Corporate Environmental

Reporting
Objectives:
 Discuss social, ethical, environmental, and
sustainability disclosure as one of the main ways in
which companies can discharge their accountability
to a wide range of stakeholders, with emphasis on
environmental reporting;

 Discuss the use of stakeholder engagement to

discharge broader corporate accountability.
Corporate Environmental Reporting…..
 In recent years, environmental issues have
attracted many sectors of society worldwide.

 CER is initiated by organizations like CERES, which

provided the first principles for companies who opt
to discharge accountability to the environment.

 It was further supported by the European Federation

of Accountants and Global Reporting Initiative.
Corporate Environmental Reporting…..
 Earlier studies such as (Deegan and Rankin 1996)
suggested that groups of users demand
environmental performance information in the
corporate annual reports.

 However, even now many companies are not

providing the required information/reporting.
Incentives of CER….
 Solomon and Lewis (2002) suggest that such
incentives loosely can be arranged into four
categories:
a. market incentives
b. social incentives
c. political incentives
d. accountability incentives

 But among the incentives enumerated by the study,

acknowledging social responsibility and marketing the
company were viewed as the main reasons why
companies produce corporate environmental
information voluntarily.
Disincentives of CER….
 Both the quality and quantity of corporate
environmental information disclosed by companies
are considered to be inadequate on the whole.

 The reluctance to report sensitive information was

considered to be one of the most significant
disincentives of CER (Solomon and Lewis 2002)
Users of CER….
 From the findings of the questionnaire survey,
Solomon (2000) showed that legislators and
regulators, local communities, and ethical investors
were considered to be the main recipients of
corporate environmental information from companies.
Qualitative Characteristics of CER….
 Solomon (2000) found from his survey evidence that
the most qualitative characteristics of CER were
considered to be understandability, relevance,
reliability, faithful representation, freedom from error,
and a true and fair view.

 There is a distinct similarity between the evolving

framework of CER and the financial reporting
framework.
Elements of CER….
 Within the current financial reporting framework, a
company has to legally own/control the assets on
which it reports.

 Clearly, the natural environment can not be owned or

controlled in the same way as financial assets.

 Air, water, land, and sound represent the most

sensible elements for CER.
Verification of CER….

 Solomon (2000) found that existing frameworks for

verification were generally preferred to a new body
designed for a specific purpose.
Bearing the cost of CER….

 Corporate environmental information tends to be

provided free of charge to interested parties, with
companies absorbing the full cost of disclosure.
Time period and
communication of CER…

 Corporate environmental information is usually disclosed

via the annual report or a separate environmental report
(usually annual) with the use of media for any interim
reporting. (Zeghal and Ahmed 1990; Roberts 1992;
Matthews 1993)
 Sustainability and a
stakeholder perspective…

 The concept of sustainability arises from stakeholder

theory.
Toward sustainability reporting…
Toward sustainability reporting…
Toward sustainability reporting…
Toward sustainability reporting…
Stakeholder engagement…
 An emerging trend in UK business is the growth of
stakeholder engagement.

 An acknowledged accountability requirement of the

developing SEE disclosure, is the emergence of dialogic
engagement. (Owen et al, 2001)

 A good example of this was the engagement process

conducted by Camelot, the Lottery operating company.
“Sustainability is no longer about doing less
harm. It’s about doing more good.”
(Jochen Zeitz, President and CEO of Harley-Davidson)