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Environmental and Sustainability Reporting and Its Impact on Financial Performance of Petroleum Industry in Nigeria

Environmental and Sustainability Reporting and Its Impact on Financial Performance of Petroleum Industry in Nigeria

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Reference ID: PS-25773-TM

DEDICATION

This research work titled "Environmental and Sustainability Reporting and Its Impact on Financial Performance of Petroleum Industry in Nigeria" is dedicated to God for his enabling grace and to all computer enthusiasts who help to make life a pleasant experience.

ACKNOWLEDGEMENT

I owe my indebtedness to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Environmental Science, Book Authors and Profound Scholars of existing/related research material for your moral support that facilitated the successful completion of my (Tertiary Institution level). I am grateful to God Almighty and my parent for their financial support in my career. I really appreciate you all for everything, Thank you very much.


Environmental and Sustainability Reporting and Its Impact on Financial Performance of Petroleum Industry in Nigeria

CHAPTER ONE

1.1 Introduction

Corporate Social Opportunity (CSR) are all terms used to describe corporate social responsibility. It has the ability to contribute positively to societal and business development (Khan, 2009) and (Sharma, 2020). Nigeria, being one of Africa's fastest-growing economies, offers a plethora of fresh options for businesses to expand their goodwill. The continuing agitation of stakeholders for environmental friendly production and competition in market for market shares has made CSR a veritable tool for improved goodwill. Of course, CSR is becoming increasingly crucial for growing businesses, and corporations have known that they cannot be successful unless they safeguard and promote the interests of all stakeholders. Good reporting of these will add value to the firms.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.


1.2 Background of Study

Sustainability Reporting (SR) is one of the non-financial reports produce by firms either as a standalone sustainability report or integrated in the company’s annual reports and accounts. SR can be described as the practice of reporting by firms or companies of such factors that are integral to the attainment of the United Nations’ sustainable development goals. Sustainability is one of the most crucial issues faced by many organizations. Global Reporting Initiative, GRI (2011) defines SR as the activities and practice which is concern with measuring, disclosing, and being accountable to the needs and interest of firm’s internal and external stakeholders for organizational effort towards the attainment of sustainable development goals.

Corporate Social Responsibility (CSR) activity is a business tactic that contributes to maintainable development by delivering economic, social and environmental benefits for all stakeholders (Robins, 2011). Such corporate social responsibility includes corporate philanthropy where economic and ethical responsibilities are entrenched depending on the motive for philanthropic expenditures; this includes contributing to community development activities and initiating infrastructural social projects such as the building of schools, bridges, roads, hospitals, recreation centre, and training institute among other projects.

Lomberdo (2009) believes that CSR is moral value of business practices and processes with regards to people, community, and environment. Meanwhile, McOliver and Yomere (2009) attributed CSR as an organizational objective, whose ultimate goal is to contribute to the society materially or in kinds such as in terms of goals or services. Sendil (2015) indicated that firms and stakeholders have relentlessly recognised that there is a significant effect of firms’ activities on stakeholders such as shareholders, government, investors, business associates, competitors, communities, environment, customers, and workers. Also, that effect of firms’ decision has high potentials of having a considerable influence on their own prosperity, societal prosperity and ultimately globally.

Corporate social responsibility can also be viewed from legal perspective whereby Schwartz and Carroll (2003) described it as firms’ response to compliance, shunning civil litigation and responding to civil expectations directed by Federal, State and local jurisdiction of firms’ operation. Succinctly the practice of corporate social responsibility as a concept entails the practice whereby corporate firms willingly incorporate both societal and social uplift in their business operations and values. Given the huge financial investment these companies inject into CSR activities, projects and programs, it is obvious that it has a huge financial burden. There is the fear that this burden may negatively affect their financial performance.

Firms’ financial performance consists of measuring the results of firm’s policies and operations in monetary terms. This can be measured by a number of indicators such as Return on Capital Employed (ROCE), Gross Profit Margin, Net Profit Margin, Asset Turnover, return on asset, Return on Equity and price to earnings ratio. However, the profitability of a firm is the ability of the firm to generate earnings or income as compared to its expenses and other relevant costs incurred during a specific period of time. It, therefore, appears that the practices of CSR will further jeopardize financial performance-profitability of the firms. As a result of the aforementioned issues peculiar with the oil and gas operating sector, there is, therefore, the need to enquire on the effect of the Corporate Social Responsibility on the profitability of the oil and gas firms.

In addition, corporate social responsibility is often conceptualized as corporate ethical responsibility, and these activities include embarking on pollution control and ecosystem recovery projects, adhering to federal government standard and continuous evaluation of production/operation procedures with a view to obtaining improved processes and better community relationship through corporate responsibility activities. Employee safety and health hazards are not left out and these are addressed by putting in place effective work environment policies and medical and safety facilities.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Impact of Corporate Social Responsibility Environmental and Sustainability Reporting on Financial Performance of Petroleum Industry.


1.3 Statement of Problems

Investigation revealed that the methodology used differs and most of those studies were carried out in corporations of varying sectors. The population used for the studies differ, their methodology, time covered, tools of analysis are also divergent. This should therefore affect the findings. There by making the findings divergent. Although this has been a problem, most research in this area had taken a narrow perspective to the assessment of the effect of CSR on firm performance which involved a one-dimensional view of CSR. Considering that each dimension may have a different influence on firm performance because of it conceptual and practical differences, it is important that the effect of various dimensions/components of Social Responsibility on firm performance be examined. Thus, this study sets to investigate the effect of corporate social responsibility on firms’ financial performance in Nigeria.


1.4 Aim and Objectives of Study

The aim of the study is to examine the Impact of Corporate Social Responsibility Environmental and Sustainability Reporting on Financial Performance of Petroleum Industry in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:

  1. To determine if the corporate social responsibility activity has impact on firms’ financial performance;
  2. To examine the contribution of sustainability reporting on financial performance of Petroleum Industry; and
  3. To investigate the effect of Corporate Social Responsibility (CSR) on financial performance of Petroleum Industry in Nigeria.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

  • Does corporate social responsibility activity has impact on firms’ financial performance?
  • What is the contribution of sustainability reporting on financial performance of Petroleum Industry in Nigeria?
  • What is the effect of Corporate Social Responsibility (CSR) on financial performance of oil and gas companies in Nigeria?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

  • H0: There is no significant contribution of sustainability reporting on financial performance of Petroleum Industry in Nigeria
  • H1: There is a significant contribution of sustainability reporting on financial performance of Petroleum Industry in Nigeria

Hypothesis Two

  • H0: Corporate social responsibility activity has no significant effect on Petroleum Industry financial performance in Nigeria
  • H1: Corporate social responsibility activity has a significant effect on Petroleum Industry financial performance in Nigeria

1.7 Significance of Study

The research goes a long way in providing information on the challenges faced in adaptation of corporate social responsibility in Petroleum Industry in Nigeria and provides recommendation for further action.

The research work will also be of immense benefit to students, enterprises businessmen, policy makers and entire citizens as it give an insight on the activities of Petroleum Industry in Nigeria, and how it improve businesses in the metropolis and direct our policy makers on appropriate policy to be adopted in the state as it regard corporate social responsibility.


1.8 Scope of Study

The scope of the research is focused on the Impact of Corporate Social Responsibility Environmental and Sustainability Reporting on Financial Performance of Petroleum Industry in Nigeria.


1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

  1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
  2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
  3. Research material: availability of research material is a major setback to the scope of the study.
  4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
  5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

Corporate Social Responsibility (CSR) Activity: It is a business tactic that contributes to maintainable development by delivering economic, social and environmental benefits for all stakeholders (Robins, 2011).

Economic Responsibility: It refers to organizations ability to provide valuable goods and services to the society, which will result in making of profit, and this profit is the nexus on which other responsibilities are executed.

CHAPTER TWO

2.0 Literature Review

2.1 Introduction

This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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