Examination of Witnesses (Questions 92
THURSDAY 8 JUNE 2000
92. Good morning, and welcome to the Committee.
Can I thank all of you for putting in memoranda, which we are
very glad to have, and also for being willing to come here today,
collectively, as it were, rather than one by one; it does accelerate
proceedings if we can deal with this in one go, it is also helpful
to have differing opinions on these subjects, because I am sure
you all have slightly different points of view, and we are glad
to have those. As you know, we are looking at the whole business
of environmental auditing worldwide, we are trying to do a bit
of cross-benching against the performance in the UK, but particularly
focusing on the UK and how things look at the moment, what is
the present state of play. We are very glad to have your point
of view, particularly from the point of view of examining not
only the public sector but also the private sector practices in
this area; so thank you for that. Before we begin asking you questions
about the various memoranda that you have put forward, is there
anything in particular which any of you would like to say, by
way of an additional statement, before we crack on; you are all
content with what you have said already?
(Ms MacGillivray) Yes.
(Dr Woollard) Yes.
(Mr Rintoul) Yes.
(Mr Adams) Yes.
Chairman: Okay; well, thank you very
much indeed. We want to start off just by taking a little bit
of a snapshot on the current trends in environmental reporting
and environmental auditing, and I know Mrs Brinton wants to lead
off on that.
93. Yes; thank you very much, Chairman. I would
like to start off on the private sector, because, certainly, I
think we are all aware, there has really been quite a growth in
environmental reporting in parts of the private sector, and particularly
over the last decade, I think it is fair to say. How do you rate
it, what sort of main features of this growth really stand out,
to you, and what good, or indeed poor, examples could you point
to, in the private sector, in this respect?
(Dr Woollard) I have been involved in environmental
reporting since 1994 and helped the Body Shop with their first
environment report. The thing I have noticed over that time has
been the fact that it is much more prevalent in some sectors than
others; in oil, chemical, utility, energy, health care, pharmaceutical,
those sectors stand out as the most advanced, in terms of the
numbers of companies reporting, and the depth and breadth of reporting.
The other thing that hits me, and I know you do not want to be
international, but it is more prevalent in the UK and Europe than
it is in the US. A third point would be that the reporters, those
in those sectors that I have just mentioned, over that time period,
have got deeper, broader, more accurate, actually shorter and
more focused reports, as the years have gone by. And the negative
trend is that the non-reporters have not really got off the starting-blocks,
in many cases, they have been generally slow to respond; certain
sectors are much worse than others.
94. Which sectors in particular would you highlight?
(Dr Woollard) I was going to say banking, first, but
actually there are some notably good examples in banking, like
the Co-op and NatWest, but I think service-based organisations,
media, some of the new economy companies, the telecoms and communications
companies, surprisingly enough; my understanding is, because they
do not have really a large impact, often they do not see the benefit
of reporting. The only other trend I would point to is the adoption
of third party verification, which has not been rapid, it has
been quite gradual and quite slow, but every year there are more
reports that are verified by third parties.
95. I find that quite a cause for concern really;
where is the main trend and where is the consistency? It seems
that there are lots and lots of initiatives in environmental reporting
but no main trend coming out. If I could just take you on to one.
Certainly, there has been a move towards increasingly integrated
reporting, triple bottom line, as I believe they call it, reporting;
is this really too ambitious, at the present time, particularly
as you have said that we have got all this disparity, and particularly
with some of the new industries and new technologies?
(Dr Woollard) My own response to that is that triple
bottom line is one way of reporting; we also work for companies
like BP Amoco on their social reports, we also work on corporate
social responsibility reports, not all of them are triple, we
also work on sustainability reports. So, if you are talking about
diversity, I would add triple bottom line as one of the several
types of diversity that exist. These are all, in my view, attempts
to broaden out the scope of reporting; some companies broaden
out their scope by issuing individual reports for parts of their
businesses, others expand the scope in terms of reporting on social
issues, merging social, health and safety and environment together.
I am not personally aware of a large number of companies waiting
in the wings to take up triple bottom line reporting; in fact,
I can think of Shell, but I cannot think of too many others who
actually, willingly, say that they do report in a triple bottom
(Mr Adams) I can add the TFU Europe Eastern Group,
which is the first European company to produce a report on the
basis of the Global Reporting Initiative guidelines.
96. I am sorry, which company was that?
(Mr Adams) TFU Europe, which is the old Eastern Group,
Mrs Brinton: I have got them in my constituency.
97. They change their name so often.
(Mr Adams) I think you can add BAA as well, as a company
that is moving very fast in that direction. I sit on the Steering
Committee of the Global Reporting Initiative (GRI), which is American-led.
98. The British Airports Authority?
(Mr Adams) BAA, yes, British Airports Authority. We
are putting out revised guidelines this July on triple bottom
line, or sustainability reporting, where one of the issues that
has flowed from the pilot testing, over the last 12 months, with
20 corporations on a worldwide basis, is that you do need to stage
the introduction of this type of reporting. Many companies are
only in a position where they can seriously be thinking about
environmental reporting, and to move to social or integrated economic
sustainability type reporting, we are building into the new guidelines
a set of procedural steps that people can adopt parts of the guidelines
and then move on to fuller adoption as greater experience in developing
indicators and internal systems within the companies grows.
99. I am glad you have mentioned the GRI, but
I think that is generally considered to be very much a top-down
initiative; and is it not true to say that the greatest improvements
and greatest developments in the whole idea of environmental reporting
have actually come more bottom-up, rather than top-down? Here
I am thinking particularly, I am glad you mentioned TFU, of the
utilities, because have they not really blazed a trail here?
(Mr Adams) I would like to make the point that I come
from a financial auditing and reporting background, and I do not
think that you can have credible financial reports, annual reports,
to shareholders that do not rest on good systems of governance
and good systems of financial management, and I do not think environmental
reporting, or sustainability reporting, or any other kind of external
reporting, can really be credible unless it is based on a set
of internal systems that produce coherent information and messages
that are useful for the company itself. So I think that is the
bottom-up side of it. I think that you do not start with reporting,
you start with perhaps an objective of greater accountability
and transparency, but then you go back into the internal systems
and you work your way through that. Reporting, in a sense, is
not the overall objective.
(Mr Rintoul) If I may add just a few comments. There
are some particularly industrial sectors, which, it is apparent
for everyone to see, are more active in this area, and I think
there is an interesting characteristic there, which I will not
say is universal, but those sectors that have been subject to
more extensive regulation and the need to declare such things
as emissions, or permit emission requirements, the evidence, to
me, anyway, my experience is, those have found it either easier,
or certainly of benefit, to move into some form of proactive reporting.
And I think that is also experience, I would suggest, that has
been seen in the States, through the TRI, the Toxic Release Inventory,
where companies have to publicly register toxic release information,
with no commentary; they have responded to it actually by practically
releasing reports, which allows them to put a commentary around
the regulatorily required, publicly released data. So, I think,
if you look in some of the areas where there has been more movement
and a greater penetration of some form of reporting, there is
at least some evidence to suggest it is areas which have actually
got quite a strong regulatory regime in play.