The role of environmental reporting in shaping the sustainable development strategy of oil companies

This paper presents the first international empirical evaluation of the current practice of environmental reporting in the Kazakhstan oil industry, based on an assessment of the period following 2019, when the regulation was modernized. It employs a mixed-methods research design, combining content analysis, econometric modeling, and qualitative interviews, to assess the impact of environmental transparency on corporate sustainability performance. To measure the quality of disclosure in priority companies (KazMunayGas, TengizChevroil, and CNPC-Aktobe), the GRI (304-306) and TCFD criteria were incorporated with the Environmental Code of Kazakhstan (2021), resulting in the creation of a new composite measure, the Environmental Reporting Quality Index. The results show that there is a high level of heterogeneity in these scores (0.58-0.79) due to the structure of ownership, foreign participation and listing status. The regression analysis indicates that report quality is negatively correlated with the CO2. Intensity with a significant negative association which demonstrates that the more successful the reporting standards of companies are, the less they produce emissions and the less they cause environmental incidents. Qualitative evidence can reinforce this causal explanation: the more successful the reporting, the greater investments in monitoring, verifying and controlling systems. Despite the improvement in the regulatory regime, Kazakhstan is at the bottom of the transparency list when it comes to the external assurance, Scope 3 coverage and board level climate governance. The net effect is that the entire industry is moving towards the aspect of reactive compliance towards proactive transparency owing to policy changes and investor pressure. The study is part of the replicable research methodology in the emerging economies in that the enhanced disclosure has been found to be an accountability measure, as well as a catalyst to quantifiable changes in environmental performance.