An Empirical Study on Corporate Environmental Reporting in Annual Reports of the Listed Companies in Sri Lanka and Its Association with Corporate Characteristics

Corporate Environmental Reporting (CER) is a predominantly voluntary practice of corporates in many countries including Sri Lanka. After reviewing the existing literature on CER the study has found that a dearth of studies in the Sri Lankan context has investigated CER using globally accepted criteria, used a significantly large sample covering all sectors in the Colombo Stock Exchange (CSE), analyzed the trend over time and investigated the relationship between CER and corporate characteristics. Accordingly, the current study explores the level and trend of CER in the annual report of listed companies for the last 5 years using GRI guidelines. Further, extends the analysis to examine the differences in CER among various industry sectors in CSE and investigates the association between CER and corporate characteristics. For the above purpose, the study uses secondary data collected from annual reports of 143 listed companies in the CSE for the period from 2017 to 2021 and employs descriptive analysis and Random-Effect Model (REM) to analyze the data. The study findings indicate that the average level of CER for the sample during the study period is 16.2% and an increasing trend in CER during the period 2017-2019. Moreover, the study discovers the highest level of CER in the Consumer Goods Sector (19.6%) and Information Processing Services Sector (20.3%) and the lowest in the Possession Processing Service Sector (10%). Further, the study identifies that firm size and usage of globally accepted CER standards are determinants of CER. In contrast, profitability and leverage have no association with CER. By considering the study finding the study suggests introducing a country-specific CER guideline for the corporates as a short-term recommendation and to introduce policies to make CER mandatory as a long-term recommendation.