Influences behind the increasing trends of Corporate Environmental Reporting in China

Author: Hui Situ

Situ, Hui, 2016 Influences behind the increasing trends of Corporate Environmental Reporting in China, Flinders University, Flinders Business School

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Chinese companies have been increasingly practicing corporate environmental reporting (CER). However, most research investigating this phenomenon are empirical studies that focus on trends and determinants. What influences Chinese companies to practice CER is not clear. In particular, stakeholders of the reporting are under-explored. Therefore, this study aims to investigate the influences on Chinese CER using a stakeholder perspective.

Previous studies in developed countries have found that stakeholders of CER are diverse and are in many ways competitive in terms of the resources they demand from companies. However, as a state capitalist country, the government in China plays a very important role in Chinese economics. The country is now heading towards a more market economy and is becoming an important part of the global economy. As a result, this study attempts to investigate who are the important stakeholders of Chinese CER and, in particular, whether Chinese and/or Western influences are behind the increasing trends.

A mixed method approach, using Content Analysis and Discourse Analysis, is used in this study. Content Analysis is firstly performed to examine the direct influence of the Chinese government and evidence of Western influence. However, this study posits that the Chinese government’s influence on CER is not only direct, but also indirect. This is difficult to examine using Content Analysis, therefore, Discourse Analysis is used as a supplementary method to examine the Chinese government’s indirect influences and mechanisms for exerting their power.

The study contributes to the current literature in that it extends the understanding of stakeholder power on CER in a state capitalist country. In particular, it examines vi

how Stakeholder Theory is manifested in the context of a strong ideology-based political system. The findings of the research indicate that, compared to those in free market capitalist countries, the Chinese government’s stakeholder power on CER is much stronger. Significantly, however, in contrast to previous research that has largely focused on the Chinese government’s voting power (that is, they use state ownership as a proxy for state power), the results of this study show that the Chinese government uses three different powers (political power, voting power and economic power) in different ways to influence CER in China. This increases understanding of the nuances and complexities of the Chinese context and how it impacts on CER.

In addition, the findings indicate that, while the Chinese government’s emphasis on the environment significantly increases the quantity of CER, it does not improve its quality. This raises the possibility that the Chinese government’s power is so strong that CER ultimately becomes a legitimacy tool that corporate management uses in response to the government’s requirements. However, it is shown that Western influence has become more noticeable in recent years, as the Chinese market becomes more open. Some of the more advanced companies examined in this study realise that protecting the environment is not just necessary to respond to the Chinese government’s policy but, more importantly, it is a part of modern business. The prevailing government power is thus mitigated by the changing economic circumstances. To operate within the competitive global environment, companies must provide comprehensive CER. As the Chinese context continues to develop it will remain as a fruitful research ground to observe this phenomenon in the future and therefore this study also identifies some important areas for further research.

Keywords: environmental reporting, social and environmental responsibility, historical discourse analysis, ideology, China, Chinese government, state-owned-enterprise, sustainability, state capitalism, content analysis, stakeholder theory, managerial stakeholder theory

Subject: Business thesis

Thesis type: Doctor of Philosophy
Completed: 2016
School: Flinders Business School
Supervisor: Professor Carol Tilt