- Email: [email protected]
Exploring Online Sustainability Disclosure among Malaysian Company
Available online at www.sciencedirect.com
Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
International Congress on Interdisciplinary Business and Social Science 2012 (ICIBSoS 2012)
Exploring Online Sustainability Disclosure among Malaysian company
Azlan Amran [email protected] Graduate School of Buisness, Universiti Sains Malaysia, Penang, Malaysia
Abstract The internet facilitate in many aspect of life. This technology can also be a significant enabler for stakeholder to put pressure to the company for them to become more socially and environmentally responsible. Vice versa, company can also be benefited from such technology to become transparent and disclose their sustainability impact and practices. Interest on sustainable development arising from various environmental issues such as climate change, waste production, deforestation and pollution has become mainstream in the society in recent years along with many other social and economical issues such as employee discrimination, human rights violation, animal welfare, accounting fraud, bribery and Ponzi schemes. Many global companies have been linked with irresponsible actions with their environmental, labor and human rights violations, dishonest business practices, frauds and many more. All these irresponsible actions by companies operating around the globe have created enough damages to the world from environmental, social and economical perspectives. As the awareness is rising, more and more company realized the importance to address such issues and make known to the stakeholder through various mechanism which include internet technology via online reporting. This study aims to survey how far such practices being adopted by the Malaysian companies. The findings indicate that the adoption of online sustainability reporting is still low among Malaysian companies
Authors.by Published Elsevier Ltd. and/or peer-review under responsibility of JIBES University, © 2012 2012The Published ElsevierbyLtd. Selection Selection and peer-review under responsibility of JIBES University, Jakarta Jakarta Keywords: Online Reporting, Company, Malayia
1877-0428 © 2012 The Authors. Published by Elsevier Ltd.
Selection and peer-review under responsibility of JIBES University, Jakarta doi:10.1016/j.sbspro.2012.11.196
762
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
1. Introduction It is important to take note that sustainability disclosure has mostly been a voluntary activity even though there are already some countries that have made it as a mandatory. With continued demand from customers as a powerful stakeholder (Podnar, 2008), sustainability disclosure is quickly becoming a key element in the business environment around the world in meeting the demand from their customers on sustainability practices. It is also has become an important tools for companies to build framework of sustainability processes, information systems, controls and governance (KPMG, 2011). In the context of Malaysia, even though there is an increase in the number of companies producing sustainability reporting ( Janggu, et al., 2007; P. Thompson & Zakaria, 2004) but the total awareness of the sustainability reporting concept is still generally low (Ramasamy & Yeung, 2008; Zulkifli & Amran, 2006). It was highlighted by Amran and Siti-Nabiha (2009) that the local pressure from the local stakeholder is missing as the driver that propels the increase in sustainability reporting in Malaysia compared with western countries (Amran & Siti-Nabiha, 2009). Amran and Siti-Nabiha (2009) also has highlighted that Malaysian public has not been as critical as the more informed public in developed countries on the practices of their companies and the impact of such practices on various stakeholders. Thus, while the number of companies reporting on sustainability practices indeed increasing in Malaysia, the main reason for the increase could be due to the compulsory requirement from Bursa Malaysia for sustainability reporting (The Star, 2009). So undoubtedly, Bursa Malaysia s direction did driven up the quantity of the reporting but according to ACCA Malaysia, only 10% of the companies actually produced a world class report (TheEdgeMalaysia, 2009). With the web emerging as an important reporting tool, the study of web reporting is of particular interest since web provides numerous benefits for communication purposes which are able to enhance the information that is communicated to the customers. In fact, the contents of websites are not regulated and companies have complete discretion to voluntarily provide the information that it wishes to disclose. This provides opportunity from the academic point of view to study the online disclosure phenomenon particularly from Malaysian public listed companies context. As the timeliness, mass communication, interactivity and presentation and organization of web based reporting able to improve the stakeholder dialogue, it is also necessary to analyze the level of practices among the Malaysian public listed companies in utilizing these potentials. Thus, this study is conducted to explore the adoption of online sustainability reporting among the Malaysian public listed.
1.1 Sustainability Disclosure Sustainability reporting has been widely used to refer to a public report by companies to provide internal and external stakeholders with a picture of the corporate position and activities on economic, environmental and social dimensions (WBCSD, 2002). Sustainability reporting is also synonymously known as corporate social and environmental reporting (CSER), social reporting, corporate sustainability reporting or environmental reporting; which refer to the same intention and meaning that is, to report on corporate responsibility towards their stakeholders (Hedberg & Malmborg, 2003; Stiller & Daub, 2007). Prior to the existence of sustainability reporting, the earlier trend of companies in the voluntary disclosure initiatives mainly focused on the social and environmental aspects through the company s annual reports. This is part of the actions by these companies to handle the public s impressions towards them or to maintain the organizational legitimacy (Neu, Warsame, & Pedwell, 1998).
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
Sustainability reporting actually evolved in the mid 1990 s with the first true sustainability reporting was issued at the end of the decade, in line with the set up of Global Reporting Initiative (GRI) and its first set of GRI sustainability reporting guidelines in 1999. The Global Reporting Initiative Sustainability the practice of measuring, Reporting Guidelines (GRI guidelines) defines sustainability reporting as disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development and act as a communication tool for business organizations to manage and balance their productive efforts with those of the environment and their surrounding communities especially with customers who have emerged as a stakeholder group with a strong interest in sustainability performance (Poolthong, 2009). With the growing importance of sustainability issues for companies around the world (C. Adams & Narayanan, 2007), sustainability reporting also has grown tremendously among these companies and has seen sharp increases in the numbers too (A. Kolk, 2003; KPMG, 2011). According to Wilson (2003): while corporate sustainability recognizes that corporate growth and profitability are important, it also requires the corporation to pursue societal goals, specifically those related to sustainable development environmental protection, social justice and equity, and economic development . Thus, sustainability disclosure intended to capture and present a comprehensive economic, social and environment towards all stakeholders including shareholders, customers, employees, governments, community, and the general public. As company s performance are being evaluated more and more by their impact on the environment and society, companies need to enhance their effort on corporate sustainability and trustworthiness in the eyes of their stakeholders (Sheikh & Beise-Zee, 2011).
2.0
Usefulness of Web Disclosure
More recently, sustainability disclosure on the web has emerged as an alternative medium for corporate sustainability reporting and communications (C. A. Adams & Frost, 2004) either to complement or even substituting the traditional printed copies. With the issue of communication style such as interactivity is becoming of greater importance (Isenmann & Kim, 2006), web started to play an important role in facilitating rapid communication of information at very low cost (Gowthorpe, 2004). While the majority of the reports on the web tend to repeat companies printed reports, a growing number of companies are taking advantage of the unique possibilities that the web can offer in terms of timeliness, mass communication, interactivity, presentation and organization ( Lodhia, 2006) by reporting exclusively on the web in PDF format or some nice multimedia features (CSREurope, 2009). With about 17 million internet users in Malaysia and more than 2 billion internet users around the world, web offers countless possibilities in providing the sustainability disclosure in the digital format, and makes the information available to the targeted customers at all time. Web provides powerful tools to the benefit of all groups involved in or affected by sustainability reporting (Isenmann, Bey, & Welter, 2007). The improved presentation of the sustainability disclosure via graphics, animation, multimedia hyperlinks, search and tracking facilities will assist the companies to enhance the stakeholders engagement.
763
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Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
3.0
Research Design
The study seeks to explore of how far such medium of reporting had been used by the Malaysian companies to convey message to their stakeholder about their sustainability practices. The research is a cross sectional study where data collection strategy is carried out at single point of time. It is a descriptive study that is conducted to ascertain and to describe the practices among the Malaysian public listed companies in utilizing the potential of the website for sustainability disclosure. The population of the present study will be all the public listed companies which are listed in the Main Board of Bursa Malaysia for the period between 1st January to 31st December 2011. There were 843 companies listed on the Main Board of Bursa Malaysia in year 2011 under 12 sectors. The financial companies had been excluded from the present study due to the different financial regulatory framework in Malaysia (Fong, 2007). Other study on sustainability reporting that had eliminated financial companies from their population is from Rahman,et al.(2011). Besides that, the only company listed under mining sector and also companies listed under REITS sector were also excluded. After excluding the sectors above, the remaining nine sectors were included in the study which are construction, consumer, industrial-products, trading/services, technology, properties, plantations, infra and hotels, with total population of 784 companies. This study uses secondary data, consisting of all the publicly available information from the company s websites and also the financial reporting downloaded from www.bursamalaysia.com. Year 2011 was selected because it is the most recent financial ending year in which the financial reports submitted to Bursa Malaysia at the time this study was undertaken. The nine sectors that included in this study are construction, consumer, industrial-products, trading/services, technology, properties, plantations, infra and hotels . Due to the time constraints and advantages of cost and convenience, disproportionate stratified random sampling method is adopted to get 100 companies as a sample for this exploratory study.
4.0
Measurement
This study used the instrument employed by Sobhani, Amran and Zainuddin (2012) consisting of 125 items. Anyhow, 17 items were removed after the consultation with the expert as these items are only applicable for financial companies whereas, this study excludes the financial companies. Thus, the study used content analysis using 108 items covering three themes which are Economic, Environmental and Society. The Online Sustainability Disclosure index (OSDI) was developed by adding all the items covering the three themes above. The index was developed by using dichotomous, with companies are given a score of 1 if it disclosed an information item on its website. On the other hand, a company is given a score of 0 if it did not disclose the information item on its website. The process will add all the scores and equally weighted. The scores will be calculated as follows:
OSDI j =
nj
Xij nij
i=1
Where; OSDI j = Online Sustainability Disclosure Index nj = Number of items expected for the company; nj = 108 Xij = of 1 , if the company disclose the items and 0 , it does not.
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
The items are measured based on the disclosure on the website only while any PDF attachment of the printed sustainability reporting are not examined. If the measurement includes the PDF attachment, then it will not meet the objective of this study. Thus, the measurement will only analyze the extent of reporting by the companies using their websites. In order to ensure the consistency and stability throughout the process of constructing the index, the companies websites were read twice for the coding between February to March 2012. The second examination on the selected websites was done after the first round was completed in April. Whenever the results were not identical, a third coding will be done in order to check the stability and consistency of the process.
5.0
Result and Discussion
This section discusses on the findings from the content analysis from the website of 100 companies. Table 1 provides the descriptive statistics for for online sustainability disclosure index of the public listed companies in Malaysia. The mean value of only 0.2 out of the maximum 1 indicates that the extents of online sustainability disclosure among the Malaysian companies are still low. Table 1: Descriptive analysis of the total 100 companies Disclosure Index Minimum Maximum Online Sustainability 0.028 0.537 Disclosure index
Mean 0.200
The following table 2 presents the range of the sustainability disclosure index. The frequency also validate that the level of online sustainability disclosure among the Malaysian companies are still low as 58% of the companies are having OSDI of less than 0.2 while only 12% of the companies are having OSDI of more than 0.5. Table 2: Cumulative analysis Online Sustainability Disclosure Index Range Frequency Percent Cumulative Percent 0-0.10 30 30 30 0.101 0.200 28 28 58 0.201 0.300 19 19 77 0.301 0.400 11 11 88 0.501- 0.600 10 10 98 >0.600 2 2 100 Total 100 100 Table 3 presents the disclosure index for different sectors. It shows that 27 out of the 39 Consumer companies analyzed having OSDI of equal or less than 0.2. Companies under the Construction, Hotel, Infrastructure sectors fares better with 66% of the Construction companies, 100% of the Hotel and Infrastructure companies have OSDI of more than 0.2. The remaining sectors have almost similar OSDI index for both less than 0.2 and more than 0.2. It is clear based on the exploratory study of 100 companies in Malaysia, the adoption of the internet reporting is still low. Still majority of the sample companies fall within the lowest range within the Online Sustainability Disclosure Index. Of 100 sample companies only two achieved over 60% of the index score which both of the company fall within the trading and services company. This probably due the nature of business where require them to make full use of the internet technology in order to reach the stakeholder.
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Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
Table 3: Disclosure index according to the sectors
SECTOR
OSDI Range 0.101 0-1 0.2
0.201 0.3
0.301 - 0.4
0.501 - 0.6
>0.6
CONSUMER
17
10
7
4
1
0
39
CONSTRUCTION
1
0
0
1
1
0
3
HOTEL
0
0
1
0
0
0
1
INDUSTRIAL PRODUCTS
3
6
7
0
3
0
19
INFRASTRUCTURE
0
1
1
0
0
0
2
Total
PLANT
2
1
0
1
1
0
5
PROP
1
3
0
1
1
0
6
TECH
1
2
1
0
0
0
4
TRAD/SERV
5
5
2
4
3
2
21
TOTAL
30
28
19
11
10
2
100
These two companies surprising did better than sample companies from some sensitive industry like plantation and construction. There are 10 companies which scored between 50% - 60% and majority come from sensitive industry. Thus, this further strengthens that nature of industry influence the usage of the internet reporting to send message about their sustainability practice and impact. This is consistent with previous findings in the research area of corporate social reporting (Amran and Susela, 2010)
6.0
Conclusion
The companies around the world including Malaysia have been pressured to be more transparent in disclosing their impact to the social, environment and economy. In the era of information technology with the internet facilities widely available in Malaysia, the company is expected to be more proactive in utilising the internet to get closer to the stakeholder. This study aims to explore the adoption of internet reporting among Malaysian companies. However the survey findings indicate that the practice of online reporting is still low and relatively conditioned by the industry sector. The finding is also consistent with past Sustainability Reporting researches where companies belong to the sensitive industry tend to disclose more. These findings contribute to the knowledge in terms of understanding of the current state and more future research is needed in this area.
7.0
References
Adams, C. A., & Frost, G. R. (2004). The Development of Corporate Web-sites and Implications for Ethical, Social and Environmental Reporting through These Media. Edinburgh: The Institute of Chartered Accountants of Scotland. Amran A and Susela Devi. (2008). The impact of government and foreign influence on the Corporate Social Reporting: A case of Malaysia. Managerial Auditing Journal, 23(4): 386-404. Amran A and Siti Nabiha Abdul Khalid. (2009). Corporate Social Reporting in Malaysia: A western mimicry or local pressure. Social Responsibility Journal, 5(3): 358-375 CSREurope. (2009). Trends and Best Practice in Online CSR/Sustainability Reporting: A CSR Europe Contribution to the European Commission ESG Workshops 2009/2010. Fong, C. M. (2007). The Determinantion of Director's Renumeration in Malaysian Public Listed Companies. Unpublished MBA thesis. Universiti Sains Malaysia. Pulau Pinang.
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
Gowthorpe, C. (2004). Asymmetrical dialogue? Corporate financial reporting via the internet. Corporate Communications: An International Journal, 9, 283-293. Hedberg, C. J., & Malmborg, F. v. (2003). The Global Reporting Initiative and Corporate Sustainability Reporting in Sweedish Companies. Corporate Social Responsibility and Environmental Management, 10, 153 164. Isenmann, R., Bey, C., & Welter, M. (2007). Online Reporting for Sustainability Issues. Business Strategy and the Environment, 16(7), 487-501. Isenmann, R., & Kim, K.-C. (2006). Interactive sustainability reporting. Developing clear target group tailoring and stimulating stakeholder dialogue. In M. B. a. R. B. S. Schaltegger (Ed.), Sustainability Accounting and Reporting (pp. 533-555). Berlin: Springer. Janggu, T., Joseph, C., & Madi, N. (2007). The current state of corporate social responsibility among industrial companies in Malaysia. Social Resposibility Journal, 3(3), 9-18. KPMG. (2011). KPMG International Survey of Corporate Responsibility Reporting 2011: KPMG International. Lodhia, S. K. (2006). The World Wide Web and Its Potential for Corporate Environmental Communication: A Study into Present Practices in the Australian Minerals Industry. The International Journal of Digital Accounting Research, 6(11), 65-94. Neu, D., Warsame, H., & Pedwell, K. (1998). Managing Public Impressions: Environmental Disclosures in Annual Reports. Accounting, Organizations and Society, 23(3), 265-282. Podnar, K. (2008). Communicating corporate social responsibility. Journal of Marketing Communications, 14(2), 75-81. Poolthong, Y. (2009). Customer expectations of CSR, perceived service quality and brand in Thai retail banking. International Journal of Bank Marketin, 27(6), 408-427. Rahman, N. H. W. A., Zain, M. M., & Al-Haj, N. H. Y. Y. (2011). CSR disclosures and its determinants: Evidence from Malaysian government link companies. SOCIAL RESPONSIBILITY JOURNAL, 7(2), 181-201. Ramasamy, B., & Yeung, M. (2008). Chinese Consumers Perception of Corporate Social Responsibility (CSR) Journal of Business Ethics, 88(1), 119-132. Sheikh, S.-u.-R., & Beise-Zee, R. (2011). Corporate social responsibility or cause-related marketing? The role of cause specificity of CSR. Journal of Consumer Marketing, 28(1), 27-39. Sobhani, F. A., Amran, A., & Zainuddin, Y. (2012). Sustainability disclosure in annual reports and websites: a study of the banking industry in Bangladeshq. Journal of Cleaner Production, 23, 75-85. Stiller, Y., & Daub, C.-H. (2007). Paving the way for sustainability communication: evidence from a Swiss study. Business Strategy and the Environment, 16(7), 474-486. TheEdgeMalaysia. (2009, August 17). Special Focus: Governance and sustainability reporting, The Edge Malaysia. Retrieved from http://www.theedgemalaysia.com/management/149242-special-focus-governance-andsustainability-reporting.html
TheStar. (2009, June 11). Sustainability reporting in poor shape , TheStar Online. Retrieved from http://biz.thestar.com.my/news/story.asp?file=/2009/6/11/business/4092911&sec=business
Thompson, P., & Zakaria, Z. (2004). Corporate social reporting in Malaysia. Journal of Corporate Citizenship, 13, 125-126. WBCSD. (2002). Sustainable Development Reporting Striking the Balance. UK. Wilson, M. (2003). Corporate Sustainability: What is it and where does it come from? Ivey Business Journal, 67(519), 1-6. Zulkifli, N., & Amran, A. (2006). Realising corporate social responsibility in Malaysia, a view from the accounting profession. Journal of Corporate Citizenship, 24, 101-114.
767
Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
International Congress on Interdisciplinary Business and Social Science 2012 (ICIBSoS 2012)
Exploring Online Sustainability Disclosure among Malaysian company
Azlan Amran [email protected] Graduate School of Buisness, Universiti Sains Malaysia, Penang, Malaysia
Abstract The internet facilitate in many aspect of life. This technology can also be a significant enabler for stakeholder to put pressure to the company for them to become more socially and environmentally responsible. Vice versa, company can also be benefited from such technology to become transparent and disclose their sustainability impact and practices. Interest on sustainable development arising from various environmental issues such as climate change, waste production, deforestation and pollution has become mainstream in the society in recent years along with many other social and economical issues such as employee discrimination, human rights violation, animal welfare, accounting fraud, bribery and Ponzi schemes. Many global companies have been linked with irresponsible actions with their environmental, labor and human rights violations, dishonest business practices, frauds and many more. All these irresponsible actions by companies operating around the globe have created enough damages to the world from environmental, social and economical perspectives. As the awareness is rising, more and more company realized the importance to address such issues and make known to the stakeholder through various mechanism which include internet technology via online reporting. This study aims to survey how far such practices being adopted by the Malaysian companies. The findings indicate that the adoption of online sustainability reporting is still low among Malaysian companies
Authors.by Published Elsevier Ltd. and/or peer-review under responsibility of JIBES University, © 2012 2012The Published ElsevierbyLtd. Selection Selection and peer-review under responsibility of JIBES University, Jakarta Jakarta Keywords: Online Reporting, Company, Malayia
1877-0428 © 2012 The Authors. Published by Elsevier Ltd.
Selection and peer-review under responsibility of JIBES University, Jakarta doi:10.1016/j.sbspro.2012.11.196
762
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
1. Introduction It is important to take note that sustainability disclosure has mostly been a voluntary activity even though there are already some countries that have made it as a mandatory. With continued demand from customers as a powerful stakeholder (Podnar, 2008), sustainability disclosure is quickly becoming a key element in the business environment around the world in meeting the demand from their customers on sustainability practices. It is also has become an important tools for companies to build framework of sustainability processes, information systems, controls and governance (KPMG, 2011). In the context of Malaysia, even though there is an increase in the number of companies producing sustainability reporting ( Janggu, et al., 2007; P. Thompson & Zakaria, 2004) but the total awareness of the sustainability reporting concept is still generally low (Ramasamy & Yeung, 2008; Zulkifli & Amran, 2006). It was highlighted by Amran and Siti-Nabiha (2009) that the local pressure from the local stakeholder is missing as the driver that propels the increase in sustainability reporting in Malaysia compared with western countries (Amran & Siti-Nabiha, 2009). Amran and Siti-Nabiha (2009) also has highlighted that Malaysian public has not been as critical as the more informed public in developed countries on the practices of their companies and the impact of such practices on various stakeholders. Thus, while the number of companies reporting on sustainability practices indeed increasing in Malaysia, the main reason for the increase could be due to the compulsory requirement from Bursa Malaysia for sustainability reporting (The Star, 2009). So undoubtedly, Bursa Malaysia s direction did driven up the quantity of the reporting but according to ACCA Malaysia, only 10% of the companies actually produced a world class report (TheEdgeMalaysia, 2009). With the web emerging as an important reporting tool, the study of web reporting is of particular interest since web provides numerous benefits for communication purposes which are able to enhance the information that is communicated to the customers. In fact, the contents of websites are not regulated and companies have complete discretion to voluntarily provide the information that it wishes to disclose. This provides opportunity from the academic point of view to study the online disclosure phenomenon particularly from Malaysian public listed companies context. As the timeliness, mass communication, interactivity and presentation and organization of web based reporting able to improve the stakeholder dialogue, it is also necessary to analyze the level of practices among the Malaysian public listed companies in utilizing these potentials. Thus, this study is conducted to explore the adoption of online sustainability reporting among the Malaysian public listed.
1.1 Sustainability Disclosure Sustainability reporting has been widely used to refer to a public report by companies to provide internal and external stakeholders with a picture of the corporate position and activities on economic, environmental and social dimensions (WBCSD, 2002). Sustainability reporting is also synonymously known as corporate social and environmental reporting (CSER), social reporting, corporate sustainability reporting or environmental reporting; which refer to the same intention and meaning that is, to report on corporate responsibility towards their stakeholders (Hedberg & Malmborg, 2003; Stiller & Daub, 2007). Prior to the existence of sustainability reporting, the earlier trend of companies in the voluntary disclosure initiatives mainly focused on the social and environmental aspects through the company s annual reports. This is part of the actions by these companies to handle the public s impressions towards them or to maintain the organizational legitimacy (Neu, Warsame, & Pedwell, 1998).
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
Sustainability reporting actually evolved in the mid 1990 s with the first true sustainability reporting was issued at the end of the decade, in line with the set up of Global Reporting Initiative (GRI) and its first set of GRI sustainability reporting guidelines in 1999. The Global Reporting Initiative Sustainability the practice of measuring, Reporting Guidelines (GRI guidelines) defines sustainability reporting as disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development and act as a communication tool for business organizations to manage and balance their productive efforts with those of the environment and their surrounding communities especially with customers who have emerged as a stakeholder group with a strong interest in sustainability performance (Poolthong, 2009). With the growing importance of sustainability issues for companies around the world (C. Adams & Narayanan, 2007), sustainability reporting also has grown tremendously among these companies and has seen sharp increases in the numbers too (A. Kolk, 2003; KPMG, 2011). According to Wilson (2003): while corporate sustainability recognizes that corporate growth and profitability are important, it also requires the corporation to pursue societal goals, specifically those related to sustainable development environmental protection, social justice and equity, and economic development . Thus, sustainability disclosure intended to capture and present a comprehensive economic, social and environment towards all stakeholders including shareholders, customers, employees, governments, community, and the general public. As company s performance are being evaluated more and more by their impact on the environment and society, companies need to enhance their effort on corporate sustainability and trustworthiness in the eyes of their stakeholders (Sheikh & Beise-Zee, 2011).
2.0
Usefulness of Web Disclosure
More recently, sustainability disclosure on the web has emerged as an alternative medium for corporate sustainability reporting and communications (C. A. Adams & Frost, 2004) either to complement or even substituting the traditional printed copies. With the issue of communication style such as interactivity is becoming of greater importance (Isenmann & Kim, 2006), web started to play an important role in facilitating rapid communication of information at very low cost (Gowthorpe, 2004). While the majority of the reports on the web tend to repeat companies printed reports, a growing number of companies are taking advantage of the unique possibilities that the web can offer in terms of timeliness, mass communication, interactivity, presentation and organization ( Lodhia, 2006) by reporting exclusively on the web in PDF format or some nice multimedia features (CSREurope, 2009). With about 17 million internet users in Malaysia and more than 2 billion internet users around the world, web offers countless possibilities in providing the sustainability disclosure in the digital format, and makes the information available to the targeted customers at all time. Web provides powerful tools to the benefit of all groups involved in or affected by sustainability reporting (Isenmann, Bey, & Welter, 2007). The improved presentation of the sustainability disclosure via graphics, animation, multimedia hyperlinks, search and tracking facilities will assist the companies to enhance the stakeholders engagement.
763
764
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
3.0
Research Design
The study seeks to explore of how far such medium of reporting had been used by the Malaysian companies to convey message to their stakeholder about their sustainability practices. The research is a cross sectional study where data collection strategy is carried out at single point of time. It is a descriptive study that is conducted to ascertain and to describe the practices among the Malaysian public listed companies in utilizing the potential of the website for sustainability disclosure. The population of the present study will be all the public listed companies which are listed in the Main Board of Bursa Malaysia for the period between 1st January to 31st December 2011. There were 843 companies listed on the Main Board of Bursa Malaysia in year 2011 under 12 sectors. The financial companies had been excluded from the present study due to the different financial regulatory framework in Malaysia (Fong, 2007). Other study on sustainability reporting that had eliminated financial companies from their population is from Rahman,et al.(2011). Besides that, the only company listed under mining sector and also companies listed under REITS sector were also excluded. After excluding the sectors above, the remaining nine sectors were included in the study which are construction, consumer, industrial-products, trading/services, technology, properties, plantations, infra and hotels, with total population of 784 companies. This study uses secondary data, consisting of all the publicly available information from the company s websites and also the financial reporting downloaded from www.bursamalaysia.com. Year 2011 was selected because it is the most recent financial ending year in which the financial reports submitted to Bursa Malaysia at the time this study was undertaken. The nine sectors that included in this study are construction, consumer, industrial-products, trading/services, technology, properties, plantations, infra and hotels . Due to the time constraints and advantages of cost and convenience, disproportionate stratified random sampling method is adopted to get 100 companies as a sample for this exploratory study.
4.0
Measurement
This study used the instrument employed by Sobhani, Amran and Zainuddin (2012) consisting of 125 items. Anyhow, 17 items were removed after the consultation with the expert as these items are only applicable for financial companies whereas, this study excludes the financial companies. Thus, the study used content analysis using 108 items covering three themes which are Economic, Environmental and Society. The Online Sustainability Disclosure index (OSDI) was developed by adding all the items covering the three themes above. The index was developed by using dichotomous, with companies are given a score of 1 if it disclosed an information item on its website. On the other hand, a company is given a score of 0 if it did not disclose the information item on its website. The process will add all the scores and equally weighted. The scores will be calculated as follows:
OSDI j =
nj
Xij nij
i=1
Where; OSDI j = Online Sustainability Disclosure Index nj = Number of items expected for the company; nj = 108 Xij = of 1 , if the company disclose the items and 0 , it does not.
Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
The items are measured based on the disclosure on the website only while any PDF attachment of the printed sustainability reporting are not examined. If the measurement includes the PDF attachment, then it will not meet the objective of this study. Thus, the measurement will only analyze the extent of reporting by the companies using their websites. In order to ensure the consistency and stability throughout the process of constructing the index, the companies websites were read twice for the coding between February to March 2012. The second examination on the selected websites was done after the first round was completed in April. Whenever the results were not identical, a third coding will be done in order to check the stability and consistency of the process.
5.0
Result and Discussion
This section discusses on the findings from the content analysis from the website of 100 companies. Table 1 provides the descriptive statistics for for online sustainability disclosure index of the public listed companies in Malaysia. The mean value of only 0.2 out of the maximum 1 indicates that the extents of online sustainability disclosure among the Malaysian companies are still low. Table 1: Descriptive analysis of the total 100 companies Disclosure Index Minimum Maximum Online Sustainability 0.028 0.537 Disclosure index
Mean 0.200
The following table 2 presents the range of the sustainability disclosure index. The frequency also validate that the level of online sustainability disclosure among the Malaysian companies are still low as 58% of the companies are having OSDI of less than 0.2 while only 12% of the companies are having OSDI of more than 0.5. Table 2: Cumulative analysis Online Sustainability Disclosure Index Range Frequency Percent Cumulative Percent 0-0.10 30 30 30 0.101 0.200 28 28 58 0.201 0.300 19 19 77 0.301 0.400 11 11 88 0.501- 0.600 10 10 98 >0.600 2 2 100 Total 100 100 Table 3 presents the disclosure index for different sectors. It shows that 27 out of the 39 Consumer companies analyzed having OSDI of equal or less than 0.2. Companies under the Construction, Hotel, Infrastructure sectors fares better with 66% of the Construction companies, 100% of the Hotel and Infrastructure companies have OSDI of more than 0.2. The remaining sectors have almost similar OSDI index for both less than 0.2 and more than 0.2. It is clear based on the exploratory study of 100 companies in Malaysia, the adoption of the internet reporting is still low. Still majority of the sample companies fall within the lowest range within the Online Sustainability Disclosure Index. Of 100 sample companies only two achieved over 60% of the index score which both of the company fall within the trading and services company. This probably due the nature of business where require them to make full use of the internet technology in order to reach the stakeholder.
765
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Azlan Amran / Procedia - Social and Behavioral Sciences 65 (2012) 761 – 767
Table 3: Disclosure index according to the sectors
SECTOR
OSDI Range 0.101 0-1 0.2
0.201 0.3
0.301 - 0.4
0.501 - 0.6
>0.6
CONSUMER
17
10
7
4
1
0
39
CONSTRUCTION
1
0
0
1
1
0
3
HOTEL
0
0
1
0
0
0
1
INDUSTRIAL PRODUCTS
3
6
7
0
3
0
19
INFRASTRUCTURE
0
1
1
0
0
0
2
Total
PLANT
2
1
0
1
1
0
5
PROP
1
3
0
1
1
0
6
TECH
1
2
1
0
0
0
4
TRAD/SERV
5
5
2
4
3
2
21
TOTAL
30
28
19
11
10
2
100
These two companies surprising did better than sample companies from some sensitive industry like plantation and construction. There are 10 companies which scored between 50% - 60% and majority come from sensitive industry. Thus, this further strengthens that nature of industry influence the usage of the internet reporting to send message about their sustainability practice and impact. This is consistent with previous findings in the research area of corporate social reporting (Amran and Susela, 2010)
6.0
Conclusion
The companies around the world including Malaysia have been pressured to be more transparent in disclosing their impact to the social, environment and economy. In the era of information technology with the internet facilities widely available in Malaysia, the company is expected to be more proactive in utilising the internet to get closer to the stakeholder. This study aims to explore the adoption of internet reporting among Malaysian companies. However the survey findings indicate that the practice of online reporting is still low and relatively conditioned by the industry sector. The finding is also consistent with past Sustainability Reporting researches where companies belong to the sensitive industry tend to disclose more. These findings contribute to the knowledge in terms of understanding of the current state and more future research is needed in this area.
7.0
References
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