Environmental Remediation Costs and Financial Performance of Listed Oil and Gas Companies in Nigeria
Keywords:
Environmental remediation costs, financial performance, profitability, return on assets, environmental safety costAbstract
The neglect by oil and gas companies of the negative footprints and externalities arising from their economic activities along with various environmental abuses have led to severe harm on human lives and ecosystem. This study therefore examined the effect of environmental remediation costs on financial performance of listed oil and gas companies in Nigeria from 2013-2022. Specifically, the study examined the effect of waste management costs, environmental cleanup costs and environmental safety costs on return on assets of these companies. The research design adopted for this study was ex post facto and secondary data used were obtained from the annual reports of ten (10) listed oil and gas companies in Nigeria. The ordinary least square regression technique was used to analyze the data and the statistical package employed was E-views version 10. The results of the analysis showed that waste management costs have insignificant negative effect on return on assets; environmental cleanup costs and environmental safety costs have significant positive effect on return on assets of the companies under study. Therefore, it was concluded that environmental remediation costs can in the long run enhance the profitability of listed oil and gas companies in Nigeria. Based on this, it was recommended among others that management of oil and gas companies in Nigeria should invest in innovative waste management practices to remediate and restore the environment as this can benefit the company in the long run. Also that the management of oil and gas companies in Nigeria should develop comprehensive contingency plans and set aside reserves specifically earmarked for environmental cleanup activities to ensure prompt and effective response to any incidence of environmental emergencies.
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