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Analysis of Corporate Environmental Reports using Statistical Techniques and Data Mining

Analysis of Corporate Environmental Reports using Statistical Techniques and
Data Mining
Jashua Rajesh Modapothala, Swinburne University of Technology (Sarawak Campus), Kuching, Malaysia
E-mail: jmodapothala@swinburne.edu.my
Biju Issac, Swinburne University of Technology (Sarawak Campus), Kuching, Malaysia
E-mail: bissac@swinburne.edu.my
Abstract
Measuring the effectiveness of corporate environmental reports, it being highly qualitative and less regulated, is often considered as a daunting task. The task becomes more complex if comparisons are to be performed. This study is undertaken to overcome the physical verification problems by implementing data mining technique.
It further explores on the effectiveness by performing exploratory analysis and structural equation model to bring out the significant linkages between the selected 10 variables. Samples of 539 reports across various countries are used from an international directory to perform the statistical analysis like – One way ANOVA (Analysis of
Variance), MDA (Multivariate Discriminant
Analysis) and SEM (Structural Equation
Modeling). The results indicate the significant differences among the various types of industries in their environmental reporting, and the exploratory factors like stakeholder, organization strategy and industrial oriented factors, proved significant. The major accomplishment is that the findings correlate with the conceptual frame work of GRI.
Keywords: Environmental Report, GRI, statistical analysis, data mining and quantitative analysis
1. Introduction
The rise of environmental reporting is observed in different forms. Traditionally, firms disclose the environmental concerns in their annual reports. The rules, procedures and presentation of these reports are too diverse across various countries [1].
Preparing such reports, in majority of the cases, is on voluntary-basis and is aimed more of a publicity than providing environmental facts and figures.
The divergent information needs of the stakeholders are to be met by the reporting companies [2]. Hence, the entities have to customize the reports to different information needs and preferences. A similar view was also expressed as, ‘an organization needs to send the right messages through the right distribution channels to the right audiences [3] [4]. In this context, the information is of highly qualitative in nature [5]. It is laborious and need expertise to provide more reliable information in measuring the effectiveness of environmental reports. The paper is organized as follows. Section 2 is literature review, section 3 is data mining concepts, section 4 is research objectives and hypothesis, section 5 is methodology, section 6 is results and discussion and section 7 is limitations and conclusion.

2. Literature Review
The environmental related information that is often presented to the external users and people-at-large via a fiscal report or some other separate report is referred as environmental reporting or corporate environmental reporting. The growing need of the information among the stakeholders and the change in organizational practices has resulted in vast amount of information which requires to be measured. The impact of Stakeholders on companies is observed in various ways, via investments, sales, governmental pressure and ultimately the size of future business profits. Grey et al., argued that communication through these separate reports has been performed where a net benefit for the company is achievable [6]. Moreover, good environmental performance (or resource productivity) is observed as an advantage in dynamic corporate competition [7] –
[9]. Therefore environmental concerns have to be integrated into corporate objectives, emphasizing that economic decisions underlie the holistic life-cycle
approach