strategy

Practicing corporate environmental self-assessment

Synonyms:
Self-reporting corporate environmental performance
Reporting use of energy and natural resources in industry
Reporting on business environmental record
Description:
To measure environmental performance; to conduct regular environmental audits and assessments of compliance with company requirements, legal requirements and these principles; and periodically to provide appropriate information to the Board of Directors, shareholders, employees, the authorities and the public.

Establishing through a global, voluntary, and multi-stakeholder process, the foundation for standardized (or uniform) corporate sustainability reporting worldwide. To accomplish this by developing three tools: a set of core metrics applicable to all business enterprises; sets of sector-specific metrics customized to specific types of enterprises; and a uniform format for reporting these metrics and related information integral to a company's sustainability performance.

Context:
Environmental reporting brings a number of benefits. It provides an opportunity to establish and publish benchmarks and targets and to review progress towards their achievement. It also meets legitimate expectations for information about the policies and practices being pursued. Importantly, it also shows where performance information is available and where it is not.

Future environmental reporting will need to integrate financial and non financial performance measures and serve the information needs of external stakeholders, internal management, and front-line personnel. Such information should be integrated into annual reports.

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities. Agenda 21 recommends that businesses should report annually on their environmental record, as well as on their use of energy and natural resources. This reporting should be transparent and available to shareholders, creditors, employees, governmental authorities, consumers and the public.

Implementation:
There are a wide array of environmental reporting programs sponsored by non-governmental organizations, governmental entities, and business associations operating worldwide. There are programs that promote reporting as a valuable practice, but offer no specific guidance on which indicators (e.g. energy efficiency; water use, air pollutants) or specific metrics (BTUs per unit product, gallons per dollar value added) should be reported. Other programs, still voluntary, offer more specific guidance on indicators, but not metrics. Still others are mandatory, but non-prescriptive with respect to indicators or metrics. There are only a handful of programs, both voluntary and mandatory, that provide some combination of a uniform format, defined indicators, and standardized metrics.

There was a dramatic increase in the practice of corporate environmental reporting in the 1990s, particularly in Europe, North America and Japan. Environmental reporting has been mainstreamed and independent verification of environmental statements have developed into an important business sector for consultancies. In line with the concept of triple-bottom-line accountability, financial, environmental and social reports are likely to be developed further and become integrated.

Among the range of reporting systems operating worldwide, the following are considered established systems: CEFIC-the European Chemical Industry Council; CERES; Danish Government "Green Accounts" Program; IRRC-Investor Responsibility Research Center; UNEP/SustainAbility; VfU-the German Association for Environmental Management in Banks; Savings Banks and Insurance Companies; WRI-World Resources Institute; The World Business Council on Sustainable Development (WBCSD) Task Force on Eco-Efficiency; and the Dutch government's non-binding reporting guidelines.

The Global Environmental Management Initiative (GEMI) has developed the Environmental Self-Assessment Program (ESAP) to aid companies interested in sustainable development and adherence to the principles of the Business Charter for Sustainable Development of the International Chamber of Commerce (ICC). ESAP helps a company self-assess its implementation of each of the 16 ICC principles. The programme was designed as an internal measurement tool to allow companies to rate, review and prioritize their environmental policies and programmes. As of March 1993, over 3,000 ESAPs have been furnished to business and non-business organizations in 23 countries around the world, also in a cooperative distribution and evaluation with the ICC and UNEP. 68% of companies using ESAP are industrial businesses, 21% are consultants, eight percent are non-government organizations and three percent are international government offices.

Various broad-based standards, such as the Public Environmental Reporting Initiative (PERI), the Coalition for Environmentally Responsible Economies (CERES) and those from the United Nations Environment Programme (UNEP), have emerged to make corporate environmental reporting data more comparable across sectors. The production of these reports helps companies to get to grips with parts of their business that have not come under such specific management scrutiny before. Many stakeholders, particularly the investment community, are increasingly looking to these reports for evidence of the effective management of environmental risk.

The Coalition for Environmentally Responsible Economies (CERES), representing business investors, financial institutions and corporations promotes 10 principles of environmental management to its corporate members. The tenth principle states: "We will conduct an annual self-evaluation of our progress in implementing these Principles. We will support the timely creation of generally accepted environmental audit procedures. We will annually complete the CERES Report, which will be made available to the public."< The CERES Report is a comprehensive, standardized, environmental report form covering all aspects of corporate environmental management and performance. First developed in 1990 and revised annually through a collaborative industry-environmental-investor process, the CERES Report has been widely recognized as the leader worldwide in standardized reporting. In a 1997 UNEP/SustainAbility survey of corporate reports worldwide, half of the 10 top-ranked reports belong to CERES companies, including the top two.

The Keidanren Global Environment Charter (Japan) requires companies to establish internal systems to handle environmental issues by appointing an executive and creating an organization in charge of environmental problems. It further requires companies to create internal regulations including goals for reducing the load on the environment. An internal inspection to determine how well the environmental regulations are being adhered to shall be carried out at least once a year.

Counter Claim:
1. While the quantity of information rapidly expands, it is far from clear that the value of information has kept pace. The reasons behind this phenomenon become evident with even a cursory look at a sample of reports. Each firm utilizes its own format, its own indicators, and its own metrics, thereby making comparisons between reports impossible.

2. Should present trends continue, the future of corporate sustainability reporting faces an uncertain and, probably, unfortunate future. In a "business-as-usual" scenario with each firm designing its own format, indicators, and metrics, the reporting landscape is sure to evolve in an increasingly chaotic fashion.

Subjects:
Business enterprises
Environment
Individuation
Type Classification:
D: Detailed strategies