The unsustainable charm of environmental reporting: lessons from current UK practice

Jason Palmer
Department of Manufacturing and Engineering Systems, Brunel University, Uxbridge, UK
Ian Cooper
Eclipse Research Consultants, Cambridge, UK

Abstract

The 1990s have witnessed an explosion in the quantity of environmental data that organisations release in the UK. Published annual 'environmental reports' are currently seen as an attractive and effective way of packaging this data for public consumption. To date, however, much of this reporting is of questionable value, both for what it tells us about an organisation's environmental performance and for what it suggests about underlying intentions and motivations.

The dominant model assumed for the spread of environmental reporting in the UK is trickle-down. Take-up of the techniques involved will pass, it is held, from the top-down, as less innovative organisations follow in the footsteps of the leading edge of 'best practice'. In this paper, the efficacy and longer term impact of this model is called into question.

For example, how much of the ground towards 'sustainable development' can we expect to be covered while in-house objectives remain the main drivers? This paper offers a critical evaluation of the movement towards environmental reporting in the UK in the light of global demographics and economic development.

Introduction

Published environmental reports are rapidly becoming the single most important vehicle in the UK for describing:

an organisation's environmental performance
what it is trying to do to improve this, and
whether its actions are being successful.

These themes reflect an emerging trend towards environmental management using a formal system, e.g. the Eco-Management and Audit Scheme and BS 7750. Organisations pass through a 4 step improvement process:

reviewing performance,
setting targets for improvement,
acting to meet the targets,
auditing to check that objectives have been met,

and then repeating the cycle. This results in a pattern of incremental improvement - each year's performance a little better than the year before, as shown in Figure 1.

Figure 1 Environmental management: incremental improvement in performance over time

This paper focuses on the current state of development of environmental reporting in the UK in terms of two quite distinct performance indicators:

risk management, and
energy management.

These represent strongly contrasting aspects of environmental management, in general, and environmental reporting, in particular. Risk management is compliance-driven, defined largely by existing laws and regulations. Energy management, in the UK at least, is not and remains voluntary. Energy has a long history of systematic management. Conversely, risk does not fit comfortably into what is becoming the orthodox 'review-target-do-audit' approach.

Although environmental reporting by companies is still in its infancy, the number of companies in the Financial Times top 100 which published annual environmental reports doubled between 1992 and 1993, from 10 to 20 (KPMG, 1994). About a fifth of them produced an environmental report, separate from their annual report and accounts. Many more (2/3) reported that they had set themselves targets for improving their environmental performance. Yet only a tenth of companies set targets in all the areas covered by the KPMG survey:

air emissions
effluent discharges
waste management
energy conservation
legislative compliance
environmental auditing, and
sustainable development.

However 45% of them reported that they had set targets on energy conservation. Hence energy consumption is widely, but not universally, being used as a key indicator of an organisation's environmental performance.

KPMG's 1994 survey of the growth of environmental reporting in the UK suggests (1995) that this is continuing, up from 20 to 34 top 100 companies in 1994. Most of them are very large organisations, with advanced environmental programmes - the front runners in good environmental management. Currently, the hope appears to be that growth in reporting will continue, trickling down from large to smaller companies, spurred on by the twin pressures of 'leading edge' example and supply chain pressures. But it remains highly doubtful if these pressures will be strong enough to drive environmental reporting across all industrial sectors or down into small and medium-sized enterprises.

A survey by Sustainability Ltd (Anon., 1995) found that 19% of published Environmental Reports are short statements or "green glosses" containing no valuable information. No companies were judged to be practising "sustainable development reporting" (including life cycle assessment, mass balances, pre-agreed targets, etc).

If environmental reporting is a primary mechanism for bringing environmental performance objectives into the public domain - and is therefore important in terms of:

influencing corporate activity on the environment, and
giving external stakeholders a measuring stick for corporate performance,

then it is worthwhile putting this type of reporting under the microscope. Just what is being delivered now? And what is it reasonable to expect from future developments?

Current state of Environmental Reporting in the UK: Energy Consumption

Eclipse (1994) reviewed the inclusion of information about energy consumption in environmental reports in the UK. In August 1993, the Secretary of State for the Environment wrote (DoE, 1993) to organisations which had signed the Making a Corporate Commitment campaign Ñ a Government initiative for promoting energy efficiency in the UK Ñ calling on them to publish energy efficiency targets. In November 1993, he broadened this call:

to all companies, and
to including these targets in their environmental reporting to shareholders through their Annual Reports.

Eclipse analysed 25 environmental reports to see whether the organisations involved had stated:

their objectives for reducing CO2 emissions
their objectives for reducing energy consumption, and
their annual and historic energy consumption figures.

The results are shown in Table 1. The reports varied considerably both in their coverage of issues and in the quality of information they provided:

Eighty percent of organisations stated their environmental objectives in their published Environmental Report but the remainder felt no compulsion to do so
nearly half of those with published environmental objectives cited energy amongst them.

All the reports mentioned energy consumption, even if only in passing, see Table 1. Two thirds of the organisations devoted 5% or less to the subject - less than might be expected for one of KPMG's key performance indicators. Four organisations devoted less than 1%. The lack of attention given to the subject by energy utilities such as BP and Powergen is particularly surprising.

Despite the UK government's conditional commitment to reducing the country's emissions of CO2 to 1990 levels by the year 2000, only three companies cited this as one of their environmental objectives or used measurement of emissions as an environmental performance indicators. British Telecommunications and Powergen set quantified targets, respectively,

"Emissions stabilised by 1995 and returned to 1990 level by 2000", and
"Emissions not to exceed 1990 level by 2000".

The third, Shell UK Ltd, only committed itself to "an active programme to offset emissions in the long term". However more than two fifths of the organisations reported their CO2 emission data.