It is pivotal for multinational companies to opt for sustainable growth while expanding their domains. In this regard, Dr Manisha Kumari, Assistant Professor from the Department of Management, Paari School of Business, has published her paper titled “The Impact of Corporate Environmental Reporting on the Financial Performance of Listed Manufacturing in Ghana” along with her research scholars Mr Musah Mohammed Saeed and Ms Mohammed Shahin Sultana in the Q1 journal Corporate Social Responsibility and Environmental Management with the impact factor 8.3.

Abstract

A growing number of businesses are facing criticism for engaging in environmentally damaging practices. Despite advancements in technology and operational efficiency, the environmental challenges confronting businesses have become increasingly urgent. As disclosure requirements have expanded, the importance of reporting standards for environmental sustainability has risen. This study explores the impact of corporate environmental reporting on the financial performance of listed manufacturing firms in Ghana. It analyses ten years (2012-2021) of annual reports from 20 publicly traded manufacturing companies, using panel regression and content analysis to assess the data. The findings reveal that environmental sustainability disclosure (ENVD) has a positive and significant effect on return on equity (ROE) and net profit margin (NPM). Furthermore, disclosures related to health, safety, and community development initiatives have a strong positive impact on ROE. The study recommends that policymakers develop guidelines, especially for environmental reporting, to aid firms in preparing their annual reports. It also suggests that corporate accountants expand their expertise and collaborate with environmental and ecological experts. This research offers valuable insights for policymakers and provides a foundation for further investigation into the effects of corporate environmental reporting (CER) on the performance of listed firms in sub-Saharan Africa.

Explanation of the Research in Layperson’s Terms

In simple terms, this study looks at how companies are being criticised for harming the environment, even though they have access to better technology and more efficient ways of working. Environmental problems for businesses are getting more serious, and as governments and organisations require companies to share more information about how they affect the environment, the standards for reporting this information have become more important.

The research focuses on how reporting environmental activities affects the financial success of manufacturing companies in Ghana. It examines reports from 20 publicly traded companies over ten years (2012-2021). The analysis shows that companies that disclose their environmental efforts, such as how they manage health, safety, and community projects, tend to have better financial outcomes, particularly in terms of the profit they return to shareholders and how much profit they make overall.

The study recommends that governments create clear guidelines for environmental reporting to help companies include this information in their annual reports. It also suggests that accountants should work more closely with environmental experts to improve their knowledge. The research provides important information for policymakers and encourages further exploration into how reporting on environmental activities affects company performance in Africa.

Practical Implementation/Social Implications of the Research

The study shows that environmental sustainability disclosures (ENVD) positively impact net profit margin (NPM) and return on equity (ROE) but have minimal effect on return on assets (ROA). This emphasises the need for stricter regulations to ensure comprehensive sustainability reporting, with policymakers incentivising better practices to boost financial performance.

• Energy disclosure (END) positively affects NPM, ROA, and ROE, suggesting mandatory energy-efficiency reporting. Regulators should set standardised metrics and offer tax incentives to encourage energy-efficient technologies.
• Mandatory environmental reporting by companies can help achieve environmental goals, gain importance in securing trade partnerships, and attract global capital.
• Health and safety disclosures (HSD) improve financial metrics, underscoring the need for stricter workplace safety regulations and rewarding safety-focused companies to enhance both worker safety and financial outcomes.
• Community involvement disclosure (CID), which has a negative but insignificant effect on financial performance, highlights the need for standardised reporting and alignment with core business strategies to show long-term value.
• To boost transparency, integrated reporting should be adopted nationwide, embedding environmental and social disclosures into financial reports to better demonstrate their long-term impact. Strengthening Ghana’s weak regulatory framework and aligning it with international standards (e.g., IFRS S1 and S2) would improve corporate social responsibility (CSR) practices, particularly in community development.
• Fiscal incentives, such as tax breaks, could encourage firms to invest in long-term sustainability projects, such as education and healthcare. Capacity building within firms, including sustainability training, would improve both financial and environmental outcomes.
• Standard method of accounting for environmental reporting can bring consistency in the market. Also, they required a proper set of guidelines that can attract environmental investors.

Overall, policy reforms focused on transparency, regulation, and aligning sustainability with financial goals would significantly benefit Ghana’s corporate sector.

Future Research Plans

Dr Manisha plans to shift her focus from traditional accounting standards to the growing field of sustainability reporting. This transition aligns with the increasing global emphasis on environmental, social, and governance (ESG) issues, which have become central to corporate accountability and transparency. Sustainability reporting has been a topic of ongoing discussion, reflecting the need for businesses to disclose not only their financial performance but also their impact on the planet and society.

Link to the Article

The students of Paari School of Business (PSB) had a memorable experience when Mr Siddesh Joglekar joined as a guest lecturer at SRM University-AP. The CRCS team’s dedicated efforts and the unwavering support of Prof. Bharadwaj Sivakumaran, Dean of PSB, made this unique opportunity possible. Students had the privilege of engaging in a personal interaction with the esteemed guest on September 18, 2024.

During the lecture Mr Joglekar shed light on various aspects of professional growth and marketing strategies. He placed significant emphasis on the need to foster a collaborative environment and recognising the contributions of peers.The lecture also delved into the imporatance of networking for career advancement, especially through ones’ Alumni Associations

Mr Joglekar delved into the expansive potential of Direct to Consumer (D2C) marketing, using examples from renowned companies like Twitter, Walmart, Instagram, Zomato, Amazon, Tesla, and Google to illustrate the evolution of brand images. A poignant quote from Mr Joglekar, “Companies are transformed into brands by people who dare to dream,” encapsulated the essence of the discussion, emphasising the role of visionary individuals in shaping successful brands.

Interactive elements were woven into the session, including an activity where students were tasked with creating logos that branded themselves, thus reflecting a unique aspect of their identity. This hands-on approach not only made the learning process engaging but also provided practical insights into branding.

A comparative analysis between traditional retail and D2C highlighted key differences such as distribution channels, pricing strategies, and brand control, offering a deeper understanding of the contemporary marketing landscape. The concepts of Customer Acquisition Cost (CAC) and Life-Time Value (LTV) were also explored, underscoring their importance in building a strong brand identity.

As the session neared its conclusion, Mr Joglekar introduced an innovative activity that involved reverse engineering an advertisement concept, inspired by the 2022 ad campaign featuring Mr Neeraj Chopra for Cred. This exercise prompted students to think creatively and apply the concepts discussed in a practical context.

The session wrapped up with a Q&A segment, where discussions ranged from market profitability to the advantages of D2C marketing, allowing for a comprehensive review of the topics covered. Ms Andrea Benedict extended a vote of thanks on behalf of the student fraternity of PSB, culminating in a group photo session that captured the essence of the enriching experience.