Corporate Environmental Disclosure in India: An Analysis of Multinational and Domestic Agrochemical Corporations

Abstract

The existing corporate environmental disclosure (CED) research focuses primarily on large companies operating in a single jurisdiction, leaving a gap of knowledge regarding the subsidiary operations of multinational corporations. In this study, consolidated narrative interrogation (CONI) is used to quantify CEDs presented in annual and stand-alone sustainability reports published over a 15-year span between 2002 and 2016 by agrochemical companies operating in India. Results show that the diversity, the quantity, and the quality of CED vary significantly, but generally each of them has been improving over time—most notably following the revisions to the Companies Act in 2013. The study finds that the subsidiaries of multinational agrochemical corporations implemented CED practices more strongly associated with those of domestic companies than those found in the reports produced by their parent companies. The CED of both subsidiary and domestic companies appears to reflect concerns of local legitimacy.

Corporate sustainability reporting in Japanese multinational enterprises: a threat to local legitimacy or an opportunity lost for corporate sustainability practices?

“…This gives rise to the conditions described by Bartlett and Ghoshal (1989) as the integration-responsiveness framework, finding the balance between external local legitimacy and internal consistency (Kittilaksanawong, 2017;Riaz et al, 2015). Local legitimacy of the subsidiary of an MNE is obtained through acceptance and approval by the local stakeholders (Husted et al, 2016;Jessop et al, 2019).…”

“…Disclosure and reporting are a means by which firms can communicate the legitimacy of their operation to the external stakeholders (Garcia-Sanchez et al, 2016;Jessop et al, 2019). CS reports aim to inform stakeholders of the firm's actions in terms of their sustainability strategy and achievements (Boiral et al, 2019;Rupley et al, 2017).…”

Post-regulation effects on driving factors (no) environmental disclosures about greenhouse gas emissions in Italian companies

“…According to the theory of legitimacy, the dissemination of more and better information can contribute to the legitimacy of companies, increasing their reputation and recognition from society (Vogt et al , 2017). However, to maintain this reputation, companies can disclose information that does not portray environmental performance; as a result, the relationship between environmental reports and environmental information is not always strong (Jessop et al , 2019). Therefore, legitimacy gaps will arise when there is a difference between corporate and social values that affect the ability to continue the business and identify a powerful audience that is capable of giving legitimacy to the company (Hardiningsih et al , 2020).…”

“…Disclosure helps companies to achieve and maintain legitimacy through broader environmental liability as it allows society's standards and expectations to be met and can be driven by philanthropic or mandatory reasons. This is because environmental liability refers to the company's commitment to social, environmental and economic aspects (Jessop et al, 2019). Specifically, the UNFCCC conceptualizes environmental liability as information on environmental impacts that must have five characteristics: transparency, ceiling effects consistency, comparability and accuracy.…”

Accountability through Environmental and Social Reporting by Wind Energy Sector Companies in Spain

“…DiMaggio and Powell [4] point out that the institutionalization process leads companies to assume the values of the society in which they find themselves, in a way that legitimizes their activity. Recent studies underline this concept, for instance, Jessop, Wilson, Bardecki and Searcy [5], proving that the so-called CED (Corporate Environmental Disclosure) of both the subsidiaries of multinational agrochemical corporations and domestic companies in India appears to underpin local concerns of legitimacy.…”