Environmental and Sustainability Reporting as a Business Tool

In some quarters, environmental and sustainability reporting is seen as an essential activity for all companies. But in the world of business, anything that takes up employees' time and/or costs money needs to be justified in terms of value added for the business. There are strong reasons for any business to invest resources in environmental and social reporting…

High-Level Pressures

There's certainly a lot of talk about sustainability reporting, with companies being encouraged from all sides to publicise their performance.
A few years ago in the UK, the pressure started with high-level encouragement: the Prime Minister wrote to the chairmen of 350 leading FTSE-quoted firms asking them to publish environmental reports. Encouragement also came in the form of various awards; some of the best-known are those presented annually by the Association of Chartered Certified Accountants (ACCA Awards) and their partners. From more modest beginning in the early nineties, this scheme currently has 3 categories - environmental, social and sustainability reporting - and covers various parts of the world.
In the financial world, the London Stock Exchange guidance requires listed companies to have a risk control system in place for all types of corporate risk, including environmental ones, and to include a statement about risk control in its annual report.
More recently, the pressure has been increasing and will soon turn into legislation. In the EU, the forthcoming introduction of a new mandatory Operating and Financial Review Statement (OFR) (which will require companies to disclose social and environmental issues where they are material to a proper understanding of the OFR) will force changes in corporate reporting.
These forces act mainly on large organisations with high public profiles, and prompt the production of substantial, corporate environmental and sustainability reports. Other factors have more bearing on the vast majority of businesses:

Audiences for Sustainability Information

A lot of customers are interested in the environmental and social credentials of their suppliers. Some send questionnaires, others incorporate environmental and social considerations into pre-tender supplier appraisals, others look for partners in performance improvement.
Managers need to monitor and act on elements of business costs that are rising, as well as stay ahead of any potential risk in their company's activities and supply-chain. With environmental taxes and levies on increasing trends, environmental reporting highlights potential cost savings.
Consumers generally, as members of the community, are becoming more concerned about possible threats to themselves, their families, the environment and wildlife or about the well-being of far-away workers. They want to konw how those concerns are being addressed.
Investors: pension funds are some of the largest investors in publicly-quoted companies, and under new requirements for clear statements from funds about their investment principles, funds' trustees must state the extent to which their investment policies take into account social, environmental or ethical considerations.
Staff. If you're already operating an environmental management system, you're no doubt asking your staff to work towards environmental goals: they'll want, and they deserve, to know what progress is being made.
Potential staff may well want to know they're getting involved with a responsible company: being seen as a "good company" can help to attract better people
Journalists looking for copy and campaigners scrutinising businesses are interested in companies' corporate responsibility records.

Alternative "Sources of Information"2

It's also worth remembering that these audiences can hear about your environmental, social and ethical performance from a number of sources other than you:

Your competitors
Pressure groups
Disaffected ex-employees
Regulators
The press

Not all of these groups will represent you as you would prefer. The "information" that some of them use may be less than perfect. What is not known, poorly or wrongly reported may feel threatening - and result in misconception, misunderstanding, or worse, hostility.
However, these threats shouldn't be the only reason for reporting: getting the right environmental and sustainability information to these audiences is - first and foremost - about improving control over the resources used by the business, as well as demonstrating that control and strengthening relationships.

What are the benefits?

What you gain from environmental and sustainability reporting depends on which audience you aim at: the groups listed above won't all be of equal importance to every business. However, here are a few examples from our experience:

An edge over your competitors in securing business. A short report demonstrating your awareness and "proactivity" reassures the growing number of customers who are concerned about environmental and social risks in the supply-chain.
Focusing environmental management programmes on environmental performance and costs. Implementing a formal environmental management system shifts attention to activities and procedures. Producing an environmental report - even if it's only for internal use at first - ensures that your environmental management system captures relevant performance data and gives you a mechanism for monitoring progress.
Improving community relations. A balanced sustainability report can help to establish a good relationship between you and your neighbours - which will be important if more contentious debate arises about the environmental impacts of your operation at any time. It can also be a valuable aid if you ever want to develop a site.
Attracting fresh talents. Environmental credentials and corporate responsibility are criteria which increasingly matter to people when selecting potential employers.

 

Reporting without Pain

Shorter, more local

When they think of sustainability reports, many people immediately think of the fat, glossy brochures produced by large multinational companies. But that doesn't mean that it's the right format for every organisation. You need to produce a report that gives your chosen audiences information that they'll find useful in a form they'll read and find interesting.

Environmental site reports will be of most interest to local communities, who probably won't want to know about the waste produced at your other plant 500 miles away.
Management is likely to find a site-based report more useful if it's to be a tool in monitoring and controlling resource use. Big sites containing several operational units might look at a structure that reflects those divisions.
Customers might prefer to read a report compiled from the standpoint of the business unit with which they deal: this can be based on a small number of separate site reports if the business unit operates from more than one location.
Soon investors will expect to see the mandatory Operating and Financial Review Statement for the whole corporate entity.

Data Availability

Many businesses - at least in the UK - are already compiling some environmental data. UK examples (not all applying universally) include: waste volumes (for transfer notes), packaging consumption (for compliance scheme or Environment Agency returns), solvent usages, emissions inventories (and/or, since 2005, the European Emission Trading Scheme)

Some of this data is already placed on public-access databases, a trend which is set to increase with the advent of Integrated Pollution Prevention and Control and the European Pollution Register.
In addition, all businesses have further environmental data available, in the form of consumption figures for energy and water, purchasing records, vehicle fuel consumption, and so on. Much of this data also relates to the efficiency of the business and is particularly relevant to environmental reports for management use.
Manufacturing industries with plant-control software can normally access extensive data about plant behaviour. More recent additions to the ranges of so-called "HMI" (Human-Machine Interface) software can consolidate this data into a variety of reports: these can readily be configured to relate environmental variables or resource usage to production levels or other parameters. Building management systems are often a useful source of historical energy consumption data in office-based businesses. Making the most of these tools, where they're available, takes a lot of effort out of environmental data collation - whether it's for regulatory or voluntary reports.

Similarly, information about your social performance can be readily found using sources such as human resources data, health & safety records, supplier contracts etc

Low-Cost Publishing

Printing costs can make up a significant part of the total cost of producing any document for an external audience - even if it is short. Including environmental information in the company's annual report can reduce costs here and makes sense for many businesses seeking to addresss investors. Large print-runs aren't usually necessary for site-based environmental reports. In fact, since this is an environmental report, they're best avoided unless you know you're going to distribute a large number of copies immediately (for example because you are targeting the community at a manufacturing site in a large residential area). Other publishing options include:

Publishing through a company internet site, possibly as a "pdf" document.
Maintaining the document as a computer file (either in a word-processor file or in a desktop publishing package) and printing on demand using high-quality laser or inkjet printers.
Either of these options makes updating much easier too.

Outside Assistance

It is worth getting some outside help with the act of compiling the report - particularly if you haven't done it before. Consultants like EuGeos can help you to achieve the balanced approach you need and advise you on the sort of material that should go into a good environmental report. The third-party perspective helps in putting together a document that an outside audience will quickly understand.

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