This study examines the social and environmental disclosures of BHP Ltd (one of the largest Australian companies) from 1983 to 1997 to ascertain the extent and type of annual report social and environmental disclosures over the period, and whether such disclosures can be explained by the concepts of a social contract and legitimacy theory. This research is also motivated by the opportunity to compare and contrast results with those of Guthrie and Parker, in whose study the social and environmental disclosures made by BHP Ltd were also the focus of analysis. In testing the relationship between community concern for particular social and environmental issues (as measured by the extent of media attention), and BHP's annual report disclosures on the same issues, significant positive correlations were obtained for the general themes of environment and human resources as well as for various sub-issues within these, and other, themes. Additional testing also supported the view that management release positive social and environmental information in response to unfavourable media attention. Such results lend support to legitimation motives for a company's social and environmental disclosures. A trend in providing greater social and environmental information in the annual report of BHP in recent years, and its variable pattern, was also evidenced.

This study examines the reaction of Australian firms, in terms of annual report disclosure, to five major social incidents. These incidents had significant implications for either the environment, or the safety of both employees and community members. The incidents reviewed are the Exxon Valdez and Bhopal disasters; the Moura Mine disaster in Queensland; an oil spill, caused by the Iron Baron, off the coast of Tasmania; and the Kirki oil spill, off the coast of Western Australia.Studies of this nature have previously been restricted to the examination of US company disclosure (e.g. Patten 1992; Blacconiere and Patten 1994), or the stock market reaction to such events in the US (e.g. Blacconiere and Patten 1994). The results of this study indicate that, following four of the incidents, sample firms operating in the affected industries provided more social information in their annual reports than they did prior to the incidents occurrence. These results support a view that organizations utilize their annual report as a means of influencing society's perception of their operations, and as a means of legitimizing their ongoing existence. The strategic nature of voluntary annual report disclosures is emphasized.

Purpose -Institutional governance theory is used to explain voluntary corporate greenhouse gas (GHG) reporting in the context of a market governance system in the absence of climate change public policy. This paper seeks to hypothesise that GHG reporting is related to internal organisation systems, external privately promulgated guidance and EU ETS trading. Design/methodology/approach -A two-stage approach is used. The initial model examines whether firms' GHG disclosures are associated with internal organisation systems factors: environmental management systems (EMS), corporate governance quality and environmental management committees as well as external private guidance provided by the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) for 187 ASX 300 firms. EU ETS trading is also included. Determinants of the extent and credibility of GHG disclosure is examined in the second stage where an index constructed from the GHG reporting standard "ISO 14064-1" items for a sub-sample of 80 disclosing firms as the dependent variable. Findings -Firms that voluntarily disclose GHGs have EMSs (uncertified and certified), higher corporate governance quality and publicly report to the CDP, tend to be large and in the energy and mining and industrial sectors. The credibility and extent of disclosures are related to the existence of a certified EMS, public reporting to the CDP, and use of the GRI. Firms that disclose more credible information are more likely to be large and in the energy and mining, industrial and services sectors. Originality/value -The paper shows that some proactive but pragmatic Australian firms are disclosing their GHGs voluntarily for competitive advantage in the current market governance system in the absence of public policy.

IntroductionThere have been numerous studies, both within Australia and elsewhere, that have reviewed the environmental disclosure policies of corporations and other forms of reporting entities. A number of these studies have been critical of the reporting practices adopted (for example Deegan and Gordon, 1996;Deegan and Rankin, 1996;Guthrie and Parker, 1990). The overwhelming criticisms, particularly within Australia, have been that annual report disclosures relating to the environmental performance of particular reporting entities tend, on average, to be biased and self-laudatory with minimal disclosure of negative environmental information.Such criticisms have, as their foundation, an assumption that those parties who use published annual reports actually take environmental performance into account. That is, there is an assumption that environmental information is material to the users of the annual reports. This would seem to be a reasonable assumption. Across time, environmental laws have increased dramatically (see Bates (1995) for Australian evidence) and, hence, many annual report users, such as investors, would be wary of the potential financial risks associated with companies that are unable to indicate environmental accountability. Membership of environmental groups within Australia has burgeoned over the last decade (see Deegan and Gordon, 1996), which is also consistent with increased community concern about environmental information. Related to this, evidence shows (Tilt, 1994) that environmental groups rely on annual reports to assess, at least in part, the environmental performance of reporting entities. It is also argued that employees, a key user group of annual reports (Accounting Standards Steering Committee, 1975), are increasingly considering organizational environmental performance when determining to which organizations they will supply their labour (

favourable to themselves. That is, they may elect to use environmental disclosures in a self-laudatory manner.Consistent with a view that companies may use annual reports to emphasize positive environmental attributes, previous Australian research studies (for example, Deegan and Gordon, 1996;Guthrie and Parker, 1990) have shown that many firms present environmental information, but they only tend to present information which is favourable to their corporate image. Within this prior research, the firms selected for review typically were selected on a random basis, meaning that there would be a possibility (albeit, remote) that such firms only had positive environmental news to report. This study takes the analysis a step further. It investigates the environmental reporting practices of a sample of 20 Australian companies which were subject to successful prosecution by the New South Wales, and Victorian Environmental Protection Authorities (EPA), during the period 1990-1993[3]. That is, we are investigating the environmental reporting practices of firms which are known, ex ante, to have bad news available to report. We investigate whether these firms disclose information about their environmental misdemeanours, or whether, consistent with the random sample reviewed by Deegan and Gordon (1996), the firms use their environmental disclosures in a very self-laudatory manner. We also investigate whether there appear to be any systematic variations in environmental reporting practices around the time of the proven EPA prosecutions. Prior Australian research relating to corporate environmental disclosuresEnvironmental disclosures constitute part of what frequently are labelled social responsibility disclosures. Social responsibility disclosures can include, among other things, disclosures relating to the interaction between an organization and its physical and social environment inclusive of disclosures relating to human resources, community involvement, the natural environment, energy, and product safety. Trotman (1979) represents one of the earliest studies on Australian social responsibility disclosures. Reviewing the corporate social disclosures of the largest 100 Australian companies between 1967 and 1977, Trotman found the disclosures to increase across time. He explained the increase in disclosures as a strategy to improve public image and gain public acceptance. He also viewed the practice of disclosing social information as a means of minimizing the likelihood of strikes, product boycotts and the introduction of legislation detrimental to the organization. Trotman and Bradley (1981) undertook a review of social responsibility disclosures made by 207 companies in the 1978 financial year. Specifically, they sought to relate the quantity of disclosure to a number of factors that had been synthesized from a review of the existing literature on social responsibility disclosures. These factors were size, systematic risk, social constraints and the management decision horizon. The synthesization process adopted by the...