Description
This is document explaining on the report of environmental sustainability.
2009
Table of Contents
Executive Summary:................................................................................................................................ 3 Introduction ............................................................................................................................................ 4 What is Sustainability Report? ................................................................................................................ 5 Petroleum, Oil and Natural gas Industry: OMV Sustainability Report3 .................................................. 6 Policy and Guidelines .......................................................................................................................... 6 Objectives and Performance............................................................................................................... 6 Organizational Responsibility.............................................................................................................. 7 Monitoring and Further Development ............................................................................................... 7 Energy Management........................................................................................................................... 7 Climate Protection .............................................................................................................................. 7 Construction Industry: Heijmans Sustainability Report3 ........................................................................ 8 Environmental Policies........................................................................................................................ 9 Challenges in Corporate Environmental Reporting4: .............................................................................. 9 Continuity:......................................................................................................................................... 10 Credibility: ......................................................................................................................................... 10 Comparability: ................................................................................................................................... 10 Environmental Reporting: Indian Perspective5 ..................................................................................... 11 Conclusion: ............................................................................................................................................ 13 References ............................................................................................................................................ 15
Executive Summary:
Environmental Reporting refers to the release of environmental performance reports to the general public as a means to demonstrate the company?s commitment to environmental responsibility. It involves a high degree of responsibility and transparency. Our report is an attempt to understand how companies manage operations to reduce risks, avoid potential liabilities, satisfy public expectations and pursue innovative solutions. Companies get a lot of benefits through environmental reporting which are both internal as well as external. Sustainability reporting program is an initiative to find out how companies are using their resources to balance in the long term. It is based on the Global Reporting Initiative which provides guidelines to reporting. The framework has taken into consideration all the stakeholders and covers the areas of content, quality, boundaries, disclosures and management approach. We have used the example of OMV and Heijmans for enumerating the reporting followed by the company in terms of policy and guidelines, objectives and performance, responsibility, monitoring, energy management and climate protection. We further look at the challenges that are faced by companies in corporate environmental reporting for continuity, credibility and comparability. Finally, a literature review on the Indian perspective of Environmental reporting revealed that Indian companies use a varied number of sources e.g. websites and annual reports to declare environmental reporting to the public, however there is still not a single complete document dedicated to the same.
Introduction
Environment Reporting refers to release of environmental performance information to the general public, as opposed to the data/reports strictly to the government. Organizations do this as a means to demonstrate their commitment to environment responsibility and to provide information on their environmental performance and initiatives. Like financial reporting, environmental reporting forces a high level of organisational transparency. It allows for feedback from informed stakeholders on environmental performance of the organization. These reports provide insight into how well a company is managing operations to reduce risks, avoid potential liabilities, satisfy public expectations and pursue innovative solutions. It consists of the following elements1: 1. Background information of the company and introduction by the chief executive 2. Organisation?s environmental policy 3. Organisation?s overall performance with regard to the environment (broken down into smaller business sections for large organisations) 4. Progress made towards specific targets established in previous reports 5. Setting of targets for improving firm?s environmental performance The benefits from environmental reporting are manifold. Studies have demonstrated that environmental performance has a positive impact on business performance. Many of these improvements arise internally, through improved efficiencies and lowered costs. Publishing comprehensive reports helps build corporate reputations and brand images. It can act as a differentiator for companies seeking access to markets and capital. Nowadays, even institutional investors and financial analysts rely more heavily on environment reports in making investment decisions. Companies that demonstrate they are engaging in practices that satisfy and exceed regulatory compliance requirements are also subject to less scrutiny and given greater freedom by national and local governments. Regulators also apply a risk based inspection scheme i.e. the more likely you are to pollute, the more often you would be inspected. Environment Reporting has traditionally been a voluntary method of communicating environmental performance to stakeholders. More recently there has been movement to make it mandatory.
What is Sustainability Report?
Sustainability is about living and working in ways that meet and integrate existing environmental, economic and social needs without compromising the well-being of future generations. The transition to sustainable development benefits today's society and builds a more secure future for our children. The Sustainability Reporting Program is an initiative to find out how the organization is doing at living in balance for the long term. The reporting system works from a definition of sustainability that sees human activities as part of and dependent upon the natural world. The Global Reporting Initiative (GRI) has come up with guidelines for reporting. The aim is to streamline the process so that sustainability reports by organizations can be compared across firms just as financial performance. These guidelines are framed taking into account views of multiple stakeholders so that all relevant issues are considered and best measures developed. As of January 2009, more than 1500 organizations from 60 countries use these guidelines for preparing their sustainability reports. The framework covers the following 5 major areas2: 1. Defining Report Content: The report should reflect organization?s economic, environmental and social impacts. It should identify various stakeholders and explain how it is responding to their expectations/interests. Stress should also be on how the organization is contributing/aiming to contribute in future (i.e. on sustainability). Thus the coverage should be sufficient to help stakeholders to assess the organization?s performance in reporting period 2. Defining Report Quality: These are necessary for ensuring transparency. The data presented should be reliable, easily understandable, accurate and timely. The report should reflect positive and negative aspects of the organization?s performance to enable proper assessment of performance. 3. Setting the Report Boundary: This guideline states that the sustainability report should include all entities over which the reporting organization exercises control or has a significant influence. 4. Profile Disclosures: This deals with the information to be disclosed in the report. It includes the organization profile (name, products, markets served etc), reporting parameters (reporting period, scope and boundary) and the strategy and analysis section (Statement from CEO, description of key impacts, risks and opportunities).
5. Disclosure on Management Approach: In terms of environment guidelines, this must deal with goals and performance, division of responsibility within the organization, training and awareness, monitoring and follow-up as well as certifications for environment related performance. Sustainability Reporting is especially important for firms operating in highly polluting sectors e.g.: Petroleum, Oil and Natural Gas, Construction etc. These reports provide an insight into the activities undertaken by the firms to mitigate the harmful impact on environment. As part of this study, the sustainability reports of 2 firms from these sectors were analyzed.
Petroleum, Oil and Natural gas Industry: OMV Sustainability Report3
In the oil industry, the company like OMV has the following features present in its sustainability report. The major aspects which are covered in the sustainability report are: ? ? ? ? ? Corporate Profile Environment issues Social Issues Economy Outlook Performance Indicators and Assurances
Some of the important environmental guidelines of the report in an oil industry OMV?s report contains the following.
Policy and Guidelines
Environmental management at OMV is based on a precautionary approach and proactive management aimed at minimizing environmental impacts. Climate protection measures at production sites, the quality of OMV products, and support for alternative energy sources all play a key role.
Objectives and Performance
The harmonization of a Group-wide directive for environmental management at all OMV operations, including acquisitions, divestment, and investment programs, set the basis for benchmarking environmental Key Performance Indicators (KPIs). The greenhouse gas (GHG) intensity of OMV products is measured systematically and provides crucial information that contributes to the development of a strategic sustainability path and a specific carbon strategy.
Organizational Responsibility
Environmental issues are managed vertically and horizontally across the whole organization. They are taken into account at specific stages in the decision-making processes at corporate level as well as in the different businesses.
Monitoring and Further Development
On the corporate level, the monitoring of environmental KPIs is embedded in standardized reporting processes on an annual and monthly basis. Annual targets are set in the Corporate Balanced Scorecard and deployed to the business segments.
Energy Management
? ? ? Energy Consumption Energy Efficiency Flaring and Venting
Climate Protection
OMV is fully committed to developing its business sustainably, balancing economic, environmental, and social considerations: They are strengthening their gas business, promoting the use of natural gas for power generation by building high-efficiency gas-fired power plants, and exploring renewable energies.
?
Reduction of Direct Greenhouse Gas Emissions by Energy efficiency, Flaring and venting.
?
OMV gas pipelines are leakage-proof, but a potential source of methane emissions is the sealing system of the compressor units.
?
Carbon Strategy: Reduction of direct GHG emissions, contribution to the decarbonization of the energy markets, power generation portfolio
?
Environmental Impacts of Products: The Company consistently works on the development of new, environmentally improved products, demonstrating a pioneering role in this field. Furthermore, they help their customers save costs and reduce the environmental and climate impacts of their products.
Construction Industry: Heijmans Sustainability Report3
Heijmans is a listed construction company operating in Netherlands, UK, Belgium and Germany. The major aspects which are discussed in the sustainability report of Heijmans are as mentioned below: ? View on SRE and Sustainability: The company attaches great significance to importance of Socially Responsible- therefore Sustainable Enterprise (SRE). It focuses on all 3 Ps in the trio: people, planet and profit. ? Core activities: The company analyses its activities in 3 main areas: Impact of their products and services, Impact of business operations and the impact that they have as a result of their position in the chain (purchasing, subcontracting etc) ? Management of SRE: Sustainability is viewed not as a separate component but an integral part of regular business operations. In 2008, a steering committee was set up to look into areas and progress on SRE. 4 working groups were constituted: Sustainable Energy, Sustainable Purchasing, Sustainable Area Development and Preservation of Existing Property ? Dialogue with Stakeholders: SRE for the company also means a continuous dialogue with society in general and key stakeholders in particular. These include clients, employees, shareholders, government, subcontractors and suppliers. ? Reporting: This deals with how data is gathered and verified. It lists the different ISO standards that the company adheres to. The firm uses GRI (Global Reporting Initiative) as a basis for reporting. ? People, Planet and Profit: These signify the triple bottom line goal of balancing the societal, environmental and economic aspects. Care for people include considering needs of employees and society. These include work-personal life balance, training opportunities etc. Planet means due diligence in terms of footprint of its own activities as well as respecting the client?s wishes relating to sustainable design and implementation of their projects. Profit includes not only financial performance but also social and economic contributions to society. ? Future challenges: The company is looking constantly to improving itself. In addition, it aims to exert positive pressure on other parties in the chain so that together they can have a greater impact when sustainable solutions are concerned.
Environmental Policies
As far as the environment policies are concerned, some of the features discussed in the report are as mentioned below ? Highlights of the environmental steps taken are homes built receive a GPR (Sustainable Building) score, more sustainable asphalt production through the partial reuse of materials, surveying the energy use of buildings and introducing improvement plans and green power for all Heijmans locations. ? Sustainable energy: Another spearhead in the Heijmans products is sustainable energy generation. Energy saving in the premises by various means to reduce power consumption. ? Lean and Green certificate for road construction: Heijmans Road Construction has commissioned the drawing up of a so-called CO2 footprint by the Climate Neutral Group. A programme of measures has been suggested: more green power, reduction in gas consumption. These activities are estimated to reduce total emissions from 49287 tons in 2007 to 41985 tons by 2010.
Challenges in Corporate Environmental Reporting4:
The environmental debate indicates that companies are accountable for their impact on the environment. There are three main perspectives from which environmental accounting can be discussed: 1. Environmental accounting for management purposes 2. Environmental accounting for external reporting 3. Accounting for sustainability Environmental Performance Indicators are becoming increasingly important at the company level. This is in part due to stakeholders demanding environmental improvements and proof that these have been made. Environmental performance indicators are defined as the quantitative and qualitative information that allow the evaluation, from an environmental point of view, of company effectiveness and efficiency in the consumption of resources. Environmental performance indicators thus have the aim of evaluating company efficiency (economical and environmental) and effectiveness in achieving environmental objectives
Key challenges for corporate environmental performance measurement and communication are as follows: ? ? ? Continuity Credibility Comparability
Continuity:
A prerequisite for benchmarking environmental performance is availability of continuous and reliable information. The sources for, as well types and continuity of information on corporate environmental performance vary according to country of operation. The different reporting standards and requirements means difficulties in developing European wide systems for reporting and rating/ ranking
Credibility:
Credibility for environmental reporting can be improved by more openness and a balanced tone in the report. Credibility for environmental reporting will also be improved when it is a part of an environmental communication strategy that focuses on stakeholder dialogue, through which the boundaries of reporting are decided. Verification can also be a way to ensure credibility, but first standards need to be developed for verification and the qualifications of verifiers.
Comparability:
Comparability is the central issue. There are several levels of comparability: ? ? ? ? Comparability with an earlier time period Comparability with other sites in the same company Comparability with other companies in the same line of business Comparability with all other companies.
It is often of interest to construct an indicator in the form of a measurement of total environmental performance in relation to a measure of operations, such as the amount of a certain effluent in relation to production volume. This allows better comparability with varying volume of operations, but has other problems. One central problem is that of how to account for suppliers Any system of comparisons will also have winners and losers, which means that the losers can be expected to put up a fight against any system that is suggested. They will always have ammunition for that battle, since an indicator never can be an accurate reflection or reality.
The problems with indicators are thus forbidding. In that context it is helpful to lower ambitions so that the goal of an indicator is to be useful, not to be absolutely correct. This would seem to imply that they need not be long lived. An indicator could be very useful for a limited time period.
Environmental Reporting: Indian Perspective5
Consumers are getting more and more aware about environmental hazards and thus expect companies to maintain high health and safety standards for workers, respect human rights, protect the interests of consumers and meet environmental standards regardless of where they operate. Therefore, the trend of triple bottom line reporting has developed whereby relevant information about environmental initiatives and performance is given by companies on their websites and annual reports. Environmental reporting choices may also influence the way stakeholders interpret the financial performance of a firm. It may also enhance investor confidence reducing the cost of capital and thus resulting in a rise in stock valuation. Thus, institutional investors would be interested in investing in the firm. This also helps firms in competing globally considering stringent environmental regulations. Due to the entry of foreign firms in India, the expectations from Indian firms have increased since these firms also report non financial information along with environmental information. Hence, to improve corporate image concerning socially responsible behaviour, it is expected that an increasing number of Indian companies will report their environmental performance and social issues. Factors to be considered while developing environmental reporting standards: 1. Introduce specific, auditable information to promote public accountability 2. Compliance can be developed as per the already in place standards of reporting 3. Environmental reporting to be made compulsory rather than just to meet the requirements of ISO14000 certification In Indian Organisations, Environmental reporting is considered to be an image building exercise by establishing itself as an environmentally responsible organisation in the eyes of the stakeholders. Modern society is increasingly organised by magazines, newspapers, annual reports and other official publications. Since information about organisation operations are not available easily people rely on words and numbers, that is, annual reports and financial statements for these activities. Therefore, organisations also use the information provided in
annual reports as a communication mode to establish legitimacy and the mode of managing public impressions. As per a survey conducted in 2002, it was found that Indian consumers are dissatisfied due to unavailability of green alternatives in consumer goods. Thus, it was expected that Indian companies would disclose environmental information to improve their corporate image. India?s existing policy framework concerning environmental protection is outlined in three documents, that is, the National Conservation Strategy on Environment & Development of 1992, the Policy Statement for Abatement of Pollution of 1992, and the National Forest Policy of 1988. The regulatory framework governing corporate disclosure in India includes the Companies Act 1956 and the Securities and Exchange Board of India (Amendment) Act 2002. There are 23 stock exchanges in India. Each of them has different listing requirements, concerning issued and subscribed equity capital (Chatterjee, 2005). However, there is no requirement from these stock exchanges to disclose environmental information. Hence, Indian companies are not bound by any regulations to provide their environmental performance information in their annual reports. Therefore, any information on the environment provided by Indian companies is voluntary. As per a survey conducted of top 45 Indian companies, it was found that highest number of sentences in terms of environmental information was disclosed by the “Diversified” Sector which includes FMCG, hotels, paperboards and packaging, agribusiness, home and personal care products, food and beverages, childcare, cooking, pet care and wellness. Oil and Gas companies disclosed the least amount of information related to environment even though their operations affect the environment more adversely as compared to other sectors. Most of the companies disclose environmental information on their websites at level 2 i.e. information is available only after two clicks from the home page. Thus it can be seen that high importance is given to environmental disclosure by Indian companies. The amounts of information disclosed in the websites differ from that in the annual reports. Diversified firms disclose more on the website however they do not give much information in the annual reports. Conversely Oil and Gas firms give lot of information in their annual reports but not much on the websites.
Out of the 19 companies who disclosed environmental information within their annual report only four have provided both monetary as well as non-monetary information in the same sentences respectively, comprising in total of four sentences. Three of these four sentences were in the area of historical environmental expenditure. None of the companies have disclosed „bad news.? This may be due to the fact that they had no such news to disclose. Another reason may be that they were reluctant to disclose their environmental „bad? news to the users of annual reports. Most of the companies have disclosed both good and neutral news concerning the environment. Most of the „good news? comprises of obtaining award(s) and/or compliance with external standard(s). Most of the companies have disclosed environmental information under Director?s Report/Chairman?s Statement/Management Discussion & Analysis. Based on this study, it can be said that: 1. Indian companies are reporting Environmental operations even though no compliances exist 2. Indian companies are using websites and annual reports to disclose Environmental operations 3. Websites contain environmental information at level 2, thus assigning a lot of importance to Environmental Reporting 4. Environmental Reporting is being done extensively in order to establish a green and environmental friendly image in the eyes of the consumers, suppliers and investors 5. Most of the environmental reporting is narrative in nature and none of them disclose bad news as a part of environmental reporting 6. Inclusion of environmental reporting in Director?s message implies an attempt to build a positive image
Conclusion:
The Corporate Environmental Reporting Systems has surely evolved over the last few years. As awareness grows amongst stakeholders pertaining to environmental impacts of a company?s business, more and more firms find it important to voluntarily act and disclose their initiatives. The more the level of awareness the more is going to be the need to follow the reporting guidelines. The Global Reporting Initiative (GRI) guidelines for reporting which aims to streamline the process so that sustainability reports by organizations can be
compared across firms just as financial performance is a very welcome development towards an aware and informed global arena where a company finds itself in a scenario where it has to perform its duties towards the environment or else take a beating from the consumers, shareholders, environmental organizations and regulatory bodies. However the present state of system is fraught with many challenges related to environmental performance measurement and communications. Most of these relate to continuity, credibility and comparability of information used to measure the environmental performance. So these deficiencies need to be ironed out in due course with appropriate research stressing on finding the solution to these problems. In the Indian context environmental reporting systems has been voluntary and companies have been doing it on their websites and annual reports to mainly form a green image for the company amongst the stakeholders. But the reports are mostly narrative with little or no mention of any negative news on part of the company. More so since the Indian companies are not bound by any regulations to provide their environmental performance information in their annual reports the lapse in compliance may be ignored in any reporting initiative which is purely voluntary. Such loopholes need to be addressed specifically in the Indian context as we are on an accelerated growth path and a strong Corporate Environmental Reporting System has the ability to make this growth sustainable.
References
1. Environmental Concepts and Tools by Five Winds International 2. GRI Guidelines: http://www.globalreporting.org/ReportingFramework/G3Online/ 3. Sustainability Reports: http://www.enviroreporting.com/ 4. Continuity, Credibility and Comparability: Key Challenges for corporate
Environmental performance measurement and communication by Asa Skillius and Ulrika Wennberg, The International Institute for Industrial Environmental Economics at Lund University 5. The Rhetoric of Environmental Reporting : The Case of India by Bikram Chatterjee, School of Accountancy, New Zealand
doc_816197680.docx
This is document explaining on the report of environmental sustainability.
2009
Table of Contents
Executive Summary:................................................................................................................................ 3 Introduction ............................................................................................................................................ 4 What is Sustainability Report? ................................................................................................................ 5 Petroleum, Oil and Natural gas Industry: OMV Sustainability Report3 .................................................. 6 Policy and Guidelines .......................................................................................................................... 6 Objectives and Performance............................................................................................................... 6 Organizational Responsibility.............................................................................................................. 7 Monitoring and Further Development ............................................................................................... 7 Energy Management........................................................................................................................... 7 Climate Protection .............................................................................................................................. 7 Construction Industry: Heijmans Sustainability Report3 ........................................................................ 8 Environmental Policies........................................................................................................................ 9 Challenges in Corporate Environmental Reporting4: .............................................................................. 9 Continuity:......................................................................................................................................... 10 Credibility: ......................................................................................................................................... 10 Comparability: ................................................................................................................................... 10 Environmental Reporting: Indian Perspective5 ..................................................................................... 11 Conclusion: ............................................................................................................................................ 13 References ............................................................................................................................................ 15
Executive Summary:
Environmental Reporting refers to the release of environmental performance reports to the general public as a means to demonstrate the company?s commitment to environmental responsibility. It involves a high degree of responsibility and transparency. Our report is an attempt to understand how companies manage operations to reduce risks, avoid potential liabilities, satisfy public expectations and pursue innovative solutions. Companies get a lot of benefits through environmental reporting which are both internal as well as external. Sustainability reporting program is an initiative to find out how companies are using their resources to balance in the long term. It is based on the Global Reporting Initiative which provides guidelines to reporting. The framework has taken into consideration all the stakeholders and covers the areas of content, quality, boundaries, disclosures and management approach. We have used the example of OMV and Heijmans for enumerating the reporting followed by the company in terms of policy and guidelines, objectives and performance, responsibility, monitoring, energy management and climate protection. We further look at the challenges that are faced by companies in corporate environmental reporting for continuity, credibility and comparability. Finally, a literature review on the Indian perspective of Environmental reporting revealed that Indian companies use a varied number of sources e.g. websites and annual reports to declare environmental reporting to the public, however there is still not a single complete document dedicated to the same.
Introduction
Environment Reporting refers to release of environmental performance information to the general public, as opposed to the data/reports strictly to the government. Organizations do this as a means to demonstrate their commitment to environment responsibility and to provide information on their environmental performance and initiatives. Like financial reporting, environmental reporting forces a high level of organisational transparency. It allows for feedback from informed stakeholders on environmental performance of the organization. These reports provide insight into how well a company is managing operations to reduce risks, avoid potential liabilities, satisfy public expectations and pursue innovative solutions. It consists of the following elements1: 1. Background information of the company and introduction by the chief executive 2. Organisation?s environmental policy 3. Organisation?s overall performance with regard to the environment (broken down into smaller business sections for large organisations) 4. Progress made towards specific targets established in previous reports 5. Setting of targets for improving firm?s environmental performance The benefits from environmental reporting are manifold. Studies have demonstrated that environmental performance has a positive impact on business performance. Many of these improvements arise internally, through improved efficiencies and lowered costs. Publishing comprehensive reports helps build corporate reputations and brand images. It can act as a differentiator for companies seeking access to markets and capital. Nowadays, even institutional investors and financial analysts rely more heavily on environment reports in making investment decisions. Companies that demonstrate they are engaging in practices that satisfy and exceed regulatory compliance requirements are also subject to less scrutiny and given greater freedom by national and local governments. Regulators also apply a risk based inspection scheme i.e. the more likely you are to pollute, the more often you would be inspected. Environment Reporting has traditionally been a voluntary method of communicating environmental performance to stakeholders. More recently there has been movement to make it mandatory.
What is Sustainability Report?
Sustainability is about living and working in ways that meet and integrate existing environmental, economic and social needs without compromising the well-being of future generations. The transition to sustainable development benefits today's society and builds a more secure future for our children. The Sustainability Reporting Program is an initiative to find out how the organization is doing at living in balance for the long term. The reporting system works from a definition of sustainability that sees human activities as part of and dependent upon the natural world. The Global Reporting Initiative (GRI) has come up with guidelines for reporting. The aim is to streamline the process so that sustainability reports by organizations can be compared across firms just as financial performance. These guidelines are framed taking into account views of multiple stakeholders so that all relevant issues are considered and best measures developed. As of January 2009, more than 1500 organizations from 60 countries use these guidelines for preparing their sustainability reports. The framework covers the following 5 major areas2: 1. Defining Report Content: The report should reflect organization?s economic, environmental and social impacts. It should identify various stakeholders and explain how it is responding to their expectations/interests. Stress should also be on how the organization is contributing/aiming to contribute in future (i.e. on sustainability). Thus the coverage should be sufficient to help stakeholders to assess the organization?s performance in reporting period 2. Defining Report Quality: These are necessary for ensuring transparency. The data presented should be reliable, easily understandable, accurate and timely. The report should reflect positive and negative aspects of the organization?s performance to enable proper assessment of performance. 3. Setting the Report Boundary: This guideline states that the sustainability report should include all entities over which the reporting organization exercises control or has a significant influence. 4. Profile Disclosures: This deals with the information to be disclosed in the report. It includes the organization profile (name, products, markets served etc), reporting parameters (reporting period, scope and boundary) and the strategy and analysis section (Statement from CEO, description of key impacts, risks and opportunities).
5. Disclosure on Management Approach: In terms of environment guidelines, this must deal with goals and performance, division of responsibility within the organization, training and awareness, monitoring and follow-up as well as certifications for environment related performance. Sustainability Reporting is especially important for firms operating in highly polluting sectors e.g.: Petroleum, Oil and Natural Gas, Construction etc. These reports provide an insight into the activities undertaken by the firms to mitigate the harmful impact on environment. As part of this study, the sustainability reports of 2 firms from these sectors were analyzed.
Petroleum, Oil and Natural gas Industry: OMV Sustainability Report3
In the oil industry, the company like OMV has the following features present in its sustainability report. The major aspects which are covered in the sustainability report are: ? ? ? ? ? Corporate Profile Environment issues Social Issues Economy Outlook Performance Indicators and Assurances
Some of the important environmental guidelines of the report in an oil industry OMV?s report contains the following.
Policy and Guidelines
Environmental management at OMV is based on a precautionary approach and proactive management aimed at minimizing environmental impacts. Climate protection measures at production sites, the quality of OMV products, and support for alternative energy sources all play a key role.
Objectives and Performance
The harmonization of a Group-wide directive for environmental management at all OMV operations, including acquisitions, divestment, and investment programs, set the basis for benchmarking environmental Key Performance Indicators (KPIs). The greenhouse gas (GHG) intensity of OMV products is measured systematically and provides crucial information that contributes to the development of a strategic sustainability path and a specific carbon strategy.
Organizational Responsibility
Environmental issues are managed vertically and horizontally across the whole organization. They are taken into account at specific stages in the decision-making processes at corporate level as well as in the different businesses.
Monitoring and Further Development
On the corporate level, the monitoring of environmental KPIs is embedded in standardized reporting processes on an annual and monthly basis. Annual targets are set in the Corporate Balanced Scorecard and deployed to the business segments.
Energy Management
? ? ? Energy Consumption Energy Efficiency Flaring and Venting
Climate Protection
OMV is fully committed to developing its business sustainably, balancing economic, environmental, and social considerations: They are strengthening their gas business, promoting the use of natural gas for power generation by building high-efficiency gas-fired power plants, and exploring renewable energies.
?
Reduction of Direct Greenhouse Gas Emissions by Energy efficiency, Flaring and venting.
?
OMV gas pipelines are leakage-proof, but a potential source of methane emissions is the sealing system of the compressor units.
?
Carbon Strategy: Reduction of direct GHG emissions, contribution to the decarbonization of the energy markets, power generation portfolio
?
Environmental Impacts of Products: The Company consistently works on the development of new, environmentally improved products, demonstrating a pioneering role in this field. Furthermore, they help their customers save costs and reduce the environmental and climate impacts of their products.
Construction Industry: Heijmans Sustainability Report3
Heijmans is a listed construction company operating in Netherlands, UK, Belgium and Germany. The major aspects which are discussed in the sustainability report of Heijmans are as mentioned below: ? View on SRE and Sustainability: The company attaches great significance to importance of Socially Responsible- therefore Sustainable Enterprise (SRE). It focuses on all 3 Ps in the trio: people, planet and profit. ? Core activities: The company analyses its activities in 3 main areas: Impact of their products and services, Impact of business operations and the impact that they have as a result of their position in the chain (purchasing, subcontracting etc) ? Management of SRE: Sustainability is viewed not as a separate component but an integral part of regular business operations. In 2008, a steering committee was set up to look into areas and progress on SRE. 4 working groups were constituted: Sustainable Energy, Sustainable Purchasing, Sustainable Area Development and Preservation of Existing Property ? Dialogue with Stakeholders: SRE for the company also means a continuous dialogue with society in general and key stakeholders in particular. These include clients, employees, shareholders, government, subcontractors and suppliers. ? Reporting: This deals with how data is gathered and verified. It lists the different ISO standards that the company adheres to. The firm uses GRI (Global Reporting Initiative) as a basis for reporting. ? People, Planet and Profit: These signify the triple bottom line goal of balancing the societal, environmental and economic aspects. Care for people include considering needs of employees and society. These include work-personal life balance, training opportunities etc. Planet means due diligence in terms of footprint of its own activities as well as respecting the client?s wishes relating to sustainable design and implementation of their projects. Profit includes not only financial performance but also social and economic contributions to society. ? Future challenges: The company is looking constantly to improving itself. In addition, it aims to exert positive pressure on other parties in the chain so that together they can have a greater impact when sustainable solutions are concerned.
Environmental Policies
As far as the environment policies are concerned, some of the features discussed in the report are as mentioned below ? Highlights of the environmental steps taken are homes built receive a GPR (Sustainable Building) score, more sustainable asphalt production through the partial reuse of materials, surveying the energy use of buildings and introducing improvement plans and green power for all Heijmans locations. ? Sustainable energy: Another spearhead in the Heijmans products is sustainable energy generation. Energy saving in the premises by various means to reduce power consumption. ? Lean and Green certificate for road construction: Heijmans Road Construction has commissioned the drawing up of a so-called CO2 footprint by the Climate Neutral Group. A programme of measures has been suggested: more green power, reduction in gas consumption. These activities are estimated to reduce total emissions from 49287 tons in 2007 to 41985 tons by 2010.
Challenges in Corporate Environmental Reporting4:
The environmental debate indicates that companies are accountable for their impact on the environment. There are three main perspectives from which environmental accounting can be discussed: 1. Environmental accounting for management purposes 2. Environmental accounting for external reporting 3. Accounting for sustainability Environmental Performance Indicators are becoming increasingly important at the company level. This is in part due to stakeholders demanding environmental improvements and proof that these have been made. Environmental performance indicators are defined as the quantitative and qualitative information that allow the evaluation, from an environmental point of view, of company effectiveness and efficiency in the consumption of resources. Environmental performance indicators thus have the aim of evaluating company efficiency (economical and environmental) and effectiveness in achieving environmental objectives
Key challenges for corporate environmental performance measurement and communication are as follows: ? ? ? Continuity Credibility Comparability
Continuity:
A prerequisite for benchmarking environmental performance is availability of continuous and reliable information. The sources for, as well types and continuity of information on corporate environmental performance vary according to country of operation. The different reporting standards and requirements means difficulties in developing European wide systems for reporting and rating/ ranking
Credibility:
Credibility for environmental reporting can be improved by more openness and a balanced tone in the report. Credibility for environmental reporting will also be improved when it is a part of an environmental communication strategy that focuses on stakeholder dialogue, through which the boundaries of reporting are decided. Verification can also be a way to ensure credibility, but first standards need to be developed for verification and the qualifications of verifiers.
Comparability:
Comparability is the central issue. There are several levels of comparability: ? ? ? ? Comparability with an earlier time period Comparability with other sites in the same company Comparability with other companies in the same line of business Comparability with all other companies.
It is often of interest to construct an indicator in the form of a measurement of total environmental performance in relation to a measure of operations, such as the amount of a certain effluent in relation to production volume. This allows better comparability with varying volume of operations, but has other problems. One central problem is that of how to account for suppliers Any system of comparisons will also have winners and losers, which means that the losers can be expected to put up a fight against any system that is suggested. They will always have ammunition for that battle, since an indicator never can be an accurate reflection or reality.
The problems with indicators are thus forbidding. In that context it is helpful to lower ambitions so that the goal of an indicator is to be useful, not to be absolutely correct. This would seem to imply that they need not be long lived. An indicator could be very useful for a limited time period.
Environmental Reporting: Indian Perspective5
Consumers are getting more and more aware about environmental hazards and thus expect companies to maintain high health and safety standards for workers, respect human rights, protect the interests of consumers and meet environmental standards regardless of where they operate. Therefore, the trend of triple bottom line reporting has developed whereby relevant information about environmental initiatives and performance is given by companies on their websites and annual reports. Environmental reporting choices may also influence the way stakeholders interpret the financial performance of a firm. It may also enhance investor confidence reducing the cost of capital and thus resulting in a rise in stock valuation. Thus, institutional investors would be interested in investing in the firm. This also helps firms in competing globally considering stringent environmental regulations. Due to the entry of foreign firms in India, the expectations from Indian firms have increased since these firms also report non financial information along with environmental information. Hence, to improve corporate image concerning socially responsible behaviour, it is expected that an increasing number of Indian companies will report their environmental performance and social issues. Factors to be considered while developing environmental reporting standards: 1. Introduce specific, auditable information to promote public accountability 2. Compliance can be developed as per the already in place standards of reporting 3. Environmental reporting to be made compulsory rather than just to meet the requirements of ISO14000 certification In Indian Organisations, Environmental reporting is considered to be an image building exercise by establishing itself as an environmentally responsible organisation in the eyes of the stakeholders. Modern society is increasingly organised by magazines, newspapers, annual reports and other official publications. Since information about organisation operations are not available easily people rely on words and numbers, that is, annual reports and financial statements for these activities. Therefore, organisations also use the information provided in
annual reports as a communication mode to establish legitimacy and the mode of managing public impressions. As per a survey conducted in 2002, it was found that Indian consumers are dissatisfied due to unavailability of green alternatives in consumer goods. Thus, it was expected that Indian companies would disclose environmental information to improve their corporate image. India?s existing policy framework concerning environmental protection is outlined in three documents, that is, the National Conservation Strategy on Environment & Development of 1992, the Policy Statement for Abatement of Pollution of 1992, and the National Forest Policy of 1988. The regulatory framework governing corporate disclosure in India includes the Companies Act 1956 and the Securities and Exchange Board of India (Amendment) Act 2002. There are 23 stock exchanges in India. Each of them has different listing requirements, concerning issued and subscribed equity capital (Chatterjee, 2005). However, there is no requirement from these stock exchanges to disclose environmental information. Hence, Indian companies are not bound by any regulations to provide their environmental performance information in their annual reports. Therefore, any information on the environment provided by Indian companies is voluntary. As per a survey conducted of top 45 Indian companies, it was found that highest number of sentences in terms of environmental information was disclosed by the “Diversified” Sector which includes FMCG, hotels, paperboards and packaging, agribusiness, home and personal care products, food and beverages, childcare, cooking, pet care and wellness. Oil and Gas companies disclosed the least amount of information related to environment even though their operations affect the environment more adversely as compared to other sectors. Most of the companies disclose environmental information on their websites at level 2 i.e. information is available only after two clicks from the home page. Thus it can be seen that high importance is given to environmental disclosure by Indian companies. The amounts of information disclosed in the websites differ from that in the annual reports. Diversified firms disclose more on the website however they do not give much information in the annual reports. Conversely Oil and Gas firms give lot of information in their annual reports but not much on the websites.
Out of the 19 companies who disclosed environmental information within their annual report only four have provided both monetary as well as non-monetary information in the same sentences respectively, comprising in total of four sentences. Three of these four sentences were in the area of historical environmental expenditure. None of the companies have disclosed „bad news.? This may be due to the fact that they had no such news to disclose. Another reason may be that they were reluctant to disclose their environmental „bad? news to the users of annual reports. Most of the companies have disclosed both good and neutral news concerning the environment. Most of the „good news? comprises of obtaining award(s) and/or compliance with external standard(s). Most of the companies have disclosed environmental information under Director?s Report/Chairman?s Statement/Management Discussion & Analysis. Based on this study, it can be said that: 1. Indian companies are reporting Environmental operations even though no compliances exist 2. Indian companies are using websites and annual reports to disclose Environmental operations 3. Websites contain environmental information at level 2, thus assigning a lot of importance to Environmental Reporting 4. Environmental Reporting is being done extensively in order to establish a green and environmental friendly image in the eyes of the consumers, suppliers and investors 5. Most of the environmental reporting is narrative in nature and none of them disclose bad news as a part of environmental reporting 6. Inclusion of environmental reporting in Director?s message implies an attempt to build a positive image
Conclusion:
The Corporate Environmental Reporting Systems has surely evolved over the last few years. As awareness grows amongst stakeholders pertaining to environmental impacts of a company?s business, more and more firms find it important to voluntarily act and disclose their initiatives. The more the level of awareness the more is going to be the need to follow the reporting guidelines. The Global Reporting Initiative (GRI) guidelines for reporting which aims to streamline the process so that sustainability reports by organizations can be
compared across firms just as financial performance is a very welcome development towards an aware and informed global arena where a company finds itself in a scenario where it has to perform its duties towards the environment or else take a beating from the consumers, shareholders, environmental organizations and regulatory bodies. However the present state of system is fraught with many challenges related to environmental performance measurement and communications. Most of these relate to continuity, credibility and comparability of information used to measure the environmental performance. So these deficiencies need to be ironed out in due course with appropriate research stressing on finding the solution to these problems. In the Indian context environmental reporting systems has been voluntary and companies have been doing it on their websites and annual reports to mainly form a green image for the company amongst the stakeholders. But the reports are mostly narrative with little or no mention of any negative news on part of the company. More so since the Indian companies are not bound by any regulations to provide their environmental performance information in their annual reports the lapse in compliance may be ignored in any reporting initiative which is purely voluntary. Such loopholes need to be addressed specifically in the Indian context as we are on an accelerated growth path and a strong Corporate Environmental Reporting System has the ability to make this growth sustainable.
References
1. Environmental Concepts and Tools by Five Winds International 2. GRI Guidelines: http://www.globalreporting.org/ReportingFramework/G3Online/ 3. Sustainability Reports: http://www.enviroreporting.com/ 4. Continuity, Credibility and Comparability: Key Challenges for corporate
Environmental performance measurement and communication by Asa Skillius and Ulrika Wennberg, The International Institute for Industrial Environmental Economics at Lund University 5. The Rhetoric of Environmental Reporting : The Case of India by Bikram Chatterjee, School of Accountancy, New Zealand
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