In the present days, the problem of the environment pollution has become one of the most serious global problems. However, the problem is not new and, in actuality, the growing environmental pollution is closely related to the economic progress of human society. In fact, the problem of environmental pollution has initially appeared with the first attempts of human beings to reign the surrounding nature. The first attempts to develop agriculture marked the beginning of the forthcoming ecological problems gradually leading to the overpopulation of the Earth and spread of people worldwide. At the same time, their activities were accompanied by elimination of different species of animals, though flora and fauna suffered practically equally from human activities.
However, environmental problems had not been quite obvious until the epoch of industrialization when people started to produce surplus products in enormous quantity due to the rapid development of industry and implementation of new technologies. On the other hand, the industrialization contributed to the growing wealth of people and led to the unprecedented growth of population due to the improvement of health services, social and material position of people. No wonder, the first serous environmental problems are directly linked to the industrialization and rapid growth of cities that led to such phenomena as smog that was absolutely unknown for previous epochs.
It is noteworthy that at the beginning of the 20th century the problem was not as grave as it is at the present moment. Basically, environmental pollution referred only to urban areas in the most developed countries while the rest of the world remained relatively environmentally friendly. Unfortunately, by the end of the century, there remained practically no room that was not affected by human activities and accompanied pollution.
During the 20th century, the exploitation of natural resources of the Earth in purely economic interests of mankind had increased dramatically. On the one hand, the economic progress was based on the wider use of natural resources, including such strategic ones as oil and gas, while, on the other hand, the growing wealth contributed to the growth of population, and, consequently, growing needs. Obviously, the supply of new products to satisfy customers demand provoked the further deterioration of human-environment relations and increased pollution.
As a result, the mankind faces a number of problems related to environmental pollution, notably, the lack of agricultural lands, the spread of non-organic farming, development of industry polluting environment, decrease of natural resources, including such vitally important as water, and many others. In this respect, one of the most serious problems is the problem of the greenhouse effect since it leads to the global changes of climate that threatens to environment and, even more, to the normal conditions of life of human beings as well as other species inhabiting the planet. For instance, the US solely, greenhouse emissions continue relentlessly to rise and in 1996 they raised by 3,4%. The similar trend is typical for many other developed countries as well as for developing ones.
Thus, nowadays it is necessary to develop the economic researches in order to better understand the effect of human activities on environment and find out possible alternatives to the current way of the development of the Earth economy since, basically, the current environmental problems are predetermined by economic factors. Consequently, it is necessary to develop effective solutions of this problem among which environmental disclosure seems to be particularly important.
Background of the problem
Obviously, the economic development practically undermined the environmental stability of the Earth. In the result of human economic-related activities the air pollution has reached unprecedented level. The same may be said about contaminated soils, pollution of water, and depletion of the ozone layer. Moreover, the wide use of non-organic materials in different spheres, especially agriculture, leads to the deterioration of food people consume, notably carcinogens can be found in the food people regularly eat. To a significant extent, the intensive food production with the use of unnatural or dangerous elements is provoked by overpopulation of the planet since more population needs more food.
Moreover, industrial progress led to the growing demand on energy that, on the one hand, stimulates the use of such natural resources as oil and gas, while, on the other hand, pollutes air, creates the greenhouse effect, and deplete the ozone layer (8). Logically, natural resources of the Earth are getting to be scarce. In this respect, it is worthy of mention that the US population that constitutes just 5% of the general population of the planet consumes 20% of its resources (Bryson 1999). At the same time, it does not mean only negative environmental effect but also economic as well since it is estimated that American nation as a whole wastes about $300 billion of energy a year (Bryson 1999).
As a result, environmental situation deteriorates dramatically, climate changes, numerous species disappear. In such a situation, the attempts of world community to unite and cope with environmental problems are particularly important, though, paradoxically, but such states as the US, one of the major polluters of the world, refuse to sign such agreements as the Kyoto protocol aiming at the gradual minimization of greenhouse effect.
The current environmental problems and their solution
Naturally, the situation could no remain unchangeable that is why a lot of measures were undertaken in order to solve this problem. Environmental disclosure is considered to be one of the means that significantly contributes to the solution of this problem. Nowadays more and more companies prefer to disclose their environmental performances in order to be closer to their customers who are extremely concerned about the problem of the environment pollution. Though the effect of environmental disclosure is not only social but economic as well since it significantly influences the financial and economic situation a company has.
It seems to be evident that it is necessary to thoroughly study the effect of environmental disclosure. Furthermore, it has to be taken into consideration whether companies that do not disclose their environmental performances benefit or not from it. Actually, it should be said that it is highly recommended nowadays to disclose a company’s environmental policy and performances because it becomes an essential part of fair business, business ethic, and finally it is the question of a company’s prestige and respect of its customers.
According to statistic data of polls in Canada and the US, the protection of environment is even more important than creation of new jobs for the majority of population of these countries (Buhr and Freedman 1999). Naturally, companies working in these and other countries of the same level of development, such as Carpenter Technology, Columbia Gas, Inland Steel and others, tend to develop their environmental disclosure and investments in this field permanently grow (Cormier and Magnan 1999).
However, environmental disclosure is not simply the question of additional investments it is rather a managerial question and the question of environmentally friendly production and a free access of wide public to companies’ strategies in their environmental policies. Here it should be pointed out that industry and size play a significant role in social responsibilities of disclosure practices of different companies. For instance, oil and gas industry or steel industry, or heavy industry at large, such as Columbia Gas, Inland Steel, tend to be more environmentally disclosed than companies working in other industries, such as Carpenter Technology (Hawken 1993).
However, the situation is not similar in all companies and in all countries of the world. For instance, some Asian companies, basically from developing countries, tend either not to disclose or disclose insignificantly their environmental performances. Among such companies may be named Alpha Mills Ltd., Beximco Ltd., Shinepkur Holdings Ltd. and others (Hossain 2000). Operating in the same industries that the companies from Canada and the US mentioned above, they compared to the latter practically ignore environmental disclosure (Buhr and Freedman 1999). The reason is that they simply do not need it since there is no pressure from the state and public that could force them to disclose their environmental performances.
Nonetheless, it is necessary to find the economic effect of environmental disclosure in order to realize why there is such a difference between companies operating in different industries and countries.
First of all, it should be said that for such companies as Columbia Gas and Inland Steel that operates in the US and Canada in heavy industry it is extremely risky not to disclose their environmental performances since they are under a double pressure of the state on the one hand, which is particularly focused on activities of companies whose environmental policy is hidden and unclear to wide public (Hawken 1993). On the other hand, there are a number of public organizations that aim at the environmental protection. Some of them may be ready to some protests or even a kind of extreme actions like a well-known Greenpeace (7). As a result, company’s expenditures on different fines and prevention of protests, etc. may be much higher than its expenditures on an open policy of environmental disclosure.
At the same time, companies operating in other industries, such as consumer goods, distribution, hi-tech, etc. like Carpenter Technology do not simply need to be so environmentally disclosed since their activities are not so dangerous for environment. As a result such companies do not have such a scrupulous attention but still they have to disclose their environmental performances in order to be among the companies which have the highest standards of business.
At these respect the companies mentioned above seem to be in a superior position compared to such companies as Alpha Mills Ltd., Beximco Ltd., Shinepkur Holdings Ltd. (MacDonald 2003) that operates in the same industries but they do not disclose their environmental performances because they actually do not need to since the control from the part of local governments is practically absent or insignificant, social situation in the countries the companies operate in is so bed that environmental problems seem to be unimportant for local population.
Consequently, the activity of such companies remains practically without any control that makes them dangerous for environment. As a result the whole world suffers, while such companies earns on a weak environment protection mechanisms.
Thus, it is possible to conclude that nowadays mankind faces the great threat of environmental pollution that should to be eliminated by all possible means since it is the question of survival of not only human beings but life on Earth at large. The role of economic in the deterioration of environmental problem is extremely important not less important should be its role in the solution of the problem. In this respect, it is necessary to underline that environmental disclosure may be one of the most effective means that could improve the current situation. The companies, which disclose their environmental performances are more perspective and ethically, morally, and economically in fact superior to those companies, which do not care about it, since the former are on a much higher level of development than the latter. Anyway, environmental protection is the global problem that could be solved only by mutual efforts of all nations worldwide.
Bryson, B. “The Waste Generation”. I’m a Stranger Here Myself: Notes on Returning to America after Twenty Years Away. Broadway Books, 1999.
Buhr, N. and Freedman, M. A Comparison of Mandated and Voluntary Disclosure: The Case of Canada and the United States. New York: School of Management Binghamton University, 1999.
Cormier, D. and Magnan, M. The Costs and Benefits of Environmental Reporting in a European Context: The Case of France. Toronto, 1999.
Hawken, P. “A Declaration of Sustainability”. The UTNE Reader. Lens Publishing, 1993.
Hossain, M.A. Corporate Environmental Disclosure in Developing Countries: Evidence from Bangladesh. Rajshahi University, 2000.
MacDonald, G.J. “Environment: Evolution of a Concept”. Journal of Environment and Development, 12:2, 2003.
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