Corporate annual report disclosures of obligations pertaining to contaminated sites: an Australian study
Creators: name: Ji, Sophia
Publisher: name: RMIT University
Year: 2024

description: The large number of industrial contaminated sites within Australia not only cause harm to the environment, but also require a significant amount of financial resources to fund remediation works. Motivated by the notion that corporations should be held accountable for their actions (or inactions), and providing Australian evidence on the issue of environmental disclosures, this research seeks to explore Australian companies’ disclosure practices as they pertain to contaminated sites and to provide explanations for the current disclosure practices. <br><br>To achieve this research objective, a four-phase research design is employed. These four phases are separate but related, with each phase forming the basis for the next phase. The first phase of the study described the processes that must be undertaken to identify Australian contaminated sites. This phase revealed that publicly available sources of information are widely dispersed between various state and local government agencies and departments, and when considered together, provide incomplete information about contaminated sites. The second phase of the study, investigated the disclosure practices of four high profile Australian publicly listed companies that have been identified as being in control of contaminated sites.<br><br>After reviewing these companies’ financial reports, the results showed that there appeared to be uniform non-compliance with the requirements (and spirit) of Australian financial reporting requirements. Phase Three, aimed to explore which theory or theories in social and environmental accounting, offer explanatory power to the findings of Phase Two. This phase provided extensive discussion on each of the two ‘mainstream theories’—legitimacy theory and institutional theory—in both the organisation and accounting literature, as well as the connections between them. An institutional theoretical framework is then proposed in which the concept of organisational legitimacy is incorporated. The last phase, Phase Four, applies the theoretical framework developed from Phase three, to provide explanations for the findings of Phase Two.<br><br>A qualitative research methodology was employed, and semi-structured in-depth interviews were conducted as the method of data collection. The findings indicated that there is a lack of institutional pressures on contaminated site disclosures and awareness of risks associated with site remediation obligations. This research offers contributions to the social and environment accounting literature and to the central issue of contaminated sites. This research provides empirical evidence that ‘negative’ news such as contaminated site information is often ‘hidden’ and ‘suppressed’ by organisations. Current use of legitimacy theory is challenged for its ignorance of its institutional origin and institutional theory is proposed to have greater potential to be applied to social and environmental accounting. In terms of the central issue of contaminated sites, by highlighting the complexity of the issue, and the difficulties in identifying contaminated sites in Australia, this research also implies that there are a large number of contaminated sites that remain unidentified, and a large amount of remediation obligations remain unaccounted for. Unless all stakeholders collaborate to tackle the issue of contaminated sites, ensuring quality financial information in relation to contaminated sites disclosed in annual reports remains a challenging task.