The advantages of coming clean about impact on the environment
By Peter Knight
Last year, BP Chemicals emitted 30 tonnes of chlorofluorocarbons (CFCs), six tonnes of chlorine and 711 tonnes of benzene into the environment.
These and other specific figures on emissions are published on a single sheet at the back of the company’s annual environmental report.
This information is among the better examples from a new set of corporate unveilings, in which companies reveal selective details of their environmental performance.
Most of the growing number of such reports tend to promise more than they deliver. Even so, they symbolise a vast step forward in business attitudes to the environment and towards accepting that the public has a right to know what goes on behind the factory wall.
Roughly 150 multi-nationals and a few smaller companies so far have published environmental reports.
Mr John Elkington, director of the consultancy Sustainability, said: "That’s a small proportion of the approximately 40,000 big companies around the world and the millions of small and medium-sized companies."
Mr Elkington is working with the United Nations Environment Programme to encourage more reporting, especially among companies in countries outside the Organisation for Economic Co-operation and Development.
The task is enormous.
For even in the Western industrialised countries, most companies make only a passing — and usually vacuous —reference to their environmental responsibilities in annual reports and accounts.
Many say nothing at all.
A 10-country survey of leading companies by KPMG, the accountancy group, showed that only 15 per cent of the 690 companies who responded published a separate environmental report.
Those were mostly in the US, Canada, Germany and Britain.
This is hardly surprising.
Other than specific accounting requirements in the US and Canada to disclose environmental contingencies and liabilities, companies are under no legal obligation to make such reports.
Why, then, should a significant group of leading companies take the risk of publishing potentially incriminating details about their environmental performance?
A glance at the different reports shows that few are as bold as British Petroleum and its fellow soul-barers such as Dow, Du Pont, ICI and IBM.
This is mainly because there are, as yet, no standards of reporting to which companies can conform.
The Netherlands is the only country close to legislating on the matter and the European Union’s Eco Management and Audit Scheme (EMAS), is the only other official standard that specifies what information should be published. But membership of EMAS is voluntary.
KPMG’s sector analysis shows that most companies publishing environmental reports are from the oil and gas sector, followed by chemical manufacturers and utilities.
These three sectors are under the most pressure — public and legal — to reduce their environmental impact.
But many large companies known to take their environmental responsibilities seriously still choose not to report. Among them are Hanson, Rolls-Royce aero-space, Blue Circle, Unilever, BAT and GEC.
But it has been the chemical industry, which tends to suffer from a poor public image, that has led the way in publishing annual reports on environmental performance.
The chemical industry trade associations in the US and Europe began a Responsible Care programme to improve the image. At the core was a commitment to be more open about industrial practices and to report on environmental impact.
Other companies have followed the chemical sector’s example mainly for public image reasons.
Companies that have published reports have been surprised and disappointed by the muted response to their efforts.
Many thought they would have their heads shot off by the environmental groups. But this has not happened because the information revealed, while significant for the company, has not surprised the campaign groups.
Mr Peter Scupholm, head of health, safety and environment policy at BP, said: "There’s always been a fear that if you report bad news people will jump on it. In our experience, that is not the case, as long as the reporting is balanced. I’m not aware of one negative reaction to a piece of bad news we have communicated."
Mr Dick Robson, environment communications manager at ICI, said the company was concerned when it published its first report two years ago: "But we recognised that it was the only way to go — we reported and our concerns have evaporated."
The first batch of environmental reports — some companies are now into their fourth year of reporting —show little consistency other than an obvious confusion about who the audience is.
And the overriding feeling when looking at the reports is one of public-relations gush with a strong emphasis on the positive aspects of the company’s performance.
Mr Steve Warshal, a business specialist at Greenpeace, said: "These reports are a management tool to get employees and shareholders to feel good about the company.
"But we would like more companies to report in this way because it signals that they are at least taking the environment more seriously," he said.
This could become the case if two industry-led initiatives to formulate reporting standards are successful.
One is run by the World Industry Council for the Environment, which has membership from the International Chamber of Commerce.
The other, Public Environmental Reporting Initiative (Peri), was initiated in the US by Amoco, IBM and others, and is being led in Europe by BP.
There are other initiatives by such organisations as the US-based Global Environment Management Initiative (Gemi) and the Canadian International Institute for Sustainable Development.
But progress at producing standards is slow.
However, cynics point to the value of keeping the initiatives in the public eye while delaying the delivery of standards.
It reduces the chance of industry’s nightmare coming true — laws that force companies to report truthfully on their environmental performance in a standard and comparable way.
Source : The Straits Times, January 17, 1994
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