Abstract:
Corporate Environmental Performance Disclosure (CEPD) is the reporting of corporate
information relating to a particular firms’ interaction with the natural environment. Typically,
the nature of reporting of CEPD may vary from one country to the other based on the
stakeholder pressure and other requirements. In Sri Lanka, although some empirical research
could be found, there is a significant dearth of descriptive research on nature and practice of
CEPD. On this backdrop, this study examines the nature of CEPD of Sri Lankan firms. The annual
reports of the top 25 companies, which includes both manufacturing and service-oriented firms,
listed in the Colombo Stock Exchange with the highest market capitalization from 2015-2019
were selected for the study and the descriptive statistics were used to determine the nature of
environmental disclosures. The results showed that a larger proportion of firms (80%) tend to
report their environmental performance through their annual reports and that, forty-eight per
cent (48%) of the firms’ environmental disclosures have shown to include both quantifiable and
descriptive information whereas 32% of the firms solely disclose their performance
descriptively. The commonly identified quantifiable environment performance indicators in the
disclosures include carbon footprint (44%), the energy consumption (32%) and water
consumption (32%). Moreover, our analysis reveals that, the lowest numeric figures with regard
to these indicators were reported by firms in the services sector. The most commonly reported
indicator by the firms were carbon footprint information and the highest carbon footprint was
reported by a diversified conglomerate. Thirty-six per cent (36%) of the top market capitalized
companies have obtained environmental certification for their business processes while 40% of
firms have disclosed their environmental performance through achievements and awards. This
concluded that a larger number of Sri Lankan companies are engaged in environmental
sustainability reporting considering the top market exposed companies in Sri Lanka and most of
these firms disclose their environmental performance in terms of quantitative figures related to
environmental indicators. The results provide insights to non-reporting companies on how the
benchmarked firms in the industry perform and understand the general concepts to be included
in their CEPD to minimize legitimacy issues and operational risks and enhance their firm
reputation.