Paper G 55 presented at
ENVIRONMENT97 - the world's first environmental conference on the World Wide Web.
http://www.environment97.org
by Simon Propper
Simon Propper is Director of Corporate Environmental Strategy at Aspinwall & company.
Abstract
Sainsbury’s does but Tesco does not. ICI does but Zeneca does not. Tarmac does but Wimpey does not. London Electricity does but Midlands Electricity does not. The distinguishing feature is the publication of a company environmental report.
Well over 200 companies have already published environmental reports, and for the early pioneers, now on their fifth annual editions, to do so is a matter of routine. However, the majority of PLCs still do not produce environmental reports, and the divergence of opinion between reporters and non-reporters is evident at conferences and in articles.
At the heart of the debate is a basic strategic business decision - should a company provide only information which is required by law such as annual accounts and mandatory registers, or should it go to lengths to offer additional insight into its inner workings?
What is clear is that no previous environmental management issue has so conspicuously divided business both between and within sectors. The answer to such questions are unlikely to be straightforward and as a starting point it is informative to view the decision from the perspective of both the pro- and anti-reporting camps.
Article
1 The case against reporting
Before starting this article, I reviewed recently-published papers on environmental reporting. What is striking is that the vast majority of these are pro-reporting except those from one specific source — the legal profession.
Some environmental lawyers regard the voluntary revelation of environmental information as risky and ill-advised. Simply speaking, their argument runs that information put in the public domain, whether in reports or through public registers, could be used by third parties to support actions against the company. At least one article gave simple advice on how companies can reduce the amount of information available to potential litigants. This included claiming commercial confidentiality to discourage regulators from placing information on public registers and even avoiding participation in internal environmental management schemes such as EMAS and BS7750. These, it was argued, would make it easier to obtain information since their document structure is standardised and is therefore simpler for litigants to 'discover’ for the purpose of a legal action.
So some lawyers frown on environmental reporting, encourage restriction of information on public registers and suggest that a non-standard internal management system would be preferable to one of the approved schemes. They even go so far as to propose an information control system audited by solicitors to protect the company from careless releases of information.
This view cannot be dismissed lightly and should be weighed against the potential benefits from an environmental report and a policy of openness. The lawyers’ advice represents their assessment of their clients’ best interest seen from the perspective of minimising the risk of litigation. It should also be recognised that company legal advisers have on occasion taken a more relaxed view and accepted their client’s decision to report without major alarm.
What is interesting is that if consensus in the legal profession errs towards confidentiality, exactly the opposite view prevails among the PR advisers and environmental consultants.
2 The case for reporting
Bruce Harrison of E Bruce Harrison Co has thirty years’ experience in handling environmental communications issues for companies in the United States and has therefore been closely involved in advising his clients on most of the high-profile environmental issues over this period. In the US, risk communications is a significant business, funding $2 million in annual research at Columbia University’s Centre for Risk Communication (headed by Dr Vincent Covello). Bruce Harrison makes good use of these facilities to research and test the most effective methods of risk communication and applies the principles for the benefit of his clients.
The basic principles of risk communication, which Bruce Harrison describes as 'Covello cardinal rules' are most informative:
involve the public as a legitimate partner in decision making;
collaborate with credible sources;
identify stakeholders;
listen and learn from stakeholders;
speak clearly with compassion;
be open, frank and honest; and
meet the needs of the media.
What is perhaps remarkable is that Bruce Harrison is applying these principles in the US, by far the most litigious of business environments. If it works in the US it should work anywhere.
The thinking behind this approach is compelling. Companies will inevitably encounter environmental issues with either their products or processes from time to time. The central premise is that by the time you have a problem, it is too late to begin to communicate. It is essential to prepare the ground, both within the company and with key external groups and the environmental report has a central role in this. Environmental issues can be complex, so company spokes–people need excellent information available to them which will stand up to media and pressure group scrutiny. They need historical performance data to demonstrate a track record of improvement and they need a comprehensive account of management programmes underway to further reduce environmental impacts. An environmental report is the most reliable means of ensuring that this information is at hand and is ready for despatch to concerned audiences.
Of course, reports are not only used in crisis management, but also as part of routine communications programmes. By building a reputation for environmental concern over a period of time, a company will reduce the risk of criticism and may enhance its image with customers, shareholders and regulators whose approval is necessary for a healthy balance sheet.
Perhaps the least well-recognised function of reports is their internal role. It is frequently the case that senior management has a clear policy of environmental protection, but that the performance of operational sites falls short of their expectations. The proper mechanism for bridging this gap is, of course, some form of management system and indeed this will provide at least part of the solution. However, many systems with their attendant procedures and manuals do little to encourage awareness and concern in the individual. A published report can complement the management system by making performance transparent and by providing a concise reference document for an organisation’s environmental issues. It is quite remarkable how many firm targets are agreed by managers in the period shortly before production of the environmental report. So the report acts as a catalyst for the environmental programme by combining an annual audit of performance with a call for renewed commitment. And of course better performance should help to avoid some of the potential crises referred to above.
3 Targeting the report
Environmental reports are frequently required to satisfy a wide range of readers and to achieve multiple objectives. In order to maximise the benefit from the report it is sensible to prioritise the possible objectives and audiences. The objectives normally stem from pressures or opportunities which will define the target audiences. Recognising that in addition to the main audience for the report, it will also be available to other groups, it is prudent to state clearly who the report is intended for and why. THORN EMI for example has designed all three of its reports for its own staff, but has received many compliments in press articles and through winning the ACCA environmental reporting award.
The report should be tailored to the needs of the priority audience groups. Where these are very different in nature, for example environmental opinion-formers and company staff, it may be necessary to produce the report in several formats. Sainsbury’s for example, has produced a full report and a shorter briefing document which is clearly suitable for a wider, less specialist audience. ICI’s last two reports were sent to all shareholders (a very large distribution), and were therefore shorter than many similar documents from other chemical companies which may be aimed at a smaller specialist audience.
4 Stakeholder research
A number of companies have sought to improve the effectiveness of their environmental reports by conducting research into the expectations, interests and concerns of their target audiences. Although acceptance of this approach is increasing, most companies have so far produced reports without conducting such stakeholder research. Three leading examples of stakeholder research are the programmes of BP, Sainsbury’s and IBM. Each has adopted a different research method:
BP Chemicals carries out regular quantitative surveys of both employees and the communities local to its sites. At the same time the company assesses the views of other stakeholder groups, such as opinion-formers, including academics, environmental pressure groups and consultants, by means of an annual forum. The findings are used as a check on emphasis given to particular subjects in the environmental report to ensure that it remains relevant to current issues and concerns.
Sainsbury’s conducted a qualitative research study of key audience groups to introduce ideas and focus priorities in its first report. Environmental opinion-formers (including environmental journalists, pressure groups and green fund analysts) were interviewed about the issues which they regarded as pertinent to a multiple supermarket and the priorities for action which they would wish to see. The feedback encouraged Sainsbury’s to take a wide view of environmental issues and to include social and ethical areas such as animal husbandry and public nutrition.
As a means of re-focusing its environmental reporting programme, IBM consulted stakeholder groups, including employees, customers, suppliers, investors, lenders, insurers, government organisations, regulators, local community, environmental experts and opinion-formers. The output was used to define and prioritise eleven broad areas in which IBM’s performance should be tracked. An assessment of performance was made in each area through an independent audit programme, and the results plotted as a percentage of the best achievable level for each performance measure.
So researching stakeholder views is helping companies to shape their environmental reports into effective communications tools.
5 Conclusions
Specialists in environmental communications are likely to advise openness and honesty in matters of environmental risk and the annual environmental report is a central part of this strategy. The company legal advisers may take a more cautious view, and corporate communications departments will have to balance the possible threat of litigation against the damage to reputation which may result from a secretive or defensive public stance. While this may sound like Hobson’s choice, it is worth remembering that it is extremely rare for criticism, let alone legal action, to stem from voluntary releases of information in the form of environmental reports.