Does Sustainability and Environmental disclosure matter in Saudi Arabia? Insights from a Stakeholders’ Perspective

Does Sustainability and Environmental disclosure matter in Saudi Arabia? 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Insights from a Stakeholders’ Perspective Laila Mohamed Alshawadfy Aladwey, Raghad Abdulkarim Alsudays This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4107918/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 3 You are reading this latest preprint version Abstract Background Our research represents a departure from previous investigations into environmental accounting disclosure, as it constitutes a comprehensive analysis of sustainability and environmental disclosure within the context of Saudi Arabian accounting practices, employing a stakeholder-oriented lens. The primary objective is to scrutinize the sustainability and environmental disclosure behaviors exhibited by companies in Saudi Arabia, specifically in relation to their accountability to stakeholders. Method Employing a methodology that combines content analysis with close reading, the study examines sustainability and environmental disclosures found in the annual reports of 18 Saudi companies spanning the period from 2008 to 2018, encompassing a total of 198 annual reports. The research takes into consideration contextual factors relevant to Saudi Arabia, including religious and political dimensions. The findings of the study reveal a paucity of disclosures pertaining to sustainability and environmental concerns among the sampled Saudi companies. Results Two predominant stakeholders influencing these disclosure practices are identified: the Islamic religion, with the interpretations of Islam by the Al-Ulama exerting significant influence, and the Saudi government. The study observes that the limited number of disclosures regarding environment and sustainability is associated with the Saudi government's apparent lack of emphasis on compelling companies to address their environmental impact or participate in sustainability initiatives during the investigated period. Furthermore, the absence of directives from Al-Ulama regarding the necessary actions for companies to address global environmental challenges or enhance sustainability contributes to the dearth of disclosures. In terms of industry-specific considerations, three sectors receive relatively more attention, albeit still limited, from the Saudi government concerning environmental issues due to their distinct impacts on the country's environmental landscape. Conclusion The study investigates environmental and sustainability disclosure practices in Saudi Arabia, providing theoretical insights into managerial motivations for such disclosures. It reveals that Saudi companies prioritize stakeholders differently, emphasizing accountability to the Islamic religion and the Saudi government. Stakeholder definitions diverge from conventional models, acknowledging moral obligations to non-human entities. Using qualitative methods, the research emphasizes the importance of contextual factors in understanding disclosure practices, challenging previous descriptive approaches. Policy implications suggest that current disclosures meet government requirements but lack broader societal contributions. Mandatory disclosure regulations could enhance accountability and encourage companies to provide more comprehensive disclosures. This underscores the significance of contextual understanding in shaping accounting disclosure practices, particularly in socially and environmentally sensitive areas like Saudi Arabia, and highlights the potential impact of regulatory changes on improving environmental and sustainability disclosures in corporate reporting. environmental disclosure sustainability stakeholder theory Saudi Arabia Saudi government Islam 1. Introduction The world is facing increasing uncertainties in respect of a range of highly significant environmental, economic and social issues. The planet is experiencing a crisis that has never been witnessed before in the form of climate change, which is a worldwide phenomenon that threatens all humans and non-humans. Different global organisations, for example the United Nations Framework Convention on Climate Change (UNFCCC), have repeatedly been urging people to change their habits and behaviours and promoting a fundamental restructuring of societies so that global average temperatures increase by no more than 1.5°C. However, it is not only the environment that is causing such heightened anxieties, but there are also important social issues urgently needing addressing. For example, poverty is one of the critical social issues and this is related to both human rights and social justice. Additionally, many people not only lack access to shelter and food, but they also lack access to clean water, which is a basic human need. Environmental risks have grown in prominence in recent years and continue to become ever more challenging (see, for example, The Dasgupta Review2, 2021). The significant risks confronting the world have been identified by a range of organisations. For example, the World Economic Forum1 (WEF) has published a risk report annually since 2006 and in the 2020 WEF Global Risks Report (prepared pre-Covid) there is clear anxiety regarding the environmental, economic and social risks we currently face: … the past five years have been the warmest on record … all while citizens protest the political and economic conditions in their countries and voice concerns about systems that exacerbate inequality. Indeed, the growing palpability of shared economic, environmental and societal risks signals that the horizon has shortened for preventing - or even mitigating - some of the direst consequences of global risks. (World Economic Forum, 2020, p. 4) WEF (2021) sets out how severe temperatures and rising CO2 emissions are occurring alongside massive losses in biodiversity and species protection is required, agricultural systems are under strain, and pollution of the air and water is becoming an increasingly serious hazard to human health and safety (World Economic Forum, 2021). Because the environmental, social and economic risks facing the world are so severe and are interconnected action is required by many different actors to address them clearly one of the most obvious actors is governments. Additionally, however, it is now almost universally accepted that companies have responsibilities for taking actions which go beyond working to maximise profits for shareholders, and that these might include responsibilities related to some or all of the above issues. Almost 70 years ago Bowen, ( 1953 ) argued that because business activities impact on peoples’ lives in different ways then they have social responsibilities. Bowen’s early discussions of businesses, ethics and social responsibility led to wider debates in the 1960s as to what responsibilities businesses may have particularly in respect of the environment (see for example, McGuire, 1963 ; Frederick, 1960 ). Companies are now expected to act in respect of environmental and social issues and are not expected to focus solely on economic aspects such as financial performance. In addition to being expected to take relevant actions on environmental and social issues, there is also an expectation that companies are accountable for their actions. This is to ensure they are transparent in explaining what actions they have taken (see, for example, Adams, 2004). Tripathi (2016) explains that there is no agreed definition of corporate accountability but suggests that it might be thought of as “the ability of those affected by a corporation to hold corporations to account for their actions” (Tripathi, 2016, p. 28). Thus, corporate accountability is typically understood as being founded on the argument that companies are not solely responsible to their shareholders and that there are other stakeholder groups to whom they are also accountable. Hence, Du Reitz (2018) states that, “(i)n both research and practice, it is commonly assumed that reported accounts enable accountability. When organisations or individuals account for their performance, their accounts allow external parties to monitor performance and demand accountability.” (Du Reitz, 2018, p. 587). Saudi Arabia, the world's 10th-largest emitter of carbon dioxide, expressed its appreciation for the accomplishments of the G20 in finding sustainable solutions to environmental challenges and strengthening efforts to tackle land degradation, a significant threat to biodiversity, food security, and climate change adaptation. This acknowledgment was made during the speech delivered by the Deputy Minister of Environment, Water and Agriculture for Environment Dr. Osama Ibrahim Faqeeha, at the G20 environment and climate ministers' meeting held in New Delhi, India, 2021. In Islam it is required of humankind that the Earth and the environment is well cared for and protected. Hence, relatedly, the Quran declares: “That Home of the Hereafter We shall grant to those who desire not high-handedness or evil on earth: and the end is (best) for the virtuous” (Quran 28: 83) to indicate that virtue is an obligation, and in terms of the environment Islam is concerned with caring for, and protecting, the environment and for ensuring there is a balance preserved whereby “all God’s creations are (kept) … in equilibrium” (Ghernaout, 2017, p.76). In this regard, Islamic holism includes a concern for not only the survival but also the well-being of future generations and we are to act as trustees for the environment (Ghernaout, 2017). According to Al-Qaradawi (2000) it is not permissible for one generation to enjoy a monopoly on wealth gained from nature and God’s creations at the expense of future generations. As a result, every Muslim who has given themself to the creator is obligated to respect and demonstrate a responsibility to the environment and to all the elements which make up the environment (Helfaya, Kotb and Hanafi, 2018). Islam also warns against despoiling or mistreating the environment; for example, contaminating or being destructive toward the environment is prohibited by the Quran (Kamla et al., 2006). Therefore, to trace the efforts in the country to scale up the Kingdom's climate action, it is vital to examine environmental disclosure practices prior to Country's efforts. As a result, this paper argues that it is appropriate to analyze sustainability and environmental disclosure of Saudi companies from stakeholder lens. The teachings of Islam have a strong accord with the environment and the Saudi Arabia is a highly religious country with Islam of the greatest importance. This research contributes to the field of disclosure research by using Saudi Arabia as the research base for examining environmental disclosure practices. Disclosure studies conducted which examine Saudi Arabia their scope is limited. By offering a very thorough analysis and a detailed understanding of environmental disclosure practices with reference to stakeholder and accountability in Saudi Arabia, this thesis addresses the second research gap, which is a scarcity of publications on the country. In addition, this thesis fully takes into account the contextual information and environment relevant to Saudi Arabia. According to Qian et al., (2021), studies of social and environmental disclosure in developing countries replicate prior work in the Western literature while disregarding the richness of contextual information in their country. Thus, this research contributes to knowledge by incorporating contextual factors relevant to Saudi Arabia into the examination of environmental and sustainability disclosure practises. By combining a content analysis with a close reading of the disclosures, this research differs from the usual disclosure research in developing countries while also contributing to the growing body of knowledge in the Western disclosure literature. The principal objective of this paper is to investigate environmental disclosure practices in the context of Saudi Arabia. More specifically, the objectives of studying the environmental disclosures for a sample of large Saudi companies are to investigate who the companies are being most accountable to and to understand what contextual factors are influencing the managers in respect of their disclosure choices. Consistent with these objectives, the aim of the paper is to answer the following questions: RQ1. Who are the primary stakeholders the companies are being accountable to?; RQ2. What contextual factors are influencing the companies to prioritise these stakeholders? The remainder of this paper is structured as follows. Following this introduction, the next section discussed literature review and stakeholder theory. This is followed by the Research methodology section. In the final two sections, we discuss the results and present our conclusions. 2. Literature review There, has been an extensive range of disclosure studies published which examine environmental issues (see, for example, Senn and Giordano-Spring, 2020 ; Lu and Abeysekera, 2017 ; O’Donovan, 2002 ; Patten, 2002 ; Gray et al., 1995 ). In the Saudi context, disclosure studies conducted which examine Saudi Arabia their scope is limited. The empirical works undertaken by Razak (2015), and Alsahlawi (2016) analysed the disclosure practices of voluntary social and environmental information based on a single theory. Razak (2015) used legitimacy theory to examine corporate social and environmental disclosure practices of 166 listed companies for the year 2013. The content analysis findings revealed that human resources and community information were the most commonly mentioned categories in corporate annual reports. This study's findings show that satisfying public expectations compelled Saudi listed companies to disclose social and environmental information as a way of securing their legitimacy. In another study that embraced a single theory, Alsahlawi (2016) reviewed annual reports of companies operating in the banking industry from 2011–2014. The study applied stakeholder theory as a theoretical underpinning to investigate voluntary social and environmental information disclosure practices. The findings support the view that particular stakeholders can be demanding social and environmental disclosure more than others. The study found that companies in the banking industry were more responsive to employees’ demand by disclosing more employee category information. Another group of Saudi studies provides theoretical explanations of voluntary social and environmental disclosure from multiple theoretical perspectives. For example, the study of Alotaibi and Hussainey (2016) examined the level of voluntary social and environmental disclosure using multiple theories including legitimacy and stakeholder theories. From a stakeholder theory perspective, their findings concluded that the government is a key stakeholder with influential power on corporate social and environmental disclosure. However, the legitimacy theory was described in general but had no link to the study's findings. Macarulla and Talalweh (2012) and Issa (2017) also applied legitimacy and stakeholder in addition to other theories. Both studies investigated the level of voluntary social and environmental disclosure in Saudi annual reports. The findings from both studies showed that Saudi companies operating in a sensitive industry, such as oil and energy companies, disclosed information related to the environment more than social information, which is consistent with the legitimation perspective. This conclusion was also supported in empirical work undertaken by Habbash and Hussainey (2016); their content analysis results revealed that companies operating in a sensitive industry, such as telecommunication companies, tend to disclose more social and environmental information in order to seek their legitimacy and avoid any threat. In a similar vein, Mahjoub (2019) support the argument that legitimacy theory provides theoretical explanations regarding industry sensitivity, and he found that oil and the utilities industries in Saudi Arabia also disclosed social and environmental information more than other industries due to their large-scale adverse effects on the environment and local population. However, the general approach of the above studies contributed to the ambiguity of the usefulness of theoretical perspective to interpret voluntary social and environmental disclosure practices in Saudi firms. Saudi prior studies discussed above typically employ multiple theoretical perspectives, such as legitimacy and stakeholder theories, without justifying their research support. Consequently, prior Saudi studies lack a clear explanation of how multiple theoretical perspectives combined in their study are framing the research and contributing to the understanding of voluntary social and environmental disclosure practices. Therefore, there is a gap in the extant literature. Thus, the paper aims to apply stakeholder theory in explaining sustainability and environmental disclosure in Saudi Arabia. The value of our paper is evolved in the notion of the thinking that according to report of the General Authority for Statistics (GAStat) published in 2018 1 , Saudi Arabia is fully committed to achieving the SDGs and aligning national plans accordingly in line with Saudi Vision 2030. The vision 2 emphasizes clean water and sanitation, affordable and clean energy, decent work and economic growth, industry innovation and infrastructure, reducing inequalities, and sustainable cities and communities. Collaboration between public, private, and non-profit sectors is central to this endeavour. The remainder of this paper is structured as follows. Following this introduction, the next section discussed literature review and stakeholder theory. This is followed by the Research methodology section. In the final two sections, we discuss the results and present our conclusions. 3. Stakeholder theory Stakeholder theory has been used widely in social and environmental accounting studies, in which the principles of the theory have emerged from business ethics (Clarkson et al., 1994 ). The primary assumption of stakeholder theory is that firms have responsibilities not only towards their shareholders but also towards their stakeholders as their business operations cause social and environmental harm (Donaldson and Preston, 1995 ; Freeman, 1984 ). Thus, it considers social issues (along with maximizing financial returns) that affect stakeholders in a more or less equal way (Donaldson and Preston, 1995 ; Freeman, 1984 ). The term ‘stakeholders’ originated in the 1960s, when the term was initially developed by Ansoff, ( 1965 ) and increased usage occurred in 1984, after Freeman’s ( 1984 ) definition of stakeholders was pulished. Freeman ( 1984 , p. 46) defines the term ‘stakeholders’ as “any identifiable group or individual who can affect the achievement of an organization’s objectives.” In addition, Gray et al. (1996, p. 45) define stakeholders as “any human agency that can be influenced by, or can itself influence, the activities of the organization”. In this regard, stakeholders are generally divided into two groups: (i) a group of stakeholders who affect the company; and (ii) a group who affected by the company’s activities. The term, therefore, refers to the many interest groups who can affect, or be affected by, the firm’s activities such as investors, employees, customers, suppliers, government, competitor, pressure groups, stock market, industry bodies, foreign governments, future generation (Gray et al., 1996). Clarkson (1995), further, offers a somewhat narrow definition of stakeholders, in which he distinguishes between two groups of stakeholders: primary and secondary. The first group consists of the key persons or organisations such as shareholders, government, employees, customers, investors, suppliers, and communities. The secondary group consists of the stakeholders who are affected by organisational activities but are not directly involved in their operating activities such as society and nature. By looking at the definitions above, the similarity between those definitions of stakeholders refers to the principle of corporate effect proposed by Evan and Freeman ( 1993 ). The principle of corporate effect implies that almost ‘any group’ that can affect or is affected by the firm is considered a ‘stakeholder’. Surprisingly, this principle (see Freeman,1984, Gray et al., 1996) confirms that terrorists and competitors are potential stakeholders of the firm due to their ability to significantly impact on a firm’s activities. This raised serious concerns over stakeholder definitions that are based on the principle of corporate effect. As Clarkson (1994, p. 119, cited in Philips, 2003) argues, “stakeholder theory should not be used to weave a basket big enough to hold the world’s misery”. Therefore, defining stakeholder is not a simple task. For this reason, some researchers, for instance, Hawrysz and Maj ( 2017 ), found that stakeholder definition or identification of stakeholders, in reality, is unclear, despite a large body of literature that has made numerous attempts to define and identify who are the stakeholders from those who are not. However, these attempts caused disagreement in the literature on what constitutes a stakeholder (Mitchell, Agle and Wood, 1997 ). As Stoney and Winstanley state “…there is considerable confusion arising from the multitude of conflicting views [and]… failure to recognise and map this diversity has weakened rather than strengthened the stakeholder concept” (2001, pp. 605–606) Therefore, different stakeholders’ definitions make it difficult to reach a general agreement on who are stakeholders (Gray, 2001 ). However, while several studies suggest that the term of stakeholder suffers from vagueness and ambiguity (see, Crane and Ruebottom, 2011 ; Fassin, 2009 ), Freeman et al., ( 2010 ) argue that different definitions are generated to serve different purposes, and each definition focuses on attributes that are relevant to the context of the study. Stakeholders from the principle of corporate rights are those to whom the company has a moral obligation and legitimate relationship, regardless of whether the stakeholder is of human or non-human origin. This definition was found by Phillips ( 1997 , 2000 ) in which stakeholder is described as: Whenever persons or groups of persons voluntarily accept the benefits of a mutually beneficial scheme of cooperation requiring sacrifice or contribution on the parts of the participants and there exists the possibility of freeriding, obligations of fairness are created among the participants in the cooperative scheme in proportion to the benefits accepted (Phillips, 1997 , p. 51). The adopted definition has a common theme with the notion of eco-justice that people have a moral obligation and legitimate relationship to their total environments, human and non-human. According to Bowers ( 2001 ): The ambitious aim of eco-justice is to develop an ethic of social and ecological justice where issues of race, class, gender, language, politics, and economics must be worked out in terms of people’s relationship to their total environments human and non-human. (Cited in Gruenewald, 2003, p. 6) Phillips ( 1997 , 2000 ) proposed that the adopted definition of stakeholder includes individuals or groups such as suppliers, the state, customers, employees, communities, local government, investors, nature, and future generations. In that sense, it contrasts with earlier versions of the stakeholder definitions, which excludes individual or groups who do not have a moral obligation and legitimate relationship with the company, even if they can affect organisational activities such as competitors, terrorists, and media (Fassin, 2009 ). From a stakeholder definition, a firm exists within a complex network of relationships between various stakeholder groups (Rowley, 1997 ) and should therefore take the needs and preferences of its stakeholders into account in decision making for reasons normative, instrumental, or both (Mitchell et al. 1997 ; Donaldson and Preston 1995 ). To this extent, Stakeholder theory has distinguished between different forms of stakeholder-company relationships through two branches (or perspectives), an ethical branch and managerial (instrumental) (Deegan and Unerman, 2011; Hasnas, 1998 ). The normative perspective of stakeholder theory focuses on the company’s moral and ethical obligations vis-a-vis its stakeholders and thus provides the answer to why firms should consider their stakeholders’ interests other than shareholders (Hayibor, 2017 ; Crane and Matten, 2016 ). In particular, it is argued that all stakeholders without exception have equal rights and interests. This implies that the company should prioritise all stakeholders’ interests, especially when conflicts arise between various stakeholder groups (Hasnas, 1998 ). In contrast, the managerial (or instrumental) perspective of stakeholder theory argues that it is unlikely a company can meet the expectations of ‘all’ its stakeholders (Cobb, 2016 ; Deegan and Blomquist, 2006 ; Deegan, 2002 ).Therefore, companies may not engage with all their stakeholders but rather respond to the ‘key’ stakeholders (Nasi et al., 1997 ). This perspective suggests that various stakeholder groups’ interests or goals often differ from one another, implying that the company needs to satisfy the needs of its ‘key’ stakeholders to maintain access to the resources necessary for its survival (Freeman, 1999 ; Brenner and Cochran, 1991 ). Mitchell et al. ( 1997 ) developed the most commonly used model that explains how managers prioritise their relationships with key stakeholders based on their perceived salience. This model has since been used regularly by practitioners and researchers, which is defined as “the degree to which managers give priority to competing stakeholders’ claims” (Mitchell et al., 1997 , p. 854). The Mitchell et al.’s ( 1997 ) stakeholder salience model assesses the importance of the stakeholders based on three attributes: (i) power, which refers to a stakeholder’s ability to exert its influence on the organisation; (ii) legitimacy, which represents the extent to which a stakeholder’s claims conform to the norms and bounds of the wider society and (iii) urgency that implies the degree to which the claims of a stakeholder demand immediate action (Farmaki and Farmakis, 2018 ). In essence, the stakeholder salience model suggests that companies tend to respond to stakeholders’ expectations with more salient (two or all attributes) than less salient stakeholders who have one attribute (Farmaki and Farmakis, 2018 ; Kaur and Lodhia, 2018 ). According to the power attribute, prior literature defined stakeholder power as “the ability of those who possess the power to bring about the outcomes they desire” (Pfeffer and Salancik, 1974 , p. 3). Gruenfeld et al., ( 2008 ) also defined power as “the capacity to influence other individuals through asymmetric control over valuable resources and the ability to administer rewards and punishments.” (p. 112). Therefore, the power attribute is viewed as a stakeholder’s degree to control corporate management, by controlling the supply of critical resources required by an organisation or by holding a principal position to reward or disregard the actions of an organisation (Kaur and Lodhia, 2018 ; Mitchell et al., 1997 ). Thus, the more critical (powerful) stakeholders’ resources required by the firms, the greater expectation that the stakeholder’s demand will be met. The legitimacy attribute, then, is used to explain the legitimacy of a stakeholder’s relationship with an organisation. Mitchell et al. ( 1997 ) argued that only legitimate stakeholders’ claims would be addressed by an organisation. However, it is argued that legitimate stakeholders would not ‘always’ have a serious effect on the decisions and activities of the organisation without power, but legitimate stakeholders could still gain power over time and change the organisation’s actions (Kaur and Lodhia, 2018 ; Driscoll and Starik, 2004 ). The third attribute of stakeholder salience, urgency, is related to “the degree to which stakeholder’s claims call for immediate attention” (Mitchell et al., 1997 , p. 687). This attribute, according to Mitchell et al. ( 1997 ), characterises as time sensitivity (issues that need to be given immediate attention) and necessity (claims that are critical and highly important). In other words, stakeholders with the urgency attribute can take actions against the firm in their attempt to protect their interests, and such actions may take different forms such as boycotts, divestments, regulation, and strikes (Hayibor, 2017 ). However, Mitchell et al. ( 1997 ) suggested that stakeholders were very likely unable to take immediate action without possessing power. In this sense, urgency is often implicitly related to power. As a result, the power attribute in Mitchell et al. ( 1997 )’s model tends to be the most influential feature in prioritising stakeholders’ relationships with the organisation. For instance, Frooman ( 1999 ) provided an extensive discussion of how stakeholders can exercise influence over the firm according to how much power they have in their relationship with the company. Specifically, key stakeholders with power attributes can threaten to withdraw their resources from being used by the firm. Then they can attach conditions to the continued supply of their resources (Frooman, 1999 ). Moreover, according to Bridoux and Vishwanathan ( 2020 ), powerful stakeholders can constrain the scope of stakeholder orientation; instead, they use their power to confiscate other stakeholders. Powerful stakeholders also can exercise their influence to sacrifice the short-term benefits and ensure fair allocation of firm resources (Herremans, Nazari and Mahmoudian, 2016 ). For instance, Tantalo and Priem, ( 2016 ) argue that investors with a long-term orientation expect their investee companies to compensate employees fairly. This increases their motivation at work and hence their productivity, which often leads to an increase in the company’s long-term profitability. Flammer and Bansal, 2017 ) provide empirical support for this argument, showing that shareholder proposals to tie executive compensation to the company’s long-term growth would encourage managers to improve its stakeholders’ relationships (for example, employees), which in turn leads to more significant improvement in its long-term profitability. Consequently, these attributes can play an essential role in the identification and prioritisation of stakeholders. In addition, the salience of stakeholders can reflect the degree to which environmental and sustainability disclosure claims are given priority. Moreover, Mitchell et al. ( 1997 ) pointed out that different stakeholder groups’ salience can change over time. Mitchell et al. ( 1997 , p. 879) posit “[…] stakeholders change in salience, requiring different degrees and types of attention depending on their attributed possession of power, legitimacy, and/or urgency, and that levels of these attributes (and thereby salience) can vary from issue to issue and from time to time”. From this quotation, various activities undertaken by organisations, including public disclosure, are likely to change depending on different stakeholder expectations and salience to continue their ability and success. In this paper, stakeholder analysis becomes relevant as it involves identifying key stakeholders and their interests and assessing their influence and relationships with organisations. 4. Methodology In order to address the research questions: RQ1. Who are the primary stakeholders the companies are being accountable to?; RQ2. What contextual factors are influencing the companies to prioritise these stakeholders?, this paper employs content analysis and close reading approach. According to Guthrie and Abeysekera, ( 2006 ) the technique of integrating multiple qualitative methods potentially provides deep insights into individuals’ perspectives. However, whilst they commend integrating multiple qualitative methods, they contend that “content analysis of annual reports together with semi-structured interviews” (Guthrie and Abeysekera, 2006 , p. 118) is not commonly used in accounting studies. Employing content analysis with close reading can increase the credibility and validity of the findings of this study. Content analysis is an exploratory research strategy used in this thesis to gather data on, and analyse the disclosure of, eco-justice issues. This method can be employed to analyse environmental disclosure by examining organisational documents, such as annual reports. Such a method allows the researcher to identify to whom the companies appear to be seeking to be most accountable by determining the most sustainability and environmental issues that companies disclose and do not disclose in their annual reports. Content analysis is one of the most significant research techniques in the social sciences and has long been utilized in accounting (Krippendorff, 2004 ). Berelson, ( 1952 ) defines content analysis as “a research technique for the objective, systematic and quantitative description of the manifest content of communication”. In addition, Holsti ( 1969 , p. 14) refers to this method as “characteristics of message”. This method has been widely mobilised in the social and environmental accounting literature to identify the characteristics of corporate social and environmental disclosure (see for example, Michelon, Pilonato and Ricceri, 2015 ; Beck, Campbell and Shrives, 2010 ; Kuasirikun and Sherer, 2004 ; Adams, Hill and Roberts, 1998 ; Guthrie and Parker, 1990 ). Other studies have also employed content analysis to track changes of organisational values over time through organisation’s documents (Bryman and Bill, 2011). Furthermore, content analysis is also useful when researching on sensitive issues as the case of this thesis which is researching eco-justice issues in Saudi company reports (Harris, 2001 ). Eco-justice is a sensitive topic as it is connected to issues of power issues (for example, who causes pollution; who suffers from pollution) and is focused on issues which can often be controversial and contentious, provoking significant debates or disputes (for example, eco-justice includes issues such as gender and corruption).Content analysis is a method that can be either quantitative or qualitative (Unerman, 2000 ). Quantitative content analysis measures the volume of disclosure, which indicates the significance of the text (Krippendorff, 2019 ; Gray et al., 1995 ), whereas qualitative content analysis focuses on the meaning and implications of the disclosure context (Bennington, 1999). The analysis of eco-justice issues in this study does not only focus on quantitative aspects of environmental disclosures such as sentence counts, but also examines qualitative aspects of the disclosure to understand their meanings and implications within the Saudi context. The close reading methodology helps ensure the quality of the environmental disclosures are considered and appropriately analysed. This is because the close reading method requires the researcher to actively observe details within the text under investigation and to be attentive to all characteristics which might usefully inform the researcher of interesting or significant ideas pertaining to the disclosures as a pre-cursor to the development of themes and sub-themes for the different categories relevant to addressing the research questions set out in the paper. Following an initial reading to familiarise the researcher with the content and nature of the disclosures then re-reading the disclosures several times is vital in this methodology. This is to ensure sufficient attention is paid to whether themes and sub-themes, and stakeholders pertinent to the companies, which are identified during the re-readings are recurring (or even possibly negated) across the disclosures; this is an important facet of assessing the quality of the disclosures. Further, attentiveness and observation must be supplemented by interpretation as this facilitates the researcher in comprehending what is important in the disclosures and again assists in enabling the researcher to assess the quality of the disclosures particularly by making connections across the different disclosures in respect of themes, sub-themes and their connection to the theories used in the research. Close reading also requires the researcher to be self-aware and self-critical particularly in respect of ensuring they avoid holding pre-conceptions in advance of applying the method. Furthermore, the close reading technique assists in interacting with an unclear text through discussion and discourse, as well as eliminating the aspect that impacts the subjectivity of qualitative research. The companies chosen for the study are all listed on the Saudi Stock Exchange (Tadawul), and the main criterion for including a company in a sample was its size, as measured by market capitalisation. To obtain a representative sample, the 18 companies were chosen on the basis of the two companies from each industry sector on the Stock Exchange with the largest market capitalization as at the year 2022. The companies chosen represent 9 of 16 industries on the Stock Exchange; 7 industries were excluded due to a lack of accessibility to the companies’ annual reports. The focus on large companies in this paper is consistent with prior literature which links the level of voluntary corporate disclosures with the size of companies indicating that larger companies are more likely to make voluntary corporate disclosures than small and medium sized companies (Adams et al., 1995). Furthermore, as this sample consist of the largest Saudis companies, it is expected that they are more liable to any change in voluntary disclosure practice in Saudi Arabia. The companies chosen for the study would be the most useful in capturing the data for several reasons identified by Gray et al, ( 1995 ): First, larger companies are more likely to demonstrate examples of voluntary corporate disclosure than an equivalent sample of medium or small companies; in terms of tracking trends, this sample is recommended to identifying innovations and capturing more voluntary disclosure practices. Second, a sample of the largest companies will be more comparable – on size at least – with a majority of other studies which sample from the largest companies. Finally, obtaining the annual reports from the larger companies proves to be much more reliable than for other samples. 5. Analysis and Discussion of Environment and Sustainability disclosures These two categories are interconnected in that they both concern the disclosures the companies have made in respect of the stewardship of natural resources, including the allocation of natural resources within the current generation and between the current and future generations. The Environment category comprises references to any issues related to the environment such as air pollution, water management, noise, waste and recycling plus any attempts to identify, improve or prevent these issues. The Sustainability category encompasses references to the concept of stewardship and the responsible management of resource use. Because they are interrelated, it is logical to consider these two categories and to investigate what factors may be causing these disclosures concurrently. i. Overall analysis As can be seen from Table 1 below, there is a total of 880 disclosures across the eleven-year period for the combined two categories of Environment and Sustainability in the companies’ annual reports. This is a relatively low number of disclosures, equating to an average of only 3.6 disclosures per year per company, and accounting for 15.5% of all disclosures. Table 1 shows that the number of disclosures within the Environment category is 9.9% of the total disclosures whilst the Sustainability disclosures account for 5.6% of total disclosures. Prima facie, this appears to suggest that providing Environment and Sustainability disclosures is not a high priority for the companies. The causes of the relatively low numbers of disclosures in the Environment and Sustainability categories are discussed in the following sub-sections. Table 1 Environment and Sustainability disclosures for sample companies Disclosure Category % of Total Disclosures Number of Disclosure sentence Environment 9.9% 561 Sustainability 5.6% 319 Total 15.5% 880 ii. Environment and Sustainability disclosures: the lack of government focus on meeting environmental challenges Saudi Arabia has a predominantly arid desert landscape with few coastal areas and mountain ranges, limited annual rainfall and scarce groundwater reserves (Al-saidi, Zaidan and Hammad, 2019 ). Despite the country’s minimal natural resources, the national government’s agenda for protecting the environment was limited in the period under investigation. Similarly, although caring for nature and the earth’s resources are an important part of Islam, many Muslim countries are reluctant to impose Western concepts of environmentalism (Ozdemir, 2021 ). Therefore, there were no specific environmental or sustainability initiatives developed by the religious authorities in Saudi Arabia. The managerial stakeholder lens emphasises that companies respond to the demands of their key stakeholders. Thus, the relative lack of attention to environmental and sustainability matters in Saudi companies’ annual reports appears to potentially stem from this lack of religious and Saudi government focus (and demand for change) in respect of these two aspects. The exploration for, and exploitation of, oil reserves commencing in 1938 transformed not only the society and economy of Saudi Arabia but brought with it tremendous repercussions on the physical environment. Unprecedented levels of socio-economic transformation resulted in rapid industrialisation, inefficient use of resources, unplanned urbanisation, and large-scale consumption patterns resulting in a set of environmental issues (Al-Saidi et al., 2019 ; Al-Soliman, 1993 ). The government’s main concern has, since 1938, however been to introduce policies and initiatives to support economic development, as well as to provide physical infrastructure, public services, and improve human capital development (Bishara et al., 2016 ). This preoccupation with economic growth has appeared to overshadow government attention regarding the environmental consequences of the country’s development and the responsibilities that should accompany economic development. This is not to suggest the government wholly neglected to attend to environmental concerns; rather that environmental and sustainability concerns were a much lower priority. The rise in environmental demands in Saudi which have been a result of major demographic pressures and increased living standards in the mid-1980s did cause the government to become uncertain about its ability to meet the needs of its population with limited natural resources (Darfaoui and Al Assiri, 2010 ). As a result, the government adopted a more positive attitude towards the environment through their national development plans. Specifically, in addition to the socioeconomic development goals, the second stage of National Development Plan (1985–2005) set out two goals in respect of the environment, although these were very broad in nature. The first is to protect the national environment by preventing pollution and desertification of terrestrial, aquatic, and water resources; the second encourages both individuals and institutions to show consideration towards the environment (Al-Soliman, 1993 ). The Saudi government established these goals in the National Development Plan primarily to encourage a limited number of industries to have a greater environmental awareness although subsequently, some limited government initiatives did occur in respect of environmental regulation relevant to companies. The industries that the government identified as contributing to environmental issues such as CO2 emissions, energy waste, and water shortages include petroleum-based industries and industries characterized by the extensive use of water and energy. Thus, there has been some emphasis by the government on these industries. However, it is important reiterate that these government regulations concerning protecting the environment have not had the same prominence or importance as policy initiatives that have been created to address social and economic issues such as improving the quality of life within society and promoting education and skills development. Consequently, the government’s efforts to resolve environmental problems are not comparable to those efforts made to address social and economic issues. This is mirrored in the companies’ disclosures and is observable when comparing Environment and Sustainability disclosures to other disclosures. the environmental issues facing the country received relatively little consideration in government policies and initiatives and the lower numbers of disclosures in the Environment and Sustainability categories reflect this. Therefore, these Environment and Sustainability disclosures are meaningfully related to the stakeholders’ demands, particularly the government, with these disclosures appearing to be a function of the companies following the government’s lead with its relative lack of focus on environment and sustainability matters. This gives the sense that companies are acting in accordance with the government’s priorities to gain or maintain their legitimacy and thus ensure their survival. It is important to note that the Environment and Sustainability disclosures it is the industry perspective which must be examined to interpret the disclosures. The next section provides support for this assertion explaining in greater detail the connection between the government initiatives and the disclosures in those industries that are more environmentally sensitive; namely, materials 3 , utilities and food and beverage. The other industries (non-sensitive to environment) played far less of a role in the Kingdom’s environmental activities and, hence, provided very few disclosures in respect to Environment and Sustainability. iii. Environment and Sustainability disclosures: analysis of the disclosures from an industry perspective In the above discussion, it has been stated that the government has had limited focus on environmental issues and that this is restricted to encouraging a limited number of industries to have a greater environmental awareness. It is important to add to this explanation as to why there are so few disclosures in the Environment and Sustainability categories through considering the disclosures from an industry standpoint. Table 2 Environment and Sustainability disclosure for sample companies across industry Disclosure Category Energy Financials Food & Beverage Materials Real Estate Telecom Utilities Total Environment 28 14 80 232 9 6 192 561 Sustainability 0 35 79 189 0 10 6 319 Total 28 49 159 421 9 16 198 880 As can be seen from Table 2 above, the materials (421 sentences), utilities (198 sentences) and food and beverage (159 sentences) industry are the leading disclosers in respect of Environment and Sustainability. Traditionally, these are industries which are more sensitive to environmental issues (Patten, 1991, 1992). Table 2 shows that other industries that are non-sensitive to environment - namely, financials, real estate, telecom and energy - provide minimal Environment and Sustainability disclosures. This observation regarding the companies in the materials, utilities, and food and beverage industries having far greater numbers of disclosures is discussed further in the following sub-section. iv. Environment and Sustainability disclosures: discussions in the annual reports for the materials and utilities industries The Environment and Sustainability disclosures provided in the annual reports are noticeably dominated by industries that are under Saudi governmental encouragement to be environmentally aware due to their sensitivity to environmental issues; namely, materials, utilities, and food and beverage. The result is that these companies provide 88.4% of disclosures (778 of the total 880 disclosures) in these categories of Environment and Sustainability. This sub-section and the subsequent sub-section build on the discussions in the previous sub-section and argue that the companies operating in environmentally sensitive industries provide Environment and Sustainability disclosures in their annual reports as a response to Saudi government placing some greater attention on requesting companies in these industries to be environmentally aware. Therefore, these companies are employing a legitimising strategy and ensuring they meet the stakeholder’s expectations regarding by disclosing they are not environmentally irresponsible (Lindblom, 1994’s strategy). Again, it is important to reiterate that these environmental initiatives in these industries have not had the same importance or prominence as policy initiatives that have been created to address social and economic issues. The oil and petrochemical industries (contained within ‘material’ industry) are essential to the country’s economy, as Saudi Arabia is the world’s third largest producer of oil and possesses the world’s largest oil reserves. However, the oil and petrochemical industries have contributed to major environmental problems in the country, such as air, water, and soil pollution, climate change, and a rise in carbon footprint. According to Darfaoui and Al Assiri ( 2010 ), oil and petrochemical industries accounted for 90% of all CO2 emissions in the country. Furthermore, the oil and petrochemical industries not only impact of climate change and greenhouse gas emissions, but also effect the environmental profile of the country. Because of this, there have been ongoing critiques of the Saudi government not having sufficient focus on acting to meet the different challenges the world faces in respect of the environment and sustainability (Barbuscia and Khalid, 2019). As a response, the Saudi government implemented a number of environmental policies and initiatives, such as Carbon Capture and Storage initiatives (CCS), as a way to regulate and raise environmental awareness in the oil and petrochemical industries, and thus improving the country’s negative environmental profile. The government attention directed at this industry is a likely explanation why the materials industry sector has the greatest number of disclosures (421 of total 880 disclosures which equates to nearly half of the total disclosures). Namely, this industry has responded to the government attention to ensure it does not neglect being accountable to this primary stakeholder. Furthermore, the environment and sustainability disclosures provided by the materials industry sector are used as a legitimation tool to portray a picture of growing awareness about the environment and sustainability and thus ensure its survival. However, it needs to be reiterated that whilst there was some government emphasis on environment and sustainability issues for this industry, it was still a limited government emphasis compared to Community and Training and Education. This is reflected in the generalised nature of the disclosure. Thus, the companies in materials industry are, for example, explaining they are compliant with regulations, as the following disclosure examples illustrate: Our exploration, mining and operational activities are subject to various environmental regulations applicable in Kingdom of Saudi Arabia. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation… Non-compliance with the applicable laws and regulations might result in imposition of fines and penalties by the regulatory authorities. (MD annual report, 2012, p. 25, emphasis added) During the year, [the company] maintained its compliance with environmental regulations , ... Assessment of nitrogen oxide (NOx) emissions at its manufacturing affiliates in Saudi Arabia was completed during the year and confirmed the plants as meeting the emission-control standards set by the Royal Commission of Jubail and Yanbu . (SB annual report, 2009, p. 46, emphasis added) In addition to implementing some policies for oil and petrochemicals, to reduce wastage and preserve the country’s energy the Saudi government established the National Energy Efficiency Programme to increase adoption of clean energy and reduce the consumption of non-renewable resources. Energy 4 in Saudi Arabia involves petroleum and natural gas production as well as and electricity production and, therefore, the materials and utilities 5 sectors are the two industries where this has some impact as they had a role to play in the Kingdom’s Energy Efficiency initiative. This is evident in the Environment and Sustainability disclosures observable in the disclosures for companies operating in materials and utilities industries, which demonstrate their general support for the government Energy Efficiency Programme, and meet the expectations of the Saudi government, as shown in the example disclosures below: …the company aims to have a leading role in the field of environmental protection throughout the Kingdom of Saudi Arabia by achieving compatibility with the updated environmental standards issued by the General Authority of Meteorology and Environmental Protection on 2/5/1435 AH … thereby increasing the production of clean energy and reducing the consumption of non-renewable resources. (SE annual report, 2015, p. 54, emphasis added) [The company] embraced energy management system focus as a key enabler of active positive contribution toward efforts to reduce global warming, and improve the performance of assets and meet legislative requirements . (SB annual report, 2016, p. 45, emphasis added) v. Environment and Sustainability disclosures: water scarcity discussions in the annual reports for the materials and food and beverage industries The above sub-section has discussed how the attention of the Saudi government on oil and petrochemicals industries, as well as the Saudi government focus on improving energy efficiency have motivated the Environment and Sustainability disclosures. A third area where the Saudi government has had some focus with regards to environmental and sustainability is water scarcity. Water scarcity is particularly relevant to the materials and food and beverage industries since water consumption is an important element of their operations, and this is now discussed. Water scarcity, which includes both water supply and water quality, is a significant health predictor and is inextricably related to food security, sanitation, and hygiene (Denicola et al., 2015 ). In Saudi Arabia, one of the largest arid countries in the world and classified by the United Nations as a water-scarce nation, the incautious use of groundwater resources for agricultural, industrial and domestic purposes over a long period of time combined with an annual increase in water demand has had a substantial impact on the availability and quality of water resources (Schaar, 2019 ; Denicola et al., 2015 ). This has meant that the risk of disease in the Kingdom has increased as a result of low water quality and availability. As a result, the Saudi government has incorporated the issue of water scarcity into national agendas and initiatives to regulate those industries that contribute to the extensive use of water in Saudi Arabia. The industries affected are the food and beverage 6 and materials industries, and the need is to ensure water is continuously available and conservation of water is important (Al Zaharani, Al Sayaa and Baig, 2011). The Saudi government has taken some conservation measures in an attempt to reduce the use of groundwater and to use desalinated seawater (Kajenthira, Siddiqi and Anadon, 2012 ). Water scarcity is evident in the disclosures of companies in these two industries in the Environment and Sustainability categories. In their annual reports, companies in food and beverage and materials industries state how water is an extremely valuable resource and the most important environmental challenge facing the Kingdom, as shown in the example disclosures below: In Saudi Arabia, we face a challenging set of environmental factors, the most pressing of which is water conservation . (MR annual report, 2015, p. 41, emphasis added) Water is a scarce and valuable commodity throughout the Kingdom (MD annual report, 2011, p. 46, emphasis added) Programs for processed wastewater recycling are one of the conservation techniques the Saudi government has introduced. Therefore, wastewater recycling has gained favour in Saudi Arabia as an efficient way to curb demands on water resources, and to help balance both water and food security (Schaar, 2019 ; Denicola et al, 2015 ; Zaharani et al, 2011). The companies state in their Environment and Sustainability disclosures that they employ wastewater recycling systems to overcome the problem of water scarcity and make efficient use of water. This type of company initiative is aligned with the government water conservation measures. This gives the sense that companies are seeking to meet government's expectation regarding efforts to curb demands on groundwater and desalinated seawater. Therefore, providing disclosures regarding water scarcity can be understood as legitimation strategy employed by Saudi companies to demonstrate their support for the government’s strategic goals and meet the expectations of the Saudi government regarding water conservation, as shown in the example disclosures below: [The company] has undertaken many initiatives to reduce water usage . This includes importing 100% of the green fodder required to produce the [company] milk which is exported out of the Kingdom. (MR annual report, 2013, p. 25, emphasis added) … the project is employing a wastewater treatment system (Engineered Natural System) that will treat and recycle processed waste water, sanitary waste water and storm water back to operations. (MD annual report, 2011, p. 47, emphasis added) vi. Environment and Sustainability disclosures: beyond government environmental initiatives In the previous sub-sections, it has been stated that the majority of the disclosures in these two categories are located in the three industries where the Saudi government attention has been focused. This is due to their having a more significant impact on the environment when compared to the other industry sectors. The discussions in the Environment and Sustainability disclosures appear to be a function of the companies following the government's lead in this area. Namely, the Saudi government has undertaken some environmental initiatives, but they are relatively low key and the result is that the disclosures are similarly modest. There is, however, an additional comment that needs adding. Some companies operating in these industries have provided a small number of Environment and Sustainability disclosures which show an awareness of the environment which goes beyond government requirements. The following disclosure, for example, clearly shows that the company's environmental programme to reduce its environmental footprint goes beyond regulatory requirements: We have strengthened our commitment to reduce [the company] environmental footprint, shifting from a compliance-led program to stewardship-based performance through a program that goes far beyond regulatory requirements . (MD annual report, 2015, p. 87, emphasis added) The most likely reason for some companies stating they have gone beyond government requirements is that they are seeking to demonstrate awareness of global environmental initiatives and standards. However, it is noteworthy that the phrasing of these types of disclosure is still by reference to how these environmental and sustainability programmes are positioned in relation to Saudi government requirements. As a result, these companies are still ware of the need to be accountable to their key stakeholder. 6. Conclusion In conclusion, this paper has argued that the two key stakeholders, namely Islamic religion and Saudi government, continue to be the two primary stakeholders for Environment and Sustainability disclosures. This is seen in the low number of Environment and Sustainability disclosures, which appear to be tied to the Saudi government’s relative lack of attention on the environment and sustainability. Further, there has been a lack of any pronouncements from Al-Ulama as to what is required by companies to address the world’s environmental challenges. It is also important to note that the low numbers of Environment and Sustainability disclosures provided in the annual reports are dominated by three industries which received some greater, albeit still limited, attention from the Saudi government. These industries have a particular impact on the country's environmental profile. As a result, the low level of Environment and Sustainability disclosures appear to be a function of the companies following the government’s lead on the environment and sustainability. Additionally, based on the evidence presented, it is possible to argue that the underlying reason for the relatively low number of disclosures in the Environment, Sustainability categories can be explained by reference to the two primary stakeholders, Islamic religion and the Saudi government. There has been a relative lack of government policies and initiatives, coupled with a lack of pronouncements from religious leaders. For example, the low numbers of Environment disclosures appear to be connected to the Saudi government’s relative lack of initiatives or pronouncements on the environment and, further, there is an absence of pronouncements from Al-Ulama as to what companies might do to address the world’s environmental challenges. Hence, the relative lack of disclosures on Environment, Sustainability matters in Saudi companies’ annual reports appears to potentially stem from the lack of government initiatives in this area and because of religious opposition to enacting positive change in respect of the two disclosure aspects. Clearly, companies do not want to be seen in these types of disclosures to be contradicting or opposing the stance of Al-Ulama and religious conservatives, and because government reforms are limited their accountability to this stakeholder can be satisfied through provision of a relatively small number of disclosures. For example, Despite the country’s minimal natural resources, the national government’s agenda for protecting the environment was limited in the period under investigation. Similarly, although caring for nature and the earth’s resources are an important part of Islam, many Muslim countries are reluctant to impose Western concepts of environmentalism (Ozdemir, 2021 ). Therefore, there were no specific environmental or sustainability initiatives developed by the religious authorities in Saudi Arabia. The study findings have a number of theoretical implications based on the research conducted. This study extends prior disclosure studies in social and environmental accounting by investigating environmental and sustainability disclosure practices in a developing economy context (i.e., Saudi Arabia). This has resulted in the construction of a framework which explains the managerial motivations behind the disclosure practices from a stakeholder perspective. A central research finding is that the companies were primarily motivated by the desire to be accountable to two key stakeholders, the Islamic religion and the Saudi government, in respect of their environmental and sustainability disclosures and to ensure that they maintained their legitimacy in respect of these two stakeholders. The definitions of stakeholders as set out according to Evan and Freeman's (1993) principle of corporate effect states that almost 'any group' that can affect or is affected by the firm is considered a ‘stakeholder’, including investors, employees, customers, suppliers, government, competitor, pressure groups, stock market, industry bodies, foreign governments, and future generations; however, surprisingly, this is not wholly applicable in the Saudi context. Based on the evidence, Saudi companies prioritize stakeholders in this Saudi context differently and in contrast to this listing (see Freeman, 1984 ; Gray et al., 1996) of primary stakeholders. Consequently, based on the evidence in this paper it needs to be acknowledged that, following the principle of corporate rights as set out by Phillips ( 1997 , 2000 ), stakeholders can include those to whom the company has a moral obligation and legitimate relationship, regardless of whether the stakeholder is of human or non-human origin for in this research the stakeholders are the Islamic religion and the Saudi government. Further, this study expands accounting disclosure studies by using a qualitative research technique to investigate Saudi companies' reporting practices that takes into account contextual factors. Accounting disclosure research has been criticized for being primarily descriptive in nature, “for example, to test the effect of various firm characteristics (size, financial performance, industry, etc.) on social and environmental disclosure behaviour or performance … ignoring the rich contextual information in that country” (Qian et al., 2021 p. 1022-3). This research has shown that explanations need to take into account the contextual features driving environmental and sustainability disclosure practices, and this can be achieved by employing a qualitative approach which uses multiple methods of data collection (content analysis with close reading methodology). The implication here is that by using Saudi Arabia as the research base for examining environmental and sustainability disclosure practices, this research has identified the need to fully take into account the contextual environment where the research is situated, in order to support further understanding of the accounting disclosure practices with regard to social and environmental information. On the policy level, the research results indicate that the reasons for lack of environmental and sustainability disclosures are that at present companies are disclosing what is sufficient to demonstrate they meet the government’s requirements. The findings further indicated that companies would only feel it necessary to provide greater numbers of disclosures in this area if it was made mandatory to disclose wider societal contributions. Presumably this is because moving from a voluntary to mandatory requirement increases the level of accountability the companies have to demonstrate. Therefore, if the government were to consider enacting regulation which mandated eco-justice disclosures this would increase and improve the eco-justice disclosures provided in the companies’ annual reports. As with any research project there are limitations and boundaries have to be placed around any research project. One limitation is in respect of the analysis of the corporate annual reports. Despite the fact that the interpretation of the environmental and sustainability information disclosed in the annual report was undertaken with great care utilising a close reading technique, the conclusions drawn regarding the managerial motivations for disclosing environmental and sustainability information in the annual reports may be subjective. Subjectivity is a fundamental challenge in any research which is qualitative. In addition, this paper offers new directions for further research which can build on this research. Further research that is worthy of exploration might involve an examination of changes in respect of environmental and sustainability disclosures post-2018 in Saudi companies’ annual reports. Therefore, future research could study the disclosure practices of Saudi companies in the years after this paper to determine whether there is any noticeable improvement or shift in the way companies disclose information about environment and sustainability. The paper has noted how Saudi Arabia is often seen from a one-dimensional perspective and future Saudi studies might give the reader of the research a more nuanced understanding of the country and different aspects relevant to the Saudi context. Declarations Ethics approval and consent to participate 'Not applicable'. Consent for publication 'Not applicable'. Availability of data and materials ‘Not applicable'. Competing interests "The authors declare that they have no competing interests" in this section. Funding Deanship of Scientific Research at Imam Mohammad Ibn Saud Islamic University (IMSIU), IMSIU-RG23102. Authors' contributions L.A and R.A A.B. wrote the main manuscript text and prepared Tables 1-2. All authors reviewed the manuscript. Acknowledgements "Not applicable". References Adams, C., Hill, W. and Roberts, C. (1998). Corporate Social Reporting Practices in Western Europe: Legitimating Corporate Behaviour? British Accounting Review , 30 (1), pp.1–21. 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Saudi Stock Exchange . Tantalo, C. and Priem, R. L. (2016). Value creation through stakeholder synergy. Strategic Management Journal , 37 (2), pp.314–329. Unerman, J. (2000). Methodological issues-Reflections on quantification in corporate social reporting content analysis. Accounting, Auditing & Accountability Journal , 13 (5), pp.667–681. Al Zaharani, K. H., Al Sayaa, M. S. and Baig, M. B. (2011). No Title. Bulgarian Journal of Agricultural Science , 17 (3), pp.389–395. Footnotes https://www.stats.gov.sa/sites/default/files/sustainable_development_goals_sdgs_in_ksa_-en.pdf https://www.my.gov.sa/wps/portal/snp/content/SDGPortal/!ut/p/z0/04_Sj9CPykssy0xPLMnMz0vMAfIjo8zi_QxdDTwMTQz93YMt3AwCzXyMg1wMAw0NLA31g1Pz9AuyHRUBEXub1w!!/ It should be noted that the ‘Materials’ industry label used by the Saudi Arabia’s Stock Exchange includes companies engaged in petrochemicals, mining, metal refining, and chemical products. It should be emphasised that the discussion of energy efficiency initiatives does not pertain to the ‘Energy’ industry. The ‘Energy’ industry sector comprises enterprises engaged in activities other than oil and gas extraction, such as storage, transportation, and marketing. As a result, the companies in this industry sector have not been impacted by the energy efficiency initiatives and provide very low numbers of Environment and Sustainability disclosures (TADAWEL, 2021 ). The Utilities industry, according to the Saudi Arabia’s Stock Exchange industry classification, includes electricity, gas, and water producers’ companies. Therefore, it is this industry sector which is impacted by the government energy efficiency initiatives rather than the Energy industry as explained in the previous footnote (TADAWEL, 2021 ). Food and beverage industry includes agricultural companies that are involved in the conversion of raw agricultural materials into consumer food and beverage products. Hence, water is of great significance as it is a primary input to their production process. Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Editor assigned by journal 15 Apr, 2024 Submission checks completed at journal 29 Mar, 2024 First submitted to journal 15 Mar, 2024 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4107918","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":285386180,"identity":"002e68ae-b386-490c-9c54-e6c5a57e8c32","order_by":0,"name":"Laila Mohamed Alshawadfy Aladwey","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA7UlEQVRIiWNgGAWjYBACPgbmBgYeBgYefmaY0AECWtgYGCFaJJtJ1cJgAFdJUAv7wcYPb2oOyxgf5078dLONQY7vRgLzhx/4tPAkNkvOOXaYx+ww72bp3DYGY8kbCWySPXgdltggzcN2G6RlA0hL4gagFrBTcWrhf9j8m+ffbR7jZt7Nv4Fa6oFamD/+wadFIrFNmrftNo8BM+82kC0JBjcSGKTx2iLxsM1ybt9/HonDvNusc85JGM4887BNWgaPFn7+5MM33nxLs+fvP7v5dk6ZjTzf8eTDH9/g0YIOJIAYGFOjYBSMglEwCigDABk6SuC4NxkcAAAAAElFTkSuQmCC","orcid":"","institution":"Imam Mohammad ibn Saud Islamic University","correspondingAuthor":true,"prefix":"","firstName":"Laila","middleName":"Mohamed Alshawadfy","lastName":"Aladwey","suffix":""},{"id":285386181,"identity":"5bee3b6c-9f85-4c7f-b8ef-4931232aea0c","order_by":1,"name":"Raghad Abdulkarim Alsudays","email":"","orcid":"","institution":"Imam Mohammad ibn Saud Islamic University","correspondingAuthor":false,"prefix":"","firstName":"Raghad","middleName":"Abdulkarim","lastName":"Alsudays","suffix":""}],"badges":[],"createdAt":"2024-03-15 12:45:29","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4107918/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4107918/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":54047087,"identity":"337c84a8-e4b5-4820-881a-fc737919362f","added_by":"auto","created_at":"2024-04-03 19:46:47","extension":"pdf","order_by":0,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":472472,"visible":true,"origin":"","legend":"","description":"","filename":"manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4107918/v1/1baf08a7-a45a-4a41-bc93-a60b8a68e509.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Does Sustainability and Environmental disclosure matter in Saudi Arabia? Insights from a Stakeholders’ Perspective","fulltext":[{"header":"1. Introduction","content":"\u003cp\u003eThe world is facing increasing uncertainties in respect of a range of highly significant environmental, economic and social issues. The planet is experiencing a crisis that has never been witnessed before in the form of climate change, which is a worldwide phenomenon that threatens all humans and non-humans. Different global organisations, for example the United Nations Framework Convention on Climate Change (UNFCCC), have repeatedly been urging people to change their habits and behaviours and promoting a fundamental restructuring of societies so that global average temperatures increase by no more than 1.5\u0026deg;C. However, it is not only the environment that is causing such heightened anxieties, but there are also important social issues urgently needing addressing. For example, poverty is one of the critical social issues and this is related to both human rights and social justice. Additionally, many people not only lack access to shelter and food, but they also lack access to clean water, which is a basic human need. Environmental risks have grown in prominence in recent years and continue to become ever more challenging (see, for example, The Dasgupta Review2, 2021). The significant risks confronting the world have been identified by a range of organisations. For example, the World Economic Forum1 (WEF) has published a risk report annually since 2006 and in the 2020 WEF Global Risks Report (prepared pre-Covid) there is clear anxiety regarding the environmental, economic and social risks we currently face:\u003cdiv class=\"BlockQuote\"\u003e\u003cp\u003e\u0026hellip; the past five years have been the warmest on record \u0026hellip; all while citizens protest the political and economic conditions in their countries and voice concerns about systems that exacerbate inequality. Indeed, the growing palpability of shared economic, environmental and societal risks signals that the horizon has shortened for preventing - or even mitigating - some of the direst consequences of global risks. (World Economic Forum, 2020, p. 4)\u003c/p\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003eWEF (2021) sets out how severe temperatures and rising CO2 emissions are occurring alongside massive losses in biodiversity and species protection is required, agricultural systems are under strain, and pollution of the air and water is becoming an increasingly serious hazard to human health and safety (World Economic Forum, 2021). Because the environmental, social and economic risks facing the world are so severe and are interconnected action is required by many different actors to address them clearly one of the most obvious actors is governments. Additionally, however, it is now almost universally accepted that companies have responsibilities for taking actions which go beyond working to maximise profits for shareholders, and that these might include responsibilities related to some or all of the above issues. Almost 70 years ago Bowen, (\u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e1953\u003c/span\u003e) argued that because business activities impact on peoples\u0026rsquo; lives in different ways then they have social responsibilities. Bowen\u0026rsquo;s early discussions of businesses, ethics and social responsibility led to wider debates in the 1960s as to what responsibilities businesses may have particularly in respect of the environment (see for example, McGuire, \u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e1963\u003c/span\u003e; Frederick, \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e1960\u003c/span\u003e). Companies are now expected to act in respect of environmental and social issues and are not expected to focus solely on economic aspects such as financial performance. In addition to being expected to take relevant \u003cem\u003eactions\u003c/em\u003e on environmental and social issues, there is also an expectation that companies are \u003cem\u003eaccountable\u003c/em\u003e for their actions. This is to ensure they are transparent in explaining what actions they have taken (see, for example, Adams, 2004). Tripathi (2016) explains that there is no agreed definition of corporate accountability but suggests that it might be thought of as \u0026ldquo;the ability of those affected by a corporation to hold corporations to account for their actions\u0026rdquo; (Tripathi, 2016, p. 28). Thus, corporate accountability is typically understood as being founded on the argument that companies are not solely responsible to their shareholders and that there are other stakeholder groups to whom they are also accountable. Hence, Du Reitz (2018) states that, \u0026ldquo;(i)n both research and practice, it is commonly assumed that reported accounts enable accountability. When organisations or individuals account for their performance, their accounts allow external parties to monitor performance and demand accountability.\u0026rdquo; (Du Reitz, 2018, p. 587).\u003c/p\u003e \u003cp\u003eSaudi Arabia, the world's 10th-largest emitter of carbon dioxide, expressed its appreciation for the accomplishments of the G20 in finding sustainable solutions to environmental challenges and strengthening efforts to tackle land degradation, a significant threat to biodiversity, food security, and climate change adaptation. This acknowledgment was made during the speech delivered by the Deputy Minister of Environment, Water and Agriculture for Environment Dr. Osama Ibrahim Faqeeha, at the G20 environment and climate ministers' meeting held in New Delhi, India, 2021.\u003c/p\u003e \u003cp\u003eIn Islam it is required of humankind that the Earth and the environment is well cared for and protected. Hence, relatedly, the Quran declares: \u0026ldquo;That Home of the Hereafter We shall grant to those who desire not high-handedness or evil on earth: and the end is (best) for the virtuous\u0026rdquo; (Quran 28: 83) to indicate that virtue is an obligation, and in terms of the environment Islam is concerned with caring for, and protecting, the environment and for ensuring there is a balance preserved whereby \u0026ldquo;all God\u0026rsquo;s creations are (kept) \u0026hellip; in equilibrium\u0026rdquo; (Ghernaout, 2017, p.76). In this regard, Islamic holism includes a concern for not only the survival but also the well-being of future generations and we are to act as trustees for the environment (Ghernaout, 2017). According to Al-Qaradawi (2000) it is not permissible for one generation to enjoy a monopoly on wealth gained from nature and God\u0026rsquo;s creations at the expense of future generations. As a result, every Muslim who has given themself to the creator is obligated to respect and demonstrate a responsibility to the environment and to all the elements which make up the environment (Helfaya, Kotb and Hanafi, 2018). Islam also warns against despoiling or mistreating the environment; for example, contaminating or being destructive toward the environment is prohibited by the Quran (Kamla et al., 2006). Therefore, to trace the efforts in the country to scale up the Kingdom's climate action, it is vital to examine environmental disclosure practices prior to Country's efforts. As a result, this paper argues that it is appropriate to analyze sustainability and environmental disclosure of Saudi companies from stakeholder lens. The teachings of Islam have a strong accord with the environment and the Saudi Arabia is a highly religious country with Islam of the greatest importance.\u003c/p\u003e \u003cp\u003eThis research contributes to the field of disclosure research by using Saudi Arabia as the research base for examining environmental disclosure practices. Disclosure studies conducted which examine Saudi Arabia their scope is limited. By offering a very thorough analysis and a detailed understanding of environmental disclosure practices with reference to stakeholder and accountability in Saudi Arabia, this thesis addresses the second research gap, which is a scarcity of publications on the country. In addition, this thesis fully takes into account the contextual information and environment relevant to Saudi Arabia. According to Qian et al., (2021), studies of social and environmental disclosure in developing countries replicate prior work in the Western literature while disregarding the richness of contextual information in their country. Thus, this research contributes to knowledge by incorporating contextual factors relevant to Saudi Arabia into the examination of environmental and sustainability disclosure practises. By combining a content analysis with a close reading of the disclosures, this research differs from the usual disclosure research in developing countries while also contributing to the growing body of knowledge in the Western disclosure literature. The principal objective of this paper is to investigate environmental disclosure practices in the context of Saudi Arabia. More specifically, the objectives of studying the environmental disclosures for a sample of large Saudi companies are to investigate who the companies are being most accountable to and to understand what contextual factors are influencing the managers in respect of their disclosure choices. Consistent with these objectives, the aim of the paper is to answer the following questions: \u003cem\u003eRQ1. Who are the primary stakeholders the companies are being accountable to?; RQ2. What contextual factors are influencing the companies to prioritise these stakeholders?\u003c/em\u003e\u003c/p\u003e \u003cp\u003eThe remainder of this paper is structured as follows. Following this introduction, the next section discussed literature review and stakeholder theory. This is followed by the Research \u003cspan refid=\"Sec4\" class=\"InternalRef\"\u003emethodology\u003c/span\u003e section. In the final two sections, we discuss the results and present our conclusions.\u003c/p\u003e"},{"header":"2. Literature review","content":"\u003cp\u003eThere, has been an extensive range of disclosure studies published which examine environmental issues (see, for example, Senn and Giordano-Spring, \u003cspan citationid=\"CR60\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Lu and Abeysekera, \u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e2017\u003c/span\u003e; O\u0026rsquo;Donovan, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e2002\u003c/span\u003e; Patten, \u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e2002\u003c/span\u003e; Gray et al., \u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e1995\u003c/span\u003e). In the Saudi context, disclosure studies conducted which examine Saudi Arabia their scope is limited. The empirical works undertaken by Razak (2015), and Alsahlawi (2016) analysed the disclosure practices of voluntary social and environmental information based on a single theory. Razak (2015) used legitimacy theory to examine corporate social and environmental disclosure practices of 166 listed companies for the year 2013. The content analysis findings revealed that human resources and community information were the most commonly mentioned categories in corporate annual reports. This study's findings show that satisfying public expectations compelled Saudi listed companies to disclose social and environmental information as a way of securing their legitimacy. In another study that embraced a single theory, Alsahlawi (2016) reviewed annual reports of companies operating in the banking industry from 2011\u0026ndash;2014. The study applied stakeholder theory as a theoretical underpinning to investigate voluntary social and environmental information disclosure practices. The findings support the view that particular stakeholders can be demanding social and environmental disclosure more than others. The study found that companies in the banking industry were more responsive to employees\u0026rsquo; demand by disclosing more employee category information.\u003c/p\u003e \u003cp\u003eAnother group of Saudi studies provides theoretical explanations of voluntary social and environmental disclosure from multiple theoretical perspectives. For example, the study of Alotaibi and Hussainey (2016) examined the level of voluntary social and environmental disclosure using multiple theories including legitimacy and stakeholder theories. From a stakeholder theory perspective, their findings concluded that the government is a key stakeholder with influential power on corporate social and environmental disclosure. However, the legitimacy theory was described in general but had no link to the study's findings.\u003c/p\u003e \u003cp\u003eMacarulla and Talalweh (2012) and Issa (2017) also applied legitimacy and stakeholder in addition to other theories. Both studies investigated the level of voluntary social and environmental disclosure in Saudi annual reports. The findings from both studies showed that Saudi companies operating in a sensitive industry, such as oil and energy companies, disclosed information related to the environment more than social information, which is consistent with the legitimation perspective. This conclusion was also supported in empirical work undertaken by Habbash and Hussainey (2016); their content analysis results revealed that companies operating in a sensitive industry, such as telecommunication companies, tend to disclose more social and environmental information in order to seek their legitimacy and avoid any threat. In a similar vein, Mahjoub (2019) support the argument that legitimacy theory provides theoretical explanations regarding industry sensitivity, and he found that oil and the utilities industries in Saudi Arabia also disclosed social and environmental information more than other industries due to their large-scale adverse effects on the environment and local population.\u003c/p\u003e \u003cp\u003eHowever, the general approach of the above studies contributed to the ambiguity of the usefulness of theoretical perspective to interpret voluntary social and environmental disclosure practices in Saudi firms. Saudi prior studies discussed above typically employ multiple theoretical perspectives, such as legitimacy and stakeholder theories, without justifying their research support. Consequently, prior Saudi studies lack a clear explanation of how multiple theoretical perspectives combined in their study are framing the research and contributing to the understanding of voluntary social and environmental disclosure practices. Therefore, there is a gap in the extant literature. Thus, the paper aims to apply stakeholder theory in explaining sustainability and environmental disclosure in Saudi Arabia.\u003c/p\u003e \u003cp\u003eThe value of our paper is evolved in the notion of the thinking that according to report of the General Authority for Statistics (GAStat) published in 2018\u003csup\u003e1\u003c/sup\u003e, Saudi Arabia is fully committed to achieving the SDGs and aligning national plans accordingly in line with Saudi Vision 2030. The vision\u003csup\u003e2\u003c/sup\u003e emphasizes clean water and sanitation, affordable and clean energy, decent work and economic growth, industry innovation and infrastructure, reducing inequalities, and sustainable cities and communities. Collaboration between public, private, and non-profit sectors is central to this endeavour.\u003c/p\u003e \u003cp\u003eThe remainder of this paper is structured as follows. Following this introduction, the next section discussed literature review and stakeholder theory. This is followed by the Research \u003cspan refid=\"Sec4\" class=\"InternalRef\"\u003emethodology\u003c/span\u003e section. In the final two sections, we discuss the results and present our conclusions.\u003c/p\u003e"},{"header":"3. Stakeholder theory","content":"\u003cp\u003eStakeholder theory has been used widely in social and environmental accounting studies, in which the principles of the theory have emerged from business ethics (Clarkson et al., \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e1994\u003c/span\u003e). The primary assumption of stakeholder theory is that firms have responsibilities not only towards their shareholders but also towards their stakeholders as their business operations cause social and environmental harm (Donaldson and Preston, \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e1995\u003c/span\u003e; Freeman, \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e1984\u003c/span\u003e). Thus, it considers social issues (along with maximizing financial returns) that affect stakeholders in a more or less equal way (Donaldson and Preston, \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e1995\u003c/span\u003e; Freeman, \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e1984\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe term \u0026lsquo;stakeholders\u0026rsquo; originated in the 1960s, when the term was initially developed by Ansoff, (\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e1965\u003c/span\u003e) and increased usage occurred in 1984, after Freeman\u0026rsquo;s (\u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e1984\u003c/span\u003e) definition of stakeholders was pulished. Freeman (\u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e1984\u003c/span\u003e, p. 46) defines the term \u0026lsquo;stakeholders\u0026rsquo; as \u0026ldquo;any identifiable group or individual who can affect the achievement of an organization\u0026rsquo;s objectives.\u0026rdquo; In addition, Gray et al. (1996, p. 45) define stakeholders as \u0026ldquo;any human agency that can be influenced by, or can itself influence, the activities of the organization\u0026rdquo;. In this regard, stakeholders are generally divided into two groups: (i) a group of stakeholders who affect the company; and (ii) a group who affected by the company\u0026rsquo;s activities. The term, therefore, refers to the many interest groups who can affect, or be affected by, the firm\u0026rsquo;s activities such as investors, employees, customers, suppliers, government, competitor, pressure groups, stock market, industry bodies, foreign governments, future generation (Gray et al., 1996). Clarkson (1995), further, offers a somewhat narrow definition of stakeholders, in which he distinguishes between two groups of stakeholders: primary and secondary. The first group consists of the key persons or organisations such as shareholders, government, employees, customers, investors, suppliers, and communities. The secondary group consists of the stakeholders who are affected by organisational activities but are not directly involved in their operating activities such as society and nature.\u003c/p\u003e \u003cp\u003eBy looking at the definitions above, the similarity between those definitions of stakeholders refers to the principle of corporate effect proposed by Evan and Freeman (\u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e1993\u003c/span\u003e). The principle of corporate effect implies that almost \u0026lsquo;any group\u0026rsquo; that can affect or is affected by the firm is considered a \u0026lsquo;stakeholder\u0026rsquo;. Surprisingly, this principle (see Freeman,1984, Gray et al., 1996) confirms that terrorists and competitors are potential stakeholders of the firm due to their ability to significantly impact on a firm\u0026rsquo;s activities. This raised serious concerns over stakeholder definitions that are based on the principle of corporate effect. As Clarkson (1994, p. 119, cited in Philips, 2003) argues, \u0026ldquo;stakeholder theory should not be used to weave a basket big enough to hold the world\u0026rsquo;s misery\u0026rdquo;. Therefore, defining stakeholder is not a simple task. For this reason, some researchers, for instance, Hawrysz and Maj (\u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2017\u003c/span\u003e), found that stakeholder definition or identification of stakeholders, in reality, is unclear, despite a large body of literature that has made numerous attempts to define and identify who are the stakeholders from those who are not. However, these attempts caused disagreement in the literature on what constitutes a stakeholder (Mitchell, Agle and Wood, \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e). As Stoney and Winstanley state \u0026ldquo;\u0026hellip;there is considerable confusion arising from the multitude of conflicting views [and]\u0026hellip; failure to recognise and map this diversity has weakened rather than strengthened the stakeholder concept\u0026rdquo; (2001, pp. 605\u0026ndash;606)\u003c/p\u003e \u003cp\u003eTherefore, different stakeholders\u0026rsquo; definitions make it difficult to reach a general agreement on who are stakeholders (Gray, \u003cspan citationid=\"CR32\" class=\"CitationRef\"\u003e2001\u003c/span\u003e). However, while several studies suggest that the term of stakeholder suffers from vagueness and ambiguity (see, Crane and Ruebottom, \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Fassin, \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2009\u003c/span\u003e), Freeman et al., (\u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2010\u003c/span\u003e) argue that different definitions are generated to serve different purposes, and each definition focuses on attributes that are relevant to the context of the study. Stakeholders from the principle of corporate rights are those to whom the company has a moral obligation and legitimate relationship, regardless of whether the stakeholder is of human or non-human origin. This definition was found by Phillips (\u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, \u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2000\u003c/span\u003e) in which stakeholder is described as:\u003cdiv class=\"BlockQuote\"\u003e\u003cp\u003eWhenever persons or groups of persons voluntarily accept the benefits of a mutually beneficial scheme of cooperation requiring sacrifice or contribution on the parts of the participants and there exists the possibility of freeriding, obligations of fairness are created among the participants in the cooperative scheme in proportion to the benefits accepted (Phillips, \u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, p. 51).\u003c/p\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003eThe adopted definition has a common theme with the notion of eco-justice that people have a moral obligation and legitimate relationship to their total environments, human and non-human. According to Bowers (\u003cspan citationid=\"CR9\" class=\"CitationRef\"\u003e2001\u003c/span\u003e):\u003cdiv class=\"BlockQuote\"\u003e\u003cp\u003eThe ambitious aim of eco-justice is to develop an ethic of social and ecological justice where issues of race, class, gender, language, politics, and economics must be worked out in terms of people\u0026rsquo;s relationship to their total environments human and non-human. (Cited in Gruenewald, 2003, p. 6)\u003c/p\u003e\u003c/div\u003e\u003c/p\u003e \u003cp\u003ePhillips (\u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, \u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2000\u003c/span\u003e) proposed that the adopted definition of stakeholder includes individuals or groups such as suppliers, the state, customers, employees, communities, local government, investors, nature, and future generations. In that sense, it contrasts with earlier versions of the stakeholder definitions, which excludes individual or groups who do not have a moral obligation and legitimate relationship with the company, even if they can affect organisational activities such as competitors, terrorists, and media (Fassin, \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eFrom a stakeholder definition, a firm exists within a complex network of relationships between various stakeholder groups (Rowley, \u003cspan citationid=\"CR58\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) and should therefore take the needs and preferences of its stakeholders into account in decision making for reasons normative, instrumental, or both (Mitchell et al. \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e; Donaldson and Preston \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e1995\u003c/span\u003e). To this extent, Stakeholder theory has distinguished between different forms of stakeholder-company relationships through two branches (or perspectives), an ethical branch and managerial (instrumental) (Deegan and Unerman, 2011; Hasnas, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e1998\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe normative perspective of stakeholder theory focuses on the company\u0026rsquo;s moral and ethical obligations vis-a-vis its stakeholders and thus provides the answer to why firms should consider their stakeholders\u0026rsquo; interests other than shareholders (Hayibor, \u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e2017\u003c/span\u003e; Crane and Matten, \u003cspan citationid=\"CR14\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). In particular, it is argued that all stakeholders without exception have equal rights and interests. This implies that the company should prioritise all stakeholders\u0026rsquo; interests, especially when conflicts arise between various stakeholder groups (Hasnas, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). In contrast, the managerial (or instrumental) perspective of stakeholder theory argues that it is unlikely a company can meet the expectations of \u0026lsquo;all\u0026rsquo; its stakeholders (Cobb, \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e2016\u003c/span\u003e; Deegan and Blomquist, \u003cspan citationid=\"CR18\" class=\"CitationRef\"\u003e2006\u003c/span\u003e; Deegan, \u003cspan citationid=\"CR17\" class=\"CitationRef\"\u003e2002\u003c/span\u003e).Therefore, companies may not engage with all their stakeholders but rather respond to the \u0026lsquo;key\u0026rsquo; stakeholders (Nasi et al., \u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e1997\u003c/span\u003e). This perspective suggests that various stakeholder groups\u0026rsquo; interests or goals often differ from one another, implying that the company needs to satisfy the needs of its \u0026lsquo;key\u0026rsquo; stakeholders to maintain access to the resources necessary for its survival (Freeman, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e1999\u003c/span\u003e; Brenner and Cochran, \u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e1991\u003c/span\u003e). Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) developed the most commonly used model that explains how managers prioritise their relationships with key stakeholders based on their perceived salience. This model has since been used regularly by practitioners and researchers, which is defined as \u0026ldquo;the degree to which managers give priority to competing stakeholders\u0026rsquo; claims\u0026rdquo; (Mitchell et al., \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, p. 854). The Mitchell et al.\u0026rsquo;s (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) stakeholder salience model assesses the importance of the stakeholders based on three attributes: (i) power, which refers to a stakeholder\u0026rsquo;s ability to exert its influence on the organisation; (ii) legitimacy, which represents the extent to which a stakeholder\u0026rsquo;s claims conform to the norms and bounds of the wider society and (iii) urgency that implies the degree to which the claims of a stakeholder demand immediate action (Farmaki and Farmakis, \u003cspan citationid=\"CR23\" class=\"CitationRef\"\u003e2018\u003c/span\u003e). In essence, the stakeholder salience model suggests that companies tend to respond to stakeholders\u0026rsquo; expectations with more salient (two or all attributes) than less salient stakeholders who have one attribute (Farmaki and Farmakis, \u003cspan citationid=\"CR23\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Kaur and Lodhia, \u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e2018\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eAccording to the power attribute, prior literature defined stakeholder power as \u0026ldquo;the ability of those who possess the power to bring about the outcomes they desire\u0026rdquo; (Pfeffer and Salancik, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1974\u003c/span\u003e, p. 3). Gruenfeld et al., (\u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2008\u003c/span\u003e) also defined power as \u0026ldquo;the capacity to influence other individuals through asymmetric control over valuable resources and the ability to administer rewards and punishments.\u0026rdquo; (p. 112). Therefore, the power attribute is viewed as a stakeholder\u0026rsquo;s degree to control corporate management, by controlling the supply of critical resources required by an organisation or by holding a principal position to reward or disregard the actions of an organisation (Kaur and Lodhia, \u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Mitchell et al., \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e). Thus, the more critical (powerful) stakeholders\u0026rsquo; resources required by the firms, the greater expectation that the stakeholder\u0026rsquo;s demand will be met.\u003c/p\u003e \u003cp\u003eThe legitimacy attribute, then, is used to explain the legitimacy of a stakeholder\u0026rsquo;s relationship with an organisation. Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) argued that only legitimate stakeholders\u0026rsquo; claims would be addressed by an organisation. However, it is argued that legitimate stakeholders would not \u0026lsquo;always\u0026rsquo; have a serious effect on the decisions and activities of the organisation without power, but legitimate stakeholders could still gain power over time and change the organisation\u0026rsquo;s actions (Kaur and Lodhia, \u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Driscoll and Starik, \u003cspan citationid=\"CR21\" class=\"CitationRef\"\u003e2004\u003c/span\u003e). The third attribute of stakeholder salience, urgency, is related to \u0026ldquo;the degree to which stakeholder\u0026rsquo;s claims call for immediate attention\u0026rdquo; (Mitchell et al., \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, p. 687). This attribute, according to Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e), characterises as time sensitivity (issues that need to be given immediate attention) and necessity (claims that are critical and highly important). In other words, stakeholders with the urgency attribute can take actions against the firm in their attempt to protect their interests, and such actions may take different forms such as boycotts, divestments, regulation, and strikes (Hayibor, \u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). However, Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) suggested that stakeholders were very likely unable to take immediate action without possessing power. In this sense, urgency is often implicitly related to power.\u003c/p\u003e \u003cp\u003eAs a result, the power attribute in Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e)\u0026rsquo;s model tends to be the most influential feature in prioritising stakeholders\u0026rsquo; relationships with the organisation. For instance, Frooman (\u003cspan citationid=\"CR30\" class=\"CitationRef\"\u003e1999\u003c/span\u003e) provided an extensive discussion of how stakeholders can exercise influence over the firm according to how much power they have in their relationship with the company. Specifically, key stakeholders with power attributes can threaten to withdraw their resources from being used by the firm. Then they can attach conditions to the continued supply of their resources (Frooman, \u003cspan citationid=\"CR30\" class=\"CitationRef\"\u003e1999\u003c/span\u003e). Moreover, according to Bridoux and Vishwanathan (\u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2020\u003c/span\u003e), powerful stakeholders can constrain the scope of stakeholder orientation; instead, they use their power to confiscate other stakeholders. Powerful stakeholders also can exercise their influence to sacrifice the short-term benefits and ensure fair allocation of firm resources (Herremans, Nazari and Mahmoudian, \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). For instance, Tantalo and Priem, (\u003cspan citationid=\"CR62\" class=\"CitationRef\"\u003e2016\u003c/span\u003e) argue that investors with a long-term orientation expect their investee companies to compensate employees fairly. This increases their motivation at work and hence their productivity, which often leads to an increase in the company\u0026rsquo;s long-term profitability. Flammer and Bansal, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e2017\u003c/span\u003e) provide empirical support for this argument, showing that shareholder proposals to tie executive compensation to the company\u0026rsquo;s long-term growth would encourage managers to improve its stakeholders\u0026rsquo; relationships (for example, employees), which in turn leads to more significant improvement in its long-term profitability.\u003c/p\u003e \u003cp\u003eConsequently, these attributes can play an essential role in the identification and prioritisation of stakeholders. In addition, the salience of stakeholders can reflect the degree to which environmental and sustainability disclosure claims are given priority. Moreover, Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) pointed out that different stakeholder groups\u0026rsquo; salience can change over time. Mitchell et al. (\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, p. 879) posit \u0026ldquo;[\u0026hellip;] stakeholders change in salience, requiring different degrees and types of attention depending on their attributed possession of power, legitimacy, and/or urgency, and that levels of these attributes (and thereby salience) can vary from issue to issue and from time to time\u0026rdquo;. From this quotation, various activities undertaken by organisations, including public disclosure, are likely to change depending on different stakeholder expectations and salience to continue their ability and success. In this paper, stakeholder analysis becomes relevant as it involves identifying key stakeholders and their interests and assessing their influence and relationships with organisations.\u003c/p\u003e"},{"header":"4. Methodology","content":"\u003cp\u003eIn order to address the research questions: RQ1. Who are the primary stakeholders the companies are being accountable to?; RQ2. What contextual factors are influencing the companies to prioritise these stakeholders?, this paper employs content analysis and close reading approach. According to Guthrie and Abeysekera, (\u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e2006\u003c/span\u003e) the technique of integrating multiple qualitative methods potentially provides deep insights into individuals\u0026rsquo; perspectives. However, whilst they commend integrating multiple qualitative methods, they contend that \u0026ldquo;content analysis of annual reports together with semi-structured interviews\u0026rdquo; (Guthrie and Abeysekera, \u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e2006\u003c/span\u003e, p. 118) is not commonly used in accounting studies. Employing content analysis with close reading can increase the credibility and validity of the findings of this study. Content analysis is an exploratory research strategy used in this thesis to gather data on, and analyse the disclosure of, eco-justice issues. This method can be employed to analyse environmental disclosure by examining organisational documents, such as annual reports. Such a method allows the researcher to identify to whom the companies appear to be seeking to be most accountable by determining the most sustainability and environmental issues that companies disclose and do not disclose in their annual reports.\u003c/p\u003e \u003cp\u003eContent analysis is one of the most significant research techniques in the social sciences and has long been utilized in accounting (Krippendorff, \u003cspan citationid=\"CR44\" class=\"CitationRef\"\u003e2004\u003c/span\u003e). Berelson, (\u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e1952\u003c/span\u003e) defines content analysis as \u0026ldquo;a research technique for the objective, systematic and quantitative description of the manifest content of communication\u0026rdquo;. In addition, Holsti (\u003cspan citationid=\"CR41\" class=\"CitationRef\"\u003e1969\u003c/span\u003e, p. 14) refers to this method as \u0026ldquo;characteristics of message\u0026rdquo;. This method has been widely mobilised in the social and environmental accounting literature to identify the characteristics of corporate social and environmental disclosure (see for example, Michelon, Pilonato and Ricceri, \u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e2015\u003c/span\u003e; Beck, Campbell and Shrives, \u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Kuasirikun and Sherer, \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2004\u003c/span\u003e; Adams, Hill and Roberts, \u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Guthrie and Parker, \u003cspan citationid=\"CR35\" class=\"CitationRef\"\u003e1990\u003c/span\u003e). Other studies have also employed content analysis to track changes of organisational values over time through organisation\u0026rsquo;s documents (Bryman and Bill, 2011). Furthermore, content analysis is also useful when researching on sensitive issues as the case of this thesis which is researching eco-justice issues in Saudi company reports (Harris, \u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e2001\u003c/span\u003e). Eco-justice is a sensitive topic as it is connected to issues of power issues (for example, who causes pollution; who suffers from pollution) and is focused on issues which can often be controversial and contentious, provoking significant debates or disputes (for example, eco-justice includes issues such as gender and corruption).Content analysis is a method that can be either quantitative or qualitative (Unerman, \u003cspan citationid=\"CR63\" class=\"CitationRef\"\u003e2000\u003c/span\u003e). Quantitative content analysis measures the volume of disclosure, which indicates the significance of the text (Krippendorff, \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2019\u003c/span\u003e; Gray et al., \u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e1995\u003c/span\u003e), whereas qualitative content analysis focuses on the meaning and implications of the disclosure context (Bennington, 1999). The analysis of eco-justice issues in this study does not only focus on quantitative aspects of environmental disclosures such as sentence counts, but also examines qualitative aspects of the disclosure to understand their meanings and implications within the Saudi context.\u003c/p\u003e \u003cp\u003eThe close reading methodology helps ensure the quality of the environmental disclosures are considered and appropriately analysed. This is because the close reading method requires the researcher to actively observe details within the text under investigation and to be attentive to all characteristics which might usefully inform the researcher of interesting or significant ideas pertaining to the disclosures as a pre-cursor to the development of themes and sub-themes for the different categories relevant to addressing the research questions set out in the paper. Following an initial reading to familiarise the researcher with the content and nature of the disclosures then re-reading the disclosures several times is vital in this methodology. This is to ensure sufficient attention is paid to whether themes and sub-themes, and stakeholders pertinent to the companies, which are identified during the re-readings are recurring (or even possibly negated) across the disclosures; this is an important facet of assessing the quality of the disclosures. Further, attentiveness and observation must be supplemented by interpretation as this facilitates the researcher in comprehending what is important in the disclosures and again assists in enabling the researcher to assess the quality of the disclosures particularly by making connections across the different disclosures in respect of themes, sub-themes and their connection to the theories used in the research. Close reading also requires the researcher to be self-aware and self-critical particularly in respect of ensuring they avoid holding pre-conceptions in advance of applying the method. Furthermore, the close reading technique assists in interacting with an unclear text through discussion and discourse, as well as eliminating the aspect that impacts the subjectivity of qualitative research. The companies chosen for the study are all listed on the Saudi Stock Exchange (Tadawul), and the main criterion for including a company in a sample was its size, as measured by market capitalisation. To obtain a representative sample, the 18 companies were chosen on the basis of the two companies from each industry sector on the Stock Exchange with the largest market capitalization as at the year 2022. The companies chosen represent 9 of 16 industries on the Stock Exchange; 7 industries were excluded due to a lack of accessibility to the companies\u0026rsquo; annual reports. The focus on large companies in this paper is consistent with prior literature which links the level of voluntary corporate disclosures with the size of companies indicating that larger companies are more likely to make voluntary corporate disclosures than small and medium sized companies (Adams et al., 1995). Furthermore, as this sample consist of the largest Saudis companies, it is expected that they are more liable to any change in voluntary disclosure practice in Saudi Arabia. The companies chosen for the study would be the most useful in capturing the data for several reasons identified by Gray et al, (\u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e1995\u003c/span\u003e): First, larger companies are more likely to demonstrate examples of voluntary corporate disclosure than an equivalent sample of medium or small companies; in terms of tracking trends, this sample is recommended to identifying innovations and capturing more voluntary disclosure practices. Second, a sample of the largest companies will be more comparable \u0026ndash; on size at least \u0026ndash; with a majority of other studies which sample from the largest companies. Finally, obtaining the annual reports from the larger companies proves to be much more reliable than for other samples.\u003c/p\u003e"},{"header":"5. Analysis and Discussion of Environment and Sustainability disclosures","content":"\u003cp\u003eThese two categories are interconnected in that they both concern the disclosures the companies have made in respect of the stewardship of natural resources, including the allocation of natural resources within the current generation and between the current and future generations. The Environment category comprises references to any issues related to the environment such as air pollution, water management, noise, waste and recycling plus any attempts to identify, improve or prevent these issues. The Sustainability category encompasses references to the concept of stewardship and the responsible management of resource use. Because they are interrelated, it is logical to consider these two categories and to investigate what factors may be causing these disclosures concurrently.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003ei. Overall analysis\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eAs can be seen from Table\u003cspan class=\"InternalRef\"\u003e1\u003c/span\u003e below, there is a total of 880 disclosures across the eleven-year period for the combined two categories of Environment and Sustainability in the companies\u0026rsquo; annual reports. This is a relatively low number of disclosures, equating to an average of only 3.6 disclosures per year per company, and accounting for 15.5% of all disclosures. Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e1\u003c/span\u003e shows that the number of disclosures within the Environment category is 9.9% of the total disclosures whilst the Sustainability disclosures account for 5.6% of total disclosures. Prima facie, this appears to suggest that providing Environment and Sustainability disclosures is not a high priority for the companies. The causes of the relatively low numbers of disclosures in the Environment and Sustainability categories are discussed in the following sub-sections.\u003c/p\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab1\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eEnvironment and Sustainability disclosures for sample companies\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eDisclosure Category\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e% of Total Disclosures\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eNumber of Disclosure sentence\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironment\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e9.9%\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e561\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eSustainability\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e5.6%\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e319\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTotal\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e15.5%\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e880\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cp\u003e\u003cem\u003eii. Environment and Sustainability disclosures: the lack of government focus on meeting environmental challenges\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eSaudi Arabia has a predominantly arid desert landscape with few coastal areas and mountain ranges, limited annual rainfall and scarce groundwater reserves (Al-saidi, Zaidan and Hammad, \u003cspan class=\"CitationRef\"\u003e2019\u003c/span\u003e). Despite the country\u0026rsquo;s minimal natural resources, the national government\u0026rsquo;s agenda for protecting the environment was limited in the period under investigation. Similarly, although caring for nature and the earth\u0026rsquo;s resources are an important part of Islam, many Muslim countries are reluctant to impose Western concepts of environmentalism (Ozdemir, \u003cspan class=\"CitationRef\"\u003e2021\u003c/span\u003e). Therefore, there were no specific environmental or sustainability initiatives developed by the religious authorities in Saudi Arabia. The managerial stakeholder lens emphasises that companies respond to the demands of their key stakeholders. Thus, the relative lack of attention to environmental and sustainability matters in Saudi companies\u0026rsquo; annual reports appears to potentially stem from this lack of religious and Saudi government focus (and demand for change) in respect of these two aspects.\u003c/p\u003e\n\u003cp\u003eThe exploration for, and exploitation of, oil reserves commencing in 1938 transformed not only the society and economy of Saudi Arabia but brought with it tremendous repercussions on the physical environment. Unprecedented levels of socio-economic transformation resulted in rapid industrialisation, inefficient use of resources, unplanned urbanisation, and large-scale consumption patterns resulting in a set of environmental issues (Al-Saidi et al., \u003cspan class=\"CitationRef\"\u003e2019\u003c/span\u003e; Al-Soliman, \u003cspan class=\"CitationRef\"\u003e1993\u003c/span\u003e). The government\u0026rsquo;s main concern has, since 1938, however been to introduce policies and initiatives to support economic development, as well as to provide physical infrastructure, public services, and improve human capital development (Bishara et al., \u003cspan class=\"CitationRef\"\u003e2016\u003c/span\u003e). This preoccupation with economic growth has appeared to overshadow government attention regarding the environmental consequences of the country\u0026rsquo;s development and the responsibilities that should accompany economic development.\u003c/p\u003e\n\u003cp\u003eThis is not to suggest the government wholly neglected to attend to environmental concerns; rather that environmental and sustainability concerns were a much lower priority. The rise in environmental demands in Saudi which have been a result of major demographic pressures and increased living standards in the mid-1980s did cause the government to become uncertain about its ability to meet the needs of its population with limited natural resources (Darfaoui and Al Assiri, \u003cspan class=\"CitationRef\"\u003e2010\u003c/span\u003e). As a result, the government adopted a more positive attitude towards the environment through their national development plans. Specifically, in addition to the socioeconomic development goals, the second stage of National Development Plan (1985\u0026ndash;2005) set out two goals in respect of the environment, although these were very broad in nature. The first is to protect the national environment by preventing pollution and desertification of terrestrial, aquatic, and water resources; the second encourages both individuals and institutions to show consideration towards the environment (Al-Soliman, \u003cspan class=\"CitationRef\"\u003e1993\u003c/span\u003e).\u003c/p\u003e\n\u003cp\u003eThe Saudi government established these goals in the National Development Plan primarily to encourage a limited number of industries to have a greater environmental awareness although subsequently, some limited government initiatives did occur in respect of environmental regulation relevant to companies. The industries that the government identified as contributing to environmental issues such as CO2 emissions, energy waste, and water shortages include petroleum-based industries and industries characterized by the extensive use of water and energy. Thus, there has been some emphasis by the government on these industries.\u003c/p\u003e\n\u003cp\u003eHowever, it is important reiterate that these government regulations concerning protecting the environment have not had the same prominence or importance as policy initiatives that have been created to address social and economic issues such as improving the quality of life within society and promoting education and skills development. Consequently, the government\u0026rsquo;s efforts to resolve environmental problems are not comparable to those efforts made to address social and economic issues. This is mirrored in the companies\u0026rsquo; disclosures and is observable when comparing Environment and Sustainability disclosures to other disclosures. the environmental issues facing the country received relatively little consideration in government policies and initiatives and the lower numbers of disclosures in the Environment and Sustainability categories reflect this. Therefore, these Environment and Sustainability disclosures are meaningfully related to the stakeholders\u0026rsquo; demands, particularly the government, with these disclosures appearing to be a function of the companies following the government\u0026rsquo;s lead with its relative lack of focus on environment and sustainability matters. This gives the sense that companies are acting in accordance with the government\u0026rsquo;s priorities to gain or maintain their legitimacy and thus ensure their survival.\u003c/p\u003e\n\u003cp\u003eIt is important to note that the Environment and Sustainability disclosures it is the industry perspective which must be examined to interpret the disclosures. The next section provides support for this assertion explaining in greater detail the connection between the government initiatives and the disclosures in those industries that are more environmentally sensitive; namely, materials\u003csup\u003e3\u003c/sup\u003e\u003ca id=\"#FNLinkFn3\" class=\"FNLink\" href=\"#Fn3\"\u003e\u003c/a\u003e, utilities and food and beverage. The other industries (non-sensitive to environment) played far less of a role in the Kingdom\u0026rsquo;s environmental activities and, hence, provided very few disclosures in respect to Environment and Sustainability.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eiii. Environment and Sustainability disclosures: analysis of the disclosures from an industry perspective\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eIn the above discussion, it has been stated that the government has had limited focus on environmental issues and that this is restricted to encouraging a limited number of industries to have a greater environmental awareness. It is important to add to this explanation as to why there are so few disclosures in the Environment and Sustainability categories through considering the disclosures from an industry standpoint.\u003c/p\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab2\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eEnvironment and Sustainability disclosure for sample companies across industry\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eDisclosure Category\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eEnergy\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eFinancials\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eFood \u0026amp; Beverage\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eMaterials\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eReal Estate\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eTelecom\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eUtilities\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eTotal\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003eEnvironment\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e28\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e14\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e80\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e232\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e9\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e6\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e192\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e561\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003eSustainability\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e35\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e79\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e189\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e10\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e6\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e319\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003eTotal\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e28\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e49\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e159\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e421\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e9\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e16\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e198\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e\u003cstrong\u003e880\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cp\u003eAs can be seen from Table \u003cspan class=\"InternalRef\"\u003e2\u003c/span\u003e above, the materials (421 sentences), utilities (198 sentences) and food and beverage (159 sentences) industry are the leading disclosers in respect of Environment and Sustainability. Traditionally, these are industries which are more sensitive to environmental issues (Patten, 1991, 1992). Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e2\u003c/span\u003e shows that other industries that are non-sensitive to environment - namely, financials, real estate, telecom and energy - provide minimal Environment and Sustainability disclosures. This observation regarding the companies in the materials, utilities, and food and beverage industries having far greater numbers of disclosures is discussed further in the following sub-section.\u003c/p\u003e\n\u003cp\u003e\u003cem\u003eiv. Environment and Sustainability disclosures: discussions in the annual reports for the materials and utilities industries\u003c/em\u003e\u003c/p\u003e\n\u003cp\u003eThe Environment and Sustainability disclosures provided in the annual reports are noticeably dominated by industries that are under Saudi governmental encouragement to be environmentally aware due to their sensitivity to environmental issues; namely, materials, utilities, and food and beverage. The result is that these companies provide 88.4% of disclosures (778 of the total 880 disclosures) in these categories of Environment and Sustainability.\u003c/p\u003e\n\u003cp\u003eThis sub-section and the subsequent sub-section build on the discussions in the previous sub-section and argue that the companies operating in environmentally sensitive industries provide Environment and Sustainability disclosures in their annual reports as a response to Saudi government placing some greater attention on requesting companies in these industries to be environmentally aware. Therefore, these companies are employing a legitimising strategy and ensuring they meet the stakeholder\u0026rsquo;s expectations regarding by disclosing they are not environmentally irresponsible (Lindblom, 1994\u0026rsquo;s strategy). Again, it is important to reiterate that these environmental initiatives in these industries have not had the same importance or prominence as policy initiatives that have been created to address social and economic issues.\u003c/p\u003e\n\u003cp\u003eThe oil and petrochemical industries (contained within \u0026lsquo;material\u0026rsquo; industry) are essential to the country\u0026rsquo;s economy, as Saudi Arabia is the world\u0026rsquo;s third largest producer of oil and possesses the world\u0026rsquo;s largest oil reserves. However, the oil and petrochemical industries have contributed to major environmental problems in the country, such as air, water, and soil pollution, climate change, and a rise in carbon footprint. According to Darfaoui and Al Assiri (\u003cspan class=\"CitationRef\"\u003e2010\u003c/span\u003e), oil and petrochemical industries accounted for 90% of all CO2 emissions in the country. Furthermore, the oil and petrochemical industries not only impact of climate change and greenhouse gas emissions, but also effect the environmental profile of the country. Because of this, there have been ongoing critiques of the Saudi government not having sufficient focus on acting to meet the different challenges the world faces in respect of the environment and sustainability (Barbuscia and Khalid, 2019). As a response, the Saudi government implemented a number of environmental policies and initiatives, such as Carbon Capture and Storage initiatives (CCS), as a way to regulate and raise environmental awareness in the oil and petrochemical industries, and thus improving the country\u0026rsquo;s negative environmental profile. The government attention directed at this industry is a likely explanation why the materials industry sector has the greatest number of disclosures (421 of total 880 disclosures which equates to nearly half of the total disclosures). Namely, this industry has responded to the government attention to ensure it does not neglect being accountable to this primary stakeholder. Furthermore, the environment and sustainability disclosures provided by the materials industry sector are used as a legitimation tool to portray a picture of growing awareness about the environment and sustainability and thus ensure its survival. However, it needs to be reiterated that whilst there was some government emphasis on environment and sustainability issues for this industry, it was still a limited government emphasis compared to Community and Training and Education. This is reflected in the generalised nature of the disclosure. Thus, the companies in materials industry are, for example, explaining they are compliant with regulations, as the following disclosure examples illustrate:\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eOur exploration, \u003cstrong\u003emining and operational activities are subject to various environmental regulations applicable in Kingdom of Saudi Arabia.\u003c/strong\u003e These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation\u0026hellip; Non-compliance with the applicable laws and regulations might result in imposition of fines and penalties by the regulatory authorities. (MD annual report, 2012, p. 25, emphasis added)\u003c/p\u003e\n\u003cp\u003eDuring the year, [the company] \u003cstrong\u003emaintained its compliance with environmental regulations\u003c/strong\u003e, ... Assessment of nitrogen oxide (NOx) emissions at its manufacturing affiliates in Saudi Arabia was completed during the year and confirmed the plants \u003cstrong\u003eas meeting the emission-control standards set by the Royal Commission of Jubail and Yanbu\u003c/strong\u003e. (SB annual report, 2009, p. 46, emphasis added)\u003c/p\u003e\n\u003c/div\u003e\n\u003cp\u003eIn addition to implementing some policies for oil and petrochemicals, to reduce wastage and preserve the country\u0026rsquo;s energy the Saudi government established the National Energy Efficiency Programme to increase adoption of clean energy and reduce the consumption of non-renewable resources. Energy\u003csup\u003e4\u003c/sup\u003e\u003ca id=\"#FNLinkFn4\" class=\"FNLink\" href=\"#Fn4\"\u003e\u003c/a\u003e in Saudi Arabia involves petroleum and natural gas production as well as and electricity production and, therefore, the materials and utilities\u003csup\u003e5\u003c/sup\u003e\u003ca id=\"#FNLinkFn5\" class=\"FNLink\" href=\"#Fn5\"\u003e\u003c/a\u003e sectors are the two industries where this has some impact as they had a role to play in the Kingdom\u0026rsquo;s Energy Efficiency initiative. This is evident in the Environment and Sustainability disclosures observable in the disclosures for companies operating in materials and utilities industries, which demonstrate their general support for the government Energy Efficiency Programme, and meet the expectations of the Saudi government, as shown in the example disclosures below:\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u0026hellip;the company aims to have a leading role in the field of environmental protection throughout the Kingdom of Saudi Arabia by achieving \u003cstrong\u003ecompatibility with the updated environmental standards\u003c/strong\u003e issued by the General Authority of Meteorology and Environmental Protection on 2/5/1435 AH \u0026hellip; thereby \u003cstrong\u003eincreasing the production of clean energy\u003c/strong\u003e and reducing the consumption of non-renewable resources. (SE annual report, 2015, p. 54, emphasis added)\u003c/p\u003e\n\u003cp\u003e[The company] \u003cstrong\u003eembraced energy management system\u003c/strong\u003e focus as a key enabler of active positive contribution toward efforts to reduce global warming, and improve the performance of assets and \u003cstrong\u003emeet legislative requirements\u003c/strong\u003e. (SB annual report, 2016, p. 45, emphasis added)\u003c/p\u003e\n\u003cp\u003e\u003cem\u003ev. Environment and Sustainability disclosures: water scarcity discussions in the annual reports for the materials and food and beverage industries\u003c/em\u003e\u003c/p\u003e\n\u003c/div\u003e\n\u003cp\u003eThe above sub-section has discussed how the attention of the Saudi government on oil and petrochemicals industries, as well as the Saudi government focus on improving energy efficiency have motivated the Environment and Sustainability disclosures. A third area where the Saudi government has had some focus with regards to environmental and sustainability is water scarcity. Water scarcity is particularly relevant to the materials and food and beverage industries since water consumption is an important element of their operations, and this is now discussed.\u003c/p\u003e\n\u003cp\u003eWater scarcity, which includes both water supply and water quality, is a significant health predictor and is inextricably related to food security, sanitation, and hygiene (Denicola et al., \u003cspan class=\"CitationRef\"\u003e2015\u003c/span\u003e). In Saudi Arabia, one of the largest arid countries in the world and classified by the United Nations as a water-scarce nation, the incautious use of groundwater resources for agricultural, industrial and domestic purposes over a long period of time combined with an annual increase in water demand has had a substantial impact on the availability and quality of water resources (Schaar, \u003cspan class=\"CitationRef\"\u003e2019\u003c/span\u003e; Denicola et al., \u003cspan class=\"CitationRef\"\u003e2015\u003c/span\u003e). This has meant that the risk of disease in the Kingdom has increased as a result of low water quality and availability. As a result, the Saudi government has incorporated the issue of water scarcity into national agendas and initiatives to regulate those industries that contribute to the extensive use of water in Saudi Arabia.\u003c/p\u003e\n\u003cp\u003eThe industries affected are the food and beverage\u003csup\u003e6\u003c/sup\u003e\u003ca id=\"#FNLinkFn6\" class=\"FNLink\" href=\"#Fn6\"\u003e\u003c/a\u003e and materials industries, and the need is to ensure water is continuously available and conservation of water is important (Al Zaharani, Al Sayaa and Baig, 2011). The Saudi government has taken some conservation measures in an attempt to reduce the use of groundwater and to use desalinated seawater (Kajenthira, Siddiqi and Anadon, \u003cspan class=\"CitationRef\"\u003e2012\u003c/span\u003e). Water scarcity is evident in the disclosures of companies in these two industries in the Environment and Sustainability categories. In their annual reports, companies in food and beverage and materials industries state how water is an extremely valuable resource and the most important environmental challenge facing the Kingdom, as shown in the example disclosures below:\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eIn Saudi Arabia, we face a challenging set of environmental factors, \u003cstrong\u003ethe most pressing of which is water conservation\u003c/strong\u003e. (MR annual report, 2015, p. 41, emphasis added)\u003c/p\u003e\n\u003cp\u003eWater is \u003cstrong\u003ea scarce and valuable\u003c/strong\u003e commodity throughout the Kingdom (MD annual report, 2011, p. 46, emphasis added)\u003c/p\u003e\n\u003c/div\u003e\n\u003cp\u003ePrograms for processed wastewater recycling are one of the conservation techniques the Saudi government has introduced. Therefore, wastewater recycling has gained favour in Saudi Arabia as an efficient way to curb demands on water resources, and to help balance both water and food security (Schaar, \u003cspan class=\"CitationRef\"\u003e2019\u003c/span\u003e; Denicola et al, \u003cspan class=\"CitationRef\"\u003e2015\u003c/span\u003e; Zaharani et al, 2011). The companies state in their Environment and Sustainability disclosures that they employ wastewater recycling systems to overcome the problem of water scarcity and make efficient use of water. This type of company initiative is aligned with the government water conservation measures. This gives the sense that companies are seeking to meet government's expectation regarding efforts to curb demands on groundwater and desalinated seawater. Therefore, providing disclosures regarding water scarcity can be understood as legitimation strategy employed by Saudi companies to demonstrate their support for the government\u0026rsquo;s strategic goals and meet the expectations of the Saudi government regarding water conservation, as shown in the example disclosures below:\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e[The company] has undertaken \u003cstrong\u003emany initiatives to reduce water usage\u003c/strong\u003e. This includes importing 100% of the green fodder required to produce the [company] milk which is exported out of the Kingdom. (MR annual report, 2013, p. 25, emphasis added)\u003c/p\u003e\n\u003cp\u003e\u0026hellip; the project is \u003cstrong\u003eemploying a wastewater treatment system\u003c/strong\u003e (Engineered Natural System) that will treat and recycle processed waste water, sanitary waste water and storm water back to operations. (MD annual report, 2011, p. 47, emphasis added)\u003c/p\u003e\n\u003cp\u003e\u003cem\u003evi. Environment and Sustainability disclosures: beyond government environmental initiatives\u003c/em\u003e\u003c/p\u003e\n\u003c/div\u003e\n\u003cp\u003eIn the previous sub-sections, it has been stated that the majority of the disclosures in these two categories are located in the three industries where the Saudi government attention has been focused. This is due to their having a more significant impact on the environment when compared to the other industry sectors. The discussions in the Environment and Sustainability disclosures appear to be a function of the companies following the government's lead in this area. Namely, the Saudi government has undertaken some environmental initiatives, but they are relatively low key and the result is that the disclosures are similarly modest.\u003c/p\u003e\n\u003cp\u003eThere is, however, an additional comment that needs adding. Some companies operating in these industries have provided a small number of Environment and Sustainability disclosures which show an awareness of the environment which goes beyond government requirements. The following disclosure, for example, clearly shows that the company's environmental programme to reduce its environmental footprint goes beyond regulatory requirements:\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eWe have strengthened our commitment to reduce [the company] environmental footprint, shifting from a compliance-led program to stewardship-based performance through \u003cstrong\u003ea program that goes far beyond regulatory requirements\u003c/strong\u003e. (MD annual report, 2015, p. 87, emphasis added)\u003c/p\u003e\n\u003c/div\u003e\n\u003cp\u003eThe most likely reason for some companies stating they have gone beyond government requirements is that they are seeking to demonstrate awareness of global environmental initiatives and standards. However, it is noteworthy that the phrasing of these types of disclosure is still by reference to how these environmental and sustainability programmes are positioned in relation to Saudi government requirements. As a result, these companies are still ware of the need to be accountable to their key stakeholder.\u003c/p\u003e"},{"header":"6. Conclusion","content":"\u003cp\u003eIn conclusion, this paper has argued that the two key stakeholders, namely Islamic religion and Saudi government, continue to be the two primary stakeholders for Environment and Sustainability disclosures. This is seen in the low number of Environment and Sustainability disclosures, which appear to be tied to the Saudi government\u0026rsquo;s relative lack of attention on the environment and sustainability. Further, there has been a lack of any pronouncements from Al-Ulama as to what is required by companies to address the world\u0026rsquo;s environmental challenges. It is also important to note that the low numbers of Environment and Sustainability disclosures provided in the annual reports are dominated by three industries which received some greater, albeit still limited, attention from the Saudi government. These industries have a particular impact on the country's environmental profile. As a result, the low level of Environment and Sustainability disclosures appear to be a function of the companies following the government\u0026rsquo;s lead on the environment and sustainability. Additionally, based on the evidence presented, it is possible to argue that the underlying reason for the relatively low number of disclosures in the Environment, Sustainability categories can be explained by reference to the two primary stakeholders, Islamic religion and the Saudi government. There has been a relative lack of government policies and initiatives, coupled with a lack of pronouncements from religious leaders. For example, the low numbers of Environment disclosures appear to be connected to the Saudi government\u0026rsquo;s relative lack of initiatives or pronouncements on the environment and, further, there is an absence of pronouncements from Al-Ulama as to what companies might do to address the world\u0026rsquo;s environmental challenges. Hence, the relative lack of disclosures on Environment, Sustainability matters in Saudi companies\u0026rsquo; annual reports appears to potentially stem from the lack of government initiatives in this area and because of religious opposition to enacting positive change in respect of the two disclosure aspects. Clearly, companies do not want to be seen in these types of disclosures to be contradicting or opposing the stance of Al-Ulama and religious conservatives, and because government reforms are limited their accountability to this stakeholder can be satisfied through provision of a relatively small number of disclosures. For example, Despite the country\u0026rsquo;s minimal natural resources, the national government\u0026rsquo;s agenda for protecting the environment was limited in the period under investigation. Similarly, although caring for nature and the earth\u0026rsquo;s resources are an important part of Islam, many Muslim countries are reluctant to impose Western concepts of environmentalism (Ozdemir, \u003cspan citationid=\"CR53\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Therefore, there were no specific environmental or sustainability initiatives developed by the religious authorities in Saudi Arabia.\u003c/p\u003e \u003cp\u003eThe study findings have a number of theoretical implications based on the research conducted. This study extends prior disclosure studies in social and environmental accounting by investigating environmental and sustainability disclosure practices in a developing economy context (i.e., Saudi Arabia). This has resulted in the construction of a framework which explains the managerial motivations behind the disclosure practices from a stakeholder perspective. A central research finding is that the companies were primarily motivated by the desire to be accountable to two key stakeholders, the Islamic religion and the Saudi government, in respect of their environmental and sustainability disclosures and to ensure that they maintained their legitimacy in respect of these two stakeholders. The definitions of stakeholders as set out according to Evan and Freeman's (1993) principle of corporate effect states that almost 'any group' that can affect or is affected by the firm is considered a \u0026lsquo;stakeholder\u0026rsquo;, including investors, employees, customers, suppliers, government, competitor, pressure groups, stock market, industry bodies, foreign governments, and future generations; however, surprisingly, this is not wholly applicable in the Saudi context. Based on the evidence, Saudi companies prioritize stakeholders in this Saudi context differently and in contrast to this listing (see Freeman, \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e1984\u003c/span\u003e; Gray et al., 1996) of primary stakeholders. Consequently, based on the evidence in this paper it needs to be acknowledged that, following the principle of corporate rights as set out by Phillips (\u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e1997\u003c/span\u003e, \u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2000\u003c/span\u003e), stakeholders can include those to whom the company has a moral obligation and legitimate relationship, regardless of whether the stakeholder is of human or non-human origin for in this research the stakeholders are the Islamic religion and the Saudi government. Further, this study expands accounting disclosure studies by using a qualitative research technique to investigate Saudi companies' reporting practices that takes into account contextual factors. Accounting disclosure research has been criticized for being primarily descriptive in nature, \u0026ldquo;for example, to test the effect of various firm characteristics (size, financial performance, industry, etc.) on social and environmental disclosure behaviour or performance \u0026hellip; ignoring the rich contextual information in that country\u0026rdquo; (Qian et al., 2021 p. 1022-3). This research has shown that explanations need to take into account the contextual features driving environmental and sustainability disclosure practices, and this can be achieved by employing a qualitative approach which uses multiple methods of data collection (content analysis with close reading methodology). The implication here is that by using Saudi Arabia as the research base for examining environmental and sustainability disclosure practices, this research has identified the need to fully take into account the contextual environment where the research is situated, in order to support further understanding of the accounting disclosure practices with regard to social and environmental information.\u003c/p\u003e \u003cp\u003eOn the policy level, the research results indicate that the reasons for lack of environmental and sustainability disclosures are that at present companies are disclosing what is sufficient to demonstrate they meet the government\u0026rsquo;s requirements. The findings further indicated that companies would only feel it necessary to provide greater numbers of disclosures in this area if it was made mandatory to disclose wider societal contributions. Presumably this is because moving from a voluntary to mandatory requirement increases the level of accountability the companies have to demonstrate. Therefore, if the government were to consider enacting regulation which mandated eco-justice disclosures this would increase and improve the eco-justice disclosures provided in the companies\u0026rsquo; annual reports.\u003c/p\u003e \u003cp\u003eAs with any research project there are limitations and boundaries have to be placed around any research project. One limitation is in respect of the analysis of the corporate annual reports. Despite the fact that the interpretation of the environmental and sustainability information disclosed in the annual report was undertaken with great care utilising a close reading technique, the conclusions drawn regarding the managerial motivations for disclosing environmental and sustainability information in the annual reports may be subjective. Subjectivity is a fundamental challenge in any research which is qualitative. In addition, this paper offers new directions for further research which can build on this research. Further research that is worthy of exploration might involve an examination of changes in respect of environmental and sustainability disclosures post-2018 in Saudi companies\u0026rsquo; annual reports. Therefore, future research could study the disclosure practices of Saudi companies in the years after this paper to determine whether there is any noticeable improvement or shift in the way companies disclose information about environment and sustainability. The paper has noted how Saudi Arabia is often seen from a one-dimensional perspective and future Saudi studies might give the reader of the research a more nuanced understanding of the country and different aspects relevant to the Saudi context.\u003c/p\u003e"},{"header":"Declarations","content":"\u003cp\u003e\u003cstrong\u003e\u003cem\u003eEthics approval and consent to participate\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e'Not applicable'.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cem\u003eConsent for publication\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e'Not applicable'.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cem\u003eAvailability of data and materials\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\u0026lsquo;Not applicable'.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cem\u003eCompeting interests\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\"The authors declare that they have no competing interests\" in this section.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cem\u003eFunding\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eDeanship of Scientific Research at Imam Mohammad Ibn Saud Islamic University (IMSIU), IMSIU-RG23102.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cem\u003eAuthors' contributions\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eL.A and R.A A.B. wrote the main manuscript text and prepared Tables 1-2. All authors reviewed the manuscript.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003e\u003cem\u003eAcknowledgements\u003c/em\u003e\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003e\"Not applicable\".\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\n\u003cli\u003eAdams, C., Hill, W. and Roberts, C. (1998). Corporate Social Reporting Practices in Western Europe: Legitimating Corporate Behaviour? \u003cem\u003eBritish Accounting Review\u003c/em\u003e, 30 (1), pp.1\u0026ndash;21.\u003c/li\u003e\n\u003cli\u003eAl-saidi, M., Zaidan, E. and Hammad, S. (2019). Participation modes and diplomacy of Gulf Cooperation Council (GCC) countries towards the global sustainability agenda. \u003cem\u003eDevelopment in Practice\u003c/em\u003e, 29 (5), pp.545\u0026ndash;558. \u003c/li\u003e\n\u003cli\u003eAl-Soliman, T. M. 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No Title. \u003cem\u003eBulgarian Journal of Agricultural Science\u003c/em\u003e, 17 (3), pp.389\u0026ndash;395.\u003c/li\u003e\n\u003c/ol\u003e"},{"header":"Footnotes","content":"\u003col\u003e\u003cli\u003e\u003cspan\u003e \u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://www.stats.gov.sa/sites/default/files/sustainable_development_goals_sdgs_in_ksa_-en.pdf\u003c/span\u003e\u003cspan address=\"https://www.stats.gov.sa/sites/default/files/sustainable_development_goals_sdgs_in_ksa_-en.pdf\" targettype=\"URL\" class=\"RefTarget\"\u003e\u003c/span\u003e\u003c/span\u003e\u003c/span\u003e\u003c/li\u003e\u003cli\u003e\u003cspan\u003e\u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://www.my.gov.sa/wps/portal/snp/content/SDGPortal/!ut/p/z0/04_Sj9CPykssy0xPLMnMz0vMAfIjo8zi_QxdDTwMTQz93YMt3AwCzXyMg1wMAw0NLA31g1Pz9AuyHRUBEXub1w!!/\u003c/span\u003e\u003cspan address=\"https://www.my.gov.sa/wps/portal/snp/content/SDGPortal/!ut/p/z0/04_Sj9CPykssy0xPLMnMz0vMAfIjo8zi_QxdDTwMTQz93YMt3AwCzXyMg1wMAw0NLA31g1Pz9AuyHRUBEXub1w!!/\" targettype=\"URL\" class=\"RefTarget\"\u003e\u003c/span\u003e\u003c/span\u003e\u003c/span\u003e\u003c/li\u003e\u003cli\u003e\u003cspan\u003e It should be noted that the \u0026lsquo;Materials\u0026rsquo; industry label used by the Saudi Arabia\u0026rsquo;s Stock Exchange includes companies engaged in petrochemicals, mining, metal refining, and chemical products.\u003c/span\u003e\u003c/li\u003e\u003cli\u003e\u003cspan\u003e It should be emphasised that the discussion of energy efficiency initiatives does not pertain to the \u0026lsquo;Energy\u0026rsquo; industry. The \u0026lsquo;Energy\u0026rsquo; industry sector comprises enterprises engaged in activities other than oil and gas extraction, such as storage, transportation, and marketing. As a result, the companies in this industry sector have not been impacted by the energy efficiency initiatives and provide very low numbers of Environment and Sustainability disclosures (TADAWEL, \u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e2021\u003c/span\u003e).\u003c/span\u003e\u003c/li\u003e\u003cli\u003e\u003cspan\u003e The Utilities industry, according to the Saudi Arabia\u0026rsquo;s Stock Exchange industry classification, includes electricity, gas, and water producers\u0026rsquo; companies. Therefore, it is this industry sector which is impacted by the government energy efficiency initiatives rather than the Energy industry as explained in the previous footnote (TADAWEL, \u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e2021\u003c/span\u003e).\u003c/span\u003e\u003c/li\u003e\u003cli\u003e\u003cspan\u003e Food and beverage industry includes agricultural companies that are involved in the conversion of raw agricultural materials into consumer food and beverage products. Hence, water is of great significance as it is a primary input to their production process.\u003c/span\u003e\u003c/li\u003e\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"energy-sustainability-and-society","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"esso","sideBox":"Learn more about [Energy, Sustainability and Society](https://energsustainsoc.biomedcentral.com/)","snPcode":"13705","submissionUrl":"https://submission.nature.com/new-submission/13705/3","title":"Energy, Sustainability and Society","twitterHandle":"@OpenEnviron","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"BMC/SO AJ","inReviewEnabled":true,"inReviewRevisionsEnabled":true},"keywords":"environmental disclosure, sustainability, stakeholder theory, Saudi Arabia, Saudi government, Islam","lastPublishedDoi":"10.21203/rs.3.rs-4107918/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4107918/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003ch2\u003eBackground\u003c/h2\u003e \u003cp\u003eOur research represents a departure from previous investigations into environmental accounting disclosure, as it constitutes a comprehensive analysis of sustainability and environmental disclosure within the context of Saudi Arabian accounting practices, employing a stakeholder-oriented lens. The primary objective is to scrutinize the sustainability and environmental disclosure behaviors exhibited by companies in Saudi Arabia, specifically in relation to their accountability to stakeholders.\u003c/p\u003e\u003ch2\u003eMethod\u003c/h2\u003e \u003cp\u003eEmploying a methodology that combines content analysis with close reading, the study examines sustainability and environmental disclosures found in the annual reports of 18 Saudi companies spanning the period from 2008 to 2018, encompassing a total of 198 annual reports. The research takes into consideration contextual factors relevant to Saudi Arabia, including religious and political dimensions. The findings of the study reveal a paucity of disclosures pertaining to sustainability and environmental concerns among the sampled Saudi companies.\u003c/p\u003e\u003ch2\u003eResults\u003c/h2\u003e \u003cp\u003eTwo predominant stakeholders influencing these disclosure practices are identified: the Islamic religion, with the interpretations of Islam by the Al-Ulama exerting significant influence, and the Saudi government. The study observes that the limited number of disclosures regarding environment and sustainability is associated with the Saudi government's apparent lack of emphasis on compelling companies to address their environmental impact or participate in sustainability initiatives during the investigated period. Furthermore, the absence of directives from Al-Ulama regarding the necessary actions for companies to address global environmental challenges or enhance sustainability contributes to the dearth of disclosures. In terms of industry-specific considerations, three sectors receive relatively more attention, albeit still limited, from the Saudi government concerning environmental issues due to their distinct impacts on the country's environmental landscape.\u003c/p\u003e\u003ch2\u003eConclusion\u003c/h2\u003e \u003cp\u003eThe study investigates environmental and sustainability disclosure practices in Saudi Arabia, providing theoretical insights into managerial motivations for such disclosures. It reveals that Saudi companies prioritize stakeholders differently, emphasizing accountability to the Islamic religion and the Saudi government. Stakeholder definitions diverge from conventional models, acknowledging moral obligations to non-human entities. Using qualitative methods, the research emphasizes the importance of contextual factors in understanding disclosure practices, challenging previous descriptive approaches. Policy implications suggest that current disclosures meet government requirements but lack broader societal contributions. Mandatory disclosure regulations could enhance accountability and encourage companies to provide more comprehensive disclosures. This underscores the significance of contextual understanding in shaping accounting disclosure practices, particularly in socially and environmentally sensitive areas like Saudi Arabia, and highlights the potential impact of regulatory changes on improving environmental and sustainability disclosures in corporate reporting.\u003c/p\u003e","manuscriptTitle":"Does Sustainability and Environmental disclosure matter in Saudi Arabia? Insights from a Stakeholders’ Perspective","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2024-04-03 19:38:39","doi":"10.21203/rs.3.rs-4107918/v1","editorialEvents":[{"type":"communityComments","content":0},{"type":"editorAssigned","content":"","date":"2024-04-15T16:14:46+00:00","index":"","fulltext":""},{"type":"checksComplete","content":"","date":"2024-03-29T13:03:26+00:00","index":"","fulltext":""},{"type":"submitted","content":"Energy, Sustainability and Society","date":"2024-03-15T12:41:12+00:00","index":"","fulltext":""}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"energy-sustainability-and-society","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"esso","sideBox":"Learn more about [Energy, Sustainability and Society](https://energsustainsoc.biomedcentral.com/)","snPcode":"13705","submissionUrl":"https://submission.nature.com/new-submission/13705/3","title":"Energy, Sustainability and Society","twitterHandle":"@OpenEnviron","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"BMC/SO AJ","inReviewEnabled":true,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"851d163c-46c4-4961-8e44-227cc72252e3","owner":[],"postedDate":"April 3rd, 2024","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"under-review","subjectAreas":[],"tags":[],"updatedAt":"2024-04-03T19:38:39+00:00","versionOfRecord":[],"versionCreatedAt":"2024-04-03 19:38:39","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-4107918","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-4107918","identity":"rs-4107918","version":["v1"]},"buildId":"qtupq5eGEP_6zYnWcrvyt","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}