Few large firms now dare to ignore their environmental impact. More and more are assessing and reporting. Here Communty affairs Briefing praises the leaders and offers to help the laggards with a five point action plan.
The environment is of universal concern to the public, customers of firms and members of voluntary organisations. Society takes less on trust and expects increasing transparency from companies and government. These two trends have led to a massive increase in environmental reporting by firms. Four fifths of the FTSE 100 responded to Business in the Environment’s invitation to participate in the 1999 Survey of Corporate Engagement1 .
The Association of Chartered Certified Accountants (ACCA) presented their ninth annual Environmental Reporting Awards2in March. United Utilities won the top award and standards were high overall. Roger Adams, ACCA head of technical and research commented that “UK-based companies are leading the way in environmental reporting. There has been a marked increase in the number of companies embracing the wider issues of environmental performance. We are particularly encouraged by the participation of the public sector and SMEs in this year’s awards.”
But important audiences think business still falls short.
At the ACCA awards ceremony environment minister, Michael Meacher MP, said he would name and shame large companies that failed to report on their environmental impact. The minister threatened mandatory reporting and noted that the review of UK company law due in 2001 could be the vehicle to bring this about. Clearly this is more likely to find acceptance if the voluntary system can be shown to be working.
Companies’ response to the Turnbull report will be key. Turnbull is the latest chapter in the UK’s developing body of guidance on corporate governance. Its prime purpose is to improve the management of internal control but it has wide-ranging ramifications. The guidance is based on risk assessment requiring each company to examine the environmental, social and reputational risks implicit in its operations. The more robust and convincing the business response to Turnbull, the weaker the case for further statutory regulation.
Not only the government is expressing concern. Warwick Business School 3recently analysed UK corporate environmental reporting and cast doubt upon the quality of many reports produced. The banking sector is singled out as having little interest in the topic. The authors judge that even where banks are reporting it is a relatively token gesture and not undertaken with any serious conviction. This is surprising given the increasing market for ‘green’ investments.
In a paper presented at Globe 2000 in Vancouver in March, John Elkington of SustainAbility4and David Wheeler of Schulich School of Business in Toronto argue that companies are not getting full benefit from their environmental and social reporting. They call for two shifts. The first is to ‘cybernetic sustainability reporting’. By this Elkington and Wheeler mean corporate reporting, including financial reporting, on line in real time “providing the right mix of economic, social and environmental information in the right format at the right time”. The second shift is that verification should concentrate more on assurance that the company’s actions are based on principles of good governance and risk management, and less on ‘end of pipe’ verification.
What practical steps can companies take in response?
To set out what practical steps can be taken we must note one peculiar difficulty of environmental reporting. Interested groups have different requirements. Customers and the general public are seeking assurance that the company is environmentally responsible, and can back up its claims with facts. Environmental researchers and activists want hard data about the company’s performance. Increasingly investment analysts are interested in the level of environmental risk in a company’s operations and its acceptability to green investors.
So an environmental report must address global issues, be clear about policy, tell a story that the ordinary reader can identify with and give firm statistical data to back up the statements made.
What role for community and communications managers?
Here are five steps which community/communications managers should take to help improve their company’s environmental reporting.
1. Influence your company’s response to Turnbull
There is a danger that Turnbull’s recommendations will be seen as an imposition on companies. This is a misreading. Turnbull is about managing risk in its widest sense, beyond the financial, which is in every company’s interests. Nor should managing risk be confused with minimising risk. Managing social and environmental risk means assessing the risks correctly – which requires a top-level overview. It also means taking action to ensure practice on the ground reflects the company’s stated corporate principles, and communicating current performance and planned improvements to key audiences. ACCA has produced a guidance paper for chief executives on implementing Turnbull.
2. Review Best Practice
The ACCA award winners provide good examples of what can be done.
•Biffa (http://www.biffa.co.uk) shows that a first time reporter can produce an excellent report. Biffa’s actions are set in the context of global and national environmental performance, key sustainability indicators are set out clearly within the body of the text and in an appendix, targets are partnered with environmental benefits, and suggested actions for government are included.
•Bovince (http://www.bovince.com), winner of best SME reporter, shows clear and simple thinking about the environment. Reading the report is like reading a good article. It is easy on the eye, has suitable illustrations, is clear about the issues and exemplary in its commitment to future progress.
•BAA (http://www.baa.co.uk) is strong on the identification and integration of risk management throughout the environmental management system.
3. Review your website
Elkington and Wheeler criticise many leading corporate web sites for being inaccessible and difficult to navigate for non-experts. The casual user needs to be able to get to your environmental report in two clicks. Compare failure to do this with printing an excellent report but not posting it to anyone. Sadly one of the ACCA winners for a 1999 report is still featuring the 1998 report on their website.
4. Review your community programme
Community programmes are good indicators of what companies really value. If your company claims commitment to good environmental performance, why is this not reflected in your community programme? This would help more people understand how seriously you take this issue.
5. Review your communications strategies
Are your corporate environmental messages being promoted to the right audiences? How do your key audiences like to receive their corporate messages? Is there a need for interactive, on line communication with them?
The environment will remain a key corporate issue, and commands a wider response from the company. Community affairs and communications managers have a distinctive and vital contribution to make.
(3) University of Warwick A sectoral comparison of corporate environmental reporting and disclosure, by Stephanie Stray and Joan Ballantine, available from 01203 522144 (http://www.wbs.warwick.ac.uk)
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