ACCA SBL Syllabus B. Governance - Environmental Reporting - Notes 4 / 5
What is Environmental Reporting
Perhaps businesses should only report on things that are required under laws, accounting standards or listing rules?
But maybe there's more - maybe businesses should be a bit more cool and groovy and become ‘citizens’ of society?
After all businesses benefit from society and so should give something back - be responsible for society just like humans are.
This includes companies taking responsibility for its environmental impacts using environmental reporting
Ok what goes into this sexy Environment Report?
Basically the environmental impact of the organisation
They can be split as follows:
Direct Impacts
The environmental effects of Manufacturing and Distributing
Indirect Impacts
The environmental impacts of the supply chain
So basically the company records, measures, analyses and then REPORTS on....
Types of Environmental Impact
Consumption - Inputs
Energy and world resources
Emissions - outputs
Pollution and by-products
Problems with Environmental Reporting
See above where we say a company should report on direct and indirect impacts?
Well the indirect is a nightmare!
Imagine a bank - it gives loans to companies so theoretically it would have to report on the impact on the environment that those companies cause - as they've been caused indirectly by the bank too!
Narrative or Numbers?
Narrative
can be used to convey objectives, explanations, aspirations, reasons for failure against previous years’ targets, management discussion, addressing specific stakeholder concerns, etc.
Numbers
can be used for emission or pollution amounts (perhaps in tonnes or cubic metres), resources consumed (perhaps kWh, tonnes, litres), land use (in hectares, square metres, etc) and similar
Guidelines for Environmental Reporting
Generally it is voluntary
So theoretically adopt any approach to environmental reporting is ok, but in practice, a number of voluntary reporting frameworks have been adopted - in particular the Global Reporting Initiative (or GRI)
Some companies now openly say they report their voluntary information under GRI
Others base their reporting on GRI guidelines without saying explicitly that they do so (perhaps wishing to adopt its provisions selectively)
Where does an environmental report go?
Many possible places...
In the Annual Report
In ‘stand alone’ reports
On company websites
In advertising or in promotional media
Advantages and Purposes of Environmental Reporting
These include:
A way to how their accountability to society and to future generations
To strengthen a company’s accountability to its shareholders
To demonstrate their responsiveness to certain issues that may threaten the perception of their ethics
To gain, maintain or restore the perception of legitimacy after a company commits an environmental error
A convenient place to all about (and re-assure investors) environmental risks and the ways that they are being managed or mitigated.
The systems and the knowledge they generate could have the potential to save costs and increase operational efficiency