Implication Of Environmental Related Cost On Performance Of Oil And Gas Companies In Nigeria

The study examined the implication of environmental cost on performance of oil and gas companies in Nigeria. The objectives of the study are to examine whether environmental cost affects return on capital employed and market value added of oil and gas companies in Nigeria. Data for this study were retrieved from reports of the companies from 2013-2017 financial years and values for the qualitative data such as environmental regulatory cost (ERC) and environmental health and safety cost (EHSC) were measured using dichotomy procedures. Values were assigned from 0-5 based on the level of disclosure using global reporting index (GRI). Having examine the content of the financial report of the companies, the analytical technique used for this study was the panel regression method. The research results indicate that there exists a relationship between environmental cost and profitability of oil and gas companies in Nigeria. The study therefore recommended amongst others that Oil and gas companies should focus reasonable attention to addressing relevant environmental issues and cost involvement disclosed in their financial report for the purpose of profit measurement.