ABSTRACT
Environmental costs comprise both internal and external costs of environmental degradation due to industrial activities. The internal costs includes; pollution costs, costs for prevention and control, waste disposal, effluent control technologies, treatment, sanitation and clean up expenditure, material purchase value of non-product output, planning, shifting actions and damage repairs that can occur at companies and affect governments or people. While the external costs are; contaminated sites, fine and penalties, costs of regulatory compliance, legal costs, fumigation to reduce bacteria effects, damage to the corporate image and environmental liabilities. This study aimed at determining the influence of these environmental costs on the performance of Nestle Nigeria Plc, GlaxoSmithKline Nigeria Plc, Guinness Plc, Unilever Nigeria Plc and Nigerian Breweries Plc. The objective of this study is to assess environmental costs influence on profit indicators (Return of Capital Employed, Net profit Margin, Earning per Share and Dividend per Share) of the sampled Companies. The study made use of an exploratory research design. A sample of five companies were selected from a population of 22 manufacturing companies quoted on the Nigerian Stock Exchange using judgmental sampling technique. Data was collected through secondary source from published annual financial reports (2005 – 2014), which was analyzed using the Ordinary Least Square (OLS) method with the help of E-view version 3.1. The study revealed that Environmental costs have a negative but insignificant effect on ROCE and EPS, and positive but not statistically significant on NPM and DPS. The study concluded that environmental costs can be offset in generating revenue through the sales of waste, by products, recycling of waste, grant of subsidies, tax credits, financial/non financial awards. Also, accounting for environmental cost and performance can support an organizations development and increase firms profitability and operations in an overall Environmental Management System (EMS). It was recommended that Government, Financial and Regulatory Bodies should make Environmental Reporting in Annual Reports compulsory and Government Agencies should give tax credit, subsidies and financial/non financial awards to organizations that comply with its environmental laws of the land which will encourage environmental reporting.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Most environmental degradations and emissions are anthropogenic, an advent traceable to the industrial revolution of late 18th century where economic activities in many communities moved from agriculture to manufacturing (Gray & Babington, 2001) as cited in (Papang, Bassey & Bessong, 2012). Production shifted from its traditional locations in the home and the small workshop to factories. The overall amount of goods and services produced expanded dramatically, new groups of investors, business people, and managers took financial risks and reaped great rewards (Lamberton, 2005) as cited in (Bassey, Sunday & Okon, 2013). In the long run the industrial revolution has brought economic improvement for most people in industrialized countries. Many enjoy greater prosperity and improved health. There have been costs; however, because industrialization has brought environment pollutants and greater land use, which have harmed the natural environment (Mastrandrea & Schneider, 2008) as cited in (Makori & Jagongo, 2013).
The ultimate disposal of the waste led to environmental pollution in many parts of the world, the magnitude of pollution of the environment has already reached an alarming level (Pramanil, Shil & Das, 2007). The awareness of the environment and man’s ability to cause damage started from the fifties of the 19th century. This concern had been repeatedly expressed in a series of international summits and consensus right from the sixties. Between 1968 and 1972, two international conference were held to asses the problems of the global environment and more importantly, to suggest corrective action. The world conference held in Stockholm on global environment in June, 1972 where the heads of the states all over the world came together for the first time, was the pivotal event in the growth of the global environment movement. The aim of the conference was to create a basis for comprehensive consideration with the United Nation of the problem of human environment and to focus the attention of the governments and public opinion to various countries on the danger of the problem; it ultimately gave birth to special UN Agency titled
In the mid-eighties, on the basis of changing situation and becoming the environmental issues, a world-wide phenomenon on the developed and developing countries, “World Commission on Environment and Development (INCED)” known as “BRUNTLAND COMMISSION” headed by Norways Prime Minister, Mrs. Gro Haslem Bruntland, was established by the UN. The commission published a report called “Our Common Future,” in 1987, with the proposed concept of “sustainable Development.” The concept received worldwide acceptance and led to the convening of the United Nations Conference on Earth and Development (UNCED), in Rio de Jenerio, Brazil known as Earth Summit. In this conference, heads of different states signed four agreed documents including the “Agenda 21.” The Agenda – 21 contains a checklist of do’s and don’ts to protect the environment throughout the next century. Particularly, the role of corporate entities in respect of overall management of the environment has been duly recognized in the conference (Touche, 1996) as cited in (Peter & Arzizeh, 2012).
Thus accounting became concerned with achieving new goals such as measuring and evaluating potential or actual environmental impacts of projects in organizations. These new goals are of great importance as they enable many users of financial statements to the different development decisions that are economically and environmentally sound (Bala & Yusuf, 2003) as cited in (Makori & Jagongo, 2013). In cognizance of this, the study sought to identify the various environmental activities and establish how their costs affect the performance of the manufacturing companies in Nigeria.
1.2 Statement of the Problem
The increasing global concern and the heightened awareness of stakeholders in respect to environmental accountability, several companies have assumed the responsibility of environmental disclosures in the financial reporting. It suffices to note that one problem with environmental accounting is that the information reported seems to be selective and as such, it is difficult to ascertain whether such environmental disclosures are anything more than corporate branding(Lehman, 1999) as cited in (Ebiringa, Emeh, Chigbu & Obi, 2013)......
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Item Type: Project Material | Size: 115 pages | Chapters: 1-5
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