New Straits Times (Malaysia) | March 7, 2004
NUMEROUS companies world-wide have jumped onto the corporate environmental reporting (CER) bandwagon. Although the growing numbers of reporters are encouraging, the overall standard of reporting leaves plenty to be desired.
"Environmental reporting by businesses has not come close to its potential as an accountability tool," argues the World Resources Institute (WRI), an independent non-profit environmental think-tank.
"To reach that potential, the quality of reporting must improve so that the information is more relevant and understandable."
COMPARABILITY: APPLES AND ORANGES?
IMPROVING comparability across the universe of corporate environmental reporting is fundamental.
However, comparability is muddled by the diversity of reporting formats - and the smorgasbord of information contained within these reports.
"Because voluntary reports typically present dissimilar types of information in various formats, and use different measurement standards, it is virtually impossible to use these reports to compare firms, facilities or products," notes WRI.
In An Introduction to Environmental Reporting, ACCA describes a variety of common environmental reports, most of which highlight different issues and different eco-efficiency indicators.
In compliance-based reporting, companies report the level of compliance with external regulations and consent limits.
This is typical of reports issued by heavily-regulated utility industries such as water and electricity companies, including Anglian Water and TXU-Europe of Britain.
In Toxic Release Inventory (TRI)-based reporting, prevalent in the US, many companies are legally required to publish lists of emissions of toxic substances.
These mandated disclosures often take precedence over voluntary performance-based disclosures. TRI-practitioners include IBM, Texaco and Monsanto.
Companies such as Kunert of Germany and NHK-RSP (Britain) practise ecobalance reporting, where they construct a formal eco-balance - a detailed account of resource inputs and outputs (product output versus waste/emissions) from which they derive performance indicators.
Perhaps the most common form of environmental reporting, performance- based reports usually focus on the most significant areas of environmental impact.
Companies set performance improvement targets and appropriate performance indicators are developed and disclosed annually.
Volvo of Sweden practises product-focused reporting, and has released an "environmental product declaration" report that evaluates the total environmental impact of one specific Volvo model in terms of operation, recycling, manufacturing and environmental management.
Environmental and social reporting goes beyond CER by incorporating social issues, such as employee conditions, community support and involvement and stakeholder consultation information.
BP Amoco of Britain and Ben & Jerry's of the US issue these hybrid reports.
Sustainability reporting integrates performance data on environment, social and economic measures into one report. Proponents include The Co- operative Bank - three-time winner of ACCA Britain's Sustainability Reporting Awards, Bristol Myers Squibb, Interface, and Procter and Gamble (US), BAA and Shell (Britain), and in Malaysia, Shell.
However, CER is progressing towards further consistency and standardisation, with the help of bodies like the United Nations Conference on Trade and Environment (Unctad).
Recently, Unctad released new guidelines on eco-efficiency indicators that link the environmental performance of corporations to their financial performance.
Unctad's Manual for the Preparers and Users of Eco-efficiency Indicators is one of the first publications in CER to standardise the presentation and disclosure of a company's environmental performance and how this relates to financial results, says www.enviroreporting.com.
"It describes a method for providing systematic and consistent information on environmental performance over time."
Unctad's effort to join the dots between environmental and financial performance is vital in order to persuade businesses that eco-efficiency can be a value-added proposition.
"The precise correlation between improved environmental performance of an enterprise and its bottom line is extremely difficult to prove because of the many factors that can affect profits," notes Unctad secretary- general Rubens Ricupero in a preface to the manual.
"However, the concept of eco-efficiency, where increased profits are achieved under conditions of declining environmental impact, demonstrates such a link."
CREDIBILITY: WARTS AND ALL
TRANSPARENCY or the "warts-and-all approach" increases the credibility of CER.
Judges at the ACCA Malaysia Environmental Reporting Awards (Mera) 2003 commended Sony Technology Malaysia Sdn Bhd for openly disclosing the targets it met - as well as its shortfalls.
Paul Monaghan, head of sustainable development at Britain's award- winning Co-operative Bank told edie.net (the online community for water, waste and environment professionals):
"The bank keeps winning because it is a degree more honest; companies are afraid to report negative findings. However, I would say that if you identify a problem, report on it and commit to making it better, then it is a whole lot better for the process."
Third-party opinions helped too. Shell Malaysia solicited testimonials from the stakeholders - business partners, community leaders, customers and academia - with whom it interacts.
Independent verifications are particularly important, added judges, who singled out Hartmann Malaysia for enclosing its verification statement from Sirim QAS International.
The ACCA Environmental Reporting Awards (ACCA Mera), aimed at promoting voluntary environmental reporting practices among organisations in Malaysia, will be held on March 16. The awards are endorsed by the Department of Environment. For further information, contact Zaiti Ali at zaiti.ali@my.accaglobal.comNew Straits Times (Malaysia):
