Environmental Reporting Flashcards
What is environmental reporting?
The practice of measuring, disclosing and being accountable to internal and external stakeholders for organisational performance towards the goal of sustainable development
Reports on economics, environmental and social impacts
Report on performance not just targets and objectives
How do stakeholder pressures increase the need to measure and report?
Reporting is voluntary so usually attempting to please those positively/negative affected by activities
Organisations have to prioritise stakeholders based on their power, legitimacy and urgency of their claim (Mitchel, et al 1997)
What is Mitchel (1997)’s theory of power, legitimacy and urgency?
Power - the ability for social actor A to get social actor B to do something that B wouldn’t have otherwise done
Legitimacy - perception of desirability + appropriateness of an action within socially constructed norms, values, beliefs (social contract)
Urgency - time sensitive (scope for delay) and criticality (importance of the claim/relationship with stakeholder)
How does legitimacy influence reporting?
Potential of a legitimacy gap - where organisational shadow is revealed: perhaps by activist group
Relates to info asymmetry - providing as much info as possible to minimise the risk of corporate shadow
How does the media agenda setting effect affect reporting?
Media shapes public awareness
- Obtrusive issues - clear topics you would experience first-hand e.g inflation
- Unobtrusive issues - less clear topics you would not experience; the media shapes our views of this e.g pollution
Lack of fact checking regarding unobtrusive issues
What did Islam and Deegan (2010) find regarding the link between negative media attention and positive corporate social and environmental disclosures?
Investigated Nike + H+M
For those industry related social and environmental issues attracting the greatest amount of negative media attention, Nike and H+M reacted by providing positive social and environmental disclosures
What are the issues surrounding sustainability reporting?
- Companies expected to move beyond philanthropy to sustainability strategy and manage their overall sustainability impacts and performance
- Financial report/balance sheet doesn’t provide answers on governance, strategy and sustainability - sustainability reporting emerges as complimentary to financial reporting
- Relevance depends on stakeholder views
What are the different stakeholder views that affect the relevance of sustainability reports?
1) Human rights
2) Energy/eco-efficiency
3) Health and safety
4) Climate protection
5) Environmental policy
Why is there a lack of reporting requirements given that there are many for financial reporting?
Recent gov enquiry concluded that it is best to leave social and environmental reporting to the control of corporations
What is the idea of reliance on ‘enlightened self-interest’ in terms of reporting regulation?
- The market knows what’s best and can address any negative externalities arising from economic activities
- Prioritises shareholder value maximisation
- Easy returns in the short run whereas reporting should focus on the long term, beyond shareholder interest
- GDP doesn’t take into account environmental depreciation meaning there is no interest to regulate the reporting of it
What is the case for the standardisation of reporting?
- Companies receive diverse information requests
- Stakeholders receive incomplete information
What are the different international reporting guidelines released by various organisations?
- Business in the Community (UK)
- Confederation of British Industry (UK)
- Deloitte and Touche (Denmark)
- Environmental Task Force and the European Federation of Accountants
- European Chemical Industry Council
- Global Environmental Management Initiatives (US)
What are the two major reporting tools?
Global Reporting Initiative (GRI)
Mission of the GRI to develop globally accepted sustainability reporting guidelines through a multi-stakeholder process
UNDP + Global Compact
Purely voluntary with two objectives: mainstream the 10 principles in business activities around the world + catalyse actions in support of UN goals
What is the global reporting initiative ?
An independent institution whose mission is to develop and disseminate globally applicable sustainability reporting guidelines
Guidelines are for voluntary use by organisations for reporting on the economic, environmental and social dimensions of their activities, products and services
How does the GRI encourage continuous improvement and how does it work in practice?
Prepare-Connect-Define-Monitor-Report cycle
Decide on topics to report on e.g waste management, water usage - decide to leave out air issues (justification of still progressing in this area)
Monitor how well they are performing against these topics
What are the guidelines for the GRI?
Transparency - full disclosure
Inclusiveness - engage stakeholders
Auditability - data should be recorded, complied, analysed (reliability and understandable)
Completeness - info consistent with the declared boundaries and time period
Sustainability context - seek to place performance in the larger context of ecological, social or other limits, where it adds significant meaning to reports info
Accuracy - achieving degree of exactness, low margin of error
Neutrality - avoid bias in selection and presentation of info
Comparability - maintain consistency in boundary and scope of report
Clarity - should be understood by the maximum number of users
Timeliness - regular schedule
What are the different environment performance indicators?
- Materials, energy and water
- Biodiversity
- Emissions, effluents and waste
- Products and services
- Compliance
- Transport
What are the different economic performance indicators?
- Market presence: interaction in specific markets
- Direct economic impacts - economic value added by activities
- Indirect economic impacts - created as a result of activities and transactions e.g cartels
What are the different social performance indicators?
Labour practices: employment, labour relations, occupational health and safety, training and education, diversity
Product responsibility: customer health and safety, product and service labelling, marketing, customer privacy
Society: community, corruption, public policy, anti-competitive behaviour, compliance
Human rights: investment + procurement practices, freedom of association, non-discrimination, child labour, forced/compulsory labour, security practices, indigenous rights
What does the UN Global Compact involve?
Commitment to the GC principles
Assessment of risks, opportunities and impacts
Definition of goals, strategies and policies
Implement strategies and policies through and across value chain
Measure and monitor impacts and progress
Communication of progress and strategies and engage with stakeholders
What do the 10 principles of the UN Global Compact relate to?
Human rights =
1) support and respect HR
2) ensure they are not complicit in HR abuse
Labour =
3) uphold right to collective bargaining
4) eliminate compulsory labour
5) effectively abolish child labour
6) eliminate discrimination in respect of employment
Environment =
7) precautionary approach
8) promote greater environmental responsibility
9) encourage diffusion of eco-friendly technologies
Anti corruption =
Work against corruption including extortion and bribery
What are the weaknesses of the UN global compact?
- Vague requirements to allow maximum no. of orgs to adopt the framework
- No requirement for accuracy
- UN gives idea that experts are checking requirements
What are the strengths of the UN Global Compact?
- UN logo = legitimacy
- Eliminate corporate strategy without investing resources whereas GRI requires investment
How is the UNGC similar to the GRI?
- Both deal with corporate shadow and media setting effect
- No real info about corporate performance
What are the trends in sustainability reporting?
- Voluntary
- Norm among large global companies
- Preferable to weakly regulated environments
- Continuously evolving
