DENMARK: Companies that involve staff in environmental reporting produce better results

A review of Denmark's compulsory environmental reporting law has shown that environmental reports improve over time, with better quality from companies that have had their own employees involved in report production.

About half of the environmental reports submitted in 1998 – 500 accounts – have been reviewed, along with 50 ‘first-generation’ accounts submitted in 1997. Interviews with staff in charge of environmental reporting at more than 500 enterprises were conducted, as well as interviews with 320 people who have a special interest or knowledge in environmental reporting.

County councils, local authorities, the Danish Environmental Protection Agency and the Danish Commerce and Companies Agency were also contacted for their views on the success of compulsory accounting. Finally, 500 neighbours of polluting enterprises and 1,900 randomly selected consumers were contacted.

Overall, the review offers good news to the Danish EPA, concluding that expectations have largely been met in the first three years of compulsory reporting. Comparison between first and second-generation reports shows that firms improve their reports over time and that, in 1998, more than 80% of environmental reports met with all or most of the legal reporting requirements. Other findings include:

  • 1 out of 3 accounts had some ‘quality’ deficiencies
  • in many cases “it can be difficult for the reader to obtain an insight into production conditions, products, and special commercial aspects in the sector”
  • 25% of reports failed to explain the criteria for deciding what type of environmental information the firm is providing
  • 62% of reports covered firms’ “most significant environmental factors”
  • 30% suffered from a “possible lack of important information”
  • 8% suffered from a “probable lack of important information”

The review identified uncertainty on the part of enterprises as to how much information regarding production should be given. This, concludes the review, “may be the reason why enterprises fail to give more detailed information on raw materials and additives. However, a more thorough description of the composition of these substances may help the reader to assess production at the enterprise in a life-cycle perspective”.

Researchers checked to see whether companies with environmental management systems (EMS) produced better reports. The answer was mixed. On the one hand, firms with EMS certification were “no better at complying with the requirements of the [environmental reporting] Act”, but when they did comply the quality of their reports was higher – 82% were deemed ‘good’ reports compared with just 45% of reports from firms without EMS certification.

Interestingly, one in three companies that did not have EMS certification mentioned that they intended to seek certification.

70% of the reports reviewed were prepared without the assistance of external consultants. Only 10% of reports were prepared by a consultant without any input from employees – the firms that used external consultants exclusively tended to be companies with fewer than 20 employees. Judged on quality, the reports prepared solely by external consultants were poorer than other reports. The researchers are unsure as to the reasons for the difference in quality: “this may be because of the enterprise’s general attitude to environmental work; but it may also be connected to the limited involvement of employees in organising environmental work and processing data for the green accounts”.

Faults and disappointments in Denmark’s environmental reporting system tend to focus on two areas:

  • lack of public interest and trust in firms’ reports (see related story)
  • confusion regarding which government bodies are responsible for assessing and commenting on environmental reports

Despite a lack of public interest, companies believe that environmental reporting has resulted in environmental and financial improvements:

  • 41% of companies believe they have achieved environmental improvements since embarking on environmental reporting; 56% say they haven’t achieved improvements
  • of those companies that say environmental performance has improved, 70% identify energy consumption or efficiency, 50% point to water and waste, 40% say resource consumption has improved, 30% believe wastewater and additive management has become better, 20% say they’ve reduced emissions to air and 10% say they have reduced emissions to soil
  • 49% of companies say they have saved money thanks to environmental reporting, as a result of improved understanding and management of their resources

In an effort to improve both the public credibility of environmental reporting and its administration, the Danish EPA has set out six changes it hopes to make:

  • cohesion of reports with environmental permits – information on emission permits for smoke, dust and noise will be added
  • use of polluting substances in production will be expanded, with firms setting out the extent of their use of substances on the EPA’s list of undesirable substances
  • supervisory authorities will be bound to confirm that firms’ environmental reports conform with their views
  • companies will have to state plainly whether they have any environmental policies or goals, and the results in meeting targets. They will also have to say whether they set environmental standards for their suppliers and contractors
  • more precise information on the scope and type of employee involvement in environmental reporting will have to be included
  • a forum on environmental reporting will be created and members will be drawn from the environmental regulation sector, companies and public interest groups

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