Ahead of the game
According to David Jackson, chairman of Business in the Environment - a sub-division of Business in the Community (BiTC), "the Environment Index has proved vital to the development of corporate environmental practice over the years". And he certainly has a point.
Currently, 750 companies pay into membership of BiTC. Among this number are 71 of the FTSE 100 businesses and 82% of the FTSE's UK leading companies in their sector. Together, these members employ around 12.4 million people in over 200 countries, including one in five of the UK private-sector workforce. So it's clear that plenty of businesses take the ideals of BiTC seriously. Meanwhile, the Environment Index (produced annually) is a voluntary exercise whereby firms are asked to supply information on their environmental management and performance in key impact areas. The idea is the information collated will benchmark businesses against both their sector peers and all companies that participate in it.
This year's results
According to the results of last year's index, climate change and water consumption are high on the corporate agenda - and companies have improved their environmental practice across the board.
More than a third of the 155 companies taking part chose to be measured on the impact area of water usage - over twice as many as the next most popular choice.
Global warming also proved to be a key driver for business action. More than 70% of companies set targets to reduce their carbon impacts. However, just half of participant businesses released details of their progress on the issue, suggesting that more still needs to be done in this area.
Since its inception in 1996, the index has proved over the past decade that big business is moving in the right direction. Average overall scores have increased by 23% in those years and now stand at 83%. But Jim Haywood, director of Business in the Environment, now wants to encourage more and more business to get involved in the index. "Looking back over the past ten years, we can see a marked improvement in the way companies manage their environmental performance," he says.
"Moving forward, we want to encourage even more companies to measure and manage their impact on the environment and bring this into the mainstream of their business thinking."
Of particular interest was the significant improvement in the scores for management within participating companies. Around 98% of companies now identify their key issues through a regular environmental risk assessment and/or a formal environmental impact review. Meanwhile, the gap between management and performance scores in 2005 closed to only 5%, compared with 10% in 2004. Companies began to balance their management and performance scores at 86% and 81% respectively this year. This was due to a rise of 6% in performance scores. Waste and resource management figures also increased by 4%. Results showed that 75% of companies now measure their performance over the three impact areas:
- environmental management, 45%
- Environmental performance and impact, 45%
- Assurance, 10%
But only 34% can demonstrate continuous improvement over the past three years.
Since 1996, the world of corporate social responsibility (CSR) has come on leaps and bounds. More and more of you are realising the benefits of maintaining a good reputation when it comes to environmental performance. The index results prove this point: the average overall score of companies participating in the index has increased from 60% to the current 83%.
GlaxoSmithKline has been involved in every index since 1996. Vice president of corporate environment, health and safety James Hagan believes it has proved vital in communicating their improvements to their clients. "Our participation in the Environment Index over the years has had a direct and beneficial effect on the way we communicate with the public about our environmental programmes and performance," he said.
"By serving as a barometer of the expectations of external stakeholders, it has pointed out opportunities for us to improve the transparency of our reporting and the way we manage and structure our programmes."
Meanwhile, Trevor Gregory, managing director at environmental consultancy ABB Limited, is happy to take part because of the positive impact it has on his staff. "Through the Index we can communicate our performance to our employees and stakeholders - allowing them to take pride in their own efforts and boosting their motivation to do even better," he said.
Unsurprisingly, companies operating within the most heavily regulated sectors scored highest, with sector firms affected by reputation, such as accountants and
consultants, also featured in the top 10. Among those on top of the pile was the Co-operative Bank, which prides itself for being "famous for its ethical approach". Co-operative Insurance came top of its sector group and tenth overall, while the group's retail operations came 61st (an improvement on 85th last year). Head of ethics and sustainable development, Paul Monaghan was delighted with his firm's progress. "Issues of social responsibility are more important to consumers than they've ever been, and the Co-operative Bank has more than anyone else demonstrated how taking these matters seriously can be good for business as well as the planet."
The bank launched its customer-led Ethical Policy back in 1992 (when CSR activity was in its infancy), which was followed by an ecological mission statement in 1996 and independently audited Sustainability Report in 1998.
Each of the companies that took part in the 2005 Environment Index have their own stories about how beneficial it has been. However, one thing is for sure: big business has realised the value of maintaining a good reputation. Now it's time for the competitors to catch up.
For more information about next year's index visit www.bitc.org.uk/bie