Business in the Environment says some firms have head in the sand

Environment Minister Michael Meacher, launching the survey at the British

Library in London, told delegates: “The Index shows that the trend towards

environmental engagement by large businesses is continuing. But I am

disappointed we are not moving faster. Engagement is patchy – some sectors

still have too many companies doing far too little.”

The BiE Index covers the global operations of 151 companies, including 77%

of the FTSE 350 by market capitalisation (a total of £1.1 trillion).

Participants were asked to assess the extent to which they measure, report

and set targets across six key areas of environmental impact: energy,

transport, global warming, emissions, waste, and water consumption.

Overall, the survey found that the area in which companies are doing least

to control environmental impact is transport, even though vehicle emissions

may account for as much as 24% of the total global warming impact. The area

where most is being done is energy consumption, with 94% of

respondents undertaking measurement, with many reporting publicly and

setting targets for reduction.

Only four FTSE 350 companies are aiming to reduce global warming emissions to 1990 levels by 2010, with just one aiming to exceed the level of the global Kyoto agreement by a further 5.2% reduction.

The five top-scoring companies in the Index are: Severn Trent (which, for

the first time in 100 years, is now able to take drinking water from the

River Trent); BT; Cable & Wireless; Woolwich Bank; and Thames Water.

Other key aspects of the survey include:

• highest-ranked new entrants out of a total of 40 companies participating

  for the first time this year are Credit-Suisse and Fuji Photo Film

• the most improved sector is insurance & life assurance, where the number of companies participating has nearly doubled compared with last year

Meacher criticised the financial sector in general, pointing to the

fact that “there are too many prominent names doing next to nothing”.

• the most active sector was utilities – all 16 FTSE 350 companies took

  part

• engineering and construction companies were the worst respondents in

  terms of number of companies participating

• only one FTSE-listed IT company participated out of a possible 15,

  sparking concern that so-called “dot-com” companies are in fact

  externalising their environmental impacts (see separate story in this section of edie news)

Environmental pressure on City analysts

Following the news that, as of 3 Juy 2000, pension funds will have to

disclose what, if any, environmental and social investment policies they

apply to their investments, and that from now on the National Association of

Pension Funds (NAPF) Voting Issues Service is to include information on the

performance of FTSE 350 companies in the BiE Index, Derek Higgs, chairman of

Prudential Portfolio Managers and recently appointed chairman of BiE, told

Industrial Environmental Management magazine: “I think anything that can be done to move environmental engagement in

the direction of harder, measured, comparable information, rather than

pictures and soft words, is going to appeal to the City and is going to

stand a greater chance of engaging more analysts.

“One of the things that BiE will look at is an update of a survey undertaken

in 1994 of analysts’ rather than companies’ engagement, and see how much

progress we have made. That will provide a means of highlighting the move, I

hope, towards a demonstrated connection between how well you manage

environmental impact and overall economic performance measured by

shareholder value. The more evidence that becomes available to support that,

the more people will naturally get there.”

Threat of compulsory environmental reporting

At the BiE presentation Michael Meacher referred to his statements at the 1999 Association of Chartered Certified Accountants (ACCA) Environmental Reporting Awards (see related story) on the possibility that the DTI’s Company Law Review (see related story) will contain mandatory environmental reporting requirements. “What we are trying to do is achieve a different culture amongst top

management,” said Meacher at BiE’s event. “It is easy to impose a mandatory reporting requirement. The

trouble is, people then do the minimum required, and won’t take on board the

change of culture. To that extent I am reluctant to do it. However, the

threat remains. We may reach a point where we are not really going to make

any more progress. To bring in the last 10 or 20%, we might have to have

compulsory reporting.”