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Environmental reporting

One of the specific purposes for monitoring information is in the area of corporate environmental reporting. The environmental performance of the company is of concern to a range of external parties. These include investors, members of the local community, political decisionmakers, regulatory bodies, local government, suppliers, contractors and buyers. Besides, more deep information may be required by parties such as academics, environmentalists and other companies.

An increasing number of mining companies are preparing environmental reports as a means of communicating information on their environmental performance to internal and external parties. The benefits of environmental reporting involve meeting community right-to-know expectations. Then environment reporting creates market opportunities by promoting the environmental advantages of products, goods and services, including accessing funding and insurance, raising staff awareness of the company’s commitment to management and enhancing the company’s credibility with regulators and the community (Blair 18).

When making the decision to prepare an environmental report, the first issue the manager addresses is the size of the report. In other words, the company provides information on how it manages itssignificant environmental aspects and impacts. Considering the audience, this will require that information is provided on the environmental policy, environmental objectives and tasks, management systems, energy and raw materials usage, emissions, wastes, compliance with environmental legislation, liabilities, risks and financial expenditures.

These aspects are covered by monitoring and measuring programs and already are part of the company’s environmental performance indicators. That is, the preparation of an environmental report do not require significant additional data gathering to that required by the company for its own internal management purposes (Blair 58). There is no standard format for public environmental reports, although a number of guidance documents are available (for example, GEMI, 1994; NSWEPA, 1997c; UNEP, 1994; WICE, 1994).

However, the environmental report should comprise sections relating to the company (that is, general activities, business areas, general financial information), environmental policy and environmental objectives and targets, environmental performance, the contribution of the company to (as appropriate) local, regional and global environmental impacts, environmental progress (such as trends in emissions), environmental expenditures and returns, and data quality (for example, processes of verifying reported information). Unlike financial reporting, there are no specific requirements on the scope and content of environmental reports.

It is probably fair to note that such reports have been of widely varying quality and rigor (Blair 17). There are a number of basic expectations of environmental reports. The first and most essential expectation is that the report will be honest and balanced. Environmental report in WELBECK has indicated that the company tends to focus on good news rather than bad. While the disclosure of negative environmental performance presents the risk of negative publicity, there is a body of experience that suggests that reporting both good and bad news enhances the credibility of an organisation in the eyes of external stakeholders (Peterson 90).

The second main expectation is that the company will communicate the context of their activities, products or services. People who read an environmental report need to understand the nature of the business as well as the overall context within which the business operates. Readers should be able to understand issues such as key markets, scale and geographic distribution. There has been a trend for such communication to become ‘greenwash’. In that case the intent of communicating this information is to cloud or hide certain environmental aspects.

UK COAL recognises that the mechanism underlying corporate reporting should be transparent and open communication. This will become the foundation for developing trust and credibility with stakeholders. The publication of glossy publicity documents is unlikely to contribute significantly to enhancing the credibility of the company. When possible, UK COAL involves stakeholders (such as local communities, environment groups, customers) in the process of developing the environmental report.

This cooperation can ensure that the report addresses the issues and concerns of stakeholders as well as gathering information about the environmental impacts of the company’s operations. It is important that this involvement is not represented as legitimising the environmental report or its conclusions. There have been cases where companies have requested the assistance of environmental groups or local community groups in developing an environmental report and then used that involvement to claim or imply that these groups have endorsed or supported the report (Blair 4).

Such claims, obviously, run counter to the objectives of developing trust and credibility. Another important issue in management is the usefulness of the data reported for the recipients of environmental reports. For instance, while the company may succeed in reducing emissions per unit of production, total emissions may have increased because of an increase in production. Therefore, it is important that the managers understand the needs and concerns of the likely users of the report and provide them with the information they need and in a form that is most useful to them.

A further important issue in management is the quality and reliability of the data reported. Most managers use quantitative data but very few give any reference as to the reliability of the data. It has been suggested that about 5 per cent of the statistics in a typical environmental report are from continuous measurement, with a further 30 per cent from frequent measurements (Peterson 21). The remaining data come from a combination of single readings and estimates. While in many cases estimation is the only cost-effective means of characterising emissions, it is critical that the accuracy of reported data be recognised and acknowledged.

Some companies discuss this limitation explicitly in their reports. For example, UK COAL noted that much of the information in its environmental report relies on estimates and cautioned that while the numbers reported were based on the best available data, a high degree of precision could not be guaranteed (Peterson 90). To ensure the credibility of environmental reporting (and also for internal management purposes), the data that is reported must be of sufficiently high quality to provide the public and external stakeholders with confidence in how data is obtained and in the results of such measurement programs.

UK COAL employs external consultants to review and confirm the accuracy of the information presented in their environmental reports. They provide a level of assurance to stakeholders regarding the quality of the data gathered in the report. They also provide assurance that the information reported is correct and not false or misleading. However, other consultants make verification processes; external consultants rarely check the data directly.

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