An assessment of the role of environmental reporting in supporting share values in FTSE100 companies

Walmsley, James Daniel and Bond, Alan (2003) An assessment of the role of environmental reporting in supporting share values in FTSE100 companies. Journal of Environmental Assessment Policy and Management, 5 (2). pp. 149-182. ISSN 1464-3332

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Abstract

This paper explores the relationship between corporate environmental reporting and share price performance amongst companies in two industry groups listed on the UK FTSE (Financial Times Stock Exchange) 100 as of the 30th July 2001. The hypothesis tested is that the production of good quality corporate environmental reports (CERs) benefits company share price, by demonstrating to investors an awareness of risk, liability, legislation and opportunities as well as providing a collection of policy, impacts, temporal trends, targets and commitment. Some other studies in this area have concluded that a positive relationship exists between corporate environmental management and performance (including environmental reporting) and share value. The results of this paper differ however, and show that on average, the production of environmental reports by FTSE100 companies (in the energy and utilities and financial services sectors) has not lead to improved historical share price performance when compared to non-reporting companies, although there is strong evidence for reduced volatility of share price. Results for sector performance varied from those obtained from individual company level. The two companies assessed as producing the best reports in their industry sector outperformed both the FTSE100 benchmark, and many of their competitors for the five-year period studied. Whilst there are many benefits to be gained by listed companies through environmental reporting, such as enhancing image and improving public and investor opinion, a positive attitude to the environment, as demonstrated through environmental reporting, can provide an indication of a truly strategic approach to business. Yet there are so many factors involved, it is not possible from the results to conclude that environmental reporting supports share value.

Item Type:	Article
Faculty \ School:	Faculty of Science > School of Environmental Sciences University of East Anglia Research Groups/Centres > Theme - ClimateUEA
UEA Research Groups:	Faculty of Science > Research Groups > Environmental Social Sciences
Depositing User:	Rachel Snow
Date Deposited:	25 Mar 2011 16:00
Last Modified:	28 Mar 2025 04:38
URI:	https://ueaeprints.uea.ac.uk/id/eprint/27247
DOI:	10.1142/S1464333203001334

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