Coding

The coding process involves determining whether a piece of information in a context unit (such as narratives, charts or graphs) that corresponds to a quality attribute is determined by the obvious meaning of that piece of information. An operational coding tool (see Figure 5.2) was developed to clarify the process of eliciting the meanings commensurate with the quality attributes explained in the regulatory frameworks reviewed in this project. Thus, a composite, two-directional content-quality instrument was developed which was tied to the established reporting frameworks and established as CONQUARF. The instrument consists of two limbs, as is shown in Figure 5.1: the vertical limb shows the disclosure contents which refer to disclosure categories and sub-categories (CON); the horizontal limb shows the disclosure quality denoted by the elements of the quality coding tools (QUA).

Figure 5-1: Illustration of CONQUARF

The process for identifying the categories and sub-categories relevant to the environmental disclosures for the resources sector and establishing quality criteria for such disclosures was described in Chapter 4 and summarised in Tables 4.2 and 4.3. The coding procedure used in the content analysis method followed three steps:

Step 1: Coding for content (CC) Step 2: Coding for quality (CQ)

Step 3: Integration and measurement of quality of disclosures

These steps are explained below.

Step 1: Coding for content (CC)

Any disclosure that contains information about the companies’ environmental impacts and strategies was considered for coding. The coding process involved a dichotomous recording of the presence or absence of disclosure under each sub-category, as shown in Appendix 1. This process had several advantages. First, it informed the relevance of an environmental narrative, as the sub-categories were selected in line with the sector supplement criteria provided in the G3 guidelines and the expectations of an industry code (MCA code 2000). Second, the classification of the theme categories into sub-categories allowed content diversity of the data to be captured. Therefore, even though the process involved a dichotomous selection, the coding resolution was enhanced; and it allowed interrogation of exactly what specific information was reported in a given category. Third, it avoided the limitation of using word, sentence or paragraph counts as units of measurement.

Disclosure content: categories or sub- categories

Quality attributes for each category or sub-category

Step 2: Coding for quality (CQ)

In order to analyse quality, a coding tool was developed to represent the quality criteria summarised in Table 4.3. The link between the coding tool and the qualitative attributes is shown in Figure 5.2. The elements of the coding tool is represented typographically as follows: a) general disclosure on a specific category/sub-category; b) disclosures quantified in units; c) disclosures classified as source or nature; d) disclosure of comparative data in the form of table or charts; and e) disclosure of a calculation method or any regulatory protocol followed by the company or assurance information. The tool was used for CQ attributes of the quantifiable disclosure categories. Quantifiable disclosure categories refer to items that contain a unit of measurement such as mega-litres, megawatts, tonnes and joules. The link between the quality attributes and the elements of coding tool with their respective typographic symbols are shown in Figure 5.2.

QUALITY ATTRIBUTES CODING TOOL

Figure 5-2: Coding tool for analysis of the quality of environmental disclosures

Disclosure on environmental impacts and initiatives: materials, energy, water, emissions, effluents, wastes, product and services, transport, biodiversity, R&D and environmental expenditure

Disclosure on environmental strategy

Quantified in measurement units

Calculation method and/or basis of assumption

Classified information

Comparison by years or by industry

Limited assurance statement or environmental audit report Understandability Comparability Reliability ↓ Verifiability Relevance (a) _ (b) (c) (d) (e) Materiality

A dichotomous recording of ‘1’ or ‘0’ was used for the existence (coded as ‘1’) or non- existence (coded as ‘0’) of each qualitative tool in a particular disclosure category/sub- category. The dichotomous recording was performed by cross-tabulating the entries for the qualitative tools against each category and sub-category. Therefore, disclosures on a specific category/sub-category were analysed as follows: first, whether a disclosure is related to a specific sub-category listed in Step 1; second, whether the disclosure provides any quantified information; third, whether the information is presented in a classified manner; fourth, whether the disclosure provides comparative information; and fifth, whether the disclosure provides any reference to a measurement method or base. The reports were also reviewed for any assurance statement made by an independent third party.

An illustration of undertaking content analysis using the CONQUARF technique in evaluating the quality of emission disclosures in an ORG sustainability report (2009b) is provided based on the following extract:

We report annually on our NOx and SOx emissions from the main production and generation facilities as part of Australia’s National Pollutant Inventory (NPI). In the reporting period, NOx emissions at our Generation sites increased by 93 per cent to 865,000 kg/yr (Origin Energy, 2009b, p. 24).

For this disclosure, whole sentences are regarded as the context unit. Individual pieces of information in these sentences would indicate the presence or absence of the elements of the coding tool and would be coded accordingly as ‘1’ for presence and ‘0’ for absence. Therefore, the coding for this disclosure would be undertaken as shown in Table 5.3:

Table 5.3: An illustration of undertaking content analysis using CONQUARF Disclosure sub-category a General disclosure b Quantified in units c Disclosures classified as source or nature d Disclosures indicating comparison e Disclosure of calculation method or any regulatory protocol Nitrogen Oxides (NOx) 1 1 0 1 1 ‘We report annually on our NOx’ ‘865,000 kg/yr’ Reason or source of increase in NOx emission is not given in this sentence. ‘increased by 93 per cent’ ‘Australia’s National Pollutant Inventory (NPI)’

Thus, it is argued that CONQUARF is able to elicit attributes of quality for each category or sub-category reported from the corporate reports, consistent with the requirements of the established reporting frameworks.

However, some disclosure categories cannot be expressed in quantified units and/or are predominantly descriptive in nature. For example, three categories: ‘methods of effluents discharge and waste disposal’, ‘biodiversity’ and ‘environmental strategy’ are predominantly descriptive and not disclosed in quantified units. The coding tool does not capture these items, which would be a limitation in the data collection process. For example, effluent related disclosures such as ‘… acid rock drainage is treated using phytoplankton cell as part of a biological treatment system…’ (BHP, 2009b, p. 15), signals environmentally friendly effluent management, however, it does not coincide with any of the 5 codes (‘a’ to ‘e’) and, hence, would be omitted. The quality of disclosures of these categories was evaluated by the level of detail of information. For example, for biodiversity, disclosures were analysed at three levels:

1) The size of the area acquired or leased for mining and the level of their association with the protected area identified by the government;

2) Organisational impacts on the natural habitat; and 3) Specific initiatives to reduce such impacts.

Therefore, separate sets of quality criteria based on the G3 guidelines and Environment (EN) Indicator Protocol set were used for these three categories of disclosures (see Appendix 3).

A dichotomous recording of ‘1’ or ‘0’ was used again for the existence or non-existence of the individual information denoting quality for these disclosures.

Step 3: Integration and measurement of quality of disclosures

The final measurement of the coded data was represented by calculating the percentage of the sample companies that addressed the qualitative attributes in each sub-category. The results were represented under the scaffold of CONQUARF (Figure 5.1), where the vertical limb displayed the disclosure categories or sub-categories. The quality attributes of each disclosure were portrayed along the horizontal limb in terms of the percentage of the sample companies disclosing them. For non-quantifiable descriptive categories, the percentage of the companies reporting on the selected criteria to denote the level of detail in each disclosure category was measured similarly. The presentation of findings in this way, not only enabled identification of ‘what is disclosed’ in terms of content diversity, but also allowed for an understanding of the extent to which quality is embraced in such disclosures.