Determining the level of comparability of quantified environmental information of mining companies

MBA, North-West University, Potchefstroom Campus, 2018The earth’s natural resources are under strain. Companies are often criticised for making profits at the expense of the environment. Stakeholders are therefore becoming increasingly concerned about the environmental impact that companies have on limited natural resources. As a result, stakeholders now require that companies report environmental information of high quality in an attempt to improve environmental performance. An important principle used to improve the quality of environmental reporting is comparability. Comparability refers to the fact that environmental reporting should be consistent to assist stakeholders to compare the environmental performance of different companies. The aim of this study is to determine the level of comparability of quantified environmental elements that companies disclose. A total of 31 different environmental elements were considered, including land area impacted, coal usage, water discharged and greenhouse gas emissions. The study used a checklist that was developed through a detailed literature study. This checklist was applied to 12 South Africa mining companies that have significant environmental impacts. Results from the checklist were inserted into a comparability classification model that was derived from literature. The model classified the level of comparability of each of the disclosed environmental elements into four categories (namely strong, moderate, weak and limited). The main findings of the research show that less than 13% of the environmental elements assessed indicate a strong level of comparability. Close to 60% of the elements indicate a weak to limited level of comparability. It was also evident that energy and emission disclosures receive more attention than other environmental disclosures. The lack of third-party assurances, which influences the reliability and quality of disclosures, was also identified as a major concern. To improve the comparability of quantitative environmental information, it is proposed that current international guidelines be modified. Guidelines should be more specific in terms of what information corporations disclose, and when information should be assuredMaster