Environmental Accountability Practices And Performance Of Mining Firms In Ghana

ABSTRACT Environmental issues have increased among firms especially those operating in environmental sensitive industries (ESI) such as the mining industry. This concern has led to a greater incentive for studies into environmental and social impacts, particularly as these are seen by some to have a commercial advantage. The essence for firms to report on their social and environmental impacts is a demonstration of their environmental accountability to their key stakeholders. Environmental accountability practices (EAP) entails a firm’s mandatory and voluntary actions and inactions to either reduce its negative impacts or to improve the living conditions of the local communities where it operates. Is there a commercial imperative for mining firms’ EAP? How can we validate the alignment of their responsibility to report on their environmental actions with their responsibility for their environmental actions? Do mining firms’ EAP translate into their environmental performance (EP) or firm performance (FP)? Or rather, is their EAP driven by their level of performance? Is EP part of the EAP composition or it is an outcome that mining firms seek to achieve or it is both a composition and an outcome? To answer these questions, the entire study employs a mixed research approach. The first two objectives of the study employed quantitative research methodology whiles the remaining two objectives were achieved using qualitative research approaches. The study employed the use of surveys and interviews to investigate the environmental accountability practices of 61 predominantly large-scale mining firms in Ghana. Principal component analysis was used to generate composite scores in measuring the three key variables. The study employed multiple regression ordinary least square (OLS) estimation technique for analysis. The study also applied structural equation methodology based on partial least squares path modelling technique to assess the moderating-mediating effect of EP on the EAP-FP link. Documentary analysis was used to examine the reporting iv practices of purposively sampled eight dominant gold mining firms, using their annual reports covering 2008 to 2017. Finally, based on interview data, the study analyses the state of environmental accountability in Ghana’s mining industry from the perspectives of multiple stakeholders. The results of the study revealed a positive and significant relationship between EAP and FP, as well as between EAP and EP. The results also showed a positive and significant relationship between FP and EP. The moderation-mediation analysis revealed that EP is a more significant predictor of EAP of mining firms in Ghana. In the presence of EP, EAP is also able to drive FP although the effect size was trivial. The study recommends that mining companies should improve on their environmental management system (EMS). EMS is a significant driver of EAP which positively impacts on EP, eventually translating into improving FP with the potential of creating value for mining firm’s stakeholders. Firms in ESIs must give premium to practices that promote environmental accountability even when such practices have the tendency of negatively affecting the bottom line significantly. The negative effects of not being environmentally accountable far outweighs the positive effects of engaging in it. Mining companies must strengthen their engagement with indigenes, and not only local elites, and ensure alignment between accountability efforts and the immediate needs of the local communities. Government should adequately resource the regulatory bodies in order to strengthen their monitoring and enforcement activities. Regulatory compliance is a major driver of EAP in the mining industry. Government’s efforts at combating illegal mining activities should be seriously encouraged and supported by all stakeholders, particularly community partners. One significant contribution of this study is the development of a scale for measuring EAP, EP and FP of mining firms. This scale can be applicable to research in other environmentally sensitive industries such as plastic waste management.