Select Committee on Environmental Audit Minutes of Evidence

Memorandum from Environmental Resources Management (ERM)


  ERM is pleased to submit this review of sustainability reporting to the House of Commons Environment and Audit Committee. We have attempted to illustrate our thoughts on reporting by matching the latest examples of best practice in the private sector with analysis of organisations' motivations.

  This paper is organised as follows:

    —  criteria for good sustainability reporting

    —  examples of emerging best practice, with analysis of companies' motivation and actions

    —  ERM's reporting experience (Annex A)


1.2.1  Drivers

  Over the last decade ERM has worked with many leading reporters, including British Airways, The Body Shop, BP Amoco, Tetra Pak, Glaxo Wellcome and Bristol Myers Squib. Such companies tell us that they report on their environmental (and increasingly, social) performance for two main reasons—to build and enhance their corporate reputation externally, and to drive forward improved performance internally.

  Above all, we are seeing a trend towards ever better offerings from established reporters but with still limited action by non-reporters. Many companies indicate that official attempts to "name and shame" them into reporting are having little impact if they do not feel the fundamental drivers of customer or competitive pressure.

  In January 2000 ERM conducted surveys of Web-based sustainability reporting by the FTSE-100 companies. We found that a number of companies are beginning to use their Internet presence to communicate about performance and progress (45 have environmental sections on their Web sites). Also, we found that the interactive nature of the Internet still represents an opportunity to develop dialogue with stakeholders (only three sites have potential for discussion on key issues although this number is increasing rapidly).

  In comparison, a similar review of the Web sites of UK government departments revealed that few (eg the Environment Agency and DETR) communicate information about their aspirations, policies and performance on sustainable development.

1.2.2  Trends

  We have seen four key trends emerging over the last few years:

    —  expanding scope to embrace social and economic issues alongside environmental;

    —  tailoring information to the individual visitor/local audience;

    —  growing maturity of reporting companies, leading to greater confidence and candour;

    —  Web-based presentation formats (which facilitates the other trends).

  These issues will be equally important for the public sector. Additionally, government departments may also be well-placed to combine their sustainability reporting activities with provision of guidance to other practitioners (eg companies) and of time series data (eg national data for key indicators, or sectoral performance).

1.2.3  The Verification Debate

  The companies we work with tell us that they have their reports verified for a number of reasons:

    —  to improve their data management system (by allowing an objective third party to challenge the numbers and analysis applied);

    —  to benchmark their systems against the best (by bringing in experts who work with competitors and reporting peers);

    —  to improve the report itself (by casting a fresh pair of eyes over the scope, style and text); and

    —  to add credibility (by opening their business to rigorous assessment by a verifier which has a strong reputation for integrity and independence among key audiences such as government and NGOs).

  Despite the growth of international standards (such as GRI and ISEA), several leading reporters are moving away from audit-style verification of their data towards testimonials from stakeholders (eg Ford, Co-op Bank). However, it is likely that tailored mandatory reporting standards (eg sector specific indicators) could be effectively used to bring non-reporters to a minimum level of disclosure.


TrendMotivation Example of
good practice
Expanding Scope
Expanding scope of reportingMoving beyond environmental performance reporting to embrace social and economic issues "The Shell Report"—Shell has taken a lead on reporting together its performance on the three strands of sustainability, setting a benchmark in 1997 with the first Shell Report

—the company has also maintained an ongoing and open dialogue via public on-line forums to discuss issues (BP Amoco has taken a similar approach with its "Ask Sir John" email line which commits the company's chairman to answer a question a day on any sustainability issue)
Increasingly detailed informationProviding evidence to employees (and externally) that issues are being increasingly well managed Glaxo Wellcome's "Health, Safety & Environment Report" —Pharmaceutical company Glaxo Wellcome has been reporting environmental performance data for several years, and has extended its scope to include a range of health and safety issues (eg mental well-being of employees)

—it is now reporting a range of "near miss" data—such as environmental incidents—which help reinforce the company's efforts to bring about a change in workplace culture
Tailoring Information
Differentiating between local audiences and operations Ensuring that the reporting process—and its output—help the company to effectively manage its relationship with the communities in which it works Rio Tinto—the international mining company has produced site-based reports for 15 of its businesses, aiming to match reporting scope with local concerns

—(American multinationals often report in great detail on local issues such as a single plant's performance [in the interests of community relations] and provide limited information on their overseas activities)
Customising Web reports for individual readers While fixed paper reports can "hit or miss" the reader, the Internet enables companies to provide vast amounts of information—and to tailor it to individuals' needs—Swiss banking group UBS has used the flexibility of the Internet to allow visitors to its Web site to filter information to suit their needs

—visitors can choose from a series of profiles (eg shareholder, employee, etc) which guide them to information likely to be of most interest
Increasing Maturity
Integrating sustainability issues into mainstream business thinking and decision making If reporting is viewed as a stand-alone activity it may be an arduous activity to gather information and may fail to inspire improved performance within the organisation—healthcare company Bristol Myers Squib has developed an environment, health & safety (EHS) Web site which has won awards in the USA

—development of the site demanded close co-operation between the company's technical EHS, information technology and communication personnel, helping to build effective internal working relationships

—the Web site also provides briefing information to pharmacists
Embedding the company's environmental philosophy into day-to-day management Recognising that being a responsible operator extends beyond the factory gate to relationships throughout the life cycle of your product Tetra Pak's 1999 environmental performance report —international packaging manufacturer Tetra Pak has this year embarked on its first corporate reporting exercise, based on its life cycle approach to environmental management

—the report explores the company's efforts to work throughout the life cycle (from raw material suppliers to waste management, including its own operations and those of its customers)
Structuring and nurturing external relationships The reporting process can become a central part of a dialogue with stakeholders on all sustainability issues Co-op Bank's Partnership Report—the Co-op Bank has worked closely with its seven "partner groups" (shareholders, customers, staff and families, suppliers, local communities, national and international society and past and future generations of co-operators) to produce its annual report

—the reporting exercise itself is an integral part of the bank's ongoing dialogue with stakeholders, whose comments stand as verification of the bank's performance on key environmental and social issues during the report year
Candour and humilityIt's not all good news—nor can it ever be Ford's "Connecting with Society" —now in its second year, auto maker Ford's corporate social responsibility report has taken a lead in corporate America by presenting a "warts and all" account of its relationship with sustainable development

—it tackles head on the company's high profile position in the growing "Sports Utility Vehicle" market, which has attracted public opprobrium from the Sierra Club

—it also features a candid interview with chairman Bill Ford by SustainAbility's John Elkington which stands as an effective form of third party attestation
Web-based Reporting
Driving cultural change in an organisation towards greater transparency Many organisations have seen environmental (and sustainability) reporting as a "spinning" exercise—but this has led to loss of credibility with key audiences (including their own employees)—BP Amoco has pledged to become "the most credible source of information about ourselves" after pressure groups (including a well-informed critical Web site— threatened to undermine the company's efforts to position itself as a leader on sustainable development (under the leadership of chairman Sir John Browne)

—its new Web site (launched in April 2000) takes sustainability issues as the main focus, rather than featuring them as an adjunct to a standard corporate home page

—a culture of increased transparency is now spreading around the organisation as business units realise the benefits of greater credibility in their own operating contexts

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Prepared 9 January 2001