Accountants call for rigour in green reports

European federation calls for uniform standards as company reporting grows

Corporate environmental reporting must be based on a rigorous and uniform set of principles if it is to be regarded as credible, the European Federation of Accountants (FEE) warned yesterday. "Unless a generally applicable...framework for non-financial reporting is developed," the body said, then extensions of environmental reporting into sustainability reporting "will fail to engender the support and credibility that their proponents apparently expect."

"Just as the financial markets have expectations that company reports are founded on certain commercial principles, environmental reporting requires a set of conceptual principles on the basis of which verifiable audits can be carried out," says Roger Adams, a member of FEE's environmental task force. With the exception of statements based on the EMAS environmental management standard, reports have tended to emerge in a random way, FEE believes. The organisation says that both firms and users would benefit from greater structure and definition.

FEE recommends developing a framework of assumptions and characteristics for reports, building on proposals for developing environmental reporting. These include a list of 50 core principles for reporting developed by the UN Environment Programme. "We want to incorporate more rigour by looking at how exactly these factors are measured, so that we can come up with numbers that are directly comparable," says Mr Adams. A shorter format is also needed for companies making a combined environmental report and set of annual accounts.

As a minimum, FEE says an environmental report should include consideration of business policy and strategy; environmental management; key environment impacts including emissions and discharges and use of raw materials and natural resources; potential impacts of past activities, as well as possible indirect effects.

The body argues that environmental reporting is moving to the mainstream in Europe. FEE expects it to become even more important as the financial sector begins to use reports for risk assessment, and as consumers and investors increasingly demand information before taking decisions about companies' products.

Interested parties have been asked to comment on the proposal by July. The federation hopes that its recommendations may eventually feed into a set of written standards, possibly through the CERES global reporting initiative, in which FEE is also involved.

Follow Up:
European Federation of Accountants, tel: +32 2 285 4074.

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