
measures.
The nature and extent of environmental reporting within the annual reports of 18 Australian state government depart-
ments over an eight-year period from 2000-1 to 2007-8 will be examined in this study. Twelve of these departments are
responsible for environmentally sensitive areas such as conservation, water management and public land management.3
The nature of these areas is a factor which might potentially affect disclosure practices. Accordingly, it might be expected that
these departments would disclose more environmental information than departments in less environmentally and politi-
cally sensitive areas. These departments also have a number of politically active stakeholder groups, including Aboriginal
communities and organisations, environmental groups and forest and timber industries. One other department from each
state was also selected for comparison purposes.
The departments’ annual reports were examined for disclosures that can broadly be termed environmental disclosures.
According to (Deegan & Rankin, 1996, p. 51) environmental disclosures are part of what are often termed social responsibility
disclosures. They state that:
‘social responsibility disclosures can include . . . disclosures relating to the interaction between an organization and its
physical and social environment inclusive of disclosures relating to human resources, community involvement, the natural
environment, energy and public safety.’
The aim of this paper is to provide a review of environmental reporting within the annual reports of 18 Australian state
government departments over an eight-year period between 2000-1 and 2007-8. A review of the relevant literature on
government environmental reporting, and the Global Reporting Initiative (GRI) is provided in the next section. The study’s
findings are followed by an analysis of trends in disclosure practices and a comparison between the departments’ reporting
practices. Finally, the limitations of the study and recommendations for future research are outlined.

3
The Victorian Government Department of Sustainability and Environment (DSE), Western Australian Department of Fisheries (DF), Western Australian
Department of Agriculture and Food (DAg), Western Australian Department of Water (DoW), Western Australian Department of Environment and Con-
servation (DEC), Tasmanian Department of Primary Industries and Water (DPIW), Tasmanian Department of Infrastructure, Energy and Resources (DIER),
South Australian Department for Environment and Heritage (DEH), South Australian Department of Primary Industries and Resources (PIRSA), New South
Wales Department of Water and Energy (DWE), Queensland Department of Mines and Energy (DME) and Queensland Environmental Protection Agency
(EPA).
34 B. Lynch / Accounting Forum 34 (2010) 32–45

2. Literature review

2.1. Government environmental reporting

Legitimacy theory is often referred to for an explanation for the provision of environmental disclosures by the private sec-
tor. According to Adams and Roberts (1995), legitimacy theory argues that companies see disclosure as a way of legitimising
their activities and will seek to portray themselves as acting in a socially responsible manner consistent with prevailing social
norms and expectations. Burritt and Welsh (1997b) state that legitimacy theory could be extended to the public sector and
suggest an examination of power relationships through case studies to further develop the links between legitimacy theory
and disclosures. Frost and Seamer (2002) also suggest further analysis of content to provide evidence of the underlying
arguments of legitimacy theory.
This study does not use a case study approach, rather, an examination of a sample of reporting practices of government
departments over a period of time. Disclosures are not analysed for the motivation behind them or whether they are used to
influence the annual report users’ perceptions as demonstrated by legitimacy theory. However, if this study was extended
by using more interview data, legitimacy theory might provide useful insights into public sector disclosure practices.
In a similar approach to legitimacy theory, institutional theory contends that organisations operate in a manner consistent
with societal norms, values and assumptions about what constitutes acceptable behaviour (Oliver, 1991). Institutional theory
has been used to explain the adoption of generally accepted accounting principles for external financial reporting by public
sector entities (Carpenter & Feroz, 2001).
Bebbington, Higgins, and Frame (2009) use an institutional theory framework to analyse why organisations initiated
sustainable development reporting. They found that a wide range of regulative, normative and cognitive influences com-
bined with organisational dynamics contribute to sustainable reporting. Regulative influences such as laws and regulations
influence disclosures practices because of the threat of penalty for non-compliance. Normative influences influence values
and norms and managers pursue various courses of actions because of societal obligations and expectations (Bebbington et
al., 2009). Cognitive influences are subtle and complex, whereby activities are enacted in a manner that is generally accepted
(Bebbington et al., 2009). Bebbington et al. (2009) state that when these influences combine, isomorphism and homoge-
nization occurs. (Carpenter & Feroz, 2001) state that because of isomorphic pressures organisations become increasingly
homogenous and conform to the expectations of the wider institutional environment.
The Bebbington et al. (2009) study undertook in-depth interviews which were able to provide rich material for analysis.
As previously mentioned, an extension of this paper would be to undertake interviews to determine how institutional
influences combine with organisational dynamics and affect disclosure practices.
Accountability is a commonly accepted objective of public sector annual reporting. According to Gray, Owen, and Adams
(1996, p. 38) accountability is ‘the duty to provide an account (by no means necessarily a financial account) or reckoning of
those actions for which one is held responsible’. Sinclair (1995, p. 221) also refers to a responsibility for actions stating that
accountability ‘entails a relationship in which people are required to explain and take some responsibility for their actions’.
Sinclair (1995, p. 225) identifies five forms of accountability; one of these is public accountability, which she defines as
‘direct accountability to the public, interested community groups and individuals’. There is acknowledgement that there is
a difference between public sector accountability and that which exists in the private sector.
Accountability responsibilities of governments far exceed those of business corporations according to Barton (2005, p.
143) who states: ‘governments, as agents of citizens are required to account for their decisions and activities as well as their
performance in substantial detail’. Governments are agents of the public and are accountable for the authority which they
hold, because of this, public accountability is more visible. There is an expectation that governments are more transparent and
open in their actions than companies in the private sector. Whilst there is the expectation that governments are transparent
and open, the absence of competitive market forces and shareholder demands for information (as in the private sector) may
result in a lack of accountability.
According to the Global Reporting Initiative (GRI) Sector Supplement for Public Agencies4 (2005, p. 7) ‘public agencies
also have a major impact on national and global progress towards sustainable development. Given their size and influence,
public agencies are expected to lead by example in reporting publicly and transparently on their activities to promote
sustainability’. Recent research by CPA Australia also found that there is a need for a universal approach to sustainability
reporting, adding weight to the need for government leadership and also international collaboration (CPA Australia, 2009).
The preparation and presentation of the annual financial report is part of the discharge of accountability. Coy, Fischer,
and Gordon (2001, p. 14) argue that ‘the value of the annual report . . . enables all stakeholders to obtain a comprehensive
understanding of . . . objectives and performance in financial and non-financial terms. No other single source of information
is available to all stakeholders on a routine basis’.
A review of Australian government environmental reporting in annual reports found only three studies, by Gibson and
Guthrie (1995), Burritt and Welsh (1997a) and Frost and Seamer (2002) have been published.
Gibson and Guthrie (1995) examined annual reports from a selection of Australian public and private sector organisations
and compared them with environmental disclosures made by overseas organisations. The authors found that environmental

4
This supplement was developed in response to increased demand for specific guidance for public sector organisations.
 B. Lynch / Accounting Forum 34 (2010) 32–45 35

disclosure practices varied between the two sectors studied and also between nations. In terms of the frequency of disclo-
sure, the sectors were similar. However, quantified information was far more frequently disclosed by the private sector. In
comparison to international surveys, Australian organisations appeared to have more disclosures (measured by more than
one page of disclosure). US companies appeared to disclose more financial and quantitative data. However, this could have
been due to the US regulations concerning mandatory accounting disclosures.
The authors acknowledge theirs was a ‘broad brush’ survey, and their sample was restricted to public sector entities
from only one Australian state however, they did acknowledge that further research is needed in the areas of environmental
disclosure practices in the public sector.
Burritt and Welsh (1997a) examined environmental disclosures by Australian Commonwealth entities (budget and non-
budget) over a ten-year period from 1984 to 1993 and analysed contextual factors. It was found that total environmental
disclosures increased over the period and that budget entities reported a greater volume of environmental disclosures than
non-budget entities. Four main reasons were put forward for the increase. These were (a) the Commonwealth government’s
signing of international environmental treaties, (b) the development of a National Strategy for Ecologically Sustainable
Development, (c) the increased ‘public concern about the state of the environment’ (Commonwealth of Australia, 1992:55)
and (d) the introduction of energy efficiency measures for buildings (Commonwealth of Australia, 1992:55). The observation
of a greater volume of environmental disclosures by budget entities was linked to the higher level of dependency of the budget
sector for future appropriations and the need to be seen to be implementing government policies (Burritt & Welsh, 1997a).
Consistent with Deegan and Gordon (1996) and Deegan and Rankin (1996), who found little or no negative disclosures
in private sector annual reports, Burritt and Welsh (1997a) also found a similar process operated in the public sector. They
found that environmental accountability was poor and did not provide information in a form which enabled the assessment
of comparative environmental performance over time.
More recently, Frost and Seamer (2002) examined the annual reports of a sample of New South Wales public sector
entities to determine whether there was an association between the development of internal environmental management
practices and the level of environmental disclosure in annual reports. The authors also tested whether the legitimisation
process was influenced by the political visibility of the entity. They concluded that further analysis was required to determine
whether environmental reporting was used to ‘educate and inform’ or was used to manipulate the readers’ perception of
the environmental performance of the entity.
Ball and Grubnic (2007:244) argue that the public sector has much to offer society as these organisations translate ‘the
heroic demands of the environmental agenda into tangible policies and programmes, and thus giving substance to the idea
of living sustainably on the planet’. They also highlight the public sector’s role in public policy that set it apart from the
private sector.

2.2. The Global Reporting Initiative

According to Adams and Frost (2007), the international guidelines for sustainability performance measures most com-
monly used by Australian companies are specified in the Global Reporting Initiative. The GRI, the global standard for triple
bottom line (TBL) reporting, provides a framework for sustainability reporting. According to the GRI guidelines, ‘sustain-
ability reporting is an organisation’s public account of its economic, environmental and social performance in relation to its
operations, products and services’ (Global Reporting Initiative, 2002).
The GRI’s mission is to ‘develop and disseminate globally applicable Sustainability Reporting Guidelines (‘Guidelines’).
The voluntary nature of the Guidelines means that organisations have flexibility in deciding what non-financial information
to disclose. The Guidelines are designed to be suitable for reporting organisations with varying degrees of complexity.
Because of this flexibility, it can be expected that there will be considerable diversity of reporting practices and this can
hamper comparability. As it is a practice that is developing and evolving, sustainability reporting does not have established,
generally accepted rules and regulations. Over time, however, there should be progress towards acceptable sustainability
reporting practices.
The GRI seeks to elevate sustainability reporting to the same level of rigour, comparability, credibility and verifiability
expected of financial reporting (GRI, 2002:1). The financial reporting principle of capital maintenance is an example of the
link between traditional financial reporting principles and those of environmental accounting, that is, the recognition of the
need to maintain the stock of natural capital for future generations (Lamberton, 2005).
The Guidelines contain core indicators5 and additional indicators. Indicators are grouped under three sections covering the
economic, environmental and social dimensions of sustainability. The environmental performance indicators have been used
to supplement the Environmental Disclosure Index (EDI) used in this study and cover materials, energy, water, biodiversity,
emissions, effluents and waste, suppliers, products and services and compliance.
Acceptance of the GRI as a guide for sustainability reporting is now quite widespread. However the GRI performance
indicators which are used in this study’s EDI have been described as onerous and overly burdensome. SustainAbility (2002,
p. 16)6 states that collecting and reporting on some indicators such as total materials used, may outweigh any obvious

5
Core indicators are relevant to most reporting organisations and are of interest to most stakeholders.
6
SustainAbility is a consultancy which focuses on sustainable development.
36 B. Lynch / Accounting Forum 34 (2010) 32–45

benefit. On the other hand, it can be argued that the stakeholders’ needs for information would outweigh any burden for the
reporting entity. (Guthrie & Farneti, 2008) are critical of the GRI guidelines and Sector Supplement for Public Agencies and
state they are too generic for all public sector organisations. However, the GRI acknowledges that sustainability reporting is
still in the early stages in the public agency context and should continue to evolve.
Ball and Grubnic (2007) expect the GRI Sector Supplement for Public Agencies (GRI, 2005) to be an influence on the UK
public sector. It might also be expected to influence the Australian public sector. Whilst Ball and Grubnic acknowledge the
positive influence of the GRI Supplement, they also argue that the Supplement does not give enough attention to the issue
of policy responsibilities and impacts.
Public sector organisations would be expected to face greater pressure to disclose information than private sector organ-
isations. This is due to their larger, more diverse groups of stakeholders. The GRI Supplement encourages public sector
stakeholder engagement and therefore the challenge is to identify the information required by different stakeholders and
then comprehensively report that information. Frost and Seamer (2002) argued that a public sector entity that is politically
visible (or politically sensitive) will attract a disproportionate share of scrutiny from their stakeholders.
The informal nature of the Guidelines whereby an incremental implementation of the Guidelines is allowed, means that
reporting entities can select which information they wish to disclose. This could lead to an inaccurate representation of the
organisation’s activities. For example, Moneva, Archel, and Correa (2006) state that some organisations that label themselves
as GRI reporters do not behave in a responsible way. Guthrie and Farneti (2008) also found that organisations ‘cherry-picked’
the GRI indicators they wished to disclose in their annual report. Therefore, there is potential for the Guidelines to be used
in a biased way. This would contradict any obligations to meet stakeholders’ information needs.
The GRI has attempted to address some of the limitations associated with the Guidelines. New Guidelines, ‘G3’ were
released in late 2006.7 The main goal of the G3 is to make reporting routine and comparable (GRI, 2006). However, given the
diversity of reporting entities, perhaps there will always be potential problems associated with a generic set of Guidelines.
There is no regulation in Australia stating that government departments must report according to the GRI, however, in
2003 the Australian Government Department of the Environment and Heritage produced a document providing a guide to
reporting against environmental indicators which is aligned to the GRI.

3. Research method

An environmental disclosure index developed by Frost (1999) was used as a framework to develop the EDI for this study.8
In order to develop a more extensive research instrument that was more appropriate for the study, the EDI was supplemented
with environmental disclosure indicators from the GRI9 and indicators produced by the Australian Government Department
of Environment and Heritage (2003) well as a Natural Heritage Trust publication.10 The EDI is presented in Appendix A.
The choice of the time frame 2000-1 to 2007-8 was motivated by the following factors:

1. The collection of annual reports of the departments was mostly obtained via the departments’ web sites.11 Obtaining
reports prior to 2000 for all departments proved difficult as some departments did not provided them.
2. The introduction of the GRI guidelines in 2000, a second version in 200212 and a further version in 200613 covered
the period of investigation, and would therefore perhaps be expected to have influenced the level of environmental
disclosures.

Annual reports from an eight-year period, 2000-1 to 2007-8, were obtained from 18 departments. Hence, the study
comprised a total of 324 annual reports. This study examines the government departments’ annual reports for a number of
reasons. First, the annual report is a consistent source document from which data can be gathered. Second, in developing a
disclosure index for content analysis, it is important to have a measure that is comparable between the departments. All the
departments produce an annual report which is of a relatively homogenous format and therefore suitable for comparison.14
Third, it was found by Deegan and Rankin (1997) that the annual report was significantly more important than any other
source of information concerning an organisation’s interaction with the environment.
Tilt (1994) found that annual reports were the most commonly used medium for corporate social information. Guthrie
and Parker (1989) argued that the annual report is not subject to misrepresentation; it is the one means of com-
munication to outside parties over which management has control. Several prior researchers have used the annual

7
New GRI Guidelines released in late 2006 have a reduced number of indicators from the previous Guidelines ‘G2’.
8
Frost’s EDI comprised 50 information categories, this study’s index comprised 85 information categories.
9
27 environmental performance indicators from the GRI Guidelines were used in this study.
10
‘Public Environmental Reporting: An Australian Approach’ (2000).
11
Those departments who did not provide annual reports on their web sites were contacted and hard copies were requested.
12
This version provided 35 environmental performance indicators.
13
This version contained 30 environmental performance indicators. The main changes from the previous version was a streamlining of the biodiversity
indicators from 9 to 5 and one less water indicator.
14
The departments also provide various other disclosures such as sustainability action statements and also environmental disclosures on their websites.
 B. Lynch / Accounting Forum 34 (2010) 32–45 37

Table 1
Level of environmental disclosures by individual departments.

Department Number of information items per year

2000-1 2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8

Victoria (DSE) 35 40 44 51 50 53 58 56
Victoria (DHS) – – 5 17 20 18 18 17
Western Australia (DF) 25 23 28 24 33 30 29 25
Western Australia (DAg) 13 16 21 24 25 34 26 28
Western Australia (DoW) 25 28 35 34 33 31 23 25
Western Australia (DEC) 28 30 34 34 38 37 (40) 37 (44) 40
Western Australia (DTF) – 1 3 6 7 11 7 6
Tasmania (DPIW) 39 41 41 42 40 40 38 35
Tasmania (DIER) 14 14 12 11 14 15 15 16
Tasmania (DTF) – 1 – – – – 4 6
South Australia (DEH) 41 42 44 42 66 50 34 35
South Australia (PIRSA) 38 41 42 38 35 29 29 26
South Australia (DTF) – 1 1 2 3 2 7 9
New South Wales (DWE) 12 17 17 22 27 27 (34) 26 (31) 23
New South Wales (DH) 5 7 7 7 10 10 9 9
Queensland (DME) (22) 20 (20) 19 (23) 21 (28) 24 (28) 24 (35) 29 18 23
Queensland (EPA) 36 37 (49) 48 (51) 50 (55) 54 (60) 59 54 50
Queensland (DE) 5 9 14 16 19 16 17 20

Total 336 367 417 441 498 491 449 449

report to examine corporate social reporting and environmental reporting.15 Chalmers and Godfrey (2004) refer to dan-
gers in using annual reports because of the limit to the amount of information that can be provided and also that
information can be released beyond the annual report domain. However, Australian legislation requires government organ-
isations to include environmental disclosures in their annual reports and therefore, for this study, annual reports were
examined.
Content analysis of the departments’ annual report was undertaken. The use of an EDI permits a comparison of the
departments’ reporting practices. For the purposes of this study, a disclosure is defined as passage of text within the annual
report. If there is a disclosure in a particular category then a score of 1 is given. If there is no disclosure, a score of 0 is given.
Reliability was assured in this study by the identification of 85 specific environmental disclosure categories which pro-
vided considerable disclosure content. Well specified definitions in each category improved reliability. According to Gibson
and Guthrie (1995) there are inherent weaknesses in content analysis. However the use of one coder provided consistency
and is consistent with prior studies.16
Four departments in this study underwent structural change over the time period examined resulting in either increased
responsibility for environmental issues,17 increased responsibility for water related functions18 or a decrease in water
responsibilities.19 Therefore in order to present a meaningful comparison, disclosures were adjusted accordingly. For exam-
ple, those departments with increased responsibility over the time period, such as the New South Wales Department of
Water and Energy which was given water related functions in 2007 had subsequent disclosures related to water removed.
For those departments with a decrease in responsibilities over the time period, past disclosures in these responsibility areas
were removed. Therefore two Queensland departments no longer responsible for water management as a result of govern-
ment changes in 2006, had disclosures related to water management prior to 2006 removed. In Table 1, raw (unadjusted)
disclosure figures are enclosed in parenthesis.

4. Results

Using the EDI, the annual reports of 18 Australian state government departments were analysed over the period from
2000-1 to 2007-8 inclusive. Total disclosures (using adjusted disclosure figures) over the period increased from 336 to 449
over the period examined.
Table 1 presents the number of information items in the EDI disclosed by each department in their annual reports. In
total, disclosures increased up until the 2005-6 reporting period. From Table 1 it is clear that the trend for environmental
reporting was increasing from 2000-1 until 2004-5. Disclosures in 2005-6 then declined from a total of 498 in 2004-5 to 491
in 2005-6 and further declined in 2007-8 and 2007-8 to 449.

15
Studies include Cormier and Gordon (2001), Deegan and Gordon (1996), Deegan and Rankin (1996), Deegan et al. (2002), Deegan et al. (2000), Gibson
and Guthrie (1995), Gray et al. (1995), Guthrie and Parker (1989) Harte and Owen (1991) Patten (1992).
16
See Guthrie and Parker (1989) and Zeghal and Ahmed (1990).
17
The Western Australian Department of Environment and Conservation.
18
The New South Wales Department of Water and Energy.
19
Both the Queensland Environmental Protection Authority and the Queensland Department of Mines and Energy.
38 B. Lynch / Accounting Forum 34 (2010) 32–45

The time period of the study saw total environmental disclosures increase from 336 to 449, representing around a 33%
increase. Disclosures from the environmental departments increased from 326 to 382 representing around a 15% increase.
A much larger percentage increase was observed from the non-environmental departments which increased disclosures
from 10 to 67, representing a 570% increase. Overall, the level of disclosures is much greater for environmental departments
than for other government departments and this is to be expected given these departments are responsible for many
environmentally sensitive areas. Similar results were found by the Environmental Audit Committee of the House of Commons
in Britain in their review of government department reporting where it was found that departments with a substantial
environmental component in their portfolios were more adept at reporting than other departments (Environmental Audit
Committee, 2006).

4.1. Discussion of results

The Victorian Department of Sustainability and Environment increased disclosures from 35 in the first year to 56 in the
eighth year of the study. The Victorian Department of Human Services also increased disclosures from 0 to 17 over the time
period of the study. From Table 1, for both Victorian departments, the largest increase of disclosures occurred from 2002-3
to 2003-4, this is probably attributable to the introduction of Financial Reporting Directive 24A in 2003 which required that
Victorian government entities measure and report on environmental performance indicators and these indicators must be
reported via the annual report (Department of Treasury & Finance, 2006).20 Disclosures have remained relatively stable since
then.
Reductions in disclosures from 4 of the 5 Western Australian departments in the 2006-7 period could be attributed
to the Western Australian Government review of public sector reporting in February 2007. This review advised agencies
that several reporting requirements were not longer required to be reported. These included waste paper recycling and
energy consumption.21 Therefore these departments reduced their disclosures when they were no longer required. The
only Western Australian department to increase disclosure practices in that period, the Department of Environment and
Conservation, has probably done so because of its increased responsibility for environmental issues due to its amalgamation
of two other departments.22
Two of the Tasmanian departments, the Department of Primary Industries and Water and the Department of Infras-
tructure Energy and Resources, reported a relatively stable amount of disclosures over the seven-year period of the study.
The non-environmental Tasmanian department included in this study, the Department of Treasury and Finance, increased
disclosures from 0 to 6 over the time period of the study. In the absence of government regulations requiring envi-
ronmental disclosures in that state, it is interesting to note the extensive environmental disclosures provided in Hydro
Tasmania’s23 annual report for 2007-8. An independent assurance statement was provided by a sustainability assurance
and advice company on Hydro Tasmania’s material sustainability performance areas as well as a validation against the GRI
guidelines.
The two South Australian departments, responsible for environmentally sensitive areas, the Department of Environment
and Heritage and Department of Primary Industries and Resources, provided a reduced number of disclosures over the time
period of the study. The other South Australian department, the Department of Treasury and Finance increased disclosures
from 0 to 9 over the time period.
Disclosures from the two New South Wales departments, the Department of Water and Energy and Department of Health,
increased over the period of analysis. The Department of Water and Energy increased disclosures from 12 in the first year to
31 in the eighth year. Some of these increased disclosure practices can be linked to the transfer of water related functions
of the former Department of Natural Resources in to the DWE April 2007.
Reduction in disclosures from both Queensland departments, responsible for environmentally sensitive areas, the Envi-
ronmental Protection Agency (EPA) and Department of Mines and Energy, from 2006 onwards can partly be related to
the transfer of water responsibilities from both departments after machinery of government changes in 2006. Water
recycling which had previously been managed by the EPA, was transferred to the Department of Natural Resources and
Water.
The Queensland Department of Mines and Energy, a new department formed in 2006-7, was a result of the merger of
the former Department of Energy and the Mineral and Petroleum Resource Services of the former Department of Natural
Resources, Mines and Water. So the new department did not have the focus on natural resources and water that the former
Department of Natural Resources, Mines and Water24 had. The other Queensland department in this study, the Department
of Education, increased disclosures from 5 to 20 over the period of the study.

20
These indicators were updated with FRD24B and FRD24C which will apply from 1 July 2007.
21
However a different approach is proposed for the 2007-8 reporting period where agencies will be required to report on sustainability issues and
achievements.
22
The DEC was formed in 1 July 2006 from the amalgamation of the Department of Environment and the Department of Conservation and Land
Management.
23
Hydro Tasmania is a Government Business Enterprise owned by the state of Tasmania.
24
The Queensland Department of Natural Resources and Water did not have annual reports available for the first two years of this study and was therefore
not included. However if these reports had been available, it probably would have provided a better comparison over time.
 B. Lynch / Accounting Forum 34 (2010) 32–45 39

Table 2
Level of GRI reporting for individual departments.

Department Number of GRI information items per year

2000-1 2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8

Victoria (DSE) 1 1 2 7 7 8 10 10
Victoria (DHE) – – – 8 8 8 8 9
Western Australia (DF) – – 2 2 2 2 – –
Western Australia (DAg) – – 2 1 1 1 – –
Western Australia (DoW) – – 2 2 2 1 – –
Western Australia (DEC) – – 2 2 2 2 – 1
Western Australia (DTF) – – 2 2 2 2 – –
Tasmania (DPIWE) – 1 3 2 2 3 4 3
Tasmania (DIER) – – – – – – – –
Tasmania (DTF) – – – – – – – –
South Australia (DEH) 1 5 4 6 18 9 4 5
South Australia (PIRSA) – 2 2 2 2 2 2 3
South Australia (DTF) – 1 1 1 1 1 1 2
New South Wales (DWE) – – – 1 1 2 – 1
New South Wales (DH) 1 1 1 1 1 – – –
Queensland (DME) – – – – – – – 4
Queensland (EPA) – – 4 5 7 9 4 4
Queensland (DE) – 1 1 2 2 3 3 3

Total 3 12 28 44 58 53 36 45

4.2. GRI adoption

Table 2 presents the number of GRI indicators disclosed by each department in their annual reports. In total, disclosures
increased up until the 2005-6 reporting period. Disclosures then declined in 2005-6 and further declined in 2006-7. The
total disclosures were greater for the environmental departments than for other departments.
The South Australian Department of Primary Industries and Resources, (PIRSA) was the only department to disclose its
consideration of the adoption of the GRI guidelines in the first two years of this study.25 In 2000-1, the department stated:
PIRSA will consider the use of the Global Reporting Initiative guidelines . . . and will adapt that framework to ensure that
PIRSA’s approach is appropriate for a State Government agency in South Australia with responsibilities for natural resources
development. (PIRSA, 2000-1:19)
However, in subsequent years there were no such disclosures and no explanation provided for their omission.
The South Australian Department of Environment and Heritage disclosed the adoption of GRI guidelines as a framework
for sustainability reporting in the 2004-5 reporting period. However, the department’s annual report from 2007-8 does not
include reference to the GRI. This is in contrast to the 2005-6 report which stated:
‘the . . . (GRI) framework and principles have guided DEH’s approach to sustainability reporting. Throughout this docu-
ment, references to GRI indicators relevant to the reported performance are included’ (South Australian Department of
Environment and Heritage, 2005:19).
In the 2005-6 reporting period, the Queensland Environmental Protection Agency announced its adoption of the GRI and
stated:
‘in line with global trends, a guide to the Charter’s (the Department’s Sustainability Charter) achievements against the Global
Reporting Initiative (GRI) is included for the first time in this report to allow comparisons with other organisations that have
set sustainability targets’ (Queensland Environmental Protection Agency, 2005:20).
However, the 2007-8 annual report does not include any mention of the GRI. This lack of information provided by
the Queensland Environmental Protection Agency and two South Australian departments above prevents a comparative
assessment over time and between departments. It also seems unusual that departments which reported that they were
adopting the GRI guidelines suddenly appeared to reduce disclosures. It also appears to be out of step with corporate
reporting with a 2005 Commonwealth Government report finding that the number of companies using the GRI guidelines
had increased substantially (AGDEH, 2005).
The Victorian Department of Sustainability and Environment disclosed its adoption of the GRI guidelines in the 2004-
5 period, however, in contrast to the above departments, continued reporting on this adoption of the GRI guidelines in
subsequent years.

25
Although the Victorian Department of Environment and Heritage reported one GRI information item in the first two years it did not provide a statement
that it had adopted GRI reporting guidelines until 2004. The New South Wales Health Department also reported one GRI information item in the earlier
years of this study but did not provide a statement that it had adopted GRI reporting guidelines.
40 B. Lynch / Accounting Forum 34 (2010) 32–45

There is considerable variation in the number of GRI information items disclosed in the annual reports. For example in
the 2004-5 reporting period, the South Australian Department of Environment and Heritage reported on a possible 18 of the
possible 27 GRI information items utilised in this study. In contrast, some Departments such as the Tasmanian Department
of Infrastructure Energy and Resources and Tasmanian Department of Treasury and Finance reported no GRI informa-
tion items in any year of the study. This low level of disclosure limits comparison between departments on sustainability
issues.
In the 2007-8 reporting period, the Victorian Department of Sustainability and Environment was the only department in
this study to include a GRI content index which allows readers to cross-reference reports to the GRI guidelines. The inclusion
of this index is one of five criteria reports must meet to be able to state that reports are prepared ‘in accordance’ with GRI
guidelines. This finding is low in comparison to a 2005 finding which reported that about 20% of Australian companies report
in accordance with the GRI (AGDEH, 2005).

5. Review and discussion of disclosures

Due to the significant decrease in environmental disclosures provided by the South Australian Department of
Environment and Heritage, some discussion will focus on that particular department. In 2004-5, this Department’s
environmental report (which was contained within the annual report) numbered 20 pages while the next year, 2005-
6, the environmental report was only 6 pages in length. The 2004-5 environmental report contained the following
headings: 1. Energy management/energy efficiency action plan, 2. water conservation and wastewater management,
3. waste management, 4. built facilities (green building) management, 5. travel and fleet management and 6. green
procurement. The 2005-6 environmental report was confined to two areas: energy efficiency action plan and waste man-
agement.
The Department was contacted by email in January 2007 to enquire why the 2006 report did not contain information on
travel and fleet management, and green procurement, which had previously been provided. Resource constraints were put
forward by a Department spokesperson as the reason. The spokesperson also stated that the report uses the GRI to provide
a focus on sustainability reporting and it hopes to build on this in future reports. This was an interesting comment given the
significant reduction in environmental reporting from the previous year.
The Department spokesperson was contacted by telephone in February 2007 and a discussion took place. The spokesper-
son indicated that resources had contracted throughout the government and quite significant spending cuts had taken place.
This had resulted in the Department allocating less staff to data collecting and reporting. One staff member had previously
been employed full time in that area and the removal of that staff member to another area had resulted in the reduction of
reporting within the environmental report. That particular staff member had a passion for sustainability reporting which was
lost after her departure. Farneti and Guthrie (2009) found in their study also, that one key individual within an organisation
pioneered and championed the process of sustainability reporting.
Another contributing factor put forward for the reduction in environmental reporting by the South Australian Depart-
ment of Environment and Heritage was that the Office of Sustainability had been moved to the Department of the Premier
and Cabinet on 1 April 2006. This meant that around the executive table there was no longer a director with a focus on
sustainability issues; the focus had diminished.
The reduction in environmental disclosures may be due to the reasons put forward by the Department spokesperson. It
may also be a response to the very limited feedback the Department receives on its annual report. Very few stakeholders
comment on the report and only occasional enquires are received. It can be argued that given resource constraints and
limited stakeholder attention, continuing to report on some environmental impacts is not cost effective.
It is of interest to note the opening sentence in the chief executive’s statement in the 2006-7 annual report; ‘The aspiration
that is central to our new Corporate Plan is prosperity for South Australians’. This appears to be a shift in focus from previous
years and seems a bizarre (or perhaps disappointing) aspiration for the Department of Environment and Heritage. It also
differs to statements made in previous years by the same chief executive. In the 2007-8 annual report the chief executive’s
statement again mentions ‘prosperity’ however, it is linked with sustainable economic development as one might expect
for such a department.
There have been calls for improvements in sustainability reporting practices. A wide range of sustainability report-
ing practices exists in Australia according to a recent CPA Australia research project (Rice, 2004). That study found that
while the majority of corporations did make some social and/or environmental disclosures within their annual report, they
generally represented policy statements of limited scope. The information was overwhelmingly positive and any negative
information was couched in positive terms. Reporting frameworks and standards were not typically employed and verifi-
cation of the stand alone reporting was inconsistent (Rice, 2004). The study suggests there is scope for improving reporting
practices.
This study also found disclosures to be predominantly positive, however some departments acknowledged the negative
impact society has on the environment.
Our rapidly growing population has rising living standards, but we are consuming more land, more energy and more water,
while generating more waste and adversely affecting the natural systems that support life (Queensland Environment
Protection Authority, 2007-8:4)
 B. Lynch / Accounting Forum 34 (2010) 32–45 41

Another department acknowledged the negative impact it could have on the environment.
As a Victorian Government organisation, DSE is also a consumer of resources and had a physical presence that potentially
impacts negatively on the environment (Victorian Department of Sustainability and Environment, 2007-8:10)
Gibson and Guthrie (1995) found that the amount of environmental information provided in annual reports is limited
and improvements need to be made before there is any useful common meaningful reporting practise by organisations.
Burritt and Welsh (1997a) found that environmental disclosures by Commonwealth public sector entities did not provide
information in a form which was able to assist with comparative assessment over time. They also called for improvements
to environmental reporting.
This study also found the lack of information provided in the annual report to not only hamper comparison, but also to
be alarming if the omission of information is also an indicator of a lack of policy in some areas. For example, the Tasmanian
DPIW (a department with responsibility for water) does not disclose any information about water conservation, instead
the Department reports, ‘more water being available for agriculture and other water dependent industries’ (Department of
Primary Industries and Water, 2007-8:20).
It is also of interest to note that the Tasmanian Department of Treasury and Finance provided only one environmental
disclosure in 2001 and then no disclosures in the four years after that until 2006. Given that Section 516A of the Environmental
Protection and Biodiversity Conservation Act 1999 had been in place for some years, it is surprising this Department does not
provide disclosures during this period. Whilst it might be argued that this department does not operate in an environmentally
sensitive area, the operations of the organisation (such as water, paper and energy usage) have an environmental impact
and should be reported.

6. Summary and conclusions

As found by Bebbington et al. (2009), various influences contribute to sustainable reporting. Regulative influences such as
increased environmental reporting regulations in Victoria were responsible for increased disclosures from the two depart-
ments in that state. Decreased reporting regulations in Western Australia resulted in a decrease in disclosures from 4 out
of 5 departments in that state. This might be partly a result of what Bebbington et al. (2009) identify as mimetic pressure
whereby organisations are highly sensitive to what they peers are doing. Carpenter and Feroz (2001) and Chalmers and
Godfrey (2004) also refer to conformity to peer practices being associated with reporting practices. Normative and cognitive
influences are not so easily identified and further analysis would be required to determine their effect.
Structural changes also influenced reporting practices. The transfer of water responsibilities from both Queensland
departments meant these departments no longer had a focus on water disclosures as they had previously and therefore
resulted in reduced disclosures in this area. Increases in disclosures can also be attributed to structural changes between
departments giving increased responsibility for environmental issues.26
Reduction in disclosures by some departments may be due to a lack of external pressure from stakeholders. Unless this
external pressure exists, the departments may not view the benefits of reporting exceed the costs of doing so. The reporting of
some indicators such as energy consumption and greenhouse gas emissions may be a complex and costly exercise involving
data gathering from many different locations and departments are unlikely to report unless there is some real benefit in
doing so. Institutional theory suggests that an organisation tends to conform with society’s expectations, traditions and
norms and unless pressure to report is significant there is no compelling reason to do so.
It is hoped that the reduction in some environmental reporting practices does not continue. It is of concern that some
departments are providing less information about activities which are not always observable. For example, the Western
Australian Department of Agriculture provided no energy consumption disclosures in 2006-7 despite providing disclosures
in previous years. This reduction in disclosures may be consistent with the predictions of institutional theory.
Community expectations change over time and the departments who provided reduced disclosures may have done so
in line with a lack of threats to the department’s legitimacy. Department managers are aware of community expectations
and change their disclosures accordingly. According to Carpenter and Feroz (2001) successful governments are those that
gain support and legitimacy by conforming to social pressures. More interview data would enhance analysis of reporting
practices and perhaps, provide more support for legitimacy and institutional theory.
This study has shown that although environmental reporting by government departments has increased, reporting is
not consistent over time and there are variations in the standard of reporting between departments responsible for similar
areas. If environmental disclosures are to be useful, these issues need to be resolved. The lack of uniform reporting regula-
tions between states hampers comparison. Whilst there is Commonwealth Government legislation in place requiring the
provision of environmental performance information in annual reports, legislation differs between states and this results in
inconsistencies in reporting practices.
It is disappointing to note the low level of reporting on GRI guidelines. Only one department in this study provided
a GRI content index enabling cross referencing with the guidelines. Ball and Grubnic (2007) believe that public sector

26
The Western Australian Department of Energy and Conservation and New South Wales Department of Water and Energy were both given increased
responsibility for environmental issues.
42 B. Lynch / Accounting Forum 34 (2010) 32–45

organisations have a role to play in moving the sustainable development agenda forward and help set new terms by which
the next generation live. Part of this involves reporting publicly and transparently on how they are promoting sustainability.
This study has demonstrated that some departments do not appear to be leading ‘by example in reporting publicly and
transparently on their activities to promote sustainability’ (GRI, 2005:7–8).
Given calls for improvements in environmental reporting, it is recommended that mandatory GRI adoption be introduced
for all government departments. The Commonwealth Department of Environment and Heritage has already produced a guide
which aims to assist Australian organisations by providing background and methodologies to enable reporting against the
GRI indicators. Use of the GRI would provide a uniform set of environmental disclosure indicators which would enable
comparison both over time and between departments. The use of the GRI would also enhance efficiency in the reporting
process by providing a standard set of indicators which could provide the basis for sustainable reporting.

7. Limitations

As with most research, this study has limitations. First, the departments in this study had different areas of responsibility.
Also, several departments underwent name or structural change over the period examined.27 Therefore, the comparison of
their reporting practices may have been affected by their changed structure.
Another limitation relates to the Environmental Disclosure Index developed for purposes of the study. Not all departments
were responsible for exactly the same areas. Therefore, the reasons for non-disclosure in some particular categories may have
been their irrelevance. For example, the Tasmanian Department of Primary Industries and Water and Western Australian
Department of Agriculture were the only departments in this study responsible for primary industries and therefore the
only departments likely to disclose effluent management practices. In another example, in several categories under the
biodiversity aspect, it was assumed that the New South Wales Department of Water and Energy did not have disclosures to
report as it did not have direct responsibility for some biodiversity categories. Therefore, the coverage of the EDI required
researcher judgement. However the final number of categories was based on prior literature28 and the GRI.

8. Further research

In providing an insight into the nature and extent of environmental reporting within the annual reports of a sample of
Australian state government departments, this study highlights areas for further research.
The EDI developed in this study could be used to determine the nature and extent of environmental reporting in other
Australian Commonwealth, state and territory government departments. The EDI could also be used to analyse other means
of environmental reporting disclosures, such as disclosures provided in stand alone environmental reports.
The reporting practices of Australian government departments could be compared to those of international government
departments. Such a comparison would provide insight into international environmental reporting practices.
As mentioned previously, more insights into the factors influencing disclosure practices could be discovered through
more interview data.

Appendix A. Environmental disclosure index

Focus areas Aspect Information category

1. External focus 1. Commitment 1. Statement of environmental concern

2. Involvement with external
(environmental)organisations
3. Stakeholder acknowledgement

2. Influences 4. Environmental awards

5. Recognition of government legislation

2. Internal focus 1. Profile 6. Goals/aims/objectives

7. Values
8. Mission statement
9. Image

2. Sustainability reporting 10. Environmental sustainability framework

11. Adoption of GRI indicators

3. Environmental programs 1. Research and development 12. Research and development internal
13. Research and development: external

27
An attempt to mitigate against these changes was made by providing two sets of data for these departments.
28
See Frost (1999).
 B. Lynch / Accounting Forum 34 (2010) 32–45 43

Appendix A (Continued )

Focus areas Aspect Information category

2. Materials 14. Green procurement

15. Green building
16. Paper management
17. Supply chain

3. Energy 18. Resource consumption/conservation

19. Green power

4. Water 20. Water conservation

21. Water monitoring
22. Water reporting
23. Water quality
24. Water recycling

5. Biodiversity 25. Precautionary principle

26. Restoration/rehabilitation
27. Flora/fauna protection/conservation
28. Pest/weed/disease management
29. Tree planting
30. Forest report
31. GMO moratorium
32. Ecological footprint
33. Fire management
34. Ecologically sensitive fire regime
35. Soil
36. Freshwater ecosystem conservation
37. Marine and fish management
38. Biosecurity
39. Biological inventory

6. Emissions, effluents and waste 40. Air quality

41. Kyoto target
42. Greenhouse gas emission
43. Climate change
44. Effluent management
45. Recycling/waste utilisation/waste disposal
46. Hazardous waste management

7. Social environmental programs 47. Heritage projects

48. Heritage strategy
49. Community projects
50. Community feedback/consultation
51. School program
52. Awards
53. Awareness and training
54. Policy advice

8. Compliance 55. Prosecution and enforcement

56. Regulation/legislation

9. Transport 57. Vehicle travel

58. Alternative forms

4. Environmental performance indicators 1. Materials 59. Total used other than water, by type
60. Percentage used that are wastes (from external
sources)

2. Energy 61. Direct energy use by primary source (report in

joules)
62. Indirect energy use (report in joules)
63. Energy consumption footprint (report in joules)

3. Water 64. Total water use

65. Annual withdrawals of ground and surface
water
66. Total recycling and reuse of water

4. Biodiversity 67. Location and size of land owned, leased, or

managed in biodiversity rich habitats
68. Total amount of land owned, leased or
managed for production activities or extractive use
69. Amount of impermeable surface as a
percentage of land purchased or leased
44 B. Lynch / Accounting Forum 34 (2010) 32–45

Appendix A (Continued )

Focus areas Aspect Information category

70. Changes to natural habitats resulting from

activities and operations and percentage of habitat
protected or restored
71. Number of endangered species with habitats in
areas affected by operations
72. Major impacts on biodiversity
73. Impacts on protected and sensitive areas

5. Emissions, effluents and waste
74. Greenhouse gas emissions (separate subtotals
for each gas in tonnes)
75. Use and emissions of ozone-depleting
substances (report each figure separately)
76. NOx , SOx and other significant air emissions by
type
77. Total amounts of waste by type and destination
78. All production, transport, import or export of
any waste deemed “hazardous” under the terms of
the Basel Convention Annex I, II, III and VIII.
79. Significant spills of chemicals, oils and fuels
80. Significant discharges to water by type
81. Other relevant indirect greenhouse gas
emissions

6. Suppliers 82. Performance of suppliers relative to

environmental components of programs and
procedures
7. Products and services 83. Significant environmental impacts of principal
products and services
8. Compliance 84. Incidents of and fines for non-compliance
9. Transport 85. Environmental impacts

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