UK firms urged to report on environment

Accountants say legislators should require reporting of limited, standardised data

Stakeholder tolerance of companies that do not disclose data about their environmental impacts is decreasing, while pressure for benchmarking of companies' performance is building, according to a report by the UK's chief accounting body, the Association of Chartered Certified Accountants (Acca).

Published on Friday, the report concludes that: "Almost every company will need to pay greater attention to environment-related performance measurement," both to improve its internal management and to meet the demands of the outside world.

Acca suggests that companies will have "much less flexibility" in future about how they undertake performance measurement. A consensus on what should be measured and how it should be reported is being developed by EU and international organisations, while agreement on data standardisation and verification "is likely" within a few years.

It will be necessary for governments to take a greater hand in pushing companies to measure and disclose environmental performance, Acca concludes, noting that the threat of legislation is increasing. At its annual reporting awards ceremony earlier this month, junior UK environment minister Michael Meacher threatened to make reporting mandatory unless more companies disclosed information voluntarily (ENDS Daily 6 April).

But Acca warns that calls for companies to be made to publish annual environmental reports may be "premature". "It is not just self-interested environmental managers who feel that current reports are often a poor means of communicating with stakeholders," it says.

Rather than forcing companies into the "light bulb" approach of disclosing a wide-variety of non-standardised data, Acca suggests that a "far more powerful driver of improvement" would be to apply a "laser" approach, in which firms are made to disclose a smaller amount of specified data based on standard definitions. It points to the recent introduction under the US "toxics release inventory" law of a requirement for companies to report site mass balances for specified chemicals as "an example of what could be done".

Based on a survey of companies who have already begun to measure their environmental performance, Acca suggests that most are still at the stage of having "reactive" environmental policies, or some proactive communication. Few have progressed to the "third generation" stage of managing for sustainability which encourages genuine debate with stakeholders.

Follow Up:
Association of Chartered Certified Accountants, tel: +44 171 396 5700; References: "Environment Under the Spotlight - Current Practice and Future Trends in Environment-Related Performance Measurement for Business."

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