Journal of Cleaner Production 129 (2016) 724e734

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Determinants of corporate environmental reporting: the importance

of environmental performance and assurance
Geert J.M. Braam a, *, Lisanne Uit de Weerd b, Mara Hauck c, Mark A.J. Huijbregts c
a
Department of Economics, Institute for Management Research, Radboud University Nijmegen, Nijmegen, The Netherlands
b
Deloitte Accountants B.V., Rotterdam, The Netherlands
c
Department of Environmental Sciences, Institute for Water and Wetland Research, Radboud University Nijmegen, Nijmegen, The Netherlands

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

Article history: Companies are increasingly held accountable for the impact of their decisions and activities on the
Received 18 September 2015 environment. These developments have been associated with a heightened tendency for companies to
Received in revised form publish a variety of information on environmental topics in corporate environmental or sustainability
19 February 2016
reports. This study explores relationship between the level and nature of voluntary corporate environ-
Accepted 8 March 2016
Available online 19 April 2016
mental reporting (CER) practices, multiple corporate environmental performance metrics and external
assurance. For this reason, measures of greenhouse gas emissions, waste production and water con-
sumption were quantified and a distinction was made between corporate environmental reports with or
Keywords:
Corporate environmental reporting
without external assurance for a sample of Dutch companies during the period 2009e2011. Our results
Determinants of environmental disclosure show that greenhouse gas emissions and water consumption, and external assurance play a significant,
Environmental performance incremental role in explaining the variation in the level and nature of CER. The results support the view
Global Reporting Initiative that legitimacy plays an important role in companies' choices concerning environmental disclosure. At
Assurance on sustainability reports the same time, our descriptive statistics indicate that companies systematically disclose an incomplete
picture of how their decisions and activities affect the environment. Our findings suggest a need to
complement voluntary CER with mandatory requirements for sustainability reporting in combination
with strong enforcement mechanisms to urge companies to become more accountable in terms of
environmental performance.
© 2016 Elsevier Ltd. All rights reserved.

1. Introduction environmental legislation and market-oriented emission-trading

Increasing public awareness of the role that corporations play in
environmental change has attracted the attention of a range of
stakeholders. Many companies have been criticized for adding to
environmental problems such as climate change, depletion of
natural resources, waste production, and lagging corporate envi-
ronmental responsibility. Evidenced by the worldwide growth in
corporate responsible investments, capital providers and other
stakeholders are urging companies to become more responsible for
the impacts of their decisions and activities on the environment,
and are pressuring them to accept greater responsibility for sus-
tainable development. Both stakeholders, and the development of
* Corresponding author. P.O. Box 9108, 6500 HK Nijmegen, The Netherlands.
Tel.: þ31 24 3613086.
E-mail addresses: G.J.M.Braam@fm.ru.nl (G.J.M. Braam), J.L.M.UitdeWeerd@
deloitte.nl (L. Uit de Weerd), M.Hauck@science.ru.nl (M. Hauck), M.A.J.
Huijbregts@science.ru.nl (M.A.J. Huijbregts).
schemes, encourage companies to become more accountable for
environmental issues such as greenhouse gas emissions and waste
generation.
These developments have been associated with a heightened
tendency for companies to publish information on environmental
performance in corporate environmental or sustainability reports.
In these reports, voluntary disclosures of a variety of information on
environmental topics are made, such as greenhouse gas emissions,
waste production, and energy and water consumption. However,
the level and nature of these disclosures varies considerably be-
tween companies (KPMG, 2013; Hahn and Kühnen, 2013). Com-
panies may publish corporate environmental reports to signal to
the shareholders that they are relatively good environmental per-
formers, and take sustainable development seriously. Companies
with inferior environmental performance, on the other hand, may
utilize corporate environmental reporting (CER) as a management
tool to obtain corporate legitimacy. CER may be used as a
communication strategy to change public perceptions rather than

http://dx.doi.org/10.1016/j.jclepro.2016.03.039
0959-6526/© 2016 Elsevier Ltd. All rights reserved.
 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734
reveal actual corporate environmental performance (CEP), which
raises concerns relating to a potential lack of accountability and
responsibility towards sustainable development (Cho et al., 2012).
In response to public concerns relating to a potential lack of
transparency, there has been a growing tendency for companies to
independently assure their sustainability reports. Previous research
supports the argument that companies with a greater need to in-
crease stakeholder confidence in the credibility of their CER, and
build their corporate reputations, are more likely to have their
sustainability reports independently assured (Simnett et al., 2009;
Pflugrath et al., 2011; Moroney et al., 2012). However, despite the
increase of CER, there is little empirical evidence describing the
relationship between CEP, external assurance, and the level and
nature of voluntary CER practices (Hahn and Kühnen, 2013).1
Research regarding the relationship between CEP and CER pro-
vide inconsistent results (Al-Tuwaijari et al., 2004; Clarkson et al.,
2008, 2011). A reason for the lack of consistency could be that the
environmental performance variables utilized in the empirical
studies differ between studies and only one variable of CEP is
applied per study. However, since CEP is a broad multidimensional
construct, it is unlikely that the application of a single variable to
define CEP will capture all aspects of environmental performance
(Dragomir, 2012). The simultaneous study of different variables
that contribute to CEP may clarify its relationship with CER and
increase the robustness of the observed relationships.
This study is among the first to systematically explore the
relationship between the level and nature of voluntary CER prac-
tices, multiple corporate environmental performance metrics and
external assurance. For this reason, measures of greenhouse gas
emissions, waste production and water consumption were quan-
tified and a distinction was made between corporate environ-
mental reports with or without external assurance for a sample of
Dutch companies during the period 2009e2011, comprising 209
observations. The level of CER is scored utilizing a content analysis
index based on the Global Reporting Initiative (GRI) (2011, 2013),
which is regarded as the most widely used set of global reporting
regulations for sustainability reporting (KMPG, 2013; Lozano, 2013;
Lozano and Huisingh, 2011). To evaluate the nature of CER, in
accordance with Clarkson et al. (2008, 2011), this study makes a
distinction between hard, objective and externally verifiable envi-
ronmental information versus soft, unverifiable disclosures.
The remainder of this paper is structured as follows. The next
section presents a review of the related literature and develops
hypotheses on the associations between CEP, external assurance
and CER. Section three describes the research method, and the
results are presented in section four, followed by a discussion in
section five. Finally, conclusions are drawn in Section 6.
2. Literature review and development of hypotheses
Literature typically emphasizes the association between CEP
and CER by using sociopolitical and economics-based theories of
disclosure to explain variation in environmental (and other social)
disclosures (Hahn and Kühnen, 2013; Hahn et al., 2015). However,
these alternative theories provide partly competing ideas on how
CEP may affect CER (Clarkson et al., 2008, 2011; Dong et al., 2014).
Sociopolitical theories of disclosure, including legitimacy the-
ory, suggest that corporate reporting issues cannot be meaningfully
investigated if considerations about the political, social, and
1
The term ‘level’ can be used interchangeably with the terms ‘quantity’ or
‘extent’. The ‘nature’ or ‘quality’ of environmental disclosure refers to whether the
information is objective and externally verifiable, i.e. hard as opposed to soft, un-
verifiable disclosure (Clarkson et al., 2008, 2011).
725
institutional framework in which accounting activities occur and
the conflicting interests of societal groups are disregarded (Gray
et al., 1995; Deegan, 2002; Hahn and Lülfs, 2014). According to
the legitimacy theory, corporate legitimacy is required for organi-
zational survival.2 A company will achieve legitimacy when it is
perceived to operate within a socially constructed system of norms,
values, and bounds of which the entity is a part. When companies
do not satisfy public expectations and requirements, they must
cope with increased public pressure, scrutiny and monitoring as
well as greater risks to legitimacy (Patten, 2002; Hrasky, 2011;
Alrazi et al., 2015). In an attempt to address these issues, com-
panies may exploit communication strategies including the use of
voluntary corporate disclosures to deflect attention and change
societal perceptions, expectations and values (Lindblom, 1994; Gray
et al., 1995; Hooghiemstra, 2000). More specifically to CEP and CER,
the legitimacy theory suggests that inferior performers, that likely
experience public pressure and threatened legitimacy, voluntarily
and selectively disclose more environmental information to reduce
the negative effects of inadequate CEP on their legitimacy and
corporate reputation (Freedman and Patten, 2004; Brammer and
Pavelin, 2006; Boiral, 2013). Companies that receive more public
attention and monitoring, self-servingly use CER as a risk man-
agement tool to improve the societal perceptions of their
commitment to and responsibility for sustainable development
(Cho and Patten, 2007; Luo et al., 2012; Cormier et al., 2005). CER
thus facilitates perceived company legitimacy, and therefore assists
the company in retaining its ‘public license to operate’ (Deegan,
2002).
However, CER is a costly process. Economics-based theories of
disclosure, i.e. voluntary disclosure theory and signaling theory
suggest that, in situations of asymmetric distribution of informa-
tion, companies voluntarily disclose information to differentiate
themselves from other companies provided that the perceived
benefits will outweigh the proprietary and other related costs
(Verrecchia, 1983; Healy and Palepu, 2001). When companies are
relatively good environmental performers, they may wish to signal
this by disclosing information relating to positive environmental
performance to gain competitive advantages such as an enhanced
corporate reputation and a reduction in the cost of capital
(Mahoney et al., 2013; Luo, and Tang, 2014; Lys et al., 2015). Ac-
cording to signaling theory arguments, to distinguish themselves
from poor performers, superior environmental performers may
provide credible information that cannot be easily replicated by
inferior performers (e.g., Connelly et al., 2011). For this reason,
voluntary disclosure theory predicts that superior environmental
performers will employ more objective, verifiable environmental
performance indicators that are hard to imitate to convince in-
vestors and other stakeholders of the credibility and accuracy of
their voluntary environmental disclosures (Clarkson et al., 2008,
2011; Meng et al., 2014). At the same time, voluntary disclosure
theory assumes that companies with inferior environmental per-
formance remain silent or self-servingly reveal more soft and
ambiguous information about their environmental performance
that cannot easily be verified and that ‘could be provided by all
2
Legitimacy theory is intertwined with stakeholder theory. Legitimacy theory is
encompassed in the idea of the ‘social contract’ paradigm that exists between
companies and the society in which the company operates and focuses on society in
its entirety (Gray et al., 1995; O'Donovan, 2002; Deegan, 2002). Stakeholder theory
focuses on particular, influential stakeholders who can affect and/or are affected by
the achievement of an organization's objectives (Freeman, 1984; Gray et al., 1995).
Stakeholder opinion contends that “organizations should be managed in the in-
terests of all their constituents, not only in the interest of stakeholders” (Laplume
et al., 2008: 1153).
726 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734
firms regardless of their environmental performance’ (Clarkson
et al., 2011: 45; Mosen ~ e et al., 2013; Hughes et al., 2001).
Legitimacy theory, on the other hand, predicts that for the
companies subject to greater threatened legitimacy and public
pressures, i.e. the higher polluting companies, it might be beneficial
to disclose objective and verifiable measures of environmental
performance. Selective disclosure of hard environmental perfor-
mance indicators helps them to increase the perceived accuracy
and credibility of their CER practices, build societal confidence and
increase legitimacy. However, if public scrutiny is strong, it is risky
for inferior environmental performers to disclose hard perfor-
mance indicators because stakeholders may detect that the com-
pany's CER is managed in an effort to mask bad environmental
performance. Detection may damage the company's reputation and
perceived integrity, reducing its legitimacy and increasing the
likelihood of outside intervention.
From an economic perspective, companies have to fulfill a core
profit-making responsibility (Friedman, 1970). Given that CER is a
costly process, it may be assumed that companies that are either
relatively good or bad environmental performers use CER as a
management tool to enhance corporate value, as long as the ex-
pected marginal benefits outweigh the marginal costs (McWilliams
and Siegel, 2001; Matsumura et al., 2014). Benefits could include
improved stakeholder trust in the level of organizational commit-
ment to the creation of sustainable values, increased legitimacy,
and enhancement of a company's image (Sullivan and Gouldson,
2012; Hahn et al., 2015). For superior environmental performers
CER may also be a signal to gain competitive advantage (Dhaliwal
et al., 2011). However, in an institutional setting in which it is
difficult to distinguish superior environmental performers from
inferior performers based on the information disclosed, inferior
environmental performers may also benefit from CER. More spe-
cifically, in an unregulated setting with the absence of certain
governance structures, it is difficult to distinguish between the two
types of firms because it is hard to observe whether a company
conveys a true and fair view of its environmental performance or
provides a misleading representation that may be not indicative of
company's actual environmental performance. For this reason,
inferior performers, that likely experience threatened legitimacy,
could use extensive CER as a risk management tool to reduce public
pressure and prevent intervention. Proactive reporting on
sustainability-related activities helps these companies to deflect
attention and positively shape societal perceptions of their
commitment to sustainable values thereby decreasing risks to
legitimacy. Selective disclosure of objective and verifiable perfor-
mance indicators could signal that the information released is
reliable and accurate, which may help to convince investors and
other stakeholders of the trustworthiness of companies' CER
practices and build a positive corporate reputation. From an eco-
nomic perspective, this study posits that, in an unregulated setting
with the absence of certain governance structures, the expected net
benefits from extensive and credible CER are likely to be higher for
highly polluting companies than for those that are better envi-
ronmental performers. In institutional environments in which it is
hard to assess differences in the quality of CER between superior
and inferior environmental performers, the expected benefits of
CER practices will more likely outweigh the costs for poorer envi-
ronmental performers than for superior environmental performers.
For these reasons, it is expected that companies facing public
pressure and threatened legitimacy, i.e. higher polluting com-
panies, are more inclined to voluntarily increase the number of
discretionary environmental disclosures and are more reliant on
hard, verifiable performance indicators to communicate their
message than similar but environmentally better performing
companies. Hence,
H1a: Corporate environmental performance is negatively asso-
ciated with the level of corporate environmental reporting.
H1b: Corporate environmental performance is negatively asso-
ciated with verifiable corporate environmental reporting.
In response to public concerns about the insufficient reliability
of environmental reports, companies may employ more hard,
objective measures of environmental performance but also exploit
third-party assurance on CER. External assurance helps to improve
societal confidence in the credibility of the environmental infor-
mation provided (Simnett et al., 2009; Moroney et al., 2012). For
external assurance on CER, information in environmental reports
must be to be verifiable. For this reason, environmental reports
have to comply with standards. In addition, the process of external
assurance may also induce companies to produce and disclosure
more reliable and accurate environmental information (see also
Hahn et al., 2015). Proactively signaling credibility of CER practices
positively influences the societal perceptions of a company's
integrity with regard to its accountability, thus increasing stake-
holder's trust, corporate reputation and organizational legitimacy
(Perego and Kolk, 2012). Hence,
H2: External assurance on environmental reports is positively
associated with verifiable corporate environmental reporting.
3. Methods
3.1. Sample
In order to test our hypotheses, a sample of 209 observations
was compiled covering a 3-year period (2009e2011) for 100 Dutch
public and private companies that voluntarily disclosed corporate
environmental reports in accordance with the GRI-guidelines as
the foundation of their CER. The Netherlands is a relevant
geographical area because this small, internationally-oriented
country has a CSR leadership role, e.g. GRI and Greenpeace are
based in Amsterdam. Moreover, large international companies are
located in the Netherlands such as Royal Dutch Shell and Unilever,
which have a leading role and affect impact CSR worldwide. Our
analysis was restricted to CER following GRI, as GRI is regarded as a
global standard for comparability between companies (KPMG,
2013). Data on the level and nature of CER and CEP was taken
from the companies' sustainability and annual reports while gen-
eral company data and information regarding company financial
performance was extracted from the databases of ThomsonOne and
Orbis.
In Table 1, panels A and B present descriptive statistics for the
sample companies. Panel A depicts the distribution of sample
companies by industry, year, and company size. Panel A demon-
strates that, during the years 2009e2011, an increasing number of
companies published corporate environmental reports using the
GRI format. Panel B shows that both public and private companies
increasingly publish corporate environmental reports and have
their reports independently assured.
3.2. Variables
3.2.1. Corporate environmental reporting
We applied a revised version of the GRI-based index developed
by Clarkson et al. (2008) in order to assess the level and nature of
CER. The revised environmental disclosure index is based on the
GRI- framework G3 and G3.1 (GRI, 2011, 2013), and consists of six
broad categories (A1 to A6), incorporating a total of 82 equally
weighted disclosure items. The Appendix provides an overview of
 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734 727

Table 1
Summary statistics of sample companies (2009e2011).

Panel A: Company characteristics across industry

Industry (US SIC codes)a Number of company-year observations Company size: total
assets (in V  milj.)
Total (in %) Year

2009 2010 2011 Mean Std. dev.

Manufacturing companies (20e39) 46 (22.0%) 12 16 18 21.35 1.75

Trade companies (50e59) 22 (10.5%) 4 8 10 21.43 2.43
Services excluding financial services and trust companies (40e49, 70e79, 80e89) 74 (35.4%) 12 28 33 20.64 2.48
Financial services and trust companies (60e69) 41 (19.6%) 10 15 16 23.92 2.82
Mining companies (10e17) 26 (12.5%) 7 10 9 21.56 1.88
Total 209 (100%) 46 77 86 21.64 2.61

Panel B: Company characteristics: listing and external assurance on corporate environmental reports across year

Year Number of company-year observations

Total Public or private companies

Public companies Private companies

External assurance on corporate environmental External assurance on corporate environmental

report report

Yes No (Sub) total Yes No (Sub) total

2009 46 11 14 25 10 11 21
2010 77 17 15 32 22 23 45
2011 86 22 14 36 26 24 50
(Sub) total 209 50 43 93 58 58 116
a
Based on the two-digit standard industrial classification (SIC), our sample is composed of companies operating in 34 different industries. For presentation purposes we
present our sample in five main industry groups.

Table 2
Summary statistics for the variables employed in the analyses.

Panel A: Summary statistics for the variables employed in the analyses

Variablea n Mean Std. deviation Min Max

CER 209 25.35 8.81 5.83 41.50

CER Hard 209 18.11 6.86 4.00 33.00
CER Soft 209 7.24 2.54 1.33 9.00
CEP1 160 17.62 2.76 11.83 25.51
CEP2 153 17.32 3.02 8.85 25.17
CEP3 85 16.53 3.19 9.47 24.78
CEP4 66 21.30 5.38 13.94 45.86
Assurance 209 0.483 0.50 0.00 1.00
SIZE 209 21.64 2.61 14.03 27.87
Listing 209 0.445 0.49 0.00 1.00
LEV 209 0.268 0.29 0.00 3.36
Industry 209 0.282 0.45 0.00 1.00
ROA 209 0.029 0.76 0.39 0.41
Board composition 209 2.467 1.96 0.00 13.00
Media coverage 209 163.13 269.36 0.00 2106

Panel B: Corporate environmental disclosure scores across year

Year Number of company-year observations Disclosure score on GRI-based index

Corporate environmental disclosure Corporate hard environmental Corporate soft environmental

score (CER)a,b disclosure score (CER Hard)a,b disclosure score (CER Soft)a,b

Mean (std. dev.) Min. Max. Mean (std. dev.) Min. Max. Mean (std. dev.) Min. Max.

2009 46 27.16 (7.72) 10.33 39.00 19.32 (5.49) 7.17 30.50 7.83 (1.91) 1.83 9.00
2010 77 24.64 (8.89) 5.83 39.33 17.57 (6.82) 4.00 30.83 7.06 (2.70) 1.33 9.00
2011 86 25.01 (9.64) 5.83 41.50 17.93 (7.52) 4.00 33.00 7.07 (2.66) 1.33 9.00
Total 209 25.35 (8.81) 5.83 41.50 18.11 (6.86) 4.00 33.00 7.24 (2.54) 1.33 9.00

See Table 3 for the definitions of the variables.

a
The Appendix provides an overview of the specific measurement items used to assess the total, hard and soft corporate environmental disclosure scores.
b
The maximum corporate environmental disclosure score on the GRI-based index is 82 points; the maximum score on the objective and verifiable disclosure items is 73
points and on the soft, non-verifiable items 9 points.

the disclosure items that were analyzed. In accordance with approximate the environmental commitment of companies in an
Clarkson et al. (2008, 2011), the index facilitates both the assess- objective and verifiable manner and are relatively difficult to
ment of the level of CER and the identification of the nature of replicate. They include the categories (A1) governance structure
disclosure, i.e. hard or soft disclosures. The hard disclosure items and management systems relating to environmental protection;
728 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734

(A2) credibility of environmental disclosures; (A3) environmental as it accounts for very different kinds of hazardous and non-
performance indicators; and (A4) environmental spending. The soft hazardous waste. External assurance is a dummy variable that is
disclosure items, which are unverifiable or not easily verifiable and equal to one if the sustainability report is externally assured and
could be provided by any company (Clarkson et al., 2008, 2011), zero in case the sustainability report not being assured (Simnett
include claims regarding vision and strategy (A5) and environ- et al., 2009; Moroney et al., 2012).
mental initiatives (A6). The Appendix states that the maximum
score for the GRI-based disclosure index is 82 points, combining
3.2.3. Control variables
both verifiable and non-verifiable items. The maximum score for
Voluntary disclosure studies that examine variation in the level
the objective and verifiable disclosure items is 73 points and on the
and nature of CER have consistently exhibited significant and
soft, non-verifiable items, nine points.
positive associations between company size, listing status,
Utilizing content analysis, we scored the disclosure items
leverage, and industry classification (Clarkson et al., 2011; Hahn
dichotomously: an item scored 1 if it was disclosed and 0 if it was
and Kühnen, 2013; Fifka, 2013). Our proxy for company size (Size)
not disclosed. For all items listed in the disclosure index, the
was the logarithm of the company's year-end total assets. Listing is
Appendix provides the average, minimum, and maximum scores of
a dummy variable that is equal to one if a company is listed on the
our sample companies. Table 2, Panel A reports summary statistics
stock exchange (on the Euronext Amsterdam Stock Exchange) and
for the dependent and explanatory variables employed in our an-
zero otherwise. Leverage (Leverage) was measured as total non-
alyses. Panel B displays the total, hard and soft corporate environ-
current debts divided by year-end total assets. To control for
mental disclosure scores between the three years 2009e2011 and
sector-specific effects, we included a dummy variable Industry that
demonstrates that all total disclosure scores were between 5.8 and
is equal to one if a company is classified as an environmentally
41.5 (out of a maximum of 82). With the exception of 2 companies
sensitive industry and zero otherwise (Patten, 2002; Gray et al.,
in 2011, all sample companies score less than 50% of the maximum
1995). As robustness check, we also controlled for industry differ-
available based on the GRI-based index in all years. Additionally,
ences based on a categorization of industries on the basis of one
Panel B indicates that the CER scores have not substantially
digit SIC codes.
changed during the years 2009e2011 in terms of the level and
In addition, we controlled for profitability, board composition,
nature of the environmental information.
leverage and media coverage. We used ROA (return on assets) as a
measure of profitability. ROA was assessed by the return on assets
3.2.2. Independent variables
equal to fiscal year-end net income divided by year-end total assets.
To measure CEP, the total amount of greenhouse gas (GHG)
Despite the fact that empirical results are mixed (Gray et al., 1995;
emissions, waste, and water consumption was included. Because
Albers and Günther, 2011; Hahn and Kühnen, 2013), ROA is
larger companies are expected to have higher levels of GHG emis-
included because companies with improved financial performance
sions, waste production and water usage, we also applied size-
and profitability have more freedom and flexibility to establish and
adjusted measures of CEP, i.e. the ratios of GHG emissions, waste
reveal relatively extensive environmental responsibility programs.
production, and water consumption to total revenue. This method
For this reason, they may exhibit a greater propensity to disclose
is similar to that applied by prior studies that employed scaled
this information (Clarkson et al., 2008). Companies with boards
measures of CEP such as TRI emission scaled by total sales revenue
consisting of more independent, non-executive directors might
(Al-Tuwaijari et al., 2004; Cho and Patten, 2007; Clarkson et al.,
provide more voluntary disclosures in the interests of shareholders
2008). To measure companies' GHG emissions, we used two
and other stakeholders than boards composed of less independent
proxies that are based on the scopes categorization from the
board members (Lim et al., 2007). Since all sample companies were
Greenhouse Gas Protocol. The GHG Protocol is a guideline for
comprised of a two-tier structure, board composition was consid-
companies to use in order to disclose their GHG footprint that
ered to be a corporate governance measure that assessed the ratio
makes a distinction between three scopes (GHG, 2004; Peters,
of the supervisory board members to the executive board members
2010; Dragomir, 2012). Scope 1 focuses on the direct emissions
(Lim et al., 2007). Consistent with measures in previous literature
which occur from sources that are owned or controlled by the
(Brown and Deegan, 1998; Reverte, 2009; Dawkins and Fraas, 2011),
company; scope 2 is based on indirect (offsite) emissions from the
media coverage was evaluated by ascertaining the number of ar-
generation of electricity consumed by the company; and scope 3
ticles per year appearing in the leading Dutch national, financial
includes the other indirect (offsite) GHG emissions of a company
and business newspapers that refer to the specific company.
relating to activities such as employee business travel, waste
disposal, and product utilization. According to the GHG Protocol,
scope 3 is an optional reporting category which allows the incor- 3.3. Regression model
poration of all other indirect emissions (GHG, 2004). Despite the
fact that comprehensive insight into a company's carbon footprint To analyze our data, the following general pooled Ordinary Least
requires disclosure of all components, not all companies report squares (OLS) regression was estimated:
their GHG emissions for all scopes. In addition, the failure to include
scope 3 emissions can create perverse incentives such as CER ¼ b0 þ b1 CEP þ b2 ASSURANCE þ b3 FIRMCONTROL
outsourcing activities to different companies, thus shifting emis- þ b4 INDUSTRYCONTROL þ b5 YEARCONTROL þ 3
sions from scope 1 to scope 3 (Peters, 2010). In this study,
depending on the availability of data, we measured a company's where the dependent variable is a proxy for the level or nature of
total GHG emissions by assessing the logarithm of the company's CER using scores on the GRI-based disclosure index (Clarkson et al.,
scope 1 and 2 emissions (CEP1) or scope 1 to 3 emissions (CEP2). 2008, 2011). The explanatory variables CEP and external assurance
The third proxy of CEP evaluates the logarithm of the company's on environmental reports, i.e. Assurance, are the factors that
waste production (CEP3). Our forth measure of CEP was the loga- explain the variability in the CER practices. A number of company-
rithm of the company's water consumption (CEP4) (Wiedmann specific variables and industry were included as control variables.
et al., 2009; GRI, 2013). Please note that our measures of the car- In addition, year dummies were added to control for omitted var-
bon (climate) footprint and water footprint are more homogenous iables that vary over time but are constant between the firms.
measures while the measure of waste is relatively heterogeneous, Finally, all parameter were estimated with robust standard errors
 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734 729

Table 3
Definitions of the variables employed in the analyses.

Variable Definition

CER CER (Corporate Environmental Reporting) is represented by the score attained with the GRI-based disclosure index; the maximum corporate
environmental disclosure score on the GRI-based index is 82 points (Clarkson et al., 2008; Clarkson et al., 2011).a
CER Harda CER Hard is hard corporate environmental disclosure representing the score attained with the objective and verifiable performance indicators of the
GRI-based disclosure index; the maximum disclosure score on the objective and verifiable disclosure items is 73 points (Clarkson et al., 2008).a
CER Softa CER Soft is soft corporate environmental disclosure represented the score attained with the performance indicators cannot be easily verified GRI-
based disclosure index; the maximum disclosure score on the soft, non-verifiable items 9 points (Clarkson et al., 2008).a
CEP1 CEP (Corporate Environmental Performance) 1 is the logarithm of the company's GHG scope 1 and 2 emissions (in kg) (GHG, 2004; Peters, 2010;
Dragomir, 2012).
CEP2 CEP2 is the logarithm of the company's GHG scope 1, 2 and 3 emissions (in kg) (GHG, 2004; Peters, 2010; Dragomir, 2012).
CEP3 CEP3 is the logarithm of the company's production of waste (in kg.) (GRI, 2013).
CEP4 CEP4 is the logarithm of the company's total water consumption (in m3) (GRI, 2013).
Assurance Assurance is a dummy variable that is equal to one if the sustainability report is externally assured and zero in case the sustainability report not being
assured (Simnett et al., 2009; Moroney et al., 2012).
Size Size is the logarithm of the company's year-end total assets.
Revenue Revenue is measured as the company's total sales revenue.
Listing LISTING is a dummy variable that is equal to one if a company is stock exchange listed (on the Euronext Amsterdam Stock Exchange), and zero
otherwise.
Industry Industry is a dummy variable that is equal to one if companies are classified as environmentally sensitive industries, and zero otherwise (Patten,
2002; Gray et al., 1995).
Leverage Leverage is measured as total non-current debt divided by year-end total assets.
ROA ROA (return on assets) is a measure of the company financial performance and profitability, assessed by the return on assets equal to fiscal year-end
net income divided by year-end total assets.
Board composition Board composition is measured as the ratio of the supervisory board members to the executive board members (Lim et al., 2007).
Media coverage Media coverage is measured by the companies' media exposure, assessed by counting the number of articles that refer to a specific company in the
national leading financial and business newspaper (Brown and Deegan, 1998; Reverte, 2009; Dawkins and Fraas, 2011).
a
The Appendix provides an overview of the specific measurement items used to assess the total, hard and soft corporate environmental disclosure scores.

Table 4
Pearson correlations.

1 2 3 4 5 6 7 8 9 10 11 12 13

1 CEP1 1.000
2 CEP2 0.987*** 1.000
3 CEP3 0.764*** 0.780*** 1.000
4 CEP4 0.766*** 0.726*** 0.489 1.000
5 Size 0.382*** 0.386*** 0.167 0.143 1.000
6 Revenue 0.412*** 0.431*** 0.318* 0.193 0.801*** 1.000
7 ROA 0.217*** 0.295*** 0.133 0.046 0.005* 0.063* 1.000
8 Leverage 0.033 0.096* 0.003 0.005 0.352*** 0.025** 0.158* 1.000
9 Board composition 0.035** 0.030*** 0.062 0.153** 0.052*** 0.165*** 0.575 0.620 1.000
10 Assurance 0.306** 0.331*** 0.276 0.054* 0.482*** 0.539*** 0.069 0.536 0.379 1.000
11 Listing 0.336*** 0.358*** 0.532*** 0.249 0.335*** 0.276*** 0.049 0.149 0.097** 0.224 1.000
12 Industry 0.584* 0.542*** 0.693** 0.049** 0.154 0.035* 0.070 0.048 0.057* 0.122* 0.102 1.000
13 Media coverage 0.042** 0.049* 0.025 0.524 0.807** 0.893*** 0.073 0.117 0.041 0.515** 0.101*** 0.204* 1.000

***, ** and * indicate statistical significance at the 1 percent, 5 percent, and 10 percent levels respectively.
See Table 3 for the definitions of the variables.

including the cluster option to account for heteroscedasticity and
firm clustering (Wooldridge, 2010). Table 3 summarizes the defi-
nitions of the variables that were utilized in our study.
The assumptions underlying the regression model were tested
for multicollinearity based on the Pearson correlations and the
variance inflation factors. Table 4 reports the Pearson correlations
coefficients for the independent variables included in the study and
exhibits an elevated degree of correlations among our four mea-
sures of CEP with the exception of CEP3 and CEP4. The high cor-
relations between the proxies for CEP indicate that, overall, they are
based on the same underlying construct. The variance inflation
factors (VIF) for these independent variables were above 5.3 (cut-
off point according to Hair et al. (1992)) which indicate multi-
collinearity. For this reason, it is not possible to simultaneously
study the association between CER and the various measures of
environmental performance, except for the CEP3 and CEP4. The
VIFs also indicated collinearity between CEP3 and industry sensi-
tivity, and between Company size and Media coverage. In the main
analysis we used the variables CEP3 and Company size. The
collinearity between Company size and Media coverage suggests
that the company size variable can be considered as a proxy for
corporate visibility. As robustness checks, we assessed whether our
results were sensitive to the use of the variables Company size or
Media coverage and CEP3 or industry sensitivity. The results of the
additional sensitivity tests indicated that the alternative variables
have qualitatively similar effects to the level and nature of CER. For
each of the other variables, both the correlations in Table 4 and the
VIFs less than two indicated no issues with multicollinearity.
4. Results
Table 5 depicts the results of the regression analysis that ex-
amines the relationship between CEP, assurance and the level of
CER. Panel A, which uses the four proxies of CEP in absolute terms,
shows significantly positive results for Models 1e2 and 4e5. These
results indicate that companies with higher amounts of GHG
emissions (CEP1 and CEP2) and water consumption (CEP4), are
more likely to disclose environmental information than companies
730 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734

Table 5
Regressions results with the level of CER as dependent variable.

Dependent variable: CER Model 1 Model 2 Model 3 Model 4 Model 5

Panel A: Regression analysis with measures of CEP in absolute terms
CEP1: GHG scope 1e2 emissions 0.675** (2.07)
CEP2: GHG scope 1e3 emissions 1.351*** (2.92)
CEP3: Waste production 0.127 (0.42) 0.080 (0.23)
CEP4: Water consumption 0.421** (2.44) 0.255** (2.41)
Assurance 6.419*** (4.87) 6.782*** (4.83) 6.701*** (3.68) 4.337** (2.34) 4.317** (2.07)
Size 0.445* (1.67) 0.728** (2.01) 0.853* (1.91) 0.550* (1.92) 0.490* (1.91)
Listing 6.380*** (4.50) 4.823*** (3.22) 4.412** (2.75) 6.507* (1.81) 7.288* (1.76)
Leverage 0.070 (0.05) 0.566 (0.29) 0.136 (0.01) 1.159 (0.17) 0.397 (0.62)
ROA 11.843 (1.25) 6.920 (0.72) 2.626** (2.78) 3.775*** (4.82) 3.844*** (5.22)
Board composition 0.134 (0.29) 0.271 (0.72) 0.305 (0.34) 1.154* (0.94) 0.554 (0.38)
Industrya 0.634 (0.39) 1.904 (0.96) 0.332 (0.19)
Year dummy 2010 1.344 (1.54) 2.059** (2.08) 1.862 (1.14) 2.048 (1.53) 2.560* (1.71)
Year dummy 2011 1.931* (1.78) 2.861** (2.49) 1.681 (1.13) 1.514 (0.86) 1.662 (0.78)
Intercept 1.596 (0.22) 1.625 (0.29) 1.002 (0.09) 1.611 (0.11) 2.165 (0.12)
F-statistic 14.52*** 9.53*** 9.03*** 11.97*** 13.34***
R2 0.513 0.461 0.537 0.605 0.632
N 160 153 85 66 56
Panel B: Regressions analysis with size-adjusted measures of CEP
CEP1: GHG scope 1e2 emissions 2.092* (1.87)
CEP2: GHG scope 1e3 emissions 4.186*** (2.97)
CEP3: Waste production 0.339 (0.37) 0.073 (0.08)
CEP4: Water consumption 1.321** (2.43) 0.765** (2.20)
Assurance 6.424*** (4.86) 6.808*** (4.85) 6.714*** (3.68) 4.323** (2.33) 4.399** (2.07)
Size 0.612** (2.36) 0.793** (2.41) 0.874* (1.92) 0.666 (1.44) 0.517 (1.29)
Listing 6.396*** (4.51) 4.823*** (3.22) 4.473* (1.77) 6.540* (1.81) 7.390* (1.71)
Leverage 0.077 (0.05) 0.564 (0.28) 0.021 (0.00) 1.284 (0.19) 1.014 (0.63)
ROA 11.855 (1.25) 7.099 (0.74) 2.672*** (2.78) 3.795*** (2.84) 3.844*** (2.42)
Board composition 0.123 (0.29) 0.272 (0.73) 0.309 (0.34) 1.239 (0.92) 0.541 (0.38)
Industrya 0.604 (0.38) 1.892 (0.96) 0.304 (0.18)
Year dummy 2010 0.604 (0.38) 0.206** (2.08) 1.869 (1.49) 0.205 (1.53) 0.251* (1.71)
Year dummy 2011 1.929* (1.78) 0.2.878* (2.51) 1.684** (1.13) 1.524 (0.87) 1.631 (0.77)
Intercept 5.343 (0.61) 0.167 (0.03) 0.767*** (0.07) 4.336* (0.29) 2.459*** (0.13)
F-statistic 14.40*** 9.66*** 9.11*** 12.04*** 15.04***
2
R 0.513 0.464 0.536 0.604 0.630
N 160 153 85 66 56

***, ** and * indicate statistical significance at the 1 percent, 5 percent, and 10 percent levels respectively (two-tailed) (t-values next to the regression coefficients in pa-
rentheses).
See Table 3 for the definitions of the variables.
a
The (unreported) results of the additional tests using industry differences based on a categorization of industries on the basis of one digit SIC codes show that the different
control variables for sector-specific effects do not change the positive associations between the metrics of CEP, particularly GHG emissions and water consumption, external
assurance and the level of corporate environmental disclosures, suggesting that our results are robust to different industry controls.

with lower amounts of GHG emissions and water consumption,
everything else being equal. Panel B shows the results that were
obtained when the ratios of our CEP measures of GHG emissions,
waste production, and water consumption to total revenue were
applied. The results for the revenue-adjusted measures of GHG
emissions (CEP1 and CEP2) and water consumption (CEP4) were
also significant and positive. These findings show that our results
are qualitatively robust to the different measures of CEP. Collec-
tively, the results provide support for H1a, indicating that poorer
environmental performers, i.e. higher polluting companies, are
more inclined to disclose environmental information than better
environmentally performing companies.
Table 6 shows the results of the regression analyses that
examined the relationship between CEP and the nature of CER. The
Models 1e4 of Table 6 depict the results for the associations be-
tween hard environmental disclosure and the proxies for CEP. The
positive and significant results in Models 1e2 and 4 illustrate that
the nature of the disclosures of the poorer environmental per-
formers is considered to be more objective and verifiable if CEP is
measured by GHG emissions and water consumption. Model 3
demonstrates a positive but not significant association when uti-
lizing waste production as a measure of CEP. These results provide
support for H1b, indicating that poorer environmental performers
are more likely to disclose hard, objective and verifiable environ-
mental information than better environmental performers.
The results in Table 6 also demonstrate the effects of the hy-
pothesized relationship between external assurance on sustain-
ability reports and the nature of CER. Models 1e4 of Table 6 show a
positive association between the nature of CER and external
assurance while controlling for the effects of CEP on CER. These
results provide strong support for H2, suggesting that companies
producing externally assured environmental reports disclose more
objective and verifiable environmental information than com-
panies not utilizing assurance for sustainability reports. Addition-
ally, Table 5 also provides convincing evidence that external
assurance is positively associated with the level of CER, while
controlling for variations in CER related to CEP.
5. Discussion
5.1. Interpretation
Our findings consistently support the legitimacy theory indi-
cating that companies which are poorer environmental performers,
i.e. higher polluting companies, are inclined to voluntarily disclose
more environmental information but also rely more on hard dis-
closures to communicate their message than those which are better
corporate environmental performers. At the same time, descriptive
statistics show that more than 99% of the sample companies score
less than 50% of the maximum environmental disclosure score on
 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734 731

Table 6
Regressions results with the nature of CER as dependent variable and with measures of CEP in absolute terms.

Dependent variable Hard environmental disclosures (CER hard) Soft environmental disclosures (CER soft)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8

CEP1: GHG scope 0.649** (2.31) 0.026 (0.26)

1e2 emissions
CEP2: GHG scope 1.133*** (3.17) 0.217* (1.67)
1e3 emissions
CEP3: Waste 0.044 (0.22) 0.122 (1.32)
production
CEP4: Water 0.375** (2.46) 0.046 (1.13)
consumption
Assurance 5.157*** (5.45) 5.004*** (4.63) 5.468*** (4.13) 4.168*** (3.27) 1.261** (2.51) 1.778*** (4.05) 01.240* (1.71) 0.169 (1.21)
Size 0.212 (1.18) 0.587*** (3.23) 0.491 (1.42) 0.232 (0.69) 0.233** (2.18) 0.141* (1.67) 0.362** (2.38) 0.316* (1.93)
Listing 5.581*** (5.47) 4.499*** (3.85) 3.974** (2.12) 5.329* (1.87) 0.795 (1.52) 0.324 (0.69) 0.437 (0.50) 1.178 (1.16)
Leverage 0.366 (0.34) 0.707 (0.52) 0.298 (0.07) 0.762 (0.14) 0.437 (0.78) 0.141 (0.19) 0.312 (0.21) 0.395 (0.20)
ROA 3.072 (0.98) 4.790 (0.66) 2.240*** (2.91) 3.050** (2.20) 4.771 (1.54) 2.130 (0.72) 3.864 (1.37) 3.725 (1.50)
Board composition 0.102 (0.35) 0.252 (1.04) 0.018 (0.03) 0.552 (0.56) 0.031 (0.17) 0.018 (0.16) 0.324 (1.21) 0.602 (1.45)
Industry 0.286 (0.22) 1.195 (0.75) 0.840 (0.57) 0.348 (0.70) 0.708 (1.53) 0.508 (1.02)
Year dummy 2010 0.766 (1.24) 1.363 (0.98) 1.318 (1.28) 1.363 (1.33) 0.578 (1.59) 0.696 (1.66) 0.544 (1.65) 0.684 (1.63)
Year dummy 2011 1.170 (1.56) 1.786 (1.15) 1.008 (1.07) 1.040 (0.85) 0.760* (1.76) 1.075 (1.58) 0.472 (1.00) 0.473 (0.73)
Intercept 5.471 (1.08) 1.616 (0.40) 5.220 (0.63) 1.257 (0.11) 1.041 (0.39) 3.241* (1.90) 4.218 (1.06) 2.869 (0.63)
F-statistic 18.77*** 10.01*** 7.69*** 9.20*** 3.89*** 5.17*** 3.52*** 2.76**
R2 0.569 0.497 0.541 0.642 0.255 0.250 0.306 0.242
N 160 153 85 66 160 153 85 66

***, ** and * indicate statistical significance at the 1 percent, 5 percent, and 10 percent levels respectively (two-tailed) (t-values next to the regression coefficients in pa-
rentheses). See Table 3 for the definitions of the variables.

the GRI-based disclosure index. These scores indicate that com-
panies provide a limited insight into the extent to which they bear
responsibility for the impact of their business activities on the
environment, regardless of their CEP and company size. Legitimacy
theory explains these results by suggesting that discretionary CER
serves to minimize the potential negative influence of poorer
environmental performance on corporate environmental legiti-
macy and reputation rather than to reveal their actual CEP. In
addition, companies with inferior environmental performance self-
servingly disclose more objective and externally verifiable envi-
ronmental information to increase the perceived reliability and
credibility of the information disclosed in their environmental re-
ports. Despite the fact that sustainability reporting ‘is being
increasingly recognized as an important driver and vehicle to
engage with and to report on a company's efforts towards
becoming more sustainable’ (Lozano and Huisingh, 2011: 106), our
findings suggest that environmental information presented in
sustainability reports may not be indicative of companies' actual
environmental performance. For these reasons, they provide sup-
port for concerns regarding the quality of voluntary CER and the
effectiveness of CER as a driver of sustainable business (Burritt and
Schaltegger, 2010; Boiral, 2013; Michelon et al., 2015).
Our results confirmed the positive association between external
assurance and the reliability and accuracy of the environmental
information provided in CER. Additionally, the results also showed
that companies producing environmental reports that are exter-
nally assured are more inclined to disclose a greater amount of
environmental information than companies producing non-
assured environmental reports. These results indicate that the
process of assurance positively affects both the nature and the level
of corporate environmental accountability. However, given that the
purchase of external assurance is costly, legitimacy theory suggests
that poorer environmental performers with more need to increase
public confidence in the credibility of their environmental reports,
more often benefit from the purchase of external assurance. For
these companies that feel the need to engage in signaling activities
such as external assurance, expected marginal benefits relating to
an increase in societal confidence in the reliability and accuracy of
the environmental information provided, and/or an increase in
stakeholder trust in the perceived level of responsibility taken in
relation to sustainable development, are likely to outweigh assur-
ance costs (Fonseca, 2010). The results of additional tests (unre-
ported) show that companies with substantial amounts of GHG
emissions (CEP1 and CEP2) are more likely to purchase external
assurance than companies that perform better in terms of green-
house gas emissions. These results support legitimacy theory,
suggesting that companies with poorer (better) environmental
performance in terms of GHG emissions are more (less) likely to
purchase external assurance to enhance the credibility of their CER
practices and build legitimacy.
5.2. Limitations
Our study is not without uncertainty. Firstly, companies' envi-
ronmental reporting practices are primarily of a voluntary nature
and are not necessarily subject to external verification. Secondly, it
seems unlikely that each company is employing the same methods
for calculating environmental performance. A lack of widely
accepted definitions for measures of CEP, such as uniform carbon
footprint definitions, negatively affects the comparability of com-
panies' environmental performance measurements and reporting
(Hrasky, 2011). Moreover, corporate environmental reporting
practices may be selective and self-serving. Companies may prefer
to signal good CEP, rather than disclose bad CEP. This creates sig-
nificant issues for the reliability, credibility, and comparability of
the results. Due to data limitations, however, only companies that
have voluntarily published corporate environmental reports could
be included. Companies that do not publish an environmental
report were not be considered in this study. However, because data
on CEP is only available if companies engage in environmental
disclosure, this raises the issue of self-selection bias. In addition,
this study could not assess CEP based on toxics release inventory
(TRI) data (inter alia, Patten, 2002; Al-Tuwaijri et al., 2004; Clarkson
et al., 2008) or on the National Pollutant Inventory (NPI) data
(Clarkson et al., 2011). Finally, this study focused on companies
from one specific cultural and institutional setting that have
voluntarily published corporate environmental reports.
732 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734

Further research could focus on examining the determinants of
CER by using more substantial national and international firm
samples to provide greater insight into the external validity of the
findings. Furthermore, future research could benefit from more
mandatory environmental regulation and strong legal enforcement
resulting in improved data comparability and reliability (Sullivan
and Gouldson, 2012; Hahn et al., 2015). Additional research is
important since increased insight into the drivers of CER may
advance our understanding of conditions that facilitate or inhibit
environmentally responsible business.
6. Conclusion
This study explored the relationship between the level and nature
of voluntary CER practices, various CEP-metrics and external assur-
ance. Multiple proxies for CEP, i.e. measures of GHG emissions, waste
production and water consumption, were quantified and a distinction
was made between corporate environmental reports with or without
external assurance. Our results show that both CEP, particularly GHG
emissions and water consumption, and external assurance play a
significant, incremental role in explaining the variation in the level
and nature of CER. Legitimacy theory explains these findings by
suggesting that companies that face greater threats to legitimacy and
public pressures, i.e. higher polluting companies, voluntarily employ
more extensive discretionary CER to deflect attention and change
societal perceptions. In addition, higher polluting companies are
more likely to self-servingly disclose objective and verifiable
environmental information and employ external assurance on their
sustainability reports to enhance societal confidence in the accuracy
and credibility of their CER practices and to build stakeholder's trust
and their own legitimacy. From an economic perspective, in an un-
regulated setting with the absence of certain governance structures,
the expected benefits of these CER practices will more likely outweigh
the costs for highly polluting companies than for those that are better
environmental performers.
Despite that companies are increasingly held accountable for
the impacts of their decisions and activities on the environment,
our findings imply that, in an unregulated setting, environmental
information presented in sustainability reports may not be indic-
ative of how companies actually address the (potentially) adverse
effects of their business activities on the environment. Our findings
also indicate that companies provide an incomplete picture of how
they address environmental issues, regardless of their environ-
mental performance and use of external assurance. The findings
signal a need to complement voluntary CER with mandatory re-
quirements for sustainability reporting, comparable with manda-
tory financial reporting systems, to urge companies to become
more environmentally accountable. This reporting approach may
enhance overall market efficiency and positively affect the devel-
opment of sustainable business practices.
Appendix A. GRI-based environmental disclosure index

GRI Percentage of companies attaining Environmental disclosure

the item (%) score

Average Minimum Maximum

Hard disclosure items (max score: 73)

(A1) Governance structure and management systems (max score: 5) 4.42 2.50 5.00
1. Existence of a department for pollution control and/or management positions for 4.1 100% 1.00 1.00 1.00
environmental management (0e1)
2. Existence of an environmental and/or public issues committee in the board (0e1) 4.1 100% 1.00 1.00 1.00
3. Stakeholder involvement in setting corporate environmental policies (0e1) 1.1 100% 0.89 0.50 1.00
4.16
4. Implementation of ISO140001 at the plant and or/firm level (0e1) 4.12 82.9% 0.72 0.00 1.00
EMAa
5. Executive compensation is linked to environmental performance (0e1) 4.5 82.2% 0.82 0.00 1.00
(A2) Credibility (max score: 6) 4.71 0.50 6.00
1. Adoption of GRI sustainability reporting guidelines (0e1) 4.12 81.6% 0.81 0.00 1.00
2. Independent verification/assurance about environmental information disclosed in the EP 3.13 84.9% 0.84 0.00 1.00
report/web (0e1)
3. Periodic independent verifications/audits on environmental performance and/or 4.9 76.9% 0.77 0.00 1.00
systems (0e1)
4. Certification of environmental programs by independent agencies (0e1) EMAa 62.5% 0.62 0.00 1.00
5. Stakeholder involvement in the environmental disclosure process (0e1) 1.1 100% 0.89 0.50 1.00
4.16
6. Participation in voluntary environmental initiatives endorsed by EPA or department of 4.13 78.9% 0.78 0.00 1.00
energy (0e1)
(A3) Environmental performance indicators (EPI) (max score: 60) 8.33 0.33 19.50
1. EPI on energy use/and or energy efficiency (0e6)b EN3, EN4, 93.4% 1.39 0.00 3.33
EN6
2. EPI on water use and/or water use efficiency (0e6) EN6, EN8 76.9% 0.87 0.00 2.50
3. EPI on greenhouse gas emissions (0e6) EN16, 93.4% 1.93 0.00 5.00
EN17
4. EPI on other air emissions (0e6) EN19, 28.9% 0.29 0.00 3.00
EN20
5. EPI on TRI (land, water, air) (0e6) EN22 57.9% 1.49 0.00 4.00
6. EPI on other discharges, releases and/or spills (0e6) EN21 39.5% 0.34 0.00 2.50
EN23
7. EPI on waste generation and/or management (0e6) EN22 57.93% 1.49 0.00 4.00
8. EPI on land and resources use, biodiversity and conservation (0e6) EN11 30.3% 0.19 0.00 1.50
EN12
9. EPI on environmental impacts of products and services (0e6) EN27 11.1% 0.13 0.00 1.00
10. EPI on compliance performance (0e6) EN28 24.3% 0.22 0.00 3.00
 G.J.M. Braam et al. / Journal of Cleaner Production 129 (2016) 724e734 733

(continued )

GRI Percentage of companies attaining Environmental disclosure

the item (%) score

Average Minimum Maximum

(A4) Environmental spending (max score: 2) 0.63 0.00 2.00

1. Amount spent on technologies, R&D and/or innovations to enhance environmental EN30 15.8% 0.14 0.00 1.00
performance and/or efficiency (0e1)
2. Amount spent on fines related to environmental issues (0e1) EN28 51.3% 0.49 0.00 1.00

Soft disclosure items (max score: 9)

(A5) Vision and strategy claims (max score: 5) 4.28 0.83 5.00
1. CEO statement on environmental performance in letter to shareholders and/or 1.1 100% 0.92 0.25 1.00
stakeholders (0e1) 1.2
2. A statement of corporate environmental policy, values and principles environmental 1.1, 1.2, 100% 0.89 0.33 1.00
codes of conduct (0e1) 4.8
3. A statement about formal management systems regarding environmental risk and 4.9 76.9% 0.77 0.00 1.00
performance (0e1)
4. A statement that the firm undertakes periodic reviews and evaluations of its 4.9 76.9% 0.77 0.00 1.00
environmental performance (0e1)
5. A statement about specific environmental innovations and/or new technologies (0e1) 1.1 100% 0.93 0.25 1.00
1.2
(A6) Environmental initiatives (max score: 4) 2.96 0.25 4.00
1. A substantive description of employee training in environmental management and 4.9 76.9% 0.77 0.00 1.00
operations (0e1)
2. Internal environmental audits (0e1) 4.9, EMAa 79.6% 0.70 0.00 1.00
3. Internal certification of environmental programs (0e1) 4.9 76.9% 0.77 0.00 1.00
4. Community involvement and/or donations related to environment (0e1) SO1 98.7% 0.73 0.00 1.00
EC1

Total score (max score: 82) 25.34 5.83 41.50

This table presents the index used to assess the voluntary disclosures about environmental policies, performance and inputs. The index items are classified in two categories:
‘hard’ and ‘soft’ disclosures. The second column presents the Global Reporting Initiative indicator(s) used to score on the items. The third column presents the percentage of
companies which made disclosures on that item, partly or fully. The last three columns present the average, minimum and maximum score on each item.
a
EMA stands for Environmental Management Approach.
b
The scoring scale of environmental performance data is from 0 to 6. A point is awarded for each of the following items: (1) Performance data is presented; (2) Performance
data is presented relative to peers/rivals or industry; (3) Performance data is presented relative to previous periods (trend analysis); (4) Performance data is presented relative
to targets; (5) Performance data is presented both in absolute and normalized form; (6) Performance data is presented at disaggregate level (i.e., plant, business unit,
geographic segment) (Clarkson et al., 2008: 312e313).

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