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
