Research conducted by a professor and three accounting students at College of Business and Economics (CBE), United Arab Emirates University (UAEU), has found that companies operating in Abu Dhabi offer greater transparency around their voluntary environmental performance compared to firms based in the other emirates.
The study, entitled Abu Dhabi Environment Vision 2030: Are Abu Dhabi organizations up to it, comes after the Environment Agency – Abu Dhabi (EA-AD) identified a gap in the level of environmental-related data available compared to the amount of data required in order to achieve the Abu Dhabi Environment Vision 2030.
“In order to achieve the Environment Vision 2030, Environment Agency-Abu Dhabi (EA-AD) identified specific imperatives which need be delivered by specific sectors,” says Dr Ahmed Abdel-Maksoud. “It also stressed on other important imperatives such as the need for better data and statistics. However, lack of data is recognized by EA-AD as a critical hindering factor in achieving its 2030 Environment Vision. EA-AD stressed the need to rectify this data collection gap through stakeholders cooperation . The objective of this study is to address the extent of voluntary environmental-related data made available by UAE organizations by investigating the extent of environmental performance disclosure by the surveyed organizations.”
For the study, which was one of UAEU’s SURE 2016 research grant projects, an international environmental performance disclosure index was used, with adaptation to UAE context, to capture the extent of voluntary environmental performance disclosure by the surveyed firms. In general, the disclosure index consists of two components: hard and soft. The hard disclosure index includes four categories (A1-A4) focusing on: disclosures pertaining to a firm’s governance structure and management systems put in place with respect to environmental protection; the credibility of a firm’s disclosures in its environmental report; the extent to which firms disclose specific environmental performance indicators; and firm’s environmental spending.
Meanwhile, the soft disclosure indexincludes three categories (A5-A7) focusing on: a firm’s disclosures of vision and environmental strategy claims; the disclosure of a firm’s environmental profile given the existing and forthcoming environmental regulations; and firm’s disclosures of its environmental initiatives. The total score of this environmental performance disclosure index is out of (83).
Data was collected from 2015 annual reports, with the sample frame comprising 94 companies, almost half operate in Abu Dhabi, 20 percent in Dubai, and the remaining companies were based in other emirates. Of those firms surveyed, 25 percent are public listed, while 75 percent are non-public listed manufacturing companies.
“In general, our findings indicate a poor score of voluntary environmental performance disclosure of the surveyed companies across UAE”, explains the research team, which is made up of Dr Ahmed Abdel-Maksoud, the principal investigator, together with a team of three accounting students at CBE, UAEU – Ahmad Jamal Elkassem, Bader Juma Saeed Alkaabi and Yousif Faisal Yousif Ahmed.
“Interestingly, the average environmental disclosure index score for companies operating in Abu Dhabi was the highest amongst all other emirates, where they have achieved a disclosure index score of (12.02) compared to disclosure index scores of (10.21) in Dubai, (7.38) in Sharjah and (8.63) across Ajman, Ras Al Khaimah, Umm Al Quwain and Fujairah”, added the team.
“The oil and gas industry has the highest average environmental disclosure score, while the food industry has the lowest score. Interestingly, the average total environmental disclosure score for non-listed companies exceeded that for the listed companies.”
Surprisingly, concluded the team: “These findings are contrary to expectations that listed companies could be more keen on voluntary environmental performance disclosure, hence merits future investigations.”
Asked why companies in the capital are more transparent, Abdel-Maksoud says it could be “ascribed to the weight Abu Dhabi government puts in to support sustainable environmental projects such as Masdar city”.
Returning to the title of his research, Abu Dhabi Environment Vision 2030: Are Abu Dhabi organizations up to it, and Abdel-Maksoud says: “They’re still not there yet. But Abu Dhabi companies could surely be leading their peers in UAE in this field. At present, the research team is working on interpretation of results and we look forward to collaborating with the EA-AD team in doing so.”