Environmental Finance

Reporting - The pitfalls in mandatory reporting

- By:

Courtesy of Environmental Finance

The UK government is now threatening to force firms to produce environmental reports. But mandatory reporting elsewhere has had mixed results, says Paul Scott.

The pitfalls in mandatory reporting

Voluntary environmental and social reporting has progressed by leaps and bounds over the past decade*, and an estimated 1,000 companies worldwide now produce regular reports. However encouraging this may be, it is a drop in the ocean compared with the tens of thousands of companies which should be reporting.

This is why UK environment minister Michael Meacher has challenged the UK's 350 largest listed companies (the FTSE 350) to report on their environmental performance by the end of this year. This follows a similar challenge by Prime Minister Tony Blair in October 2000 at an address to the Green Alliance in London.

Meacher has long threatened to introduce mandatory reporting if companies do not do so voluntary. He appears to be upping the ante. In two recent speeches in London - at the ACCA (Association of Chartered and Certified Accountants) environmental reporting awards on 23 March, and at the Environment Council's Stakeholder Accountability conference on 29 March - he emphasised his readiness to take appropriate steps. At the ACCA Awards, for example, he said: 'I end by giving this warning - if we do not get an adequate and prompt response to our demand for proper environmental reporting from the leading 350 companies that we have asked for, then, in the light of good practice already well established in the UK and against a background of repeated requests for co-operation from the government over the last four years, I am inclined to include a requirement for companies to report their environmental impacts in an early Environmental Bill in the next Parliamentary Session.'

The day before, Meacher's department sent FTSE 350 firms a consultation draft of its 'General Guidelines on Environmental Reporting', aimed specifically at companies' new to reporting. (See www.environment.detr.gov.uk/envrp/index.htm.)

Other countries have set precedents in this area. Within Europe, Denmark, Norway, Sweden and The Netherlands have already introduced reporting legislation (see table 1).

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