Internal governance, external pressure, and biodiversity disclosure

Citation

Uyar A, Al-Shaer H, Kuzey C & Karaman A (2024) Internal governance, external pressure, and biodiversity disclosure. Journal of International Accounting, Auditing and Taxation.

Abstract
The declining rate of biodiversity due to land, water and air pollution is alarming. Thus, stakeholders expect firms to engage with cleaner operational processes to preserve biodiversity and share undertaken practices with biodiversity disclosure. To provide a catalyst for biodiversity engagement and disclosure, we adopt two important mechanisms: the internal (i.e. board structure) and external governance mechanisms (the United Nations Global Compact [UNGC] signatory commitment and public governance quality of nations [i.e. Worldwide Governance Indicators-WGI]). We conduct an initial empirical analysis to assess their association with biodiversity disclosure, followed by an assessment of the substitutive or complementary role of two governance mechanisms in spurring biodiversity disclosure. Drawing on 46,564 observations affiliated with 9 sectors and 47 countries and executing logistic regression analysis, we find that directors with corporate affiliations and independent and female directors spur biodiversity disclosure. Furthermore, the UNGC signatory commitment and WGI stimulate firms’ biodiversity disclosure. Although UNGC signatory status and board structure are substitutes for driving biodiversity disclosure, the interaction effect of WGI with boards of directors is not uniform. For example, WGI, and affiliated directors are substitutes, but WGI and independent directors are complements in spurring biodiversity disclosure.