Select Committee on Environmental Audit Minutes of Evidence


Annex 2

The ACCA UK Environmental Reporting Awards

  1999 was the ninth cycle of the ACCA UK Environmental Reporting Awards and the level of participation was the highest yet: 64 reports were submitted from which a shortlist of 16 reports was selected for further consideration by the judging panel. The overall winner of the 1999 reporting awards was United Utilities Plc. In the view of the judges, the report of United Utilities—a public company since 1989—"addresses the full environmental aspects of the group's operations (which include energy supply and distribution, water, wastewater and telecommunications) including its international operations. The range of issues covered and the innovative reporting approaches demonstrated in the report were commended by the judges, who felt unreservedly that this report should be overall winner in 1999."

  The panel of judges recommended that awards should also be made in the following categories:

    —  Joint runners-up for the overall award (ScottishPower and British Airports Authority plc)

    —  A special commendation for best "first time reporter" (Biffa Waste Services Limited)

    —  A special commendation for best "SME reporter" (Bovince Limited)

    —  A special commendation for best "supply chain reporter" (B&Q)

  According to the ACCA panel, the quality of the shortlisted reports this year was extremely high, with many companies embracing wider issues than their environmental performance. Since its launch in 1999, a number of companies have begun to use the DETR's greenhouse gas reporting guidelines. Both the quality and quantity of target setting has improved. The sustainability reporting guidelines issued by the Global Reporting Initiative (GRI), have begun to be referred to by a number of companies—Eastern Group published the UK's first full GRI style report. The number of independent verification statements included in environmental reports has increased.

  While the overall quality of reporting is improving, there does appear to be a widening gap developing between the good reporters and the very weakest, which often do not identify the key environmental issues relevant to their business. This year, the reports reviewed by the judges showed less diversity of reporting style and greater convergence around a more or less recognisable reporting model. Possibly as a result of this trend, the judges noted fewer reporting innovations.

  The level and extent of financial disclosures remains disappointingly low, with most reports lacking environmental financial data dealing with issues such as environmental expenditure (operational and other costs such as fines and taxes), environmental revenue (such as savings incurred), liabilities and risks.

  Some companies still tend to discuss sustainability in a loose manner without first addressing environmental issues in an adequate way. Cross-references to other material should be included, in particular links should be provided for all reports and websites, including mention of the availability of the environmental report in the annual report and accounts.

NON-CONVENTIONAL REPORTERS: SMES AND THE PUBLIC SECTOR

  Experience has tended to show that even those SMEs that are aware of their environmental impacts often lack the resources (financial, time, staff) to properly assess their real environmental impacts, measure their environmental performance or produce a public report. As an SME that reports on its environmental performance and targets, Bovince Limited is certainly the exception to the usual rule, with an ISO 14000 certification, an EMAS accreditation, an Investors in People achievement and a published environmental report under its belt. Bovince employs less than 70 full-time staff. Quite an achievement.

  The number of NGOs and public sector bodies producing an environmental report continues to be minimal, but the ACCA were encouraged by the participation of The Environment Agency and Stroud District Council in this year's Awards. Both these organisations have acknowledged and measured their own environmental impacts, and reported on them accordingly.

FINANCIAL CONSEQUENCES OF ENVIRONMENTAL ISSUES

  The judges have observed that the level of financial data in most environmental reports continues to be very low. This view tallies with the results of the PIRC survey of the FTSE 350 published in early 1999. Two reports are available, however, which highlight the need for greater financial disclosure.

FUTURE DIRECTIONS IN ENVIRONMENTAL REPORTING

  As well as commenting on the strengths and weaknesses of the current crop of environmental reports, the ACCA judges usually try to comment on what they perceive to be emerging issues, or areas where further experimentation or greater emphasis is required.

  Normalisation and trends: Environmental performance indicators are becoming more frequent in environmental reports, but sometimes data is presented in an unhelpful way. Data should be presented both as a unit per product (or similar), for example—CO2 tonnes/quantity of product and as absolute values, for example—CO2 tonnes, so that real performance improvement can be measured.

  Communication: the growing length of a number of environmental reports has led to a data dense and text heavy approach to corporate reporting which has necessitated the need for summation. This may be resolved in the production of an additional, but shorter summary report with links provided to more detailed reports or websites for those who wish to become better informed. Also, the inclusion of executive summaries in each report could also achieve this objective.

  Increased focus on more frequent reporting and more extensive reporting using the internet present challenges both to reporters and to verifiers. Preparers must seek to establish the reporting boundaries more clearly than is currently done, and verifiers will need to ensure that continuous or interim reporting is subject to external monitoring.

  Verification: Although the number of verification statements has increased, the quality and depth of them could still be improved. Most statements simply address the data collection method and offer little by way of interpretation of the data reported. Similarly, very few verifiers reports indicate that site visits and site specific testing has occurred. Future statements should begin to address the following in order to enhance stakeholder assurance:

    (1)  Should other data be included that is not currently being measured?

    (2)  Is any improved environmental performance significant in relation to the company?

    (3)  Are all key issues addressed?

    (4)  Are the targets that have been set too easy to achieve?

  Resource Use and Bio-diversity: there is a trend in mainland Europe of increased reporting of inputs, such as energy, material and water use. This information is essential for measuring the environmental performance of a company. Bio-diversity is an area that is frequently neglected but which requires far greater attention.

  Outsourcing: outsourcing of some (significant) part of an entity's operations can lead to misleading environmental reporting unless the fact that outsourcing has occurred is acknowledged. It may be appropriate to explore the notional environmental burden or footprint shifted as a consequence of outsourcing. Stakeholders will wish to know what environmental performance standards are enforced by the reporting entity as part of the outsourcing agreement and how the subsequent performance is monitored and reported back.

LAST YEAR'S ISSUES: STILL ROOM FOR FURTHER IMPROVEMENT:

  Better explanations: explanations of variations in environmental performance (and failure to achieve pre-determined performance standards) could be further improved.

  Direct and indirect effects: many companies focus on direct effects while neglecting to investigate and report on their sometimes significant indirect (upstream and downstream) effects.

  Key impacts: reporters do not always clearly identify the main environmental impacts of their operations and their products. Without such a statement at the beginning it is impossible to make an informed judgement concerning the reliability or significance of the performance data that follows.


 
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Prepared 9 January 2001