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22 CERTIFIED MANAGEMENT ACCOUNTANT

Environmental

Disclosure Practices of

Sri Lankan Listed Companies

Nimanthi D.K.S., Priyadarshanie W.A.N.
Department of Accountancy – Wayamba University of Sri Lanka

Introduction

The main objective of a company is to generate (2017), companies should show some concern
acceptable returns for their shareholders. with regard to the environment in order to
However, the survival of a company depends successfully face the ongoing competition in
not only on the financial performance, but business world. Accounting and reporting for
also on non-financial performance, because environment have become a critical concept of
companies have to satisfy a broader group of accounting information system in the twenty-
interested stakeholders. Their interests are first century. The stakeholders’ demand for
more than just financial. Traditionally, the main environmental information is also increasing
focus is given to the financial information which day by day. Thus, environmental information
gives an idea about financial performance of disclosure has become a popular topic not only
a company. This communication is called for among business corporates, but also among
by shareholders and investors to analyze the general public, the government, and social
relevance of their investments. However, other media. Jariya (2015) found that stakeholders
stakeholders demand for particular information are always looking at sustainability practices
about corporate, social, and environmental of corporates. Rajapakse (2003) found that
performance. Over the years, the importance stakeholders’ attention on environmental
attached to other interest groups was also information and firms’ impact on physical
recognized, and corporations provide the environment have gradually increased in
particular information required by them. the last few years. Moreover, Pahuja (2009)
Companies have thereby expanded social and discovered that environmental disclosure
environmental reporting that can be viewed shows positive impact on the financial health
as a vehicle through which companies take of a company. At present, many firms produce
responsibility for their impact on society and environmental reports in addition to the annual
the environment. According to Elshabasy financial reports as a voluntary discourse
www.cma-srilanka.org | Volume 06 - No. 2 - September 2021