Survey shows slight improvement in environmental reporting
PIRC's second annual survey of over 350 leading companies shows only marginal improvement in environmental reporting since last year with major gaps in quality and comparability of information.
The survey, The 1999 Survey of Environmental Reporting of the FTSE 350 companies, shows that the proportion of companies reporting in some form on environmental issues has risen from 65% to 70% since last year. Some sectors have shown more improvement though: for instance reporting by financial companies has risen from 52% to 70%.
This year, PIRC extended its survey to cover corporate websites. Some 35% of companies reporting used the Internet as a way of providing environmental reports, although the survey found there was often no cross reference to the report and accounts so that shareholders could be directed to the site.
PIRC also found that the reporting cycle for the environmental report is rarely synchronised with the financial reporting cycle, and usually not integrated. A small number of companies are tackling this issue, the survey found, but for most, the environmental and financial information cannot be read as a complete set.
On the other hand, the scope of environmental reporting has improved. There was a rise in the number of companies reporting on a group-wide basis, from 72% of reporters to 87%. This, said the report, was “an increasingly important issue in a world of global capital and international markets.”
“A further encouraging sign,” said PIRC, “is the rise in the number of companies using some form of external verification for their report.”
Reporting on environmental impact is still undertaken by only a minority of reporting companies, the survey found. “In making sustainability a realisable goal, this needs to be driven forward at a much faster rate.”
According to the report, management of environmental issues and consequent reporting has become an issue of growing importance for companies. The UK Government has announced its intention to ensure that leading companies do report, in order to achieve its objectives of sustainability.
Shareholders increasingly recognise that they have a vital role to play in ensuring that environmental reporting improves, as performance in these areas underpins business reputation and commercial success in the long term.
The challenge for companies, the report says, is to provide information which is consistent, reliable and benchmarked, to allow investors to assess policy and practice according to sector. Recent developments, such as the Global Reporting Initiative, and other industry efforts, mean that such a reporting framework could well emerge in the near future.
The survey concludes that the results are “broadly encouraging, but the pace of improvement is frustratingly slow. The overall improvement in reporting levels includes companies which provide a one sentence statement in the report and accounts, to those giving a fully fledged and comprehensive report with external verification. There is no room for complacency, and shareholders, Government, business and others still have much to do.”
Joint managing director of PIRC, Anne Simpson, commented: “It is pleasing to see that 70% of companies now make some reference to environmental issues in their reports, up from 65% last year. However, the ‘green gap’ in reporting between the best and the rest is widening.
“It is not enough for companies to say they have a policy and leave it at that. Shareholders and other stakeholders need to see comprehensive information, which is relevant, comparable and externally verified.
“If the Government’s aim to control Britain’s contribution to global warming, then business needs to be monitoring and managing its output – yet only 8% of companies currently report on their emission of greenhouse gases. The target must be that 100% report, as 100% of companies have a role to play in meeting the UK’s targets.”
The report is PIRC’s second survey of environmental reporting among leading companies. PIRC surveyed the FTSE 350 in 1998 to assess the range and scope of environmental reporting by companies.
The 1999 survey charts a wider range of reports for a slightly larger sample of 363 companies. The survey covers information provided in the report and accounts, separately produced documents and corporate web-sites. The survey provides analysis of these companies’ reporting practice on environmental issues in the UK, and compares trends over the period.
The survey analyses company reports in relation to a set of key points on environmental disclosure identified by PIRC, which incorporate the UK Environmental Investor Code, guidelines drawn up by the Advisory Committee on Business and the Environment (ACBE), issues identified by Business in the Environment (BiE), advice from the Association of Chartered and Certified Accountants (ACCA) and the UK Government’s statement that it wants to see all UK businesses with more than 250 employees having a publicly stated environmental policy and reporting to stakeholders on progress.
PIRC says there are various initiatives seeking to benchmark environmental reporting which are in the early stages of being co-ordinated to ensure minimum standards of relevance, reliability, comparability and availability to shareholders. The quality as well as the quantity of the information provided is key, says PIRC.