Environmental-and-Social課件

1、Lecture 7: Environmental and Social reportingEnvironmental and sustainability reporting is linked into the concept of corporate social reporting which in turn may be seen as associated with wider perceptions of the impact of corporations (and indeed other organisations) on the lives of individualsLe

2、cture 7: Environmental and Social reportingThis lectureConsiders wider aspects of the framework within which environmental and social reporting functionsReviews, selective, historical antecedents Reviews disclosure practice as documented by triennial KPMG reportsDiscusses those factors and motivatio

3、ns which are likely to drive enhanced disclosureReviews suggested frameworks for disclosure (GRI) and for assurance (EMAS/ISO 14000)Environmental and Social reportingWhy should we have environmental and social reporting?Corporations dominate all aspects of our lives. Their power affects the quality

4、of life, food, water, gas, electricity, seas, rivers, environment, schools, hospitals, medicine, news, entertainment, transport, communications and even the lives of unborn babiesEnvironmental and Social reportingUnaccountable corporate power is damaging the fabric of society, the structure of famil

5、ies, the quality of life even the very future of the planet(This is the perspective of Mitchell and Sikka, 2005, p.2) (quoted in Solomon (2010) p.250) which may be seen as a call for more accountability and disclosure)Environmental and Social reporting wider issuesBut is there any agreed perspective

6、 as to what are good corporate activities or, perhaps more prosaically, what is the appropriate disclosure? Here issues as to what corporations should do might include those relating to the nature of the business activityfor exampleDefenceTobaccoGamblingAlcoholNuclear powerDrugsAnimal experimentatio

7、n etc, etc, etcDefenceDefenceTobaccoTobaccoGamblingAlcoholEnvironmental and Social reporting wider issues Here there are wide ranging problems as to the particular ethical/moral/religious/social perspective to adopt? Should (local?) legality be the only yardstick by which corporate activity is judge

8、d? or should corporations seek to operate to higher standards than those accepted locally?Environmental and Social reporting historical antecedentsSome, e.g. Solomon (2010 pp.255-256) see sustainability reporting as having its roots in nineteenth century concerns as to working conditions in the earl

9、y years of the industrial revolution in the UK (for example, concerns expressed by Christian Socialists, Kingsley, Shaftesbury amongst others)Nineteenth century child labourEnvironmental and Social reporting - although whilst the expression of these concerns were influential in alleviating (to an ex

10、tent) working conditions for example via the Factory Acts (and prohibitions on the use of dangerous materials) the extent to which they resulted in enhanced disclosure was limitedEnvironmental and Social reportingSolomon refers to William Morriss attempt to prevent pollution in a local river and wid

11、er disclosure associated with pollutant activity but there is limited evidence that such activities resulted in further voluntary disclosure.William MorrisWilliam Morris was a writer and designer loosely associated with the mid nineteenth century pre-Raphaelite movement itself vaguely associated wit

12、h notions of beauty and romanticism. His continuing fame relates to his status as a founder of the arts and crafts movement and as a designer of wall-paper.Pre-Raphaelite art Millais - OpheliaPre-Raphaelite commerce Millais - BubblesArts and Crafts architectureThe London match-girls strikeIn late C1

13、9 the match girls strike of 1888 was directed against excessive hours, low pay and the use of yellow phosphorus (which was highly toxic causing Phossy Jaw a necrotic disease) as compared with red phosphorus (which was less toxic but much more expensive as an input material)Red phosphorusLondon match

14、 girlsThe London match-girls strikeThe adverse publicity surrounding the use of yellow phosphorus resulted in the factory owners announcing in 1901 that yellow phosphorus would no longer be used in their production process ahead of an Act of Parliament in 1908 which prohibited the use of yellow phos

15、phorusEnvironmental and Social reportingHowever, notwithstanding wider public interest aspects of environmental and social disclosure there is relatively little evidence of systematic non-financial disclosure by companies in the UK until the 1970s essentially corporate social disclosure/environmenta

16、l/sustainability reporting is a comparatively recent phenomenon as compared with mainstream financial reportingEnvironmental and Social reportingAs we have seen, in the UK the Corporate Report (1975) called for a wider range of corporate disclosure including those relating to wider social issues and

17、 KPMG (a multinational accounting firm) have conducted triennial surveys of environmental reporting since 1973 and sustainability reporting since 1999(information about the 2008 survey is available at/News/13565.html) and the most recent 2011 survey at/sites/default/files/private/cr_report_2011_fina

18、l.pdf(and a mild critique thereof at)/2011/11/08/us-companies-put-csr-communication-before-performance-kpmg-says/Environmental and Social reportingOver this period the KPMG reports note that corporate responsibility reporting has changed from purely environmental reporting to sustainability (social,

19、 ethical, environmental and economic) reporting.KPMG Survey 2008The KPMG International Survey of Corporate Responsibility Reporting 2008 shows that:Eighty percent of the Global Fortune 250 now release corporate responsibility information in stand alone reports or integrated with annual financial rep

20、orts, up from 50 percent in the three years since KPMG last conducted its survey in 2005. KPMG Survey 2008National level companies trail the Global 250 with an average of 45 percent issuing reports, but numbers vary widely from country to country. For example less than 20 percent of large companies

21、in Mexico and Czech Republic issue reports, but well over 90 percent of companies in Japan and the United Kingdom do so. KPMG Survey 2008With these results the KPMG Survey shows that sustainability reporting is now becoming a mainstream business issue for many of the worlds largest companies althoug

22、h the level of integration into annual reporting shows considerable room for improvement. KPMG Survey 2008In addition to tracking the increase in reporting and assurance over time, the survey examined key topics in reporting such as corporate governance, supply chain, and climate change. Key finding

23、s from the Global 250 sample on these topics include: KPMG Survey 200892 percent disclose a code of conduct or ethics, but less than 60 percent report on non-compliance with the code Over 90 percent have a supply chain code of conduct, but only half disclose details of how it is implemented and moni

24、tored KPMG Survey 200860 percent report on new business opportunities associated with climate change, but 41 percent of the Global 250 and 62 percent of the 100 largest companies by country do not report on their carbon footprint. KPMG Survey 2008The survey reveals that about half of the Global 250

25、has detected the business opportunities of corporate responsibility and report on the business value. One third of companies cited shareholder value as a driver for reporting. KPMG Survey 2008The survey also looked into assurance trends. The number of companies that utilize formal assurance with the

26、ir corporate responsibility reporting made a significant jump to 40 percent this year after holding steady at 30 percent in the 2002 and 2005 versions of the survey. Top drivers for assurance cited by companies in the sample included improving report quality and reinforcing credibility among stakeho

27、lders. KPMG Survey 2008 comparison with 1993In 1993 only 13% of national companies defined as the 100 largest companies in the eleven countries surveyed produced a separate corporate environmental report (Solomon, 2010 p.273)KPMG Survey 2011 overall resultsCorporate Responsibility ReportingComes of

28、Age in 2011 Ninety-five percent of the 250 largest companies in the world (G250 companies) now report on their corporate responsibility (CR) activities, two-thirds of non-reporters are based in the US. Traditional CR reporting nations in Europe continue to see the highest reporting rates, but theAme

29、ricas and the Middle East and Africa region are quickly gaining ground. Only around half of Asia Pacific companies report on their CR activities.KPMG Survey 2011 overall resultsEuropean companies continue to lead the pack, with 71percent of companies reporting on CR, but the Americas are quickly cat

30、ching up.Nordic countries have seen a striking rise in thenumber of companies reporting.Japan and the UK both report near-unanimousadherence to CR reporting.Almost 60 percent of Chinas largest companiesalready report on corporate responsibility metrics.KPMG Survey 2011 overall resultsFor the 100 lar

31、gest companies in each of the 34 countries we studied (N100 companies), CR reporting by the consumer markets, pharmaceuticals and construction industries more than doubled since KPMGs last survey in 2008, but overall numbers in some sectors such as trade and retail and transportation continue to lag

32、 stubbornly behind.Of the N100 companies, 69 percent of publicly traded companies conduct CR reporting, compared to just 36 percent of family-owned enterprises and close to 45 percent for both cooperatives and companies owned by professional investors such as private equity firms.KPMG Survey 2011- m

33、otivationMotivation?With almost half of the largest companies already demonstrating financial gains from their CR initiatives, and with the increasing importance of innovation and learning as key drivers for reporting, it is clear that CR has moved from being a moral imperative to a critical busines

34、s issue.KPMG Survey 2011 ownership structureWhile family-owned and private equity-owned companies may face a different level of scrutiny than publicly traded companies, this does not exempt them from accounting for their positive and negative impacts on society, particularly in the modern informatio

35、n ageKPMG Survey 2011 green or business?There is every indication that the romance with green and sustainable products may be short-lived. In the near future, customers and stakeholders will expect all products to be as environmentally friendly and socially responsible as possible, effectively turni

36、ng green-label products into the norm. Eventually, a products sustainability benefits will become just one of the many characteristics that differentiate a brand (akin to price, quality and effectiveness).KPMG Survey 2011 the reporting framework and disseminationEighty percent of G250 and 69 percent

37、 of N100 companies adhere to GRI Sustainability Reporting Guidelines. Companies are increasingly using multiple forms of media to communicate results; only 20 percent of G250 rely solely on stand-alone CR reports, and barely 10 percent restrict their report either to web-only formats or annual repor

38、ts alone.KPMG Survey 2011 the reporting frameworkWhile the GRI Guidelines will continue to be the de facto standard, we believe that global CR reporting would benefit from further global standards that enable the benchmarking of the quality of the information and quantitative performance in CR activ

39、ities.KPMG Survey 2011 data issuesData quality appears to be a significant issue, with a third of G250 and over 20 percent of N100 companies issuing a restatement of their CR reports.Thirty-five percent of G250 and 40 percent of N100 companies do not currently include information on CR governance or

40、 control mechanisms.Unlike financial reporting, the disclosure of sustainability metrics to the market is largely unregulated.KPMG Survey 2011 assuranceonly 46 percent of the G250 and 38 percent of N100 companies currently use assurance as a strategy to verify and assess their CR data. And while thi

41、s is slightly higher than the 2008 figures, it is also a troubling finding; companies without an external assurance program not only run the risk of restatements in the future, but also send the message that CR information is not held in as high regard as financial information, which is frequently a

42、ssured in most businessesKPMG Survey 2011 assuranceFifty-one percent of mining companies and 46 percent of utility companies conduct assurance activities on their CR reports, but overall numbers lag across other sectors.The desire to enhance credibility is the most frequent driver for companies to s

43、eek assurance, with improving the quality of reported information close behind.Of those that undertake assurance, more than 70 percent of the G250 and close to 65 percent of the N100 engage major accountancy organizations.KPMG Survey 2011 assuranceThe comparatively slow uptake of assurance on CR rep

44、orting is somewhat surprising, particularly in light of the recent crisis of trust that many companies are currently experiencing. And while one would have expected to see a sharper increase in assurance over the research period, we anticipate that as the trend towards integrating reporting picks up

45、 speed uptake in assurance will grow apace. As a result, many companies will continue to seek out major accounting firms who have the broad financial and business background to successfully integrate not only the CR data itself, but also the systems and controls that underpin the integrated reportin

46、g process.KPMG Survey 2011 continuing trendsFor now, CR reporting is still a somewhat nascent field, and almost every company seems to be slowly evolving their information systems and processes to adjust to this new and transformative approach. In the long-run however, restatements, errors and omiss

47、ions in CR reporting will begin to erode investor confidence in not only the data presented, but potentially also the quality of the wider governance structure and internal controls within the organization. We believe that if companies are to take the integration of CR reporting seriously the time h

48、as now come to enhance CR reporting information systems to bring them up to a level that is equal to current financial reporting, including a comparable quality of governance, controls and management.What has caused this increase in disclosure?A variety of theoretical perspectives have been employed

49、 to explain this significant increase in disclosure these include (Solomon 2010 pp.263-267):Market incentivesSocial incentivesPolitical incentivesAccountability incentivesMarket incentivesEnhanced disclosure boosts shareholder value (Macve and Carey 1992) -companies voluntarily disclose information

50、effectively to obtain a reduced cost of capital(A corollary of this is that there may be reduced need for regulation of disclosure)Market incentives(Note that empirical evidence as to superior financial performance by companies with more sustainability type disclosure is very mixed (Solomon, 2010 pp

51、.259-260)Social incentivesThese may encompass aspects of stakeholder and legitimacy theory in terms of the need to recognise the diverse needs for information of a companys stakeholders and the implied social contract between companies and society. Voluntary social reporting may be a means for compa

52、nies to legitimize their existence to societyRousseau the social contractThe Social ContractMan is born free but everywhere is in chains essentially representing the (voluntary) change from the free will of the noble savage to the limitations and restrictions which bind society togetherPolitical inc

53、entivesThis recognises the institutional nature of society and the power based relationships within which political economy existsHere the activities and role of pressure groups, such as Greenpeace, and of institutional bodies such as DEFRA, the Environment Agency, in the UK, may be seen as exerting

54、 pressure toward enhanced reporting and disclosure Accountability incentivesSolomon (2010, pp.266-266) associates these with changes in societal approaches to risk and trustLack of trust in institutions has led to the creation of counter experts whose views compete with those of traditional expertsA

55、ccountability incentivesIn this context companies use environmental and social disclosures as a means of communicating with their stakeholders so as to restore trust and manage reputational risk (note the importance placed by BP on its reputation in considering issues relating to directors remunerat

56、ion etc)MotivationsNote that these various theories/explanations are to an extent overlapping for example environmental activism as in the case of the Brent Spar may have direct commercial impact via the boycott of product purchase and it is difficult to unequivocally claim any one such theory as th

57、e primary driver for the, increase in disclosure practiceBrent SparVoluntary/regulated disclosureThe majority of social reporting is still largely unregulated although, as we have seen, for UK quoted companies there is the requirement for the business review to identify to the extent necessary for a

58、n understanding of the development, performance or position of the companys businessthe main trends and factors likely to affect the future development, performance and position of the companys business, Voluntary/regulated disclosureincluding information as toenvironmental matters (including the im

59、pact of the companys business on the environment),the companys employees, andsocial and community issues,including information about any policies of the company in relation to those matters and the effectiveness of those policies; andVoluntary/regulated disclosureinformation about persons with whom

60、the company has contractual or other arrangements which are essential to the business of the company.If the review does not contain the information of each kind mentioned then it must state which of those kinds of information it does not contain.Disclosure criteriaNor is there any required format fo