The relationships between reporting format, environmental disclosure and environmental performance: an empirical study

Purpose
This paper seeks to assess whether European companies issue standalone environmental reports in an attempt to gain and maintain legitimacy with relevant stakeholders. This is achieved by creating and empirically testing a model of the relationships between corporate reporting format, industry membership, environmental disclosure, and environmental performance.

Design/methodology/approach
Data is collected from 100 large European companies in carbon and non-carbon intensive industries. Hypothesis testing is conducted via structure equation modelling.

Findings
Evidence exists that companies which disclose environmental information in standalone environmental reports tend to provide higher levels of environmental information than companies which combine financial and environmental disclosure in annual reports. Our findings support greenwashing as a new perspective of legitimacy theory: companies in carbon intensive industry use standalone environmental reports to pose as good corporate citizens even when they are not.

Research limitations/implications
Our sample companies are large European companies and this could limit the generalizability of research findings. We call for longitudinal studies examining how the relationship between reporting format and environmental disclosure changes.

Practical implications
This paper suggests that reporting format be considered a proactive, strategic communication driven activity rather than a decision that managers passively make in response to external scrutiny.

Originality/value
The paper contributes to the literature by adding to the scarce evidence of the relationship between reporting format and environmental disclosure. Greenwashing as a new perspective of legitimacy theory is used to develop research hypotheses.