Executive Summary
The 1997 Benchmark Survey analyses 100 Company Environmental Reports (CERs) from 16 sectors and 18 countries. The purpose of the survey is to identify areas of strength and weakness in company environmental reporting and to highlight examples of best practice. Out of the 100 companies covered here, more than 40 were also covered in our 1994 survey of 100 companies - and 24 were among the 40 reporting pioneers covered in Engaging Stakeholders in 1996. Where appropriate, we show how these companies' scores have changed over the 1994-1997 or 1996-97 periods.
Support and assumptions
The Engaging Stakeholders programme is carried out by SustainAbility and is supported by the United Nations Environment Programme and 18 participating companies. The programme is based on two key assumptions: firstly, that markets work most efficiently and effectively when there is adequate information; and, secondly, that increased pressures for accountability accelerate environmental improvement. As a result, business must increasingly get used to operating in a global 'goldfish bowl'.
It is in this broader context that we see the conclusions of the 1997 survey providing useful guidance to companies on how to respond. And it is in this context, too, that we see an urgent need to ensure that all regions, all industries and all significant companies are involved in this vital, global shift towards greater levels of disclosure.
Objectives
The objectives of the 1997 Benchmark Survey are to:
- update our 1994 and 1996 findings by ranking 100 of the latest CERs against the UNEP/SustainAbility 50 reporting criteria and revised 5-stage model;
- begin the regional and sectoral analysis of such reports; and
- outline what will be expected from 1998-1999 CERs.
Structure and key conclusions
The 1997 Benchmark Survey has six main chapters (2-7) and five appendices.
Chapter 2 spotlights key results of the 100-company survey. The Body Shop (UK) tops the survey rankings for the second year running, followed by Baxter (USA). Alphabetically, the nine other high-scoring companies are: British Airways (UK), Bristol-Myers Squibb (USA), General Motors (USA), Neste (Finland), Novo Nordisk (Denmark), Polaroid (USA), Sun Company (USA), Tokyo Electric Power (Japan) and Volvo (Sweden). Comparing the results of the three benchmark surveys to date, it is clear that the standard of reporting is improving all the time.
Chapter 3 reviews the results against the revised 5-stage reporting model. These illustrate the improvement trend fairly dramatically, as shown in Figure 7 on p11, where Stage 1 represents 'Green Glossy' reports and Stage 5 represents 'Sustainability' reporting.
Chapter 4 looks at sectoral results, focussing on the automobile, chemical, oil, pharmaceuticals and retail industries. Overall, the pharmaceutical sector leads followed by the transport and retail sectors.
Chapter 5 provides a regional and country breakdown of the results. In terms of numbers of CERs in the survey, the USA contributes 19, closely followed by the UK, with 18. This is perhaps a reflection of the fact that the voluntary reporting movement has gone further in the Anglo-Saxon world, providing a larger pool of reports to draw upon. But other countries also figure strongly in the 1997 rankings: Germany and Sweden (both contributing 8 CERs), Canada, Japan and Norway (each 11 contributing 6), the Netherlands and South Africa (5 each), Finland and Switzerland (4 each), Denmark (3), France and South Korea (2 each) and Australia, Belgium, Italy and Venezuela (1 each).
Chapter 6 reviews progress in the verification of reports. Verification is so important that it was the focus of one of the 10 Transitions identified in Engaging Stokeholders (see Figure 1). In our 199394 100 CER survey, just 4 CERs had been verified in some way. The intervening three years have seen marked change in this area. By contrast, 28 of the latest crop of 100 CERs have been verified representing a seven-fold increase. Of the 10 top-scoring companies in the 1997 survey, five have had their latest reports verified.
Chapter 7 suggests some of the features which report-users will want to see in CERs and broader 'triple bottom line' reports published in 1998 or 1999. This chapter concludes with 12 recommendations for companies, industry federations and governments:
The 12 recommendations
Companies
1 Account for the triple bottom line of sustainable development
2 Spotlight real issues, impacts and priorities
3 Develop SMART (Specific, Measurable, Attainable, Relevant and Trackable) targets - and verify
4 Integrate your reporting
5 Link your CER with your annual
6 Focus on financial market users
7 Quantify and monetise
8 Communicate, communicate, communicate
9 Use the Internet - but don't go paperless
Industry Federations
10 Help develop - and use - sustainability indicators
11 Engage - and re-engage stakeholders
Governments
12 Review the need for new mandatory reporting requirements
The 10 transitions
The findings of the 1997 Benchmark Survey reinforce a number of core messages of our 1996 report Engaging Stakeholders For example: the CER is a means to greater accountability and environmental improvement, not an end in itself; the 10 Transitions (Figure 1) are growing in importance; and, while the 1996-97 crop of CERs shows considerable progress, many challenges remain. Some brief highlights of our latest findings fol low:
1 Multi-way, active dialogue:
The European Union leads in terms of active stakeholder engagement, but some US companies (eg Monsanto) are also now movinq stronqlv in this direction.
2 Verification as standard
Verification has arrived, but there is a fair way to go before it is accepted in the same way it is in corporate financial accounting and reporting.
3 Benchmarkability
Figure 11 (p16) shows the 1997 sectoral breakdown of benchmarked CERs, ranked by the average score for each sector. The pharmaceutical sector is currently in the lead. The next step will be to benchmark performance.
4 Life cycles, business design, strategy
Ideally, corporate strategies will eventually be based on detailed understanding of life-cycle impacts and ways of minimising them. Companies to watch include Danish Steel Works, Enso, Neste, Novo Nordisk, SAS and Sun Company.
5 Impacts and outcomes
Little progress has been made to date in terms of moving on from the quantification of inputs and outputs to the assessment and reporting of environmental - let alone triple bottom line - impacts and outcomes.
6 Global operating standards Again, little progress.
Among the rare CERs which discuss these issues in some detail are those by The Body Shop, BP, Fiat, Sony and Volvo.
7 Corporate governance
Very few companies yet link their CERs to the corporate governance agenda. This is a subject which SustainAbility is exploring in a separate project within the 1997 Engaging Stakeholders programme.
8 Mandatory reporting
A small number of countries are developing mandatory schemes, most notably Denmark and The Netherlands (see page 25). Again, this is a subject SustainAbility is exploring in a separate project on non-reportinq companies.
9 Boundaries set by stakeholder dialogue
The Body Shop, BP, Monsanto and Novo Nordisk offer pioneering examples of stakeholder involvement in setting reporting boundaries and parameters.
10 Triple bottom line performance
The triple bottom line of sustainable development aims to capture progress against a range of economic, environmental and social performance indicators. The results of the 1997 Benchmark Survey show little evidence to date of real efforts to develop and plot progress against sustainability indicators. Among the companies to watch however are the EB Eddy Group and The Body Shop.
Ten transitions
| Established focus on | Emerging focus on |
| 1. One way, passive communication | Multi-way, active dialogue |
| 2. Verification as option | Verification as standard |
| 3. Single company progress report | Benchmarkability |
| 4. Management systems | Life-cycles, business design, strategy |
| 5. Inputs and outputs | Impacts and outcomes |
| 6. Ad-hoc operating standards | Global operating standards |
| 7. Public relations | Corporate governance |
| 8. Voluntary reporting | Mandatory reporting |
| 9. Company determines reporting boundaries | Boundaries set through stakeholder dialogue |
| 10. Environmental performance (Stage 3-4) | 'Triple bottom line' performance (Stage 5) |