Methodological Aspects of Assessing the Quality and Quantity of Corporate Environmental Reporting

Corporate environmental reporting is one of the major themes in scientific research on business transparency regarding matters of social and environmental responsibility. Environmental reporting serves to provide answers to the following crucial question: what do companies actually disclose when they commit to protecting the natural environment in front of their employees, customers, the communities, or in a global perspective? In terms of qualitative characteristics of environmental information, specific disclosure is equated with financial reporting, since the users generally demand reliability, comparability, relevance and completeness of information. It is obvious that in a context far less formalized than financial reporting, environmental reporting has acute weaknesses in terms of such qualitative features as mentioned above. For at least four decades, the literature has tried to establish a reliable methodology for measuring the quantity and quality of environmental reporting. This type of reporting is not formalized, and the companies have full freedom to choose the quantity of information, indicators, format, and time horizon. Therefore, researchers and external users of information have attempted to classify and evaluate the elements of environmental reporting, in order to identify those firms that are truly transparent in this area, and to provide a diagnosis on the quality of corporate environmental reporting. In addition, researchers have tried to correlate the quantity and quality of environmental reporting with other company-specific variables to seek common elements and explanatory variables for the amplitude of the firms' reporting efforts. In most cases, the contributions were inspired by qualitative methodologies (e. g. critical, comparative, semiotic interpretation) or by diverse statistical approaches encompassing content analysis, scoring methods, or interviews. These endeavors sought to answer several questions: (a) who reports environmental information? (b) What amount of environmental information is provided to external users? (c) How relevant and reliable is this information? (d) What is the internal process of collecting, aggregating and compiling this information? (e) Which is the economic context in which this information is provided? Finally, one of the major questions of research in this area is related to external auditing of environmental data and the impact of report credibility on the level of public confidence in corporate disclosure. This paper aims to review the literature on environmental reporting, including the most representative titles in three decades. The most significant aspect of these studies is how researchers have adapted and used conventional or innovative methodologies to assess the quantity and quality of environmental reporting. These methodologies and their degree of complexity are directly linked to obtaining relevant data on environmental reporting in various firm-specific contexts or industries. Nevertheless, they also have a wider purpose: they can be used by any group of external users to assess the quality and quantity of corporate environmental reporting. Various methodologies of this kind, some more or less reliable, have been used by sustainability rating agencies, but it is the role of scientists to provide sound and widely accessible solutions to this issue. These methodologies should become a part of the current practice of evaluating the level of companies' involvement in environment protection measures.