Current Practice in Environmental Reporting: The Chemicals Industry

Current practice in environmental reporting: the chemicals industry Current practice in environmental reporting: the c...

Author: Bob Ceurstemont

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Current practice in environmental reporting: the chemicals industry

Current practice in environmental reporting: the chemicals industry Bob Ceurstemont, Tom Bolton and Clive Capps

Cambridge England

Published by Woodhead Publishing Limited, Abington Hall, Abington, Cambridge CB1 6AH, England www.woodhead-publishing.com First published 2001, Woodhead Publishing Ltd © 2001, Woodhead Publishing Ltd The authors have asserted their moral rights. This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission where appropriate, and sources are indicated. Reasonable efforts have been made to publish reliable data and information, but the authors and the publisher cannot assume responsibility for the validity of all materials. Neither the authors nor the publisher, nor anyone else associated with this publication, shall be liable for any loss, damage or liability directly or indirectly caused or alleged to be caused by this book. Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming and recording, or by any information storage or retrieval system, without permission in writing from the publisher. The consent of Woodhead Publishing Limited does not extend to copying for general distribution, for promotion, for creating new works, or for resale. Specific permission must be obtained in writing from Woodhead Publishing Limited for such copying. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation, without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. ISBN 1 85573 471 0 Typeset by Best-set Typesetter Ltd., Hong Kong Printed by Astron On-line, Cambridgeshire, England.

Contents

About the authors

ix

Executive summary

xi

Section A Review of global environmental reporting 1

Introduction 1.1 Scope of this report 1.2 Corporate governance 1.3 The future of the annual report 1.4 The environmental reporting concept

1 1 2 4 5

2

Background to environmental reporting 2.1 Calendar of events 2.2 The main drivers 2.3 Environmental pressure groups 2.4 Benefits and barriers 2.5 Mandatory or voluntary? 2.6 UK government support

7 7 10 13 14 16 20

3

Current status of environmental reporting 3.1 The first companies 3.2 Structure of the CER market 3.3 Length of CERs 3.4 The dating issue 3.5 Extent of group coverage 3.6 Environmental management systems (EMSs) 3.7 Award schemes 3.8 Verification 3.9 Supply chain management 3.10 The social reporting element 3.11 Link with financial performance 3.12 Cost of environmental reporting 3.13 Lack of comparability 3.14 Feedback

23 23 24 30 31 32 32 37 40 44 45 49 52 53 54

4

Environmental reporting guidelines 4.1 The range of guidelines 4.2 Advisory Committee on Business and the Environment (ACBE), UK 4.3 Association of Chartered Certified Accountants (ACCA), UK 4.4 Business in the Environment (BiE), UK 4.5 European Chemical Industry Council (CEFIC), Belgium 4.6 Coalition for Environmentally Responsible Economies (CERES), USA 4.7 Global Environmental Management Initiative (GEMI), USA 4.8 International Chamber of Commerce (ICC), France

55 55 56 57 58 60 61 62 63

4.9 Public Environmental Reporting Initiative (PERI), USA 4.10 United Nations Environmental Programme (UNEP), France 4.11 World Business Council for Sustainable Development (WBCSD), Switzerland 4.12 Other guidelines and approaches 4.13 Design considerations

63 64 65 67 67

Section B Analysis of worldwide chemicals industry environmental reporting

vi

5

The chemicals business 5.1 Definition of chemicals industry sector 5.2 Profile of chemicals industry sector 5.3 Main environmental concerns 5.4 Sustainable development 5.5 Chemicals industry associations 5.6 Chemicals industry initiatives 5.7 Legislation

71 71 72 76 82 83 84 87

6

Analysis of corporate environmental reports 6.1 Methodology 6.2 Section headings and environmental performance indicators 6.3 Analysis of global chemicals industry CERs Air Products and Chemicals Inc., USA Akzo Nobel, Netherlands Ashland Inc., USA BASF, Germany Bayer, Germany The BOC Group, UK Ciba Specialty Chemicals, Switzerland Clariant, Switzerland Dainippon Ink and Chemicals, Japan Degussa-Huls, Germany Dow Chemical Company, USA DSM, Netherlands DuPont, USA DuPont Herberts, Germany Eastman Chemical Company, USA Elf Atochem, France EniChem, Italy Henkel, Germany Hickson International Plc, UK ICI, UK Kemira, Finland Methanex, Canada Neste, Finland Norsk Hydro, Norway Perstorp, Sweden PPG Industries. USA Rhone-Poulenc, France Sasol, South Africa Solutia UK Ltd, UK Solvay, Belgium Sumitomo Chemical, Japan Tioxide, UK UCB, Belgium Union Carbide Corporation, USA Wacker, Germany

89 89 90 96 99 107 113 121 129 137 143 149 155 161 169 177 183 189 195 201 209 215 223 229 237 243 249 255 261 269 275 283 291 299 305 311 319 325 333

© Woodhead Publishing Limited Contents

7

Main findings from chemicals industry CERs 7.1 Overall profile of CER providers 7.2 Comparison of environmental reporting 7.3 Utilisation of selected EPIs 7.4 Comparison of environmental reporting in chemicals and paper industries

341 341 342 349 359

Section C The further development of environmental reporting 8

The future of environmental reporting 8.1 Key factors inducing change 8.2 Future trends in the chemicals industry impacting on environmental reporting

361 361 365

Section D Appendixes 1 2 3 4

References Glossary of terms Abbreviations Units

Index

369 371 375 379

381

© Woodhead Publishing Limited

vii Contents

About the authors

Bob Ceurstemont is a chartered chemical engineer with over 30 years’ experience in coal chemical, fine chemical and pharmaceutical manufacturing. As a process engineer and multi-disciplinary team leader he has broad experience of developing and scaling-up batch processes for pharmaceutically active ingredients (PAIs), and of designing and commissioning manual and computer-operated plants. From 1995 to 2000 he worked for BASF, where he was responsible for transferring the technology required for synthetic hormone manufacture in the USA. He also coached the professional engineers during the Knoll Pharma business reorganisation. Bob is co-founder of Chemical and Process Engineering Associates (CPEA Ltd), which is a consultancy based in Nottingham, England, specialising in front end process engineering and environmental reporting. Tom Bolton joined the paper industry after graduating in the mid-1950s and he has accumulated a lifetime of experience in the industry. He has worked with a number of international companies and their subsidiaries in the UK, Australia and South Africa. Starting as a technologist, he began work as a research and development scientist at a time when the industry was moving from its craft base to establish a position as a scientifically based industry. He has held a variety of senior positions in technical, production and general management in a wide range of papermaking and converting operations around the world. He has always been actively involved with the Paper Industry Technical Association, and in 1998 became its manager when it was undergoing a period of restructuring. There he was involved with all of the technical working groups, covering the full span of the technology of the industry. His contacts are and have been truly international, and with this perspective he recently wrote The International Paper Trade and has now collaborated with Clive Capps to produce the recently published Current practice in environmental reporting: the pulp and paper industry, and now this present title dealing with the chemicals industry. Clive Capps is a versatile business manager with a degree in chemistry and over 30 years’ experience in the paper and the chemicals industries. This involved both working on technical development in the fine paper mills sector and responsibility for sales of chemicals to European paper mills. He had a spell away from the paper industry in the mid-1970s with Exxon Enterprises, when he was in charge of sales of solar energy devices to Europe and parts of the developing world. Since 1990 he has been general manager of CJC Marketing Associates, a consulting and market research company, which specialises in the analysis and review of environmental issues in the paper industry worldwide. The current focus is on looking at means of assessing corporate environmental performance, including environmental reporting. He has acted as consultant to CEPI (the Confederation of European Paper Industries) in Brussels, and was coordinator of the handbook The Impact of Environmental Legislation. A major contribution on environmental issues was made to the FT Management Report on Managing Change in the Paper Industry, published in 1997. His collaboration with Tom Bolton has led to the establishment of the Current practice in environmental reporting series.

Executive summary

Environmental reporting Environmental reporting is still in its infancy, having emerged only in the latter part of the 1980s. Companies are under increasing pressure to be transparent and accountable in the whole spectrum of their business. In recent years, a number of companies have seen the need to introduce environmental reporting, placing environmental information into the public domain. Such reporting may be within the traditional annual report, or presented in a separate corporate environmental report (CER). This handbook is directed both at companies that are already providing CERs, and which wish to be able to compare their efforts with others in the same sector, and also at those companies that have not yet taken the step. They will be able to find some guidance on how to set about it, avoiding some of the pitfalls experienced by those already involved. It will also be of interest to the wide range of stakeholders concerned with corporate environmental performance and to the many verifiers involved. There is much detailed information in the document, and it is worth studying by those responsible for generating and using company environmental information, as well as those responsible for the policy of their company. The fundamental task of a CER is to provide an environmental ‘bill of health’ for a company, in the same way that the annual report provides a financial bill of health. It covers the provision of environmental information by management for the use of multiple stakeholder groups on the environmental status and performance of a company. In addition to providing an overall policy statement, these reports give details of resource consumption and environmental impacts. The unique aspect of this particular survey of environmental reporting is that it provides an in-depth appraisal of CERs from one individual sector, the chemicals industry. The main objectives of the survey are to examine current practice in environmental reporting and to identify the areas in need of improvement. A ranking of CERs is provided, the range and quality of reporting being determined by establishing the degree of utilisation of a comprehensive set of environmental performance indicators (EPIs). Geographically, the main focus is on Western Europe and North America, although CERs were obtained from other countries, namely, Japan and South Africa. For many, the original decision to produce an environmental report is stimulated by a desire to improve credibility with stakeholders. The most significant drivers for the disclosure of environmental information are: • • • • • • •

government pressure; the presence or threat of mandatory action; a need for transparency; concerns of climate change and carbon dioxide emissions; legislation; peer pressure; the competitive element.

Guidelines and awards Consideration needs to be given to better-focused, stakeholder-related reporting. The lack of a universal standard – there are currently around 40 guidelines in this

changing scene – has contributed to the huge lack of comparability found both in previous CER industry surveys and in this chemicals survey. The hope is that a universal standard can be developed, as the stage has now been reached where environmental reporting would benefit from greater structure and definition (see section on ‘The future of environmental reporting’). A host of award schemes for environmental reporting have sprung up around the world, perhaps the most significant being the Association of Chartered Certified Accountants (ACCA) scheme in the UK. Started in 1991, it aims to support the development of corporate environmental techniques. ACCA is one of the largest professional accountancy bodies in the world, with nearly 200 000 members.

Current level of environmental reporting In the developed world, at least 60% of the larger industrial companies report on the environment in some form in their annual report, and this figure exceeds 70% for the top 100 companies in many countries. There is, however, considerable variation in both the quantity and quality of environmental reporting. By 1994, well over 100 companies worldwide had published CERs. A division of these by industry sector showed the chemicals sector at the top of the league, with 22% of the total, closely followed by energy, with 19%. Some of the first chemicals companies to emerge with CERs were: • • • •

BASF, Germany (1989); Dow, Canada (1989); GE Plastics, Europe (1989); Norsk Hydro, Norway (1990).

Two of these, BASF and Norsk Hydro, are still producing CERs and are featured in this current Woodhead survey. The 1999 KPMG international survey identified a large variation in environmental reporting level across a range of industries. Chemicals led the field, with 59% of the top companies producing CERs, in contrast to a figure of 8% for the finance and insurance sectors. This once again confirmed that businesses, such as the chemicals industry, with high perceived environmental impact, are more likely to produce CERs, presumably in an attempt to highlight action taken to improve their environmental performance.

Analysis of current practice in the global chemicals industry Each CER obtained was analysed using a comprehensive set of environmental performance indicators (EPIs). An overall ranking of CERs was made difficult by the lack of a universal standard. In addition, there was frequently little or no quantitative information, making some of the individual EPI assessments subjective. While most annual reports do mention the environment, close to 20% of them do not actually point out that a CER exists. This seems very strange, as it is a costly and time-consuming exercise to produce a CER, and one would imagine that companies would seek to maximise the return from this effort.

Findings in the chemicals industry Environmental reporting for this industry sector has predominantly occurred in two regions: Western Europe and North America, respectively accounting for 20 (57%) and 8 (23%) of the total number of CERs. In all, 14 countries were involved, with just two countries (Japan and South Africa) outside these two main regions. The top three countries in the chemicals industry providing CERs are the USA, Germany and the UK, together accounting for approximately 50% of the total. The nearer the top of the chemicals industry league, the higher the density of CERs. For example, 16 of the top 20 companies provide CERs, compared with 10 for the next 20 companies. The majority of the CERs are produced by the large multinational

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© Woodhead Publishing Limited Executive summary

companies. However, the overall range in business size terms is very wide, from DuPont at $40 billion to Solutia UK at $100 million, a ratio of 400 : 1. While the CER providers by number represent just a fraction of all sizeable chemical companies worldwide, the collective environmental impact of these companies is very much greater than this figure would suggest, as in most cases the company turnovers are so much larger. An estimate for the share of the chemicals industry world turnover accounted for by the CER providers is around 20%, which means that a significant part of environmental impact of the chemicals industry is already being reported upon in the open manner required by CERs. Two of the CERs were combined with the annual report in one document, and this may well be the way that environmental reporting will develop in the future. One of the main advantages of incorporating the two reports into one is that it enables an easier linkage between financial, environmental and social information to be established. A ranking of the CERs was produced by evaluating the degree to which each CER has utilised the wide range of EPIs applicable to the chemicals industry. In general, the Western European companies did overwhelmingly better than their North American counterparts, accounting for 18 (90%) of the companies in the top 20 ranking, compared to just one for North America. The four highest-ranked CERs were: • • • •

Neste, Finland; Henkel, Germany; Dow, USA; Sasol, South Africa.

Lack of comparability is the biggest single issue which needs to be addressed. In order to highlight the specific shortcomings in environmental reporting in the chemicals industry, the least-used EPIs (less than 40%) are identified below: • • • • •

triple bottom line (17%); transport effect (20%); supplier involvement (29%); prosecutions, fines and liabilities (31%); reply card (31%).

Thus the survey has highlighted the areas where most improvement in environmental reporting is needed.

Regional and country comparison The principal strengths and weaknesses of the three main reporting regions with regard to use of EPIs can be shown in tabular form. Comparison of North America, Scandinavia and Europe for EPI utilisation Region

Strengths

Weaknesses

North America

Lost time accidents (100%) Social responsibility (75%) Prosecutions and fines (50%) Occupation illness (50%)

Transport effect (0%) External verification (13%) Water consumption (13%) Energy usage (25%)

Scandinavia

External verification (100%) Prosecutions and fines (75%) Transport effect (75%) Fatalities (75%)

Reply card (25%) Transport incidents (25%) Emergency preparedness (25%)

Europe

Water consumption (65%) Emergency preparedness (65%) Site coverage (65%) Occupational illness (60%)

Triple bottom line (5%) Transport effect (20%) Prosecutions and fines (20%) Reply card (30%)

The leading country for EPI utilisation is Finland (80%), followed by Germany (73%) and France (72%). In three of the countries, Finland, France and the Netherlands, over half of the EPIs are in use by all the companies.


xiii Executive summary

It is also worth identifying another type of leader, namely those companies that appear to be sole producers of CERs within a country: • • • • •

Canada – Methanex Italy – EniChem Norway – Norsk Hydro South Africa – Sasol Sweden – Perstorp.

Utilisation of EPIs A selection of the EPIs, in particular the ones showing low utilisation, is reviewed.

Business profile Turnover About two-thirds of the CER providers recognise the need to put the CER in context by describing the magnitude of the company by turnover (66%). Nevertheless, it is still difficult to believe that as many as 34% do not give turnover figures, given that this is a basic requirement.

Company reporting Internet reports In the future more and more use of the web will be made by companies to provide corporate information, both financial and environmental, to shareholders and other stakeholders. This was certainly confirmed in this study as 86% of the CERs were found to be available on the internet, the only exceptions being five companies in the European region.

Environmental report Clear dating Clear dating is essential for location and comparability of data. Overall 91% of the CERs met the requirement of clear dating. The level of achievement was 100% in North America and Scandinavia. Each year Just over 50% of the companies indicate or imply that the provision of a CER is an annual event. A small number declare the CER will be issued periodically, usually every two or three years. External verification This has emerged as a key issue as the concept of environmental reporting has developed. The basic need for it stems from the lack of trust that many stakeholders have in information published by companies. Environmental groups are identified as most likely to give the truth about the state of the environment. Scientists and consumer associations are ranked in second and third place, respectively. Industry is placed at the bottom of the league, emphasising the lack of public trust in judging industry performance. This clearly confirms why it is necessary to verify CERs in order to increase credibility of the data and the document as a whole. In the chemicals industry CERs, it was found that there was often plenty of information on internal environmental auditing, accompanied by frequency and performance evaluation. However, true independent external verification of the CER as a

xiv


whole, confirmed by the availability of an appropriate certificate or naming of the actual verifier, is provided by only 40% of the companies. With a level of 100 %, Scandinavia is well ahead of all the other regions. North America performs poorly in this respect with only 13%. Reply card This is one of the lowest-scoring indicators for chemicals industry CERs, with only 31% of companies complying. This means that many of the companies are losing the opportunity to gain valuable feedback from recipients of the CERs. This is one of the few EPIs where Scandinavia (25%) lags behind all other regions.

Environmental management Policy While 77% of the CERs carry an environmental policy, it is surprising to deduce from this that eight of the companies (23%) do not provide this fundamental piece of information pertaining to their overall environmental strategy. Objectives These are quite widely provided (71%), which is a pleasing feature of the findings as to obtain a yes score they must be quantified and progress reported for key indicators. Environmental management systems (EMSs) Most chemicals companies are committed to the Responsible Care® programme, and eight of the CERs have these words in the front page report title. However, what is required in this EPI is the employment of and a declared intention to work to a recognised environmental management system. Bearing this in mind, it is pleasing to observe an overall level of 74% for this EPI. Scandinavia is the leading region, with a 100% score.

Health and safety A growing number of CERs now contain a health and safety section, and this is confirmed by the fact that ten of the chemical CERs (29%) have the words ‘health and safety’ in the title. The subject of health and safety is reported in all under five parameters – fatalities (43%), lost time accidents (86%), occupational illnesses (51%), transport incidents (49%) and emergency preparedness (63%). This suggests a fair coverage of health and safety is building in chemicals CERs, which no doubt has been assisted by the inclusion of this aspect in the CEFIC environmental reporting guidelines. Fatalities This is the lowest-scoring EPI (43%) within the health and safety area. Scandinavia leads with 75%, whereas North America is at the other end of the scale with 25%.

Environmental protection Supplier involvement Companies are beginning to realise that in order to accurately reflect their total environmental impact, the behaviour of their suppliers needs to be taken into account. This in turn should include transport providers. This is one of the lowest-scoring EPIs (29%). Three countries, all located in Western Europe, show the best score (50%) in this area.


xv Executive summary

Prosecutions, fines and liabilities Fines and environmentally linked liabilities are considered as key indicators because of the potential impact on both the short- and long-term financial health of the company. This is one of the lowest-scoring EPIs (31%). Scandinavia led with 75% and Finland achieved 100%. Information on this EPI is provided by 50% of North American companies, and it is one of the few EPIs where this region is well ahead of Europe (20%). This may well be linked with the strict financial reporting requirements prevailing in North America. Downside reports The main purpose of including this indicator is to ascertain whether the company is prepared to tell the bad news as well as the good news. It basically covers lack of compliance with legislation and regulations, e.g. environmental incidents, defined as any reportable permit non-compliance or reportable release. There is also a financial implication because a level of non-compliance will normally result in fines. The overall level of involvement in downside reporting is 71%, with Scandinavia (100%) and Europe (70%) ahead of North America (63%). In individual country terms Finland (100%) and the UK (100%) did best.

Environmental impact Production volume It is surprising to find that only 40% of chemicals CERs provide information on level of production, which is essential in order to assess changes in environmental impact over time. North America is the weakest of the regions, with just one company out of eight (13%) scoring. Energy usage Energy sources are a complex area covering a wide range of fuels, both fossil and renewables. The overall score was 69%. On a regional basis, Scandinavia (100%) and Europe (80%) are significantly ahead of the other regions. Water consumption In view of the predictions of a world water shortage in the long term, both the quantity and quality of water have become major issues. The overall score was 49%. On a regional basis, Europe (65%) leads the way, with Germany and the Netherlands each achieving 100%. North America is once again the weakest of the regions with just one company out of eight (13%) scoring. Emissions to water, land, air This group of EPIs represents the bulk of the environmental impact arising from a company’s activities. Emissions to water, land and air are widely reported (80%, 89%, 89%, respectively). In North America, it is obligatory to report releases of certain chemicals under toxic release inventories. This comes through clearly on some of the CERs, but, surprisingly, there are still some companies that appear reluctant to present this data in the CER, despite the fact that government agencies make this available for public access. Transport effect An important part of the emissions to air, often overlooked, is the gaseous emissions resulting from the fuel used in vehicles for transportation of both raw materials and

xvi


finished products. This EPI seeks to ascertain if there is a recognition that this aspect of energy use has been brought into the overall emissions equation. This is the second-lowest used EPI (20%), which is somewhat surprising in view of the emphasis in some countries of the adverse effects of vehicle emissions. One explanation could be the size and complexity of the task to implement an appropriate monitoring system. The Scandinavian level of 75%, compared with the North American figure of 0%, would suggest that this region is much further advanced in its thinking on this EPI. This may be linked with the likelihood of an energy tax being imposed by the European Commission.

Social responsibility This is a very important ingredient of CERs as the anticipated move to sustainability reporting will require an input on social issues. However, it is a very subjective EPI, and for a CER to qualify there must be clear evidence of expenditure on social and community issues over and above that required to maintain good public relations. The overall utilisation figure was 46%. This emerges as one of the strengths of North American chemicals CERs confirmed by a score of 75%, compared with Scandinavia (50%) and Europe (35%). In country terms, the UK leads the way with 100%, followed by the USA with 71%.

Triple bottom line The inclusion of this EPI recognises the emerging threefold importance of environmental protection, social responsibility and economic performance in providing a sustainable future. This is the lowest-scoring EPI (17%). Scandinavia leads with 50%, followed by North America with 38%. The efforts of those companies that have seen fit to make this move are to be commended as they represent the first part of an inevitable trend towards sustainable development reporting in the future.

Corporate environmental contacts It seems a simple matter to provide a named contact for readers of CERs, particularly in view of the need to portray a policy of transparency and to obtain feedback on the scope of CERs. However, about 40% of CERs did not meet this requirement. The tendency to provide this information was fairly uniform across the regions, but in country terms the UK excelled by achieving 100%.

Comparison of environmental reporting in chemicals and paper industries The findings from the chemicals industry CERs are compared with the results obtained from the first handbook in this series, in which 39 CERs from the paper industry were analysed in a similar manner. However, it should be pointed out that the definitions of the EPIs are not always identical. Also the ranking criteria applied may vary in some cases. Therefore, the comparison should be viewed with these limitations in mind. The two sectors have similar scores on emissions, contacts, social responsibility, and prosecutions and fines. However, the chemicals industry CERs are substantially better with respect to environmental management systems (+25%), internet reports (+22%) and occupational illness (+20%). Also there is a significant improvement on external verification (+17%). On the other hand, the chemicals CERs provide much less information on business profile (manufacturing countries (-25%) and operations (-24%)) and give significantly less attention to supplier involvement (-30%) and water consumption (-18%).


xvii Executive summary

The future of environmental reporting It is estimated that CERs are produced by between 800 and 1000 companies worldwide. This represents about 2.5% of the estimated 35 000 multinational companies. On a turnover rather than a company basis, the coverage is as high as 25–30%. The UNEP is looking for 10 000 of the multinational companies to be involved in environmental reporting by the year 2005. This target can be achieved if the historical growth rate is maintained, and plenty of evidence was unearthed during this survey to suggest that it may well be realisable. Three key factors will determine the progress and quality of environmental and sustainability reporting: • • •

availability of universal standards; application of new information technology; introduction of triple bottom line reporting.

Universal standard Until recently there has been no universal standard for environmental reporting. However, in March 1999, CERES launched the first draft of a universal standard at a London conference. This is to be known as the Global Reporting Initiative (GRI), and the CERES has worked on this in conjunction with a substantial number of the international organisations involved with guidelines. The CERES believes that only in this way will it be possible to: • • •

use capital markets effectively to promote sustainable business practices; assist corporate benchmarking efforts; empower investors and NGOs around the world with the information they need to hold companies accountable for environmental performance.

A fundamentally good point about the CERES approach is the involvement of the financial community. Through this action, linkages between environmental performance and shareholder value are sought. After a stage of pilot testing, the GRI guidelines were released in June 2000, headed ‘Sustainability Reporting Guidelines on Economics, Environmental and Social Performance’. A major part of the funding is provided by the United Nations Foundation, with additional money coming from the US Environmental Protection Agency. However, it is recognised that there is still some way to go to fully achieve the vision of a generally accepted framework. Thus in addition to strengthening its engagement with stakeholders worldwide and continuing to test and refine the June 2000 Guidelines, the GRI has set in motion plans to establish a permanent institution by 2002 to carry out this task. This must be truly global, multi-stakeholder, independent, continuously learning and operate with the highest integrity. The next most immediate step was a GRI Symposium in Washington in November 2000.

Application of new information technology Estimates suggest that by 1999 about 120 million computers were connected to the internet. A growing number of companies are contemplating using the internet as a channel for offering corporate information, both financial and environmental, and it is predicted that within ten years some companies could even move beyond webdelivered reports to real-time reporting. One of the key factors in environmental reporting is to communicate with the everwidening range of stakeholders and try to meet the different needs of each stakeholder. Some companies are contemplating producing a series of audience-specific hard copy documents that will help them to respond to different types of stakeholders, who should be seen as users of information, not just receivers of it. This can be very expensive, and therefore companies may prefer to use the internet to produce environmental information in more diverse formats on their website. The

xviii


internet can also inform a broader spectrum of stakeholders about the specific environmental measures a company is undertaking, by means of the interactive capabilities it can offer. The survey showed that the majority of the CER providers, with the sole exception of four companies in Europe, have now seen the merits of using a website to offer environmental information, including the CERs themselves.

Introduction of triple bottom line reporting With many national governments making commitments to sustainable development, in order to address matters such as global warming, the whole area of reporting is likely to be broadened to include sustainability. As companies become increasingly aware of the external scrutiny of their operations, there will be more discussion in annual reports of environmental, social and ethical issues. For companies and organisations wishing to project a strong environmental image, the ultimate objective is a move to the so-called triple bottom line reporting concept. The UNEP provides a definition for this in its long-term plan: ‘reporting on indicators of progress in the linked areas of economic prosperity, environmental quality and social equity’.

In 1997, the UNEP launched the first in a series of international round tables on ‘Financing the Environment’, in New York. The primary objective was to explore how the environmental dimensions of business impact on corporate performance and ultimately shareholder value, both now and in the long term. A January 1999 UNEP survey showed that the most significant obstacle cited to advancing integration of environmental issues into credit and investment analysis was the translation of environmental impacts into financial implications. The latter point is very relevant to environmental reporting. It identifies an obstacle for progress to sustainable development but also highlights a challenge and an opportunity for CERs to play a part in providing an answer. In September 1999, Dow Jones became the first organisation in the world to launch a special index based on corporate attitude to the sustainability concept. This is termed the Dow Jones Sustainability Group Index (DJSGI) and will initially only be applied to those companies with a good record of observing sustainability principles. At the time of writing, just 200 companies have been selected from the league of 2000 stock exchange listed companies with the highest market capitalisation in the Dow Jones Global Index. In essence, the methodology employed picks out the top 10% of the leading sustainability companies in 68 industry groups in 22 countries. In evaluating a company’s corporate sustainability, Dow Jones looks at how the company evaluates and takes account of economic, environmental and social factors in an integrated manner. It is claimed that evidence is now emerging that shows that a company’s share price does benefit from environment-friendly operation and support for the sustainability concept. The DJSGI is now used by a number of financial institutions for making comparisons between companies.

The future for environmental reporting in the chemicals industry The survey has shown that as far as environmental reporting is concerned, the chemicals industry has moved in line with many other industries by issuing a significant number of CERs. No doubt a major reason for this is the high profile it has acquired in the environmental debate. Also, concerns arising from implementation of regulations, such as IPPC (Europe) and the Cluster Rules (USA), must add to the pressure to allay fears arising in stakeholders’ minds. As far as the future is concerned, there is little danger that the quantity of environmental data collected by industry will diminish! Regional legislation will continue to demand this information and most chemical industry associations have set clear


xix Executive summary

internal reporting targets that cover the first few years of the 21st century. So the future of public environmental reporting depends on whether companies: • •

feel the need to try to influence public opinion; need to meet a regulatory requirement.

Following the rapid expansion of public environmental reporting in the 1990s, further development is likely to continue in the short term and beyond. While public opinion of the chemicals industry remains poor the chemicals industry federations will continue to encourage the process, and corporate environmental reports provide an excellent means of demonstrating performance. The driver that could potentially bring about a step change in the need for public environmental reports is the need to meet regulatory requirements. At the present time, statutory imperatives to report publicly have emerged in some countries, such as Denmark and the Netherlands (see Chapter 2). Also, the EMAS, which is of course voluntary, does require it. Member companies already have requirements to report to their industry associations. The 1998 ICCA Responsible Care® Report states: ‘All companies and federations are encouraged to develop their own reporting strategy, taking into account these (the CEFIC’s) basic set of core parameters in their Responsible Care® reports.’ While there is strong public opinion in favour of statutory reporting it will only take place in those countries where a strong governmental will prevails. National interests will generally determine that these countries will not be those with strong chemicals industries, where the chemicals industry associations promote self-regulation. The chemicals CER leaders, identified by the ranking of utilisation of EPIs, should be commended for their efforts in providing comprehensive and credible information to a wide range of recipients. However, the survey has highlighted the following shortcomings: •

• • • • •

a lack of a universal environmental reporting standard, making comparison and ranking of CERs very difficult, particularly with regard to certain areas such as emissions; a significant difference in the quality of reporting between the three main reporting regions of North America, Scandinavia and Europe; a lack of attention to basic requirements such as environmental contacts (57%), production volume (40%) and reply card (31%); in North America, a low utilisation of EPIs covering transport effect (0%), external verification (13%) and water consumption (13%); in Scandinavia, a low utilisation of EPIs covering reply card (25%), transport incidents (25%) and certain health and safety factors; in Europe a low utilisation rate of EPIs covering triple bottom line (5%), transport effect (20%) and prosecutions and fines (20%).

The move by the CEFIC to issue environmental reporting guidelines should help address many of these shortcomings. At the same time, attention should be given to the universal standard for sustainable reporting issued by the CERES in June 2000 and the work of the ISO in the area of environmental performance standards. Such moves could lead to a number of benefits, in particular: • • • • •

vastly improved comparability; the ability to determine the total environmental impact of the chemicals industry (a CEFIC objective); a credible means of benchmarking overall progress in environmental performance at company, regional and industry levels; the opportunity to make comparisons with other industries; an improved means of presenting the industry position on environmental impacts to regulators.

The latter point will certainly be relevant if governments around the world attempt to introduce an energy tax, remembering the energy-intensive nature of the chemicals industry.

xx


How will reporting change? Companies have been experimenting with different formats and content to make their CERs attractive and reflect the organisation in the best possible way. To date this has tended towards opening out debate on particular environmental issues. A further trend in public reporting is the dual shift towards Responsible Care® reports and sustainability reports. The move towards Responsible Care® reporting arises directly out of the increasingly more structured approach demanded by chemicals industry associations and Responsible Care® initiatives operated at most sites. There is therefore a trend towards reporting about all sites, and this works well in the small to medium-size businesses, but is less than satisfactory for larger organisations. Sustainability reports are much more directed to providing information about the ethos of the whole organisation, and because each organisation interprets sustainability in slightly different ways and applies the concepts to suit its own purposes the reports tend to be quite general and varied and to lack evidence. There seems little doubt that sustainable development will become a cornerstone of any future acceptable corporate strategy. Ultimately the ability to communicate the progress achieved to the many stakeholders will probably be the critical point. This is where more effective environmental reporting and, in due course, sustainable development reporting could make a significant improvement. So how much progress has been made in this respect? While a significant number of CERs discussed various aspects of sustainability, in the end the triple bottom line indicator recorded a low level of utilisation (17%). Nevertheless this equated to six companies positively moving in this direction, the names of which are well worth highlighting in view of the important nature of this indicator: • • • • • •

Ashland, USA Dow, USA DuPont, USA Henkel, Germany Neste, Finland Norsk Hydro, Norway.

The only company that went as far as using the word ‘sustainable’ in the title was DuPont.


xxi Executive summary

1 Introduction

1.1

Scope of this report In recent years, a number of companies have seen the need to introduce environmental reporting. In essence, this means placing environmental information into the public domain. Such information can be contained within the traditional annual report or presented in a standalone environmental report. While this move has mainly been driven by legislation and corporate governance issues, the public expectation of disclosure and the range of information required by shareholders and stakeholders has broadened significantly. A key aspect of this Woodhead study on corporate environmental reports (CERs) is that it provides an in-depth appraisal of environmental reporting in an individual sector, the chemicals industry. Geographically, the main focus is on Western Europe and North America, which account for about 50% of world chemicals production. A few reports were obtained from other regions, including Asia. The timing is opportune, as the corporate annual report itself is under review by a number of the major accountancy bodies. A feeling is emerging that the current format may no longer meet the needs of a changing business environment involving globalisation, a need for greater transparency and the increasing importance of intellectual capital. The report is divided into an executive summary and four sections.

Executive summary An overview of the full report highlighting the key findings from the analysis of 35 chemicals industry CERs.

Section A: Review of global environmental reporting This provides the background to this relatively new concept. The key issues are identified, but it was evident at a very early stage that a major issue is the lack of comparability between reports, which provides support for the urgent need to establish worldwide standards. After charting the relevant environmental events, the report identifies the main drivers, in particular legislation and pressure groups. It also draws upon the published literature, including a number of previous surveys carried out on CERs from across the whole of industry.

Section B: Analysis of worldwide chemicals industry environmental reporting The main environmental concerns faced by the industry are identified, followed by a discussion on how these might change in the future. CERs known to have been produced within the chemicals industry worldwide are analysed in depth. An overall ranking of the companies is then produced based on how many of the environmental performance indicators have been met in the CER. The findings are compared with those found in the first report in this series covering the paper industry.

Section C: The further development of environmental reporting The steps needed to move towards ‘expanded’ reporting are identified. These will include not only environmental performance but also social and ethical matters within the overall umbrella of sustainability. The chemicals industry is unique in that it has established an industry-specific standard for environmental reporting, and the case for other industries following this lead is discussed. Also, the role of the internet in future reporting strategy is considered briefly.

Section D: Appendixes There are four appendixes: a list of references, glossary of terms, list of abbreviations and list of units.

General This study should be regarded as a snapshot of current progress, but it will be of value to both reporters and non-reporters. It will also be of interest to the wide range of stakeholders concerned with corporate environmental performance and to the many verifiers involved. First, those companies already providing CERs will be able to compare their efforts with others in the same sector. Secondly, those companies that have not yet taken the step will be able to find some guidance on how to set about it, avoiding some of the pitfalls experienced by those already involved. Considerable difficulty was experienced in obtaining the CERs, and this is discussed later in the report. Contact details of the report providers are given in each analysis where these have been made available in the CER.

1.2

Corporate governance Corporate governance is a modern term for an issue that companies have faced for many years: the question of accountability. At its most fundamental level, it concerns how those entrusted with the management of the affairs of a company are held to account by shareholders, providers of finance and, more recently, other stakeholder groups. The environmental report is beginning to assume this status. There is no doubt that company boards are coming under pressure to comply with higher standards of procedure and behaviour than ever before. The confidence level in corporations has changed. Originally, it was simply a question of ‘trust me’. The desire for greater accountability moved this on to ‘tell me’, and now with the increasing emphasis on transparency, the need changes to ‘show me’. The governance debate probably originated in the USA where it has been an issue for at least twenty years. The early stages were led by the large institutions, which dominate the US stock market, attempting to find means of exerting more control over the companies that they in reality own. The debate has been influenced by a discernible shift in emphasis away from short-term profit horizons on the part of management and investors towards a commitment to enhance long-term shareholder value, the latter needing to take into account many other factors such as liabilities. Following the stock market turmoil in a number of world regions such as Asia and Russia, the subject of corporate governance has moved further up the agenda. In Europe, the governance debate was stimulated by a series of prominent corporate failures, which occurred towards the end of the 1980s. In the UK, the collapse of companies such as Blue Arrow and Polly Peck prompted directors, investors and financial advisers, encouraged by government, to look for ways of ensuring that such failures would not be repeated. Then, in the mid-1990s, the perceived high levels of directors’ pay prompted further interest in the governance debate. Similar events also occurred in continental Europe, with highly publicised corporate failures. The result was the emergence of a series of discussion documents and codes from a variety of sources around the world, such as the OECD and the World Bank, the overall aim being to produce more universal-style guidelines for minimum corporate

2

© Woodhead Publishing Limited Current practice in environmental reporting: the chemicals industry

governance principles. In summary, the three overriding principles that appear to dominate are: • • •

accountability; transparency; morality.

In addition, there is a call for greater emphasis on board performance rather than conformance, involvement of stakeholders rather than just shareholders, and the inclusion of the public as well as the private sector. For example, in Germany there is now compulsory employee representation on supervisory boards. An additional requirement will be the greater social responsibility that is now expected of companies. Also, companies have to acknowledge that secretiveness, which has long been a feature of corporate life, is no longer acceptable. In the UK, the best-known of these governance codes is probably that drawn up by the 1992 Cadbury Committee, dealing with the financial aspects of corporate governance. Others of significance are the Hampel and Greenbury reports. In 1999, two further major documents were published by bodies that have historically had a financial emphasis. The issues being considered have the potential to redefine the more traditional corporate governance approach to one that embraces a greater consideration of environmental and social issues. Firstly, the UK government’s company law reform project was launched in April 1998 and is scheduled to be concluded in 2001. Its remit is to review company legislation from top to bottom with a view to ensuring that UK company law is brought more into line not only with the way modern business is conducted but also with the expectations of today’s stakeholders. The reform project team has specifically raised the question of whether the law should require companies to disclose, in their annual reports, more information of a non-accounting nature, in particular information concerning their environmental, social and ethical performance. In March 2000, a second consultation document, ‘Modern Company Law for a Competitive Economy: Developing the Framework’, was published by the UK government setting out how the current legal framework could be modernised for both large and small companies. As well as calling for simplification of the law for small companies, the document recommends the inclusion of mandatory environmental and social reporting in the annual reports of large companies. For the first time, companies will have to say something about their environmental and social responsibilities. A mixed response to this document was received. The Centre for Tomorrow’s Company, a newly formed business think-tank, offered the following comments. If companies say they do not have environmental policies, they will be challenged by NGOs. If they say they do, then they would be expected to quantify those policies into targets, and then will either have to achieve those targets or come under further pressure. This now gives the stakeholder community a real means to engage companies in dialogue on the core business approach to their environmental and social impact. Integration of this type of reporting brings the issues into the mainstream, thus involving the finance director and not just the public affairs director. Environmentalists were less enthusiastic. Friends of the Earth claimed that the proposals left too great a proportion of the reporting requirements to the discretion of directors, and said the statement on directors’ duties was too weak to prevent companies taking short-term profits at the expense of public health, the environment or employees. The other document concerning corporate governance was the Turnbull Report, ‘Internal Control: Guidance for Directors on the Combined Code’, which was issued in September 1999. This is regarded as the last piece of a corporate governance jigsaw and includes reports by Sir Adrian Cadbury, Sir Richard Greenbury and Sir Ronnie Hampel. This guidance document is based upon the adoption by a company’s board of a risk-based approach to establishing a sound system of internal control and reviewing its effectiveness. This should be incorporated by a company within its normal management and governance processes and goes well beyond the conventional financial aspects of internal control. Under Turnbull, all listed companies will be required to have an embedded internal control system that monitors important threats to the company, including environmental, ethical and social risks.


3 Introduction

It quickly became apparent that there is division on the best course of action, for example, between those who believe that there should be one code for all and those who feel that there should be agreed values tailored to suit the circumstances of different regions, i.e. at least a broad split between the developed and developing world. Also, the point has to be recognised that solutions cannot simply be exported from one country to another. The idea of a pan-European standard on corporate governance may well be resisted on the basis of respecting national cultural and historical differences. Governance is also about communication, and depends heavily on how the company presents itself to the wider world, i.e. to all the groups with a legitimate interest in its affairs. This process of communication becomes even more vital as companies expand and go beyond their national boundaries, sell their products internationally and endeavour to raise finance on the world’s capital markets. The emphasis on transparency and serving a wider range of stakeholders underpins the perceived need for more environmental reporting.

1.3

The future of the annual report Globalisation, information technology and the increasing importance of intellectual capital are all raising fundamental questions about how companies report on their performance. As a result, there is a growing feeling that conventional corporate reporting, based on historical cost accounting methods, falls short in providing all of the right data for investors and stakeholders in a timely manner. The growing importance of the internet and the increasing availability and complexity of computer systems are simplifying the preparation of financial data and revolutionising the speed of reporting. All of this is making the traditional annual report look rather like a Victorian snapshot! Constantly updated internal information and concepts such as continuous auditing are opening the door towards the release of more frequent audited information and the ultimate possibility of real-time reporting. Already, US companies report every quarter, and this could conceivably reduce to every month. At a conference in London in September 1998, the Institute of Chartered Accountants in England and Wales (ICAEW) called for a major review of financial reporting. An interactive prototype of how the annual report could look in the next century was presented to the chairmen and financial directors of 160 companies. This confirmed that corporate reporting is at a crossroads. Many users of conventional financial accounts are becoming increasingly unhappy with their limitations. More and more institutional investors are recognising the role of risk and intangibles in determining future profit potential. It is the voluntary disclosure of qualitative information that creates a share price premium, and therefore this should be seen as a fundamental component of company reporting. Overall, the ICAEW feels that there is no point in accountants working to produce more and more standards that serve simply to over-specify an old technology. However, despite the enthusiasm for change there are also words of caution. The accounting profession should be careful not to abandon too quickly the safe ground provided by quantifiable and audited financial data. Many questions need to be answered. For example, should a line be drawn between data we can trust and data we can use? Also, should accounting standards be stretched to cover non-financial measurements? The Centre for Tomorrow’s Company has issued a report urging a shift towards interactive annual reports, which, for example, would contain home telephone numbers of key directors who should be ready to answer stakeholder questions. Leading-edge companies are seizing the opportunity presented by the new business landscape to make corporate reporting on performance an integral part of their business strategy, rather than just a statutory obligation. Increased financial disclosure needs to be matched by expanded narrative reporting. This gives companies an opportunity to communicate their corporate strategy and to explain how they have dealt with both operational and financial risks. As companies become increasingly aware of the external scrutiny of their operations, there

4


will be more discussion in annual reports of environmental, social and ethical issues. With many national governments making commitments to sustainable development, in order to address matters such as global warming, the whole area of reporting will need to be broadened to include sustainability. Accountancy practices have traditionally reported on and controlled the assets and financial performance of companies. Environmental resources have tended to be seen as ‘free’ goods, available for general consumption, without having to be accounted for. As Phil Case, Environmental Director, Barclays Bank, says, in a recent book, ‘consumption of environmental resources does not therefore feature in normal financial statements’. A number of stakeholders, in particular the financial community, have become dissatisfied with the environmental information contained in annual reports and accounts. They want more comprehensive disclosures of environmental capital and revenue expenditure, and exposure of the penalties for non-compliance and fines. In Europe, ‘the environment’ is still not mentioned by relevant EU accounting directives, nor is there guidance as to how environmental issues should be dealt with in the annual report. The European Commission is now beginning to redress this omission by offering guidance on making balance sheet provisions for environmental liabilities or risks, and on the capitalisation of environmental expenditure. Traditional accounting practices only permit accounting for items that have a market value, not for those that have a ‘social’ value. Nevertheless, a number of environmentally conscious companies in Europe have started developing environmental accounts, now becoming known as ‘green’ accounts. They deal with the environmental cost to society of a company’s operations. Although accounting standards vary around the world, the annual report needs to be a good source of environmental information. This position is improving, but there is still a long way to go in getting the level of disclosure right, and too much is left to subjective judgement. With many national governments making commitments to sustainable development, in order to address matters such as global warming, the whole area of reporting will need to be broadened to include sustainability. In addition to reform of the annual report itself, the usefulness of the traditional annual general meeting is being questioned. In the UK, the government is considering a radical plan to eliminate the legal requirement for companies to hold annual meetings for their shareholders. Annual meetings have been traditionally regarded as the centrepiece of communication between companies and shareholders. In particular, they have provided small investors with the chance to question directors, and more recently often a means for pressure groups to highlight the involvement of some companies in controversial issues. It is now argued by the company law review steering group that in practice many of these objectives are not achieved. Individual shareholders have neither the participation rights nor the equality of information, whereas, modern technology such as the internet and videoconferencing offer interesting alternatives. Rapid advances in communications are providing a wide range of modes of real-time communication between geographically separate locations. The steering group suggests that smaller meetings in several locations would help small shareholders to attend while electronic communication might encourage more private investors to take an interest.

1.4

The environmental reporting concept While financial reporting has a history extending over hundreds of years, the standalone environmental report concept has evolved virtually over the last decade or so, with the first reports of this kind appearing at the end of the 1980s. The amount of environmental information provided in a report and the method of presenting it can vary enormously. The main methods of communicating the information are: • • •

single environmental policy document; pamphlets and booklets; section in annual report;


5 Introduction

• •

separate environmental report; combined financial/environmental/social report (equivalent to a sustainable development report).

Generally speaking, the mode of presentation of the information should not affect its credibility or its relevance. A growing number of companies are offering their reports on-line as well as in hard copy form.

Definitions It is important to distinguish between environmental reporting and the standalone corporate environmental report (CER). In both the trade press and general literature, the two terms are often used as if they are one and the same thing. Environmental reporting is virtually a catch-all term that covers the various means by which companies disclose information on their environmental activities, of which the CER is one important form. A reference to an environmental report can mean different things to different people, which is hardly surprising considering the newness of the concept and the many audiences being served by this one document. For the purpose of this exercise, CERs will be defined as ‘publicly available freestanding documents issued voluntarily and devoted to environmental, plus sometimes health and safety, issues at the corporate level’. The health and safety aspects can often be covered in the annual report, and the same is true for social issues. As far as the chemicals industry is concerned the CERs are often encompassed within an overall health, safety and environment (HS&E) report. First, a word of caution about the methods of grouping individual companies under specified business sector codes. While both the Financial Times and The Times publish sector codes, which in the main compare well, inevitably differences do arise. A good example is oil, which can be included in energy or stand on its own. Even within the chemicals sector overlaps arise, and for the sake of good order the position on which CERs have not been included in the analysis will be clarified. A number of major oil companies such as BP and Shell have chemicals subsidiaries, but in turnover terms these represent only a fraction of their total business. Pharmaceutical companies are sometimes regarded as part of the chemicals business, but an examination of the main environmental issues immediately suggests they should be treated differently. Therefore CERs from both these business sectors have been excluded, but will each be covered by reports planned later in this series of analyses of CERs. The fundamental task of a CER is to provide an environmental bill of health of a company, in the same way that the annual report provides a financial bill of health. It covers the provision of environmental information by management for the use of multiple stakeholder groups on the environmental status and performance of the company. As well as performing this communication role on environmental activities, it should encourage dialogue between the numerous and often diverse stakeholders. In addition to providing an overall policy statement, these reports give details of resource consumption and environmental impacts. In many ways this is a brave step, as it opens up their operations for criticism. However, it does give the opportunity to improve accountability and show that improvements are being achieved. The definition may well also depend on the part of the world where it is being used. In some parts of Europe, the term ‘environment report’ may be interpreted as an environmental impact document or eco-balance report. To a growing number of European companies, particularly those going down the formal environmental management route, the reporting aspect will be deemed to have been covered by the environmental statement they are required to make public to achieve EMAS registration (see section 3.6). In the USA, the term may be interpreted to mean the reporting of regulatory information for legal compliance purposes, e.g. emission data for the Toxic Release Inventory (TRI). Despite these many interpretations, the common denominator is the provision of data covering environmental performance, compliance and stewardship for stakeholder groups.

6


2 Background to environmental reporting

2.1

Calendar of events The chronological listing of environmental ‘events’ spanning the last 40 years is presented in two parts (Table 2.1). The first part is the lead-up of events that finally made the world at large realise that unless environmental degradation was arrested, in due course the planet would become increasingly sick because of pollution and would eventually exceed critical resource-use thresholds. The second part is much more specific and identifies the main events in recent years encouraging disclosure of environmental information, seen now as one of the key stepping stones in the path towards the ultimate goal of sustainable development. Here the main emphasis will be on the formal standalone environmental reports. This is a formidable list, which certainly shows the many pressures at work in the environmental field. The first truly global environmental issue after the Second World War was the realisation of the dangers arising from radioactive fall-out from nuclear testing, which was the main driving force behind the creation of Greenpeace. Another event that has gone down in history as contributing to raising public awareness was the publication in the USA in 1962 of Rachel Carson’s book Silent Spring, showing the impact of misuse of pesticides. This struck a very sensitive chord with the people of the USA, becoming a bestseller overnight, and eventually prompting the creation of a national advisory panel on pesticides. The level of public concern about the many environmental issues identified, ranging from deforestation to global warming, was reflected in the dramatic growth of the membership of the different environmental groupings (WWF, Greenpeace, etc.). During the 1980s, membership of such groups virtually doubled every four to five years, resulting by 1990 in a total figure in the developed world of around 50 million people. This is truly a force to be reckoned with, and their main objective has been to make the public aware of the frightening impact of environmental issues. They certainly achieved this through their wide-ranging communication skills and by making full use of the media (see section 2.3). By the end of the 1980s, the idea of both measuring and reporting environmental performance at corporate level had been flagged up as a key factor in the pursuit of sustainable development at both national and global levels. During the 1990s, a series of mandatory and voluntary measures, mainly stemming from North America and Europe, added further weight to the case for companies to report on environmental performance. Prime examples of mandatory measures are the Toxic Release Inventory (TRI) in the USA and European Pollutant Emission Register (EPER) in Europe. During this time, a number of bodies, particularly in the accountancy field, became interested enough to set up award schemes to identify the best and most innovative CERs. Prominent here was the London-based ACCA, which started an award scheme in 1991, which has gathered strength ever since (sections 3.7 and 4.3). In 1997, a Europe-wide scheme was launched under the ACCA’s guidance. Global conferences involving world leaders have also played a part in outlining the environmental scenario. The first world environmental summit took place in Stockholm in 1972, and from this emerged the now famous Bruntland definition of sustainable development (section 5.4). This was followed some twenty years later by the United Nations Summit Conference on Environment and Development in Rio de

Table 2.1

Calendar of environmental events Date

Event

First phase (1960–1989) 1961 WWF founded 1962 Rachel Carson’s book, Silent Spring 1967 Torrey Canyon: oil spill in English Channel 1969 Greenpeace founded Friends of the Earth founded 1970 Earth Day in the USA 1972 First Earth Summit in Stockholm Seveso, Italy: chemical plant incident 1984 Responsible Care Initiative launched in Canada Bhopal, India: chemical plant incident 1986 Chernobyl, Russia: nuclear reactor incident 1987 Toxic Release Inventory (TRI) Convening of World Commission on Environment and Development 1988 Responsible Care® Initiative developed in USA 1989 Exxon Valdez, Alaska: oil spill incident Second phase (1989–2000) 1989 First standalone CERs, e.g. Ontario Hydro, Canada First Responsible Care® Programme in W. Europe chemicals industry launched in UK 1990 European directive on freedom of access to environmental information 1991 ACCA starts environmental report award scheme PIRC adopts UK environmental investor code 1992 Rio Summit Agenda 21 Signing of UNEP statement on the environment and development Cadbury code on corporate governance The fifth European action programme covering sustainability 1993 CEFIC publishes the first issue of ‘Guidelines on Environmental Reporting for the European Chemical Industry’ 1994 UNEP survey of company environmental reporting 1995 EMAS council regulation issued 1996 ISO 14001 published IPPC directive adopted 1997 Kyoto Protocol on greenhouse gas emissions First ACCA coordinated European environmental report awards VROM, Netherlands makes environmental reporting mandatory 1998 UK government pushes environmental reporting for large companies EPA, USA finalises Cluster Rules CEFIC issues new sets of health, safety and environmental reporting guidelines Feb 1999 UK government (Michael Meacher) issues warning to non-reporters Oct 1999 IPPC directive becomes effective Mar 2000 At ACCA award ceremony, UK government repeats warning to non-reporters June 2000 Release of revised Global Reporting Initiative (GRI) Sustainability Reporting Guidelines July 2000 European Commission announces the setting up of a European Pollutant Emission Register (EPER)

Janeiro, Brazil in June 1992. While this was very well attended, some were disappointed at the outcome. Nevertheless, many actions have flowed from it, including initiatives and programmes now being fostered by organisations such as the UN. Basically these encourage all types of businesses to take environmental factors into consideration in both their current operations and their future plans. An action plan for sustainable development, ‘Agenda 21’, was adopted at the Rio Summit, and it is interesting to note that some of the wording is specifically directed at the subject of environmental reporting. Agenda 21 states, inter alia, that: ‘The business community, including transnational corporations, should recognise that envi-

8


ronmental management is one of the highest priorities and a decisive factor in sustainable development.’ Chapter 30 of Agenda 21 encourages business and industry to communicate their environmental performance and to report ‘annually on their environmental records, as well as on their use of energy and natural resources’ as well as ‘on the implementation of codes of conduct promoting best environmental practice.’ In many ways, the chemicals industry has led the way with regard to reporting on environmental performance. First of all, in the 1980s, the Responsible Care® concept, showing equal emphasis on environment and health and safety, was developed in North America. This is a voluntary industry action programme for demonstrating improvements in performance. The first programme of this type for the Western European industry was launched by the Chemical Industries Association (CIA) in the UK in 1989. This was followed in 1993, by the European Chemical Industry Council (CEFIC) publishing guidelines on environmental reporting which were updated and reissued in 1998 (see section 4.5). The CEFIC is a Brussels-based organisation covering the interests of the 18 national chemicals industry associations in Europe. These associations represent some 40 000 chemical companies, which employ about 2 million people and account for more than 30% of world chemicals production. The CEFIC also coordinates the development of Responsible Care® in Europe. Responsible Care® is an initiative that originated in the chemicals industry in Canada in 1984 and was then further developed in the USA in 1988. Essentially, it is a voluntary industry action programme aiming to demonstrate improvements made in all aspects of performance. A key step is to involve all interested parties, including employees, local communities, suppliers and customers, in order to improve dialogue with a view to improving public perception of the issues and the industry’s attempts to deal with them. The basic guiding principles of Responsible Care® are: • • •

to operate to the best practices of the industry; to assess the actual and potential impact of activities on the health and safety of employees, the public and the environment; to work closely with public and statutory bodies to achieve an acceptably high level of health, safety and environmental protection.

This explanation of the term ‘responsible care’ shows equal emphasis on environment and health and safety. It also lays the ground for the environmental reporting concept, by indicating that companies should ‘make available to employees, customers and the public all relevant information about activities which affect health, safety and the environment’. The first formal Responsible Care® programme for the Western European chemicals industry was launched by the Chemical Industries Association in the UK in 1989, followed by UIC, the French chemical association, in 1990. Within a few more years, the chemicals industries in most of the European countries had programmes running. In 1993, the CEFIC published the first issue of ‘Guidelines on Environmental Reporting for the European Chemical Industries’ in order to promote the publication of annual environmental reports by its members. The guidelines were well received and a number of member companies proceeded to publish environmental reports, albeit at different levels – local, national, European and international. However, it is now felt by the CEFIC and its members that there is a need to communicate the achievements of the whole of the chemicals industry at national and European level. As a result, in November 1998, new sets of health, safety and environmental reporting guidelines were issued. These offer a common reporting framework for both national chemical industry federations and individual chemical companies, bringing in health and safety for the first time. The 16 core parameters selected by the CEFIC are shown in Table 2.2. Judging from CERs produced within the chemicals sector, some of the chemicals companies are already actively following the above guidelines. A good example is provided by the Tioxide Group, which is a supplier of titanium dioxide pigment to the paper industry.



Table 2.2

Core parameters selected by CEFIC Number

Parameter

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Number of fatalities Lost time injuries frequency rate Occupation illness frequency rate Hazardous waste for disposal Non-hazardous waste for disposal Sulphur dioxide Nitrogen dioxide Carbon dioxide and other global warming gases Volatile organic compounds (VOCs) Phosphorous compounds Nitrogen compounds Chemical oxygen demand (COD) Heavy metals Other substances that potentially impact human health or the environment Energy consumption and energy efficiency Distribution incidents

15 16

Source: CEFIC

Now that there is an agreed framework, through the CEFIC, the European chemicals industry has committed itself to reporting on all of the 16 core parameters specified in these guidelines by the year 2002. If this objective is achieved, it could set an example for other industries.

2.2

The main drivers Pressures on companies have traditionally come from many stakeholders, ranging from employees to the media. As the pressure groups began to highlight one environmental issue after another, virtually all of these conventional stakeholders developed an interest in the environmental impact of company operations. When the wider-reaching implications of accounting for the environmental dimension began to unfold, a further group of ‘service’ stakeholders emerged. These were mainly from the financial sector and they wanted reassurance that environmental policies were in place and taking full account of all environmental issues affecting the bottom line. This grouping consisted mainly of: • • • •

banks; insurers; auditors; institutional investors.

Banks are beginning to realise the need to incorporate environmental factors into credit ratings. The ultimate requirement will be to demonstrate that there is a link between environmental performance and share value (section 3.11). The insurance industry is becoming increasingly concerned about the possibility of long-term environmental liabilities leading to devaluation of companies. Consequently, certain types of cover are difficult to obtain and are also expensive. The arrival of these new stakeholders on the scene coincided with some profound shifts in industry corporate thinking, taking place to cope with environmentally driven demands. This aspect was debated at a 1996 Greenpeace Business conference attended by over a hundred industry and government delegates. Some of the transitions in convincing shareholders are shown in Table 2.3. The historical Anglo-American view of business culture is that a company is managed by directors on behalf of the shareholders, and the highest priority of directors is to create value for the shareholders. In recent years, however, particularly in

10


Table 2.3

Changes in business culture Traditional position

Emerging focus

Compliance Environmental protection seen as a cost Commercial secrecy Company defensive strategy Emphasis on production One-way passive communication Single issue focus Inputs and outputs Ad hoc operating standards Public relations Voluntary reporting

Beyond compliance Could be a business opportunity Total transparency Industry challenges individual polluters Reduce resource depletion Multi-way active dialogue Life-cycle analysis Impacts and outcomes Global operating standards Corporate governance Mandatory reporting

Source: SustainAbility, UNEP

Europe, the belief has begun to emerge that the company’s role in society is just as important as generating greater financial returns for shareholders. At the UNEP third international round table conference on ‘The Environment and Financial Performance’, the subject of communicating with stakeholders was debated. An interesting paper was given by BP America, which now lays great emphasis on communicating with stakeholders, particularly on environmental issues. The paper provided an insight into the wide range of stakeholders involved and the different roles they each played: • • • • • • • •

employees – deliver the goods; partners – joint business interest; governments – grant or deny permits; communities – implicitly grant a licence to operate and a licence to grow; customers – make choices every day; shareholders – buy and sell the company shares; contractors – increasingly important as outsourcing proceeds, as they have a growing influence on safety and environmental performance; environmental groups – work with us, criticise us, change us and educate us.

‘In short, we cannot do business in isolation. Everything we do depends on someone else’s decision to do business with us.’ In some European countries, the interest of employees is enacted by means of the legal system. For example, in the Netherlands and Germany, statutory provisions ensure that employees play an important role in corporate governance through their seats on works councils and even main boards. Therefore, in some companies it is possible that employees may have a greater influence on management decisions than some investors. A view on the importance of different drivers of change was provided by consultants EAG Environ, UK, who conduct an annual survey to investigate the business case for environmental disclosure. In this, companies from a range of different business sectors were asked to rate the relative influence of a range of stakeholders in their decision to produce an environmental report. Scoring ranged from 0 (no importance) to a maximum of 3 (very important). The results are shown in Table 2.4. The survey found the top categories to be staff and customers. On the whole there was good consistency from one business sector to another, with just a few exceptions. For example, pressure groups were higher in utilities, retail and oil. From the preceding dialogue, a comprehensive list of the drivers of the environmental disclosure concept was compiled. The list in Table 2.5 shows that there is a substantial pressure building in favour of environmental reporting. Inevitably, there are some downside factors; these are dealt with later, in section 2.4. Because of the environmental connotations of energy in terms of resource depletion and emissions, perhaps the most important driver to emerge in recent years has



Table 2.4

Relative importance of key opinion formers in decision to produce CER Key opinion formers

Average score (scale 0–3)

Staff Customers Shareholders General public Regulators Media Pressure groups Financial institutions

2.6 2.5 2.3 2.2 2.0 1.9 1.8 1.7

Source: EAG Environ

Table 2.5

Drivers of environmental reporting Driver

Comments

Government pressure for disclosure UNEP pushing CER concept Presence or threat of mandatory action

Good examples are USA and UK Refer to UNEP Technical Report No. 24 Refer to section 2.5. CER required by law in Netherlands, Denmark and Norway Prime example is EMAS

Environmental management systems that require public statement Transparency Companies with CER prefer suppliers to do the same Tougher codes of corporate governance urging more accountability Call for modernising conventional annual report Corporate performance measurement to include environmental, social and ethical factors Chance to promote environmental image by gaining CER awards Increasing need to include environmental factors when assessing risk Environmental pressure groups Stock exchange pressures Climate change and carbon dioxide indicator Legislation Greening of pension Pollutant registers Protest websites

Requirement of corporate governance Refer to section 3.9 Examples in UK are Cadbury, Hampel and Turnbull reports Refer to ICAEW in section 1.3 Triple bottom line reporting For example, ACCA scheme in UK True for banks and insurers Refer to section 2.3 Particularly in USA Stimulated further by 1997 Kyoto Protocol Prime example is IPPC directive (see section 5.7) New UK regulations (see section 3.11) Launch of EPER by European Commission (see section 2.5) FOE name-and-shame campaign (see section 2.3)

Source: CJC Marketing Associates

been the carbon dioxide indicator, which governments will use to monitor their efforts to meet their Kyoto commitments on both a macro (country) and micro (company) scale. This and the broader aspects of the energy issue are dealt with in some detail in section 5.3. A UN working group is now recommending that companies should be required to disclose their environmental costs and liabilities. Another key driver is the competition element. There is evidence that if one major company in a sector produces a CER, then others soon follow. The influence of competitor pressure can also be observed as environmental reporting best practice is developed in terms of features such as layout and content, and by learning from the successes and failures of those already in the field.

12


2.3

Environmental pressure groups Worldwide, there are now in the region of over 20 000 sizeable environmental groups, with an annual income in excess of $2 billion. Many of these groups are based in North America and Europe, where most of the early environmental groups have their roots. The formation of groups to campaign on environmental issues goes back over the last century. In the environmental movement that has now evolved, there exists wide variations of styles, objectives and ideologies. However, it was not really until the 1960s that the modern green movement emerged, the dominant feature of which was the challenging and vocal nature of the approach to the issues. The World Wide Fund for Nature (WWF), one of the first pioneer groups, was established in 1961 and soon followed by other groups, such as Greenpeace, which were much more antiestablishment in character. Another distinct feature was the creation of multinational environmental groups, whereby an organisation formed in one nation provided the resources to establish offices in other countries. For example, Friends of the Earth (FOE) spread from the USA to the UK and France, in the early 1970s, and from there to several other European countries. Thus, once an international network is established, it provides a resource base to sponsor the formation of other national offices. As far as the current global scene is concerned, it is dominated by the three large international groups, FOE, Greenpeace and the WWF. Collectively, they represent a very powerful force with over a hundred national offices, a combined membership of 11 million and an annual budget of close to $400 million. However, there is much competition between the groups for attracting funds from the many different sources. At one end there is the WWF, originally founded to preserve wildlife, now a major world player currently deriving a significant part of its income from corporate sponsorship. At the other end, there is the no-compromise Greenpeace, with a high degree of central control, which has until recently stayed completely clear of any suggestion of links with industry and government. In Western Europe, the environmental groups now have at least 25 million members, representing a membership level of the order of one in ten of the population. On most counts, the Netherlands leads the world league of environmental concern, substantiated by a membership level as high as one in five of the adult population. Most of the groups derive their income from a wide range of sources. This is well illustrated by Table 2.6, showing the source of funding in the UK. While a significant proportion of the income comes from individuals (40%), no single person, by the small nature of the donation, is able to exert any real influence on the policy of the environmental group. With foundations and corporations, however, the size of each donation is much larger and thus provides the donor with the potential to influence programmes within the environmental group.

Campaign strategy It has been shown many times by the pressure groups that the public can be mobilised to force change. Classic Greenpeace examples of this are: • •

the campaign to prevent sinking of Brentspar Rig; convincing UK tissue manufacturers to cancel pulp contracts for Canadian pulp made using unacceptable wood harvesting techniques.

However, many of the pressure groups now feel there is a need for some fundamental changes to counteract a fall in media attention and donations over the last few years. Their own internal gatherings have suggested the movement at large is at a crossroads, and to survive must move from the original phase of highlighting problems to a new phase of finding answers. With this in mind, the main shifts likely to be encountered in campaign strategy are: • • •

solution-led campaigns; stronger internal network; better technical justification;



Table 2.6

Source of funding for environmental groups in the UK Source Individuals Government Investment income Corporate Product sales Foundations Other Total

% of total 40 19 14 6 5 3 13 100

Source: CAF, UK

• • • • • •

global approach to issues; utilising in-house legal support; lobbying to influence legislation; cooperation with industry; influencing criteria for funding of industry investments; identifying clean technologies.

It is recognised that the pressure groups must become much more sophisticated in their tactics, and some now have professionals, such as business analysts, on their staff. All of this would appear to signal a move towards the penetration of the business infrastructure, e.g. targeting finance. For example, in 1996 the New Zealand branch of Greenpeace launched a campaign directed at the stock exchange to coincide with a new share issue by Fletcher Challenge, a major player in the world pulp and paper industry. Greenpeace demonstrated outside the exchange, urging the company to phase out chlorine bleaching in all its mills worldwide. A report criticising the plan to invest in chlorine dioxide production was circulated to fund managers and financial analysts. The presence of the pressure groups has made some companies nervous about issuing CERs, which depending on the attitude of the company could require it to reveal all. In this respect, FOE UK has established a ‘name-and-shame’ website where it amasses all the information it can find on emissions, incidents and non-compliance on a company-by-company basis. It is claimed that the FOE website receives many more ‘visits’ than the Environment Agency, responsible for policing pollution. On the other hand, some proactive companies have seen fit to cooperate with the pressure groups rather than face confrontation. Perhaps the biggest threat to the future of the environmental movement is the backlash now appearing in a number of countries. New environmental laws, many inspired by environmental pressure groups, are claimed to have caused job losses and to have placed excessive economic burdens on companies. Organised groups have sprung up to protest against these adverse effects arising from what are considered to be unreasonable demands by the environmentalists. These anti-environmental groups are now grouped under an umbrella organisation, known as the Wise Use movement, which is basically fighting for less restriction of basic human rights. Their main slogan is: ‘Natural resources should be preserved for the public, not from the public.’ This new movement claims to support the full and proper use of public land and is now turning its attention to three key laws – those concerned with water, with endangered species and with mining. Its basic strategy is to insist on a full-cost evaluation of suggested environmental improvements before the introduction of proposed legislation, and to seek compensation for any resultant losses.

2.4

Benefits and barriers Companies are under increasing pressure to be transparent and accountable in the whole spectrum of their business. For many companies, the impetus to produce an environmental report is stimulated by a desire to improve their credibility with stake-

14


Table 2.7

League table of benefits of environmental reporting Benefit

Averaged scoring

Plus features arising

Improved stakeholder relations

2.3

CER is valued method of communication, increasing employee awareness, improving public relations and providing means of demonstrating progress

Improvements in management strategy

2.1

Environmental information put into a wider business management strategy context, strengthening of internal commitment to environmental performance

Increased competitive advantage

1.5

New business opportunities, attraction of advantage investment, business advantage over peer companies within the sector

Public recognition

1.4

Opportunity to show external ranking of company performance and awards gained

Source: EAG Environ

holders. For example, such reporting gives an opportunity to address investor and lender concerns about the business impacts of environmental issues. Many seem to believe that voluntary reporting is one avenue open to meet these requirements. At the same time it will prepare them for the possibility of mandatory requirements on reporting, as is already the case in some countries.

Benefits An EAG Environ survey of over 100 UK companies engaged in environmental reporting asked senior environmental managers to score a list of possible benefits on a scale of 1 to 3. The results are shown in Table 2.7. This poll showed that with those already involved with environmental reporting, improvement in stakeholder relations came top of the league, followed closely by improvements in management strategy. A 1998 survey undertaken by BMRB International on behalf of the UK Environmental Best Practice Programme (ETBPP) looked at attitudes and barriers to improved environmental performance. The survey was compiled from the responses of over 1400 companies across 12 industry sectors. Overall, the survey found that large companies (more than 250 employees) are more advanced in almost all areas of environmental policy. Whereas the 1995 survey confirmed the widely held belief that environmental investment represented mainly cost and little financial benefit, signs are now apparent that within today’s corporate culture a feeling is developing that there are bottom line benefits emerging from improved environmental performance. Regulatory pressure is no longer the main driver, as over half of all companies surveyed agreed that improving environmental performance usually improves production efficiency. The chemicals, food & drink and iron & steel sectors are leading the way. However, 53% of smaller companies remain motivated solely by legislation. The survey reveals a widespread need for more information about the potential impact of environmental legislation. A 1998 UNEP/SustainAbility CER survey also attempted to determine what motivated companies to start environmental reporting. Many of the answers tied in closely with the EAG Environ findings, as shown by a sample of the individual company comments: • • • •

Akzo Nobel – enhanced ability to track progress against specific targets; Body Shop – licence to operate and campaign; Electrolux – facilitating the implementation of the environmental strategy; Glaxo Wellcome – greater awareness of broad environmental issues throughout the organisation;



• • •

J Sainsbury – ability to clearly convey the corporate message internally and externally; Noranda – improved all-round credibility from greater transparency; Novartis – ability to communicate company’s efforts and standards.

Barriers On the other side of the coin, there are some companies which have taken a conscious decision, at least for the moment, not to report, because they are not convinced of the benefits. It would certainly appear that costs are quite significant. For example, producing a CER can cost a large company over £100 000 (section 3.12). In many cases the biggest perceived obstacles are gathering the actual data and converting this data into meaningful and reliable environmental performance indicators for a particular business. While this can be a significant task, particularly for those companies with activities spread worldwide, most of the environmental management standards, such as ISO 14000 and EMAS, are going to require this anyway. Some feel they are supplying the information already through other channels such as the internet, where it can be more easily updated. Also, certain companies are concerned that disclosure of ‘sensitive’ information such as toxic emissions could leave them open to attack by environmental pressure groups, or subject to legal proceedings. While there may be some truth in this, judging by regulatory moves in countries such as the USA with TRIs, it may only be a question of time before disclosure of such information will be mandatory. Attitudes of the non-reporters could change when the peers in their sector decide to proceed down the CER route, as it could then become a competitive issue and they could be left behind if they do not follow the same path.

2.5

Mandatory or voluntary? It is important to understand the various channels whereby information can find its way into the public domain. There are three basic categories of disclosure of information about a company’s environmental activities: • • •

mandatory – required by law; voluntary – at the discretion of the company; involuntary – without the company’s approval and probably against its will.

Typical mandatory disclosures are pollution registers and EU directives. Sometimes, mandatory disclosure may be direct to the authorities, who in turn may well be required to make their records available to the public. Voluntary disclosure can be either confidential or non-confidential. Examples of confidential disclosures are those to banks, insurers and joint venture partners. While application for EMAS registration is itself voluntary, one of the conditions for registration is that a public environmental statement must be supplied. Examples of involuntary disclosure are those made as a result of pressure group campaigns, press exposure and court investigations. There is a debate in progress on whether reporting of environmental information should be mandatory or voluntary. At the last count, there were over ten countries where already there was some form of obligatory requirement in place to report on the effect of environmental issues. The extent of this varies a great deal, ranging from reporting of toxic releases in the USA to annual CERs in the Netherlands. The key point about mandatory measures is that they force the company to introduce methods for measurement and control of environmental impact, which is fundamental to any environmental management system. This then places that company well on the road to both implementing an EMS and producing a CER. An increasing number of countries are imposing requirements on companies to report on their environmental performance. Also, industry initiatives for voluntary reporting continue to appear. As mandatory reporting, or the threat of it, is such a

16


fundamental driver in environmental reporting, the position in those countries where action has or will be taken will now be reviewed.

Australia As far as voluntary corporate environmental reporting is concerned, in general it is felt that Australia lags behind much of the developed world (section 3.2). However, a number of governmental steps being implemented could change this. Australian companies are now expected to give information on performance with regard to the environmental regulations that apply to them under the amended Corporations Law. In addition, a National Pollutant Inventory (NPI) is being created, based on the US TRI, which will require industrial companies to report emissions and inventories for specified chemicals (up to 90 substances). This was expected to become applicable for the 1999–2000 financial year and affect 3000 to 5000 companies/divisions. In New South Wales, other positive steps are the promotion of a Community Right to Know initiative and preparation of guidance documents for corporate environmental reporting. Regulatory innovations such as tradable permit schemes may also have a positive impact on corporate disclosure and reporting.

Canada The National Securities Commission requires public companies to report the current and future financial or operational effects of environmental protection in an annual information form. Canada has a National Pollutant Release Inventory, similar to the USA’s TRI programme.

Denmark Denmark was the first country to adopt legislation on public environmental reporting. The Danish Protection Act will require certain categories of companies, particularly those with significant environmental impacts, to draw up and submit so-called green accounts annually. Since 1996, approximately 3000 companies have had to comply. In general, the reporting requirements in Denmark are strict compared to those of most other European countries. For example, compulsory fines can be imposed if a company does not submit the green accounts. Danish law guarantees to the public annual accessible information on the environmental impact of enterprises. Companies are exempt from regulatory reporting requirements if they are, or plan to be, registered under the EMAS.

European Union The legislation most applicable to the European chemicals industry is covered in section 5.7. The Accounting Advisory Forum (AAF) in the European Union published a document in December 1995 entitled Environmental Issues in Financial Reporting. The recommendation of the AAF is that environmental issues related to financial reporting should only be disclosed in the accounts and annual report to the extent that they are material to the financial performance of that organisation. A significant step was taken in late 1998 when the European Commission initiated a study to examine the environmental reporting practices of over 100 companies. The chemicals industry was one of the five ‘target’ industry sectors identified as having a significant environmental impact, the others being paper, oil, energy and metals. In Europe and elsewhere there are moves afoot to establish similar systems to the US Toxic Release Inventory (TRI), again in the form of registers. In 1996, the OECD published a guidance manual for governments on Pollutant Release and Transfer Registers (PRTRs). These already exist in some European countries, e.g. the UK and France, and usually require companies to report periodically on the release and transfer of a range of substances. The results provide comparative



quantitative information and have enabled investors and other stakeholders to question those companies with a poor showing on PRTRs and to demand improvements. PRTRs thus provide a powerful incentive for report providers to cut emissions, as corporate vulnerability is much increased by making this information readily accessible. In July 2000, the European Commission announced that it would set up a European Pollutant Emission Register (EPER). This will cover emissions of 50 pollutants from about 20 000 industrial plants across the European Union. The EPER has the following main objectives: • • • • •

pollutant register – to identify chemicals and provide quantitative data on their release to the environment; public awareness – to encourage the public to compare the achievements of industrial facilities and sectors, as well as with different countries; right to know – to provide publicly accessible data on specific chemicals pollutants released by individual industrial facilities; name and shame – to encourage the public to ask questions about the environmental performance of industry; policy monitoring – to enable governments to monitor industrial emissions and to demonstrate improvements in the environment.

The register represents a key element of the Integrated Pollution Prevention and Control (IPPC) Directive. It is also linked to the 1999 Aarhus Convention on ‘Access to information and public participation in environmental matters’, which includes the disclosure of site-specific information of relevant polluting sources. The EPER will be a further step in improving public awareness and meeting the public ‘right to know’ requirement. The EPER is seen by the Commission as an important means for the public and industry to access pollution information and to provide comparable data on industry emissions and environmental performance. Also, governments will be able to use the registered data to monitor their achievements in meeting environmental targets in national and international agreements and protocols. Member states will be obliged to report to the Commission every three years. The first reports, providing data on 2001 emissions, should be sent no later than June 2003. The Commission, assisted by the European Environment Agency, will make this EPER data, including site specific information, publicly available on the internet.

Germany Environmental reporting is required under the Federal Pollution Control Act and the Federal Waste Act for those companies operating specified activities. The regulations require the designation of one member of the management team to be responsible for the company’s compliance with environmental law. The Waste Act stipulates that producers of waste must provide a waste balance sheet to show how the previous year’s waste was disposed of or recovered.

Italy There is no legislation obliging companies to report on the environmental policies adopted and their corporate performance in environmental matters. However, by the end of 1998, approximately 15 companies had produced a publicly available environmental statement under the EMAS registration requirements.

The Netherlands Under the 1997 VROM Environmental Policy, the Dutch government is implementing one of the first examples of national eco-limiting tracking, utilising macro-level indicators. National and environmental targets have seen set on climate change, ozone depletion, acidification, eutrophication, toxic substances and solid waste dis-

18


posal. The objective is not only to track national progress but to measure the relative impacts made by different industries on the environment. Through an extension of the National Environmental Management Act, from January 1999 certain categories of industry, predominantly large enterprises, will be obliged to publish environmental reports. Initially, about 300 industrial companies across 29 industries will have to meet this requirement, which will mean an annual environmental report must be drawn up for public distribution, in addition to the environmental report for the authorities. As in Denmark, companies are exempt from regulatory reporting requirements if they become registered under the EMAS. The combination of macro-level indicators with micro-level reporting provides real pressure for environmental performance improvement.

New Zealand In New Zealand, the 1991 Resource Management Act outlined disclosure requirements, but these were mainly limited to local authorities. However, matters are now progressing further, as the government is proposing a policy initiative to develop ‘state of the environment’ reporting and to amend the 1993 Companies Act to introduce a requirement for statutory disclosure of environmental impacts by companies.

Norway In Norway, a new Accounting Act requires that all companies include environmental information in their annual financial reports from 1999 onwards. They are required to describe any activities with significant environmental impacts as well as the plans and targets implemented to rectify the environmental impacts. In addition, the offshore industry has concluded a negotiated agreement on emission reductions, and a standard for environmental reporting has been developed under the guidance of the Environmental Department.

Sweden Under the Swedish Environmental Protection Act, which came into force in January 1999, those companies that are responsible for environmentally hazardous activities requiring a permit are obliged to report on their environmental performance each year. Further, the Swedish authorities may decide that these environmental reports should include other environmental effects that are not covered in the permits. These requirements are expected to apply to as many as 20 000 companies.

The UK A number of specific measures have been suggested by the British government, most of which to date have been voluntary. These are reported on in some detail in section 2.6.

The USA In the early 1980s, the so-called ‘super fund’ legislation created huge liabilities for companies faced with cleaning up contaminated sites. Despite this legislation, there was a shortfall in the measurement and disclosure of these liabilities in corporate financial statements. The Securities and Exchange Commission (SEC) looked into this and created the following rules to ensure adequate environmental disclosure in Form K-10: •

•

companies must disclose material effects that compliance with federal, state and local environmental laws may have on capital expenditures, earnings and competitive position. Existing estimates of current and future environmental expenditures must also be disclosed; companies must disclose any environmental, administrative or judicial proceedings, both contemplated and pending, that might have a material effect;



•

management is required to disclose any environmental problems likely to have a material effect, and they should quantify any liabilities as far as is reasonably practicable.

A landmark in the disclosure of highly significant environmental information, from a polluting point of view, was the establishment of the Toxic Release Inventory (TRI) under the auspices of the 1987 Emergency Planning and Community Right-toKnow Act. This requires all companies with more than ten employees to report data annually to the EPA (Environmental Protection Agency) on the use, manufacture, and/or emission of approximately 600 different toxic chemicals. As a result, around 20 000 manufacturing sites and 200 federal facilities are required to submit reports annually. This data is compiled and processed by the authorities and then made available to the general public through the internet and other channels. TRI is essentially a public report card for the industrial sector and acts as a powerful motivation for decreasing pollution and waste. It gives an annual account of the country’s management of toxic chemical wastes, and concerned organisations can use the TRI information as a starting point for dialogue with manufacturing companies.

2.6

UK government support Governments vary a great deal in their outlook on corporate performance, and there are many ways in which they can show their attitude and the level of their interest. The UK’s is a good example of a government taking an active stance, where some of its measures enacted have a direct bearing on the subject of environmental and sustainability reporting. In this respect, the areas of particular relevance are: • • • •

company law reform; corporate governance; ethical standards for overseas business; the Kyoto Protocol.

At the time of writing, the government appears to be favouring voluntary action by businesses with regard to fulfilling its strategy on sustainable development. It has been very positive towards environmental reporting, and in recent years a number of senior government figures have made a series of public declarations. The main such actions to mid-2000 are described below in chronological order.

June 1997 On World Environment Day, the Deputy Prime Minister, John Prescott, said: ‘Increasingly, environmental performance will distinguish companies in the eyes of their customers, their neighbours, financial institutions and their regulators. I would like to see all businesses with more than 250 employees with a publicly declared environmental policy statement and reporting regularly to their stakeholders.’

January 1998 Once again, it was reiterated within some government departments that all firms with over 250 employees should report on their environmental performance and issues.

March 1998 When making the ACCA awards for best environmental reporting, Environment Minister Michael Meacher reinforced the words of John Prescott by saying: ‘Over the coming months, I want to encourage those companies, with over 250 employees, that have taken only limited steps to report openly about their environmental performance, to go further. I will also be encouraging better-quality information. For instance, I would like to see companies producing higher-quality, more consistent and more complete information on their emissions of greenhouse gases. I want to

20


hear what actions you are taking to reduce them by increasing efficiency. Also, I need to hear about the benefits – energy saved, lower costs and a better understanding of your business.’ Meacher added that if companies did not follow up this voluntary course, he would not rule out mandatory action. He also hinted that he might revert to the ‘name and shame’ technique to scare the non-reporting companies into action. Eventually, he did in fact single out five non-reporting companies – Asda, Cable & Wireless, House of Fraser, Somerfield and the Woolwich.

June 1998 The Department of the Environment, Transport and the Regions sent out an open consultation paper on business and sustainable development to 31 000 companies and 160 trade associations. This dealt with how to extend environmental reporting in order to highlight the growing importance of environmental issues. The paper sought views on how to encourage companies to become more environmentally aware. Recipients were asked whether they thought the UK should follow countries such as the Netherlands and introduce ‘an element of compulsion’ to achieve a substantial increase in the number of companies reporting. It also invited views on whether reporting against a few key environmental indicators should be mandatory.

August 1998 Michael Meacher sent a letter to the chairmen of non-reporting companies, making some specific statements on how best to proceed: ‘a first step to meet the challenge would be for you to raise the subject of an environmental strategy at your next board meeting . . . declare your environmental policy, set in place a programme of action to deliver your objective and publicly report on progress.’ He added that the assumption that companies in financial, media, retail and leisure services had little impact on the environment is incorrect, as all businesses consume fuel, electricity and paper and generate waste.

September 1998 The UK government also lent its weight to the desire to link financial and environmental performance. At a UNEP Conference on Finance and the Environment in Cambridge, Michael Meacher gave a keynote speech entitled ‘Green chip companies are a blue chip investment’. In this he stated that: ‘companies that manage their environmental impacts effectively are often better managed generally, and fund managers are now picking them as long-term winners. Looking to underlying strengths and effective disclosure of environmental as well as broader performance has proved its worth in the recent falling financial markets. Green chips are now as significant as blue chips.’

February 1999 Michael Meacher once again spoke at the annual ACCA award ceremony, encouraging more companies to report. He stressed that good reporting need not be glossy, and pointed to innovative and often low-cost ways of reporting, including use of websites. He indicated that a huge debate was going on about how the UK could deliver its Kyoto commitment to reduce emissions of greenhouse gases by 20% by 2010. At the end of his speech Meacher departed from the prepared text with a warning that if companies did not cooperate with regard to environmental reporting, the government might have no alternative other than ‘to put the boot in’ – the implication being that if voluntary measures did not succeed, legislation would be considered. These were strong words indeed for a government minister. It would appear that most of this pressure is coming from the government’s desire to set an example to the world by meeting or exceeding the targets in greenhouse gas reductions required by the Kyoto Protocol.



The net result of all these government moves is very strong support for the advocates of environmental reporting.

March 2000 For the fourth year running, Michael Meacher presented the ACCA Environmental Reporting Awards in London and said the trend had improved, with companies such as Orange, Allied Domecq and Prudential publishing their first reports. However, he once again added that if the existing voluntary approach did not work fast enough, the government would introduce mandatory reporting. He added that in a world where communication and reputation were ever more important, companies simply could not afford not to report.

June 2000 Demands for environmental reporting to be made obligatory for larger companies were made at an inquiry by the House of Commons Environmental Audit Committee. A range of experts presented the case for this, and the outcome of the inquiry is awaited.

Government CERs Despite the many calls by the UK government encouraging companies to produce CERs, there is some criticism on the extent to which government departments are reporting on their own environmental performance. The Department of the Environment, Transport and the Regions (DETR) is still the only department to have produced a CER, but the Trade/Industry and Defence departments hoped to publish documents by the end of 2000. However, nearly all the departments now include something on the environment in their annual reports. However, it is claimed that the extent and quality of this coverage remains highly variable and targets and hard data are still rather limited.

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3 Current status of environmental reporting

3.1

The first companies Standalone corporate environmental reports (CERs) started to appear in the late 1980s. The first companies to issue CERs were certainly admired in some quarters for being prepared to take the risk of coming under attack from the environmental pressure groups by exposing details of their environmental impacts in terms of emissions, etc. In a UNEP technical report on Company Environmental Reporting, issued in 1994, it was stated that ‘well over 100 companies worldwide have now published corporate environmental reports’. This served to confirm that at that point in time the CER concept was under-way. In order to build up a picture of this first wave of CERs, in terms of country location and industry sector, an analysis of the companies contained in this UNEP report was carried out. The results are shown in Table 3.1. In terms of the main regions, Europe was well ahead, with 47% of the total, followed by North America (33%). On an individual country basis, the USA and the UK were well ahead, together accounting for close to 50% of the total. As might have been expected, the distribution of CERs by industry sector showed that the chemicals sector was at the top of the league with 22% of the total, closely followed by energy with 19%. In some of the CERs, the industry codes/guidelines utilised were identified. A look at these indicates where the initiative and guidance was coming from at this early stage of environmental reporting. In this respect, the Business Charter for Sustainable Development from the International Chamber of Commerce (see section 4.8) was the dominant source of guidance, accounting for over 60% of the cases. The only other significant source was the chemical industry’s Responsible Care Programme®, accounting for about 25%. The PERI and CERES initiatives were mentioned just a few times. At least 40% of these CERs had not reached stage 3 of the UNEP 1–5 grading system, which in today’s terms would not have been acceptable as CERs. On the other hand, CERs from three companies had reached stage 4 – BSO/Origin Netherlands, Dow Canada and Kunert Germany. It was quite an achievement, as this places these companies on a similar footing to the top-grade CERs produced some four or five years later. As far as the chemicals industry was concerned, the following are examples of some chemical companies that were present in the 100 CER list, and the date at which their report appeared. • • • •

BASF, Germany (1989); Dow, Canada (1989); GE Plastics, Europe (1989); Norsk Hydro, Norway (1990).

Rather surprisingly, three banks appeared in the First 100 CER list – Bank America USA, Landesgirokasse Germany and NatWest UK. So who were the real pioneers who had the courage and foresight to take this first step into the CER world? By examination of the UNEP report, a list of the very first ten companies to produce CERs was compiled, as shown in Table 3.2. All of these pioneers were located in either North America or Europe, and the leading sector was chemicals. At least half of them were Fortune Global 500 companies, illustrating that environmental reporting tends to start with the larger companies.

Table 3.1

Source of first 100 CERs, by country and industry sector (a) By country

Number of CERs

USA UK Germany Canada Japan Norway Belgium Brazil Denmark France Netherlands Switzerland Sweden Other

26 23 9 7 6 3 2 2 2 2 2 2 2 12

Total

100

(b) By industry sector

Number of CERs

Chemical Energy (oil, gas, utilities) Mining & metals Consumer goods Pulp & paper Automobile IT Waste Pharmaceutical Banking Beverage Telecommunications Transport Other Total

22 19 9 8 6 6 5 4 4 2 2 2 2 9 100

Source: UNEP/IE Technical Report No. 24

Table 3.2

Pioneers in environmental reporting Date first CER

Company

Sector

UNEP grade

1989

Ontario Hydro, Canada BASF, Germany Dow, Canada GE Plastics, Europe Polaroid, USA AT&T, USA Eastman Kodak, USA Kunert, Germany Noranda Forest, Canada Norsk Hydro, Norway

Utilities Chemicals Chemicals Chemicals Consumer goods Telecommunications Consumer goods Textiles Pulp & paper Metals/chemicals

3–4 3 4 3 3 3 3 4 3–4 2–3

1990

Source: UNEP/IE Technical Report No. 24

3.2

Structure of the CER market Market share As far as can be determined, no official figures for the total size of the CER market have been published. However, combining the authors’ market research with information in previous CER surveys suggests an approximate figure for 1998 of between

24


800 and 1000 CERs worldwide, excluding public statements for EMAS registered sites. This represents about 2.5% of the estimated 35 000 multinational companies worldwide. The Spring 2000 edition of the UNEP newsletter, The Bottom Line, provided confirmation of these figures by the following statement ‘The latest estimates are that by the end of 1998 approximately 1000 of the world’s largest companies had produced environmental reports’. However, as it tends to be the largest companies that first make this move to environmental reporting, the proportion of industry turnover (i.e. environmental impact) covered by the CERs will be much greater than the above figure. For example, in the world chemicals industry, the top 50 companies represent close to 25% of the industry turnover. The estimated number of CERs given above was confirmed by analysis of the chemicals industry CERs. This in-depth examination of one industrial sector yielded about 35 CERs. Fortune 500 identifies a total of close to 50 individual sectors. Assuming about half of these have a significant degree of environmental sensitivity, this would indicate a world market CER figure approaching 900. An examination of the earlier surveys provided some indication of the degree of environmental reporting by individual business sectors, particularly with relation to company size. The 1999 KPMG International Survey of Environmental Reporting was produced in collaboration with the Institute for Environmental Management and Amsterdam University. This survey had two main inputs. Firstly, an analysis of environmental reporting by the largest 250 companies in the world, based on the Fortune list, which covers 19 countries. Secondly, a survey of the top 100 companies in 11 countries – Australia, Belgium, Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, the UK and the USA. These two sources produced a total of 1193 companies as some of the largest companies appeared in both surveys. The selected companies were approached from July 1998 and March 1999, and the response rate was close to 98%. The 1999 KPMG Report found that 84% of the UK FTSE 100 companies provided environmental information in corporate reports (financial and CER), compared with 78% three years earlier. The corresponding ‘world’ figure was 47%, which was the overall average for the 11 selected countries, excluding Australia. The 1998 PIRC Survey found that 65% of the UK FTSE 350 companies provided some form of coverage of the environment in their annual reports. This figure increased to 89% if just the FTSE 100 companies were considered – clearly confirming the fact that the larger the company, the more likely there is to be coverage of the environment. Considering that the interpretation of ‘coverage’ of environmental issues could vary between the two surveys, the figures compare quite well. Overall, the results show that at least 65% of the UK companies approached do report on the environment in some form in their annual report. In general, the standalone CER will provide a much more detailed coverage of environmental issues than the annual report. However, it should be noted that a few companies have taken the conscious decision to incorporate the full environmental report in the annual report. The 1999 KPMG Survey recorded that 32% of the FTSE 100 companies produced a CER, compared with 27% three years earlier. The ‘world’ figure for the 1999 KPMG Survey was 25%, compared with 16% for six years earlier. The corresponding 1998 PIRC survey figure for CERs for the UK FTSE 350 companies was 17%, which increased to 37% when limited to just the FTSE 100 companies. Once again, there is a reasonable degree of agreement between these two sources, allowing for the fact that the response rates could be different and that the issue dates of CERs can be spread throughout the year (see section 3.4). From these findings, it is possible to build a very approximate picture of how reporting on environmental issues is influenced by company size (Table 3.3). This clearly shows how the tendency to report on the environment is heavily geared to company size. These are strictly average figures across the whole of the industry, but our own analysis confirmed in general the findings on this point (see section 7.1).



Table 3.3

Effect of company size on environmental reporting tendency Number of companies

% with environmental information in annual report

% with CERs

Top 100 Top 350

86 (84–89) 65

34 (32–37) 17

Source: CJC Marketing Associates

Table 3.4

Proportion of top 100 companies producing CERs, by country Country

% of top 100 companies with CERs

USA Sweden Germany Canada Netherlands Norway UK Belgium Switzerland Finland Denmark Australia New Zealand

42 37 33 33 31 30 27 27 18 12 10 5 0

Source: 1997 KPMG Survey

A broad picture of how environmental reporting is progressing by country and business sector has been constructed.

Progress by country As reported earlier, the 1999 KPMG ‘world’ Survey found that 25% of respondent companies produced a CER. This figure increases to 35% for the Fortune Global Top 250 companies, once again confirming that the larger the company the more likely it is to produce a CER. The proportion of companies producing CERs varies a great deal between countries, ranging from a high of 42% for the USA to a low of zero for New Zealand (see Table 3.4). A further input on this aspect is provided by background market research. Here the aim was to build up a representative sample of 250 CERs of the world market from a wide literature search, including websites, databases, award schemes and direct approaches to companies. This will be identified as the Woodhead 250 CER list, and on many aspects will give a more up-to-date picture than the previous surveys. By the nature of the sources, it is somewhat biased towards the larger companies and limited to those CERs available in English. An analysis of the Woodhead 250 CER list by country is shown in Table 3.5. This league table shows the USA clearly out in front, accounting for over one-third of the total figure, followed by the UK with about 15%. This seems to make good sense, as many of the guidelines and award schemes for CERs originate from these two countries (see Chapter 4). On a regional basis, Europe and North America each account for about 40% of the CER total, with Asia, predominantly Japan, contributing a further 10%. It was interesting to see a number of small countries (less than 10 million population), such as Sweden and Switzerland, appearing in the top 12 places in the league, ahead of much larger countries like France and Italy. No doubt they are pushed up the league by factors such as legislation and export dependence. It is felt relevant to identify even those countries with one or two CERs, as once the concept is established others will follow, particularly if it is the market leaders who have taken the initiative to produce a CER, which is usually the case. Also, just to

26


Table 3.5

Country league for CERs worldwide (1998) Country USA UK Japan Sweden Canada Germany Switzerland Norway Finland South Africa Denmark Netherlands France Italy Australia South Korea Belgium Other* Total

Number of CERs

% of total

87 37 24 18 14 12 9 6 5 5 4 4 3 3 3 2 2 12

34.8 14.8 9.6 7.2 5.6 4.8 3.6 2.4 2.0 2.0 1.6 1.6 1.2 1.2 1.2 0.8 0.8 4.8

250

100.0

* includes Brazil, China, Hong Kong, New Zealand, Nigeria, Portugal and Venezuela.

prove that this CER concept is not entirely exclusive to the developed world, it should be noted that there are a few CERs emerging from the developing world. The ‘firsts’ in country terms are: • • •

Brazil – Aracruz Celulose (paper); China – China Light and Power (electricity); Venezuela – PVDSA (oil).

As might be expected, particularly without a universal standard in place, reporting practice and quality vary considerably around the world. The position in some countries has been affected by legislation, and this aspect is covered in section 2.5. Other factors having an influence are described below. Asia In this region, the CER report activity is dominated by Japan, where the 1997 UNEP survey found over 30 CERs, compared with three a few years earlier, but less than half of them were available in English. Examples of CER producers are Tokyo Electric Power and Sony. The relatively high number of Japanese CERs is undoubtedly linked to the priority attached to introducing environmental management systems to consolidate their position in overseas markets. This point is confirmed by Japan occupying first position in the ISO 14001 world league (see section 3.6). In general, Japanese CERs are gauged to be strong on input and output data, but the level of verification is low. CERs are also appearing in South Korea, e.g. Posco (mining/minerals), which again ties in with its relatively high place (tenth) in the world ISO 14001 league. Australasia Research into voluntary corporate environmental reporting has indicated that this region is lagging somewhat behind the rest of the developed world, apart from some activity in the sensitive resource management area. In general, Australian environmental reporting is claimed to be of a relatively low standard – rather brief, and qualitative in form. The main efforts seen so far appear to have been mainly regulation-driven. The research concluded that while most companies have



no intention of disclosing environmental information in their annual report, most users of the report perceived the need for it. These findings confirm that there is a big difference between how the provider and user see the function and content of a CER. It would appear that this situation in Australia may be set to change, with the establishment of a National Pollutant Register, the promotion of a community Right to Know Initiative and preparation of guidance documents for environmental reporting. All of these should push environmental reporting up the agenda. Europe In the EU, the voluntary EMAS initiative has put a great stimulus into environmental reporting as one of the key conditions for registration is the issue of a public statement, which along with the rest of the data will have to be verified (see section 3.6). Other particularly strong drivers in Europe are legislation, award schemes and once again the existence of many guidelines and initiatives. The European Chemical Industry Council (CEFIC) guidelines for environmental reporting for chemical companies are particularly worth mentioning as they constitute the first move to produce comprehensive guidelines for a specific sector. These were first issued in 1993 and then revised in 1998 (see section 4.5). The degree to which these guidelines have been utilised by the chemicals industry CERs examined is discussed in section 7.3. In Germany, the national standardisation body issued a standard for environmental reports in July 1997. This emphasised the qualitative aspects of truth, importance, clarity, the public, continuity and comparability. North America One of the biggest factors affecting reporting practice here has been the ready availability of a wide range of guidelines, notable examples being the CERES, PERI and GEMI plus the recently issued GRI (see sections 4.6 and 8.1). South Africa This is an interesting arrival on the CER scene. The first CER provider was probably Eskom (energy), followed by NCP (chemicals), Sasol (chemicals) and Umgeni Water (water utility). The differences found geographically for the chemicals industry CERs are covered in section 7.1.

Progress by sector There is considerable variation in both the quantity and quality of environmental reporting across the business/industrial sectors, which is linked to a number of factors, such as level of environmental sensitivity and availability of guidelines. First, a word of caution about the methods of grouping individual companies under specified business sector codes. While both the Financial Times and The Times publish sector codes, which in the main compare well, inevitably differences do arise. A good example is oil, which can be included in energy or stand on its own. The 1999 KPMG Survey provides information on how the environmental reporting level varies in the top companies in each sector. Table 3.6 shows the huge variation existing between the sectors. Those with the highest frequency are chemicals (59%), forestry pulp and paper (55%) and utilities (55%). At the other end of the scale are trade & retail (7%) and finance & insurance (8%). Table 3.6 also confirms those sectors with a high reliance on the environment for the supply of raw materials, or which are seen to have significant environmental impacts, appearing high in this table. In addition to chemicals, examples of this are forestry and oil & gas. Conversely, business sectors perceived to have little or no direct link to the environment are far less likely to produce CERs, e.g. the financial sector.

28


Table 3.6

Level of CERs for top companies worldwide, by sector (1999) Sector

% of companies in sector with CERs

Chemicals Forestry Utilities Oil & gas Pharmaceuticals Mining Automotive Transport Electro-tech Food & beverage Construction Metals Communications/media Finance & insurance Trade & retail Other services Average for all sectors

59 55 55 53 50 47 38 33 30 22 18 17 16 8 7 4 24

Source: 1999 KPMG Survey, based on 1100 companies in 11 countries Table 3.7

Sector league for CERs worldwide Sector Chemicals Oil Energy (excluding oil) Electrical/electronics Transport Pulp & paper Mining/metals Engineering/electrical Consumer Telecommunications Food Pharmaceuticals Water Banks Retailing Textiles Hotels/leisure Building Other Total

Number of CERs

% of total

31 29 29 20 20 17 15 13 10 9 9 7 5 5 4 2 1 1 23

12.4 11.6 11.6 8.0 8.0 6.8 6.0 5.2 4.0 3.6 3.6 2.8 2.0 2.0 1.6 0.8 0.4 0.4 9.2

250

100.0

The 1998 Pensions Investment Research Consultants (PIRC) survey found that 65% of the UK FT 350 companies report in some form on the environment, and it is interesting to look at the sector variation found. Sectors in which all companies (100%) report to some degree on environmental issues are extractive, oil-integrated, paper/packaging/printing, electricity and water. Next were chemicals and food producers at the 92% level. At the other end of the scale, there were only four sectors below the 50% level: support services (40%), media (26%), and once again finance in the form of life assurance (22%) and investment trusts (6%). It is perhaps surprising to note leisure and hotels with a respectable score of 73% – this could mean that the greening of this sector is beginning to take place, with attention being given to energy savings in hotels, eco-tourism, etc. To obtain a further picture of the CER variation by sector, an analysis of the Woodhead 250 CER list is shown in Table 3.7. Predictably, the league is headed



by chemicals, oil and energy, all of which are heavily involved in either pollution or resource-depletion issues. As far as the chemicals sector is concerned, environmental reporting has been much assisted by the introduction of the Responsible Care® Programme and the issue of appropriate guidelines through the CEFIC. Despite the normal low placing of the finance sector, it does contain some interesting names – Landesgirokasse of Germany, Bank of America of the USA, ING Group of the Netherlands, and NatWest and Co-operative Banks of the UK. The latter company gained a 1998 ACCA award for introducing innovative reporting practices. It is interesting to note the observations made by the ACCA with regard to NGOs and public sector bodies. Here, they report that the number producing CERs continues to be minimal. Also as yet, despite their many demands on industry to report environmental performance, the environmental pressure groups do not appear to have produced CERs.

3.3

Length of CERs The page length of CERs varies considerably. It will be significantly influenced by a number of factors, such as: • • •

how comprehensive is the approach, particularly with regard to the number of performance indicators used; the size of the company and number of subsidiaries; inclusion of other areas, such as health and safety, social issues and sustainable development.

Bearing in mind the coverage to be achieved by the CER to fulfil the requirements of the main guidelines, an environmental report needs to be more than just a page or two to acquire some degree of credibility with the readers. The UNEP/SustainAbility surveys state that a report must be at least three pages in length to qualify as a CER. At the other end of the scale, the CER should not be too long, making it difficult to digest. Also, the longer the report, the more it will cost to print and mail out. This can be a significant factor, as print runs as high as 100 000 have been quoted for some CERs. The 1998 PIRC survey provided information on the length of environmental reports for the UK FT 350 companies. Table 3.8 gives the details. This shows a range in length of from one to over 50 pages, with an average of about 20 pages. Ideally, report providers should seek to synchronise their financial and environmental reporting periods. This would enable the reader to review the environmental performance alongside the financial results. So far, only a few companies appear to be making a conscious effort to do this. This needs to change if we are to get away from

Table 3.8

Length of CERs produced by the top UK companies Number of pages

Number of environmental reports

1 2 3–4 5–10 11–15 16–20 21–25 26–30 31–35 36–40 41–45 46–50 50+

9 11 8 6 3 5 10 9 6 7 2 2 2

Source: 1998 PIRC Survey

30


the idea that environmental reporting is a separate exercise and not yet part of the mainstream thinking of the company.

3.4

The dating issue Reporting periods for financial reporting are well-defined and in many cases determined by company law. For environmental reporting, however, the final position for the frequency of reporting is not yet resolved. There are at least three possibilities: • • •

CER published at the same time as the financial report; CER published at a different time from the financial report; the environmental report is integrated within the annual report.

The general pattern is that most CER providers have chosen to issue full reports each year. Others have indicated that the ‘pace of change’ in systems, processes and results is relatively slow, and consequently propose to issue an environmental report only every two or three years. It is not the intention to prescribe how and when environmental reports should be published. However, all environmental reports should contain a clear indication of the reporting period covered and the frequency of reporting. Difficulties can arise when trying to obtain CERs for the same calendar year. This is because, in general, they tend to appear a few months after the publication of the annual report, the timing of which is normally tied to both the year-end accounting date and the AGM. The complexity of the timing can be illustrated by the analysis carried out of the accounting dates for the FTSE 100 companies in the UK, shown in Table 3.9. Table 3.9 indicates that most months of the year are used, the most popular dates being December (49%), followed by March (22%). The net result is that the issue of both annual reports and in turn CERs will be spread out over the year. Consequently, there will always be an overlap of up to two years in the CERs collected at any point of time, such that requests for CERs in mid-2000 will bring in 1998 and 1999 and 2000 reports. In practice the spread is even wider than this, because some companies, as mentioned earlier, only issue CERs periodically, every two or three years. The position in Europe and North America is somewhat better, as in both these regions a higher proportion of the financial year-end dates is in December. The situation on the actual dating of CERs is far from satisfactory, and in our opinion lack of clarity on this point is a serious shortcoming in terms of both credibility and linkage with the annual report. First, rather surprisingly, some CERs show no date at all, which greatly diminishes the value of the document. Secondly, some CERs are using data corresponding with the date on the front cover page while others employ data from the previous year.

Table 3.9

Accounting date for UK FTSE 100 companies Year-end accounting date

Number of companies

January February March April May June July August September October November December

1 1 22 3 4 5 2 3 10 — — 49

Source: Financial Times



Stakeholders need to know how often a company plans to report, so that progress on environmental performance can be gauged with the passage of time. While the most common frequency of reporting is annually, the 1998 PIRC survey recorded that only 30% of those companies producing CERs actually stated that it would in fact be carried out annually. Ideally, a CER should state when environmental reporting started in the company. Such information will give the reader some idea of the length of CER experience and how far back performance data may be available for.

3.5

Extent of group coverage Businesses report at many different levels – site, subsidiary, business division and group. Also, the reporting policy can be determined by geography, as a result of which reporting could be by country or region. Ideally, it should be at group level so that the total global impact of the company can be ascertained. Many CERs do not make the position clear in this respect. As the ultimate consideration is to gauge the full environmental ‘footprint’ of the group at large, whatever the practice the important point is to state what proportion of the total group activities is covered, rather than leave it to the reader to work out. There is also the question of whether joint ventures should be included and to what degree the impact of subcontractors and suppliers should be factored in. On the other hand, the reporting company is trying to deal with the varying demands of a wide range of stakeholders, e.g. from local parochial interests to the overall global impact of the company. Even if the extent of coverage is stated, it will be important to know whether this has been measured by production tonnage, turnover, number of operating units or some other means.

3.6

Environmental management systems (EMSs) The first step for any company that is serious about reducing its environmental impact is to formulate an environmental policy statement. To implement this policy, there will need to be sound environmental management in place, ideally encompassed within a well-thought-out corporate policy and strategy. Overall, there is a need for companies to convince their stakeholders that they are truly introducing policies that reduce environmental impact. The three main routes open to them are: • • •

conforming to or even moving ahead of legislation; utilising voluntary environmental agreements; involvement with voluntary EMS-type initiatives.

It is the latter EMS route which will now be reviewed. The main objective of ecomanagement is to promote continuous improvement in environmental performance, as opposed to meeting a given limit. To achieve this, companies are being encouraged to adopt formal EMS systems to identify and control environmental impacts that they may be creating through their activities, products and services. In the environmental management field to date, much of the stimulus has come from the public sector (regulators) pushing the private sector (companies). However, now a number of the more proactive industry leaders are seeing fit to try and jump ahead of forthcoming regulations, e.g. oil companies with emission trading. A useful first step towards introducing a full environmental management system in a plant is to consider registering against an appropriate standard. The main EMS schemes available are the EMAS and ISO 14001, which now incorporates BS 7750. A key element of each of these is to seek third-party, independent verification by means of the process of certification. In order to determine how companies have responded to the provision of EMSs, Arthur D. Little carried out a survey, which essentially identified the points for and against an EMS.

32


Case for and against EMS For

Against

• Environmental benchmark for leading companies. • Management model for companies that are not leading-edge. • Focused industry attention on environment as a business issue. • Financial benefits. • Good corporate citizenship can be demonstrated. • Improved relations between industry and the regulators. • Insurance industry recognising the value in controlling liability. • Companies with major export markets may benefit. • Promote as advantage over competitors. • Chance to get employees more involved with environmental issues.

• May not guarantee continual improvement in environmental performance. • Some EMS standards vary in their requirements. • May discourage the integration of environment into existing business practices. • Value depends upon credibility of the certifier. • Does not mean full compliance with environmental regulations. • Could add additional operating costs.

Source: Arthur D. Little

Over 60% of respondents in the UK and the USA saw certification as an important issue in their business. The main reason for companies seeking certification was to show due diligence to their stakeholders. The principal concerns identified were an increase in documentation and bureaucracy, and additional costs. Also, some say they are still waiting to see the clear marketing advantages appear. These findings are very relevant to this Woodhead CER survey, as many of the positive and negative points apply equally to environmental reporting. This is not surprising, as the presence of an EMS is considered to be one of the key parameters for an acceptable CER. In most cases, certification serves to consolidate the internal auditing processes already in place. Preparing for certification, however, can be a long and costly exercise, which rarely takes less than two years. But the effort should bring rewarding results. Eco-management helps to set clear priorities, while maintaining competitiveness and product quality, and can ultimately reduce costs by reducing inefficiencies and waste.

EMAS The Eco-Management and Audit Scheme (EMAS) was launched in April 1995 by the European Commission under Regulation 1836/93, and is only available to European sites. It encourages industrial companies to manage their environmental effects and to publicly report on their environmental performance. The procedure for registering under the EMAS is as follows: 1

2

3 4

Prepare an environmental policy. This sets the environmental priorities of the company and must include a commitment to comply with relevant environmental regulations and a commitment to continuous improvement of environmental performance. Undertake an environmental review. This looks at the current environmental performance of the site, including issues such as waste, raw materials use and energy consumption. It should also identify to the site management how the performance can be improved. Develop an environmental programme that contains specific objectives and targets for improving environmental performance of the site. Put in place an environmental management system (such as ISO 14001) to ensure the successful implementation of the policy and the programme.



5 6

7

Carry out periodic audits to check environmental performance against the goals that have been set to improve performance. Prepare a concise environmental statement that sets out the environmental performance of the site and explains how the site’s environmental impacts are being managed. Have the environmental statement and the EMS policy of the site validated by an independent verifier to ensure that the information is accurate and that the requirements of the scheme are being met.

There are essentially two distinguishing features of the EMAS when compared with other environmental management systems. The first is that the EMAS requires sites to publicly report on their environmental performance in an environmental statement and for the information to be independently validated. This transparency gives users of the information a high level of assurance that performance data being reported is accurate and representative of the site’s performance. This helps to build the confidence and trust of the stakeholders, and in particular increase credibility with regulators and the neighbouring community. The second distinguishing feature of the EMAS is that sites must comply with all relevant environmental regulations. In order to ensure this, the national EMAS competent body contacts the environmental regulators when processing every application to ensure that legal requirements are being met. This also enhances the credibility of EMAS registered sites with their stakeholders. Initially, registration to the EMAS was on a site-by-site basis and was only open to companies in specified industrial sectors, the original thinking being that this is where the environmental impact is greatest. However, in time it was acknowledged that every business activity has some impact, and in any case some of the companies in the other sectors wanted to use it to increase their credibility with stakeholders. Consequently, the European Commission drafted new proposals to revise the EMAS regulation and, following a number of successful pilot studies, with, for example, local authorities in the UK, is recommending that registration should be available for any type of organisation. There is also pressure on the Commission to offer greater flexibility in the reporting of environmental performance. The present requirement to produce a single environmental statement means that it is unlikely to meet the requirements of all stakeholders, as by their very nature they have very different interests. Therefore new proposals are likely to allow companies to produce reports tailored to meet the different stakeholders’ expectations from a core of independently validated environmental performance information. The proposals are also likely to allow companies to report on environmental performance indicators, on the assumption that they will provide a basis for comparison with national, regional or sectoral benchmarks on a year-byyear basis. By August 1997, over 1000 sites had registered for the EMAS in Europe; this figure had risen to over 3000 by July 2000. Table 3.10 shows the division by country. Germany is the clear leader with close to 70% of the registrations. As expected, the UK has a relatively low number of registrations because of the early focus on BS 7750 when companies first considered EMS implementation. France and Italy are well down the league, considering their size in terms of gross domestic products (GDPs). On the other hand, for its size Denmark is high in the league. This is no doubt linked to the strong government action bringing in mandatory measures for reporting environmental performance (see section 2.5).

ISO 14001 BS 7750 was first issued in September 1992 and rapidly became a popular environmental standard worldwide. ISO 14001 was formally adopted in September 1996 and eventually replaced BS 7750 on 31 March 1997. The International Organisation for Standardisation (ISO) is a federation of standards associations, funded by governments and corporations. The main points covered by the ISO 14001 standard are corporate environmental policy, all the aspects

34


Table 3.10

EMAS registrations in Europe, by country (July 2000) Country

Number of registered sites

Germany Austria Sweden Denmark UK Norway Spain France Italy Finland Netherlands Belgium Ireland Portugal Luxembourg Greece

2083 249 199 143 76 64 61 37 33 30 25 9 6 1 1 1

Total

3018

Source: European Commission

of an EMS (planning, implementation, verification and corrective action), identification of environmental impacts and auditing. Further detail on the background to ISO 14001 can be found on an information sheet produced by the UNEP. So far, the standard has predominantly been used by industrial companies, but this document also explains the situation for financial institutions seeking registration. By July 1997, the total number of BS 7750/ISO 14001 site registrations worldwide was close to 800, with the UK well out in front with nearly 50% of the total figure. The top four industry sectors, with their share of the total registrations in parentheses, were identified as: • • • •

electronics (32%); chemicals (13%); machinery/equipment (9%); pulp/paper, publishing, printing (6%).

By July 2000, some three years later, according to ISO World figures, the number had leapt to over 18 000, with close to 70 countries involved. Table 3.11 shows a league table of the top countries. Europe and Asia together account for around 95% of the world figure. In individual country terms, Japan heads the ISO league by a considerable margin, followed by Germany in second place. The dominant Japanese position is no doubt linked to the strong standards attitude of the electronics industry and the dependence on exports. These latter points will also have bolstered the league positions of Taiwan (seventh) and Korea (tenth). The USA lags behind, in fifth place, and as yet does not appear to have attached the same importance to EMS/certification as Europe and Asia. However, it is reported that many US companies are upgrading their systems to comply with ISO 14001, but will not take the last step and seek verification until they feel the market is really demanding it. As far as sectors are concerned, at the end of 1999 the electrical/electronics sector continued to lead in ISO 14001 certification, accounting for around a fifth of the total. This was followed by the chemicals industry, machinery and equipment, construction and fabricated metals industries. It is now acknowledged that there are many similarities between the EMAS and ISO 14001, the main difference being that with the EMAS a verified environmental policy statement must be made public. A further requirement with the EMAS is that



Table 3.11

ISO 14001 registrations worldwide, by country (July 2000)

Country Japan Germany UK Sweden Korea Taiwan USA Netherlands Denmark Switzerland Australia France Austria Spain Finland Belgium Thailand Italy Canada Brazil Ireland China Malaysia Singapore Norway India Turkey Indonesia Hong Kong Mexico Argentina Hungary South Africa New Zealand Philippines Czech Republic Egypt Slovak Republic Israel Poland Other Total

1998 GDP ($ billion) 3191 2431 1451 251 287 265 8849 397 186 273 369 1623 222 592 131 260 132 1294 622 789 83 978 63 88 165 377 208 123 160 452 224 52 105 52 69 57 90 20 98 161

Number of registered sites July 2000

March 1999

% increase (July 2000/March 1999)

3992 2300 1400 1123 463 718 840 656 444 N/A 806 597 223 430 400 130 283 410 276 149 116 294 175 87 175 217 65 77 80 148 100 127 80 63 53 85 52 27 25 55 291

1950 1300 800 516 463 423 400 360 350 336 300 238 200 175 160 130 121 120 100 88 82 80 80 78 72 60 45 44 40 40 37 31 30 28 23 20 15 13 13 13 66

105 77 75 118

134 242 176 69 41 268 119 12 143 261 44 75 100 270 170 310 167 125 130 325 247 108 92 323 340

18 032

9440

91

70 110 82 27 169 151 12 146 150

Source: ISO World, Federal Environment Agency, Germany

companies set up an environmental policy with a view to reducing impacts to levels achievable using the ‘economically viable application of best available technology’ provisions for legal compliance. This degree of overlap has been recognised by a Commission decision (97/265/ EC), which will allow a company with ISO 14001 to proceed to EMAS registration fairly smoothly, provided a policy statement is issued and certain other minor details of the EMAS are complied with. This move has stimulated renewed interest in ISO 14001. The European standards body CEN has also given internal approval to a bridging document. To give some idea of the level of take-up of the EMS concept, the 1999 PIRC survey reported that 100 out of the UK FTSE 350 companies claim to have a formal EMS in place, with 43 certified to ISO 14001 and 12 certified to the EMAS.

36


3.7

Award schemes It has been normal practice for some time to evaluate and compare companies and annual reports in a variety of ways, resulting in league tables based on various parameters. A good example of this is the FT’s ‘World’s Most Respected Companies’, which looks at environmental issues under the attribute of corporate culture. The rating methodology will be described in some detail to show the depth and complexity of this type of exercise and, in order to have any real value, the rating mechanism must be very thorough. For a number of years, the FT has carried out a survey on corporate reputation, initially restricted to Europe. In 1998 the survey was expanded to cover the world, and renamed the ‘World’s Most Respected Companies’. The fieldwork was carried out by Mori on-line in Europe, Pricewaterhouse Coopers in Japan and A.C. Nielsen in the rest of the world. The results were obtained by questioning over 650 CEOs of publicly quoted companies in 53 countries, as well as leaders from state-owned enterprises and private companies. Each organisation was asked to nominate the company most respected in the world in its own industry sector and region. Attributes, from a predetermined list, were ranked. The top 40 nominations were dominated by American companies, i.e. close to 60% of the total. The remaining 40% was divided between Europe (30%) and Japan (10%), with little trace of the rest of the world. At the very top were General Electric and Microsoft, the world’s two largest companies by market value, which suggests that the respectability rating is enhanced by company size. The most important attributes contributing to respectability were identified from a predetermined list of ten. Table 3.12 shows the ranking for these (only eight were discussed in the FT text). The FT comments that shareholders are unlikely to approve of placing profit performance down the list in fifth position. However, for the average CEO, no doubt reflecting his current preoccupations and responsibilities, the most important attribute is future strategy. Business leadership is ranked third, pointing to the importance of gaining market share in a global economy where sectors such as financial services, chemicals, paper and automotive are consolidating. Not surprisingly, Microsoft scores well here, being praised for its innovation and rapid growth from small beginnings. Robust and human corporate culture is sixth, reflecting the growing importance to company reputations of issues such as the environment and equality in the workplace. In view of the focus in this Woodhead report on environmental performance, the comments made about the companies selected for excelling on this attribute are given below: • • •

Procter & Gamble – sensitive to social needs as well as displaying concern for the environment; Neste – an international group that combines profit with ecology and ethics; Royal Dutch/Shell – accused in the past of lacking sensitivity and environmental responsibility, but now praised for taking a lead in acknowledging the wider issues and implications of its activities.

Placing successful change management and globalisation of business at the bottom of the list may signify the risks envisaged in either attempting to manage an important change or to internationalise a business.

CER awards In the short period that CERs have been in existence, a relatively large number of award schemes have appeared. The terminology used for these is wide-ranging and at times confusing. The two main items in use, rating and ranking, may be defined as follows: • •

environmental rating is the use of a range of criteria to assign a score to a specific company CER depending on the degree of fulfilment of the set of criteria; environmental ranking is the listing of the companies in order, according to the score achieved, in league table form.



Table 3.12

Ranking of ‘respectability’ attributes Order of priority

Attribute

1 2 3 4 5 6 9 10

Strong and well-thought-out strategy Loyalty Business leadership Quality of products and services Strong and consistent profit performance Robust and human corporate culture Successful change management Globalisation

Source: FT

Once a company has taken the step towards environmental management to improve performance, there is a strong desire to communicate the results to stakeholders, and this is where the CER can be used. However, it will be even more beneficial if the CER produced can gain an award or a good league table placing. This will go a long way towards showing that the CER is covering the relevant environmental performance indicators in a proper and thorough manner, and the award could also imply that the company is ahead of its competition. There are two basic ways of being involved in an award scheme: first, when the company consciously enters the scheme; in the second case, the company may not necessarily know its CER is under assessment, as the operator of the award scheme simply puts in a request for a CER, which is then evaluated against the assessment system employed. In this case, the first the company may know about it is when the results are published. Therefore any company entering the CER field must accept that it could well be subject to some form of ranking, the result of which will depend on how well it scores against the particular criteria employed. The positive side of this type of exposure is that it may well deter the publication of so-called ‘green glossies’, which are seen mainly as PR exercises and which will be easily detected by a discerning evaluation scheme. While it is true that the current award schemes vary enormously in approach, content and stringency, overall they will ensure that the CER providers try harder, whether it be to gain recognition or to avoid bad media exposure from a poor assessment. Many of the elements of an award scheme will overlap with the factors that influenced the development and shaping of environmental reporting guidelines (see Chapter 4). One of the earliest environmental rating approaches was understandably to concentrate mainly on the company’s impact on the environment, i.e. emissions and resource consumption. This was primarily to satisfy investors wishing to steer their investments towards companies with good positive environmental credentials. However, this alone was not particularly appealing to the mainstream financial community whose preoccupation is with profit and risk. This led to rating systems incorporating historical compliance with environmental legislation. A further and more recent step was to include criteria for assessing the environmental management of the company, including presence of EMS. Other approaches take into account ethical and social parameters. Finally, some schemes combine criteria for environmental performance with those for financial performance. The quality and usefulness of the rating answer will also depend on the methodology employed and the effort expended. At one end of the scale, the assessment can be mainly qualitative in nature and record results through a simple yes/no system on whether a particular parameter is covered. While limited in depth, this does enable the coverage of a large number of reports at relatively low cost. On the other hand, an assessment can look at the actual data and even go as far as attempting to benchmark on an eco-efficiency basis if there is enough data available. Also, contact can be made with the report-providing company for discussion and clarification of the contents.

38


Table 3.13

Worldwide award schemes for environmental reports Country

Award organiser

Latest winner

Australia

Annual Reports Awards Australia Inc

ACTEW Corp (1996)

AMEEF Award CICA/National Post Investor Relations Magazine Foreningen Statsautoriserede Revisor Accountancy bodies of UK, Denmark, Belgium, Netherlands, Norway, France, Germany and Italy Elinkaari IOW

not available Northern Telecom (1997) Noranda (1997) Novo Nordisk (1997) Novo Nordisk & BT (1996)

Wirtschaftsmagazin Capital Ranking Umweltberichte Green Reporting Forum Japanese Environment Agency

not available Mohn Media (2000) IBM Japan (1996/1997) IBM Japan, Sony, Tokyo Gas (1996/1997) NAM (1997) Tasman Pulp and Paper 1997 Umgeni Water (1997) SAS (1997)

Canada Denmark Europe

Finland Germany

Japan

Netherlands New Zealand South Africa Sweden UK USA

NIVRA/VMA Milieu Magazine KPMG WWF South Africa Foretagsekonomiska Institutet, Affarsvarlden ACCA Investor Relations Magazine Investor Relations Magazine

Neste (1997) Axel Springer (1997)

United Utilities (1999) Severn Trent (1997) Exxon (1996)

Source: CEI/University of Sunderland (Year of report shown in parentheses)

The actual assessments are carried out by a wide range of bodies, including agencies, academic institutions, governmental organisations and industry associations, often involving a panel of judges. A listing of award schemes now operating around the world is provided in Table 3.13. Most of these award schemes utilise certain guidelines/criteria. In nomenclature terms, there is often considerable overlap between these CER award schemes and environmental reporting guidelines. For example, the ACCA criteria are also referred to by some as guidelines, which is fair enough as they are every bit as comprehensive and relevant as some of the so-called guidelines (see section 4.3). The ACCA award scheme has emerged as one of the leaders in this field, and has managed to attract government support in that the UK Environment Minister has presented the awards in recent years. Table 3.14 shows the winners of the ACCA awards for the years 1991–1999. United Utilities was the overall winner of the ACCA scheme in 1999. The features the ACCA panel judges considered to be important are identified below: • • • • • • •

excellent coverage of climate change issues, including global and national perspectives; good links to other United Utilities reports and websites; sustainable economy section addresses management, benchmarking and partnership issues; government’s headline indicators of sustainable development used in report; utilisation of DETR’s carbon dioxide indicator; key impacts addressed in national, regional and corporate level contexts; engaging and clear layout.

These features picked out by the judges particularly identify the need to compare CERs with others by employing benchmark techniques.



Table 3.14

ACCA CER award winners in the UK (1991–1999) Date

Award

Company

1991

Joint winners

1992

Winner Commendations

1993

Winner Best new entry Commendations

1994

Winner Best new entry Commendations

1995

Winner Runner-up Best first-time reporter Best SME reporter Winner Runner-up Best first-time reporter Commendations

British Airways Norsk Hydro BT Body Shop International British Airways BT Thorn EMI Plc British Petroleum Plc British Gas Thorn EMI Plc Rohm & Haas British Petroleum Plc Dow Europe SA BT Det Daanske Stalvalsevaerk A/S Thorn EMI Plc National Power London Electricity Neumarkter Lammsbrau (Germany) British Airways London Electricity Plc J Sainsbury Plc Shared Earth Ltd Inveresk Plc BT Glaxo Wellcome NSK-RHP Europe Anglian Water Vauxhall Motors Co-operative Bank

1996

1997

Overall winner Best newcomers

1998

Winner Best first-time reporter Commendation for social/stakeholder reporting Commendation for site reporting Runner-up Overall winner Joint runner-up Joint runner-up Best first time reporter Best SME reporter Best supply chain reporting

1999

3.8

BAA Eastern Group United Utilities Plc Scottish Power British Airports Authority Plc Biffa Waste Services Ltd Bovince Ltd B&Q

Verification Independent verification has emerged as a key issue as the concept of environmental reporting has developed. The basic need for it stems from the lack of trust that some stakeholders have in the information published by companies. This point was clearly illustrated by a survey organised by the European Commission in which members of the public throughout Europe were questioned about their level of trust in information on the environment issued from a wide range of sources. The survey (see Table 3.15) clearly showed that the environmental groups are identified as the source of information most likely to give the truth about the state of the environment. Scientists and consumer associations are ranked in second and third place, respectively. On the other hand, industry is placed at the very bottom of the league, polling only 1%, which emphasises the lack of public trust when judging industry performance. This clearly confirms why it is necessary to verify CERs in order to increase credibility of the data and the document as a whole. A further poll, involving over 1000 people, was carried out in the UK in January 1999. The results are shown in Table 3.16. In general this poll confirmed the European Commission findings. By once again placing pressure groups at the top of the trust

40


Table 3.15

Level of trust in environmental information source Source

% of respondents who trust source

Environmental groups Scientists Consumer associations Media Teachers Public authorities Trade unions Political parties Industry Other

36 19 18 5 4 2 1 1 1 13


Table 3.16

‘Which sources would you trust to advise you on the risks posed by pollution?’ Sector

Most trust (%)

Pressure groups Independent scientists Television Government scientists Friends/family Newspapers Government ministers Private companies Politicians generally

61 60 26 23 15 14 6 5 4

Source: Mori

league and private companies at the bottom, it emphasised the urgent need for industry to use all means possible to improve their status in this respect. This could well be a strong motivation for a company to get involved with environmental reporting. Apart from the overriding point of trust, there are other questions to be answered. For example, is the reporting company including all the relevant issues? Is the company compiling the data in a way which gives an accurate picture of its environmental performance? Initially, very few of the CERs were verified in any way at all. With the increasing emphasis on transparency and accountability this situation has started to improve. The UNEP/SustainAbility surveys recorded an increase in verified CERs from a figure of just 4% in 1993–4 to 28% in 1996–7. The 1999 KPMG International Survey of 1100 companies reported that 18% of the CERs found were independently verified, compared with 15% in 1996. However, the 1999 survey was deemed to be more critical as it did not allow verification statements from EMS certification to be used in the marking of CER verification as they do not relate to the report as a whole. The three leading sectors for verified CERs were oil and gas (32%), utilities (25%) and chemicals and synthetics (18%). In country terms, the UK leads the way with 53% of CERs independently verified, followed by Finland with 33%. Countries outside Europe, particularly the USA and Japan, had very few of their CERs verified. The 1998 PIRC survey of FTSE 350 companies gave a figure of 35% of reporting companies disclosing some form of audit, either for the company as a whole or for subsidiary parts of the company.

Standards The voluntary nature of CERs will inevitably detract from their credibility as far as some stakeholders are concerned. While external verification is very important to



some stakeholders, the lack of a standard verification framework limits its value to others. Currently, the scope of verification varies widely. Some verification statements may simply confirm the accuracy of data collection or provide an overall general endorsement of the report. Others may be far more comprehensive and challenging, involving discussions with management, site visits, a review of documentation and management systems, and finally pinpointing areas requiring improvement. It is felt that some statement on any activities of this type carried out should appear in the CER itself to consolidate the authenticity. Verification statements by environmental auditors vary a great deal, indicating that the audit process is not consistent. There appears to be a strong case to review the remit and basis of environmental auditing in order to establish appropriate professional standards. A Fédération des Experts Comptables Européens (FEE) survey of European verifiers highlighted the point that progress on verification of environmental reporting was severely hampered by a lack of proper standards. It stated that the added value normally derived from an expert statement was very limited under the present circumstances. One of the FEE’s recommendations was that given the absence of generally accepted guidelines on both how to report and how to carry out the audit, expert statements should at least contain a description of the scope of the audit and its objectives. The FEE has issued a set of recommendations for the format of verification statements. In the UK, the DETR’s Advisory Committee on Business and the Environment (ACBE) comments on independent verification in its guidelines: ‘An authoritative, independent review of an environmental report can be a major spur to improving the quality, integrity, and credibility of its content. Different forms of review may be appropriate for different parts of the material presented. Environmental liabilities and costs will be reported in the Accounts and thus subject to financial audit, while physical information in the Operating and Financial Reviews (OFRs) and environmental reports may be scrutinised by environmental auditors.’

Market research by GEMI in the USA suggests that the credibility of the verification statement would be increased if developments along the following lines could be implemented: • • • •

standards covering the scope and limitations of third-party audits; standards specifying the content of third-party statements; sampling techniques for third-party statements; integration into the accounting system.

Deciding whether a company has carried out an audit will in turn depend to some degree on the company’s own definition. A number of different types of audit have been identified. An environmental review is an initial analysis of the environmental issues, impact and performance related to activities at a site and should be seen as the first step in the audit programme. Following the review, a system audit will assess the effectiveness of the company’s environmental management system. Other audits will cover particular sites, acquisition or divestment and the production impacts of making a specific product. A number of the relevant bodies in the UK have spoken out in favour of environmental auditing. In the early 1990s, the CBI issued some guidelines indicating that this form of auditing was of clear commercial benefit to the reporting companies. The so-called Hundred [FT 100] Group of Finance Directors published a statement that recognised environmental audits as part of an environmental perspective, which should be integrated into the basic management process. The importance of systematic independent examination has also been emphasised by the ACCA, who insist that companies should not be allowed to just pick out the good news but should be subject to a full appraisal against recognised standards. This point can be traced back to the inevitable difference of views on CER content when comparing report providers and report users. In the early CERs it was evident that companies were still treating the CER as a ‘qualitative’ public relations exercise, a

42


point emphasised when distribution of the CER was found to be handled by the corporate PR department. On the other hand more of the stakeholders are now seeing the CER as a further means of benchmarking companies utilising quantitative performance data. Even when standards are eventually established, some stakeholders may push for more than the reassurance offered by verification of voluntarily produced CERs. This could be achieved by site visits, as already arranged by proactive CER-providing companies such as Novodisk and Body Shop. For some, voluntary reporting may never suffice. For example, the 1997 UNEP survey records that: ‘To remedy the defects of existing reporting practice, Greenpeace proposes that environmental accounting and reporting be given the same legal and professional basis accorded to annual financial audits and published financial accounts and reports. This would require co-ordinated action from government, professional bodies and institutions, but led by governments.’

There are also some who think that there are higher priorities to attend to than verification, such as developing appropriate performance indicators. Also verification could make companies limit the breadth of their reports, knowing that everything recorded could be closely scrutinised.

Verifiers So which organisations are available and competent to carry out this verification? Predominantly, verification is either undertaken by the environmental section of financial auditors or by specialist consultancies. The difference in approach by these two groups is that accountancy firms tend to look at what is reported and the reliance that can be placed on this, whereas the consultancies look more generally at the whole approach adopted. The qualifications of the verifier need to be acceptable for the task to be undertaken, particularly as it is such a new area. The feeling is that the same type of qualification requirements that exist within the financial auditing profession will need to be applied to verifiers of CERs. In this way, acceptability would be increased for the wide range of stakeholders, which of course includes banks and insurers. An initial demand for environmental verifiers arose from the introduction of the EMAS in 1995, where the required public statement of a site’s performance against standards must be accredited by an approved verifier responsible for ensuring the validity, completeness and reliability of the statement. As mentioned earlier in this chapter, by July 2000 over 3000 sites had been approved for the EMAS. This created a significant demand for verifiers, particularly in Germany, which accounted for a high proportion of the registered sites. To show some of the active organisations in this field, a listing of verifiers of CERs has been compiled from the market research carried out by the authors (Table 3.17). It should be noted that the majority of the companies that have sought verification are European. Some companies have an external advisory committee. For example, ICI involves three outside experts to help it develop its Environmental Burden approach. The 1999 KPMG Survey included a league table of verifiers (Table 3.18). The top four positions were occupied by KPMG (24%), PricewaterhouseCoopers (12%), Aspinwall (11%) and Deloitte & Touche (11%). This same report showed an overall CER verification level of 17%, with the oil and gas sector leading the field with a level of 32%. The chemicals sector was in third place with a level of 18%. A strong case is emerging for independent external verification – so much so that it would appear that verification could move from being seen as a desirable option to being a fundamental requirement. After all, this has been the case in financial accounting and reporting for a long time.



Table 3.17

Verifiers of CERs Verifier

Company

Aspinwall

Anglian Water, EMI, London Electricity, Scottish Power, Tarmac, Thames Water, Thorn, Unilever and Yorkshire Electricity Electrowatt Bayer and Rio Tinto British Nuclear Fuels Body Shop NatWest Eastern

Aretas AG Arthur D. Little ARUP BSI (NEF, SGS) Coopers & Lybrand Construction Quality Assurance Danish Standards Deloitte & Touche ECOS Entec UK ERM Ernst & Young Graham Consulting Group KPMG Lloyd’s Register PA Consulting SustainAbility

Brodrene Hartmann British Telecom, DSM, IVO, Norske Skog and Nortel Enterprise Oil BAA Body Shop, British Airways, Glaxo Wellcome and Severn Trent British Petroleum and Statoil Hyder Danish Steel, ING, National Grid and WMC National Power South West Water ASG, Novo Nordisk and Neste

Source: 1998 PIRC and 1997 UNEP

Table 3.18

League of verifiers of CERs Verifier

% of total

KPMG PricewaterhouseCoopers Aspinwall Deloitte & Touche SustainAbility Ernst & Young Arthur D. Little Dames & Moore Norske Veritas ERM Danish Standards IFEU Institut EAQA Arthur Andersen Lloyds Total

24 12 11 11 10 6 4 4 4 4 2 2 2 2 2 100

Source: KPMG 1999 International Survey of Environmental Reporting

3.9

Supply chain management Increasingly, companies are starting to consider not only their own impact on the environment but also that of their suppliers. This is to be expected, as in order to fully comply with most of the environmental management systems a company must also be able to demonstrate that its suppliers (equipment, materials and services) are also operating environmentally sound practices. Several strategies are being used to integrate environmental issues into the supply chain. Those companies already into EMS are sending strong signals to suppliers that they will expect EMAS or ISO certification as a condition of doing business in future years. For companies with even more sophisticated environmental programmes, the emphasis tends to be to ask suppliers to improve particular aspects of products or processes that are significant from an environmental perspective. Finally, and prob-

44


ably the most common technique, is to ask the supplier to fill in a detailed questionnaire covering a range of environmental performance aspects. The 1998 PIRC survey records that 13% of the FT 350 companies in the UK disclose information on environmental standards required of suppliers, and about half of these are FTSE 100 companies. The proportion of companies getting involved in this way with suppliers varies considerably according to sector, and utilities show the highest figure at 31%. The BiE second survey (1997 reports) of Corporate Environmental Engagement found that 40% of the UK FTSE 100 companies disclosed they were operating a supplier ‘challenge’ process in the environmental area. A good example of pressure passing along the supply chain from business customers is that of Volvo. The car maker issued a statement to its 80 largest suppliers requesting some form of EMS registration by July 1999. The rest of the suppliers had to comply by July 2000.

3.10

The social reporting element There is growing pressure on companies to adopt codes of conduct or ethical values. The case for ethics goes beyond mere compliance with the law. Speed of communications and developments such as the internet enable pressure groups to mobilise public opinion, as with Shell’s controversies over Nigeria and Brent Spar. A survey issued by Control Risks, a London consultancy, found that 71% of UK businesses believed social and ethical factors had become an important part of their agenda over the previous five years and would become even more important over the next five years. The survey was based on interviews with 68 UK fund managers and 26 City analysts between March and April 2000. A majority cited public opinion combined with media coverage as key influences, with pressure groups playing a part in this. However, the survey suggested that the City was still tending to be reactive rather than proactive on these issues. Respondents rated environmental pollution as the most relevant issue to potential investment decisions, followed by unstable political regimes, corruption and human rights. This leads on to the subject of social reporting, which is well worthy of discussion as sustainable development reporting will only be possible if a report on social matters is available. The 1998 PIRC report gives an interpretation of ‘social and community reporting’. In PIRC’s view, the term refers to reporting on a diversity of issues in terms of matters such as employment policies, business ethics, charitable donations and community involvement. In multinational companies, this area is further highlighted by a concern in the public domain for companies to make clear their position on issues such as human rights and assistance with the management of developing countries’ resources. Most people believe that social reporting is new. This is not the case – attempts to get this concept on to the agenda were first made in the 1950s, and there was mixed interest and success throughout the following thirty years. During this period, France introduced the ‘Bilan Social’, a law requiring companies with over 300 employees to produce an ‘employee’ report. During the 1970s, a number of bodies began to rate companies publicly on their social performance, a good example being the Council on Economic Priorities (CEP), located in the USA. Shortly after the emergence of the environmental reporting concept in the early 1990s, something of a revival in social reporting occurred. This could well have been connected with the push towards sustainability stemming from the 1992 Rio Summit. Governments and proactive multinationals such as Shell pronounced that the social reporting element was an essential part of the newly defined ‘triple bottom line’, which combines financial, environment and social aspects and goes hand in hand with achieving sustainable development. So once more it was back on the agenda, but this time far more likely to stay. Another input came from the fact that supply chains are now being looked at more closely, following news stories about exploitation of child labour in developing countries, for instance. The practice of global outsourcing means that companies can



Table 3.19

Pioneers in social reporting Date

Company

Name of document

1974 1989 1990 1992 1993 1995

Atlantic Richfield, USA Ben & Jerry, USA Sbn Bank, Denmark Van City Credit Union, Canada Traidcraft, UK Body Shop, UK Co-operative Bank, UK

Social Report Social Performance Assessment Ethical Accounting Statement Annual Report (social auditing) Social Report Values Report Partnership Report

Source: UNEP/SustainAbility

obtain products from developing countries without necessarily being aware of the labour conditions in the producing plants. All this was reinforced by the rising demand for greater corporate accountability, emphasised in recent years by concerns over financial turmoil in world markets. Some feel the required degree of corporate transparency will only be achieved by listening more to stakeholders and responding to their views. As the pressure for greater accountability mounts, a number of companies appear to be using social reporting to enhance their standing in society and to provide an acceptable means to build relationships with stakeholders. Social performance can become a critical element in their strategic objectives. For example, BP makes a great effort to measure, analyse and benchmark its social activities, firmly believing that this enhances its future business value. The approaches to social disclosure vary widely in content and means of communicating results. While the leaders in this field create specific documents, quite often the information is hidden away in other corporate publications such as the annual report, health and safety report, or even the environmental report itself. The net result is a wide variety of social documents, as illustrated by the titles of the reports produced by some of the pioneers in this field. Table 3.19 shows that the early activity mainly occurred in the USA and the UK across a number of different industry sectors. Traidcraft, established in 1979, was the first business in the UK to develop voluntary social accounts and to publish independently audited social reports. By the end of the 1990s, the social reporting concept was becoming more mainstream, as big players like Avon, BT, IKEA, Renault, Rio Tinto and Shell became involved. There is a debate in progress on whether it could now become mandatory. Although this is already the case in France and could follow in Brazil, at present it seems unlikely. However, it should be noted that in certain countries it is already a condition that some of the social aspects must be included in the annual report. For example, in the UK annual reports are required by law to include information on charitable donations, pension fund adequacy and employee share ownership schemes. In general, the quality of social/ethical reporting falls below that of environmental reporting. In addition, the lack of standards creates difficulties with comparability. With limited agreement over the nature of social indicators or how to measure social performance there is a pressing case for greater convergence of the standard setters in this area.

Standards There are now a number of organisations involving NGOs, governments, trade associations and multilateral bodies working to develop both performance indicators and reporting standards for social reporting. The activities of some of these, mostly located in the UK, will now be briefly reviewed. Centre for Social and Environmental Accounting The organisation believes that social accounting could be modelled on traditional financial accounting practice provided it is recognised that modifications will have to

46


be made to accommodate the many complex and qualitative elements associated with social performance. National Economic Foundation (NEF) An alternative approach by the NEF suggests giving more emphasis to internal and external stakeholder inputs than previously. However, this could make comparability even more difficult as the wide range of stakeholder groups may have very different priorities. The NEF has developed a set of assessment criteria, the ‘Quality Scoring Framework’, involving a five-stage ladder, which will allow broad benchmarking of social reports. National Centre for Business and Ecology (NCBE) This organisation was set up in the UK with support from the Co-operative Bank, to work closely with the four universities in Greater Manchester, particularly with regard to identifying and developing sustainable solutions for all types of business. The Co-operative Bank has emerged as a leader in environmental reporting in the banking sector, with a particular emphasis on the social aspect as seen in its awardwinning 1998 Partnership Report. The NCBE has established an advisory panel, which will act as a source of advice and guidance. Panel members are drawn from organisations across a range of disciplines including industry, trade unions and the NGO sector, as well as leading academics. A broad definition of social responsibility is offered as follows: ‘The acceptance by an organisation of its responsibility towards its key partners in society at large to account for, manage, and report on the social impact of its activities.’ It states that business is becoming increasingly aware of the case for companies to take responsibility for the social impact caused by their activities. Business in the Community (BiC), UK This is a non-profit-making charitable organisation. Over 70% of the top UK companies are members of the BiC, a national network of regional support, focusing on how companies can help deprived communities. BiC established the Per Cent Club, which encourages its members to contribute at least 0.5% of their UK pre-tax profits to community projects. In 1997, it launched a set of principles for community investment (see section 4.4). Institute of Social and Ethical Accountability (ISEA), UK This UK organisation was established in 1996 with BT and the Body Shop as founding members. The prime objectives are to promote best practices and professional standards in both social and ethical accounting and auditing. As can be seen from the name of this organisation, it is the intention to group both social and ethical issues under the same umbrella. The ISEA has identified a number of categories for which social performance indicators are needed: • • • • • • • • •

business values and integrity; distribution equity (with internal and external stakeholders); diversity; employee conditions; employee development; human rights; impacts on local communities; impacts on indigenous groups; social investment.

This list certainly indicates the complexity of carrying out social reporting.



Council on Economic Priorities (CEP) This organisation is based in the USA and works closely with international business groups, NGOs and other professional certification organisations, with regard to developing standards for all aspects of accounting. In 1997, the CEP launched a global standard, ‘Social Accountability 8000’, which provides a framework for the independent verification of the ethical production of all goods. This is a third-party code, which can be applied internationally across all sectors to evaluate whether companies are complying with basic standards of labour and human rights practices. Any organisation can be accredited to SA 8000. It is proposed that the auditors involved consult a number of the stakeholders, such as trade unions, employees and local NGOs, to take in views from a broad cross-section.

Progress The 1998 PIRC survey found that approximately 25% of the FTSE 350 companies reported on community matters in their annual report. Just under 10% provided standalone social or community reports on community involvement. The 1999 UNEP/ SustainAbility survey of social reporting identified over 30 companies providing some form of social report. As most of the pioneer work and standard drafting has been carried out in the UK and the USA, it came as no surprise to find that 50% of these social reports were produced in these two countries. The 1999 KPMG Survey found that environmental policy statements were included in 84% of the CERs analysed. A total of 59% of the policy statements mentioned employee involvement, compared with 33% three years earlier. Mention of local community issues occurred in 32% of the policy statements, compared with just 7% three years before. This increase in commitment to social issues indicates a move towards greater broad-band stakeholder involvement. Verification of social/community reports lags well behind that of CERs. PIRC found only one social report, Body Shop, had been verified. However, the verification method adopted here was rather interesting as it involved three ‘expert’ organisations, each for one particular aspect: • • •

environmental content – British Standards Institution; social content – New Economics Foundation; animal protection – SGS Yarsley.

The anticipated growth of the social and environmental audit sector has been confirmed by the formation of a new business division, by KPMG, known as Sustainability Advisory Services (SAS). This is a joint venture with Body Shop, a recognised world leader in sustainability reporting. KPMG estimates that the business resulting from this type of work will be worth £20 million within three years of opening the new division. One of the incentives behind the launch of SAS was the UK government’s positive attitude towards environmental reporting and social/ethical issues (see section 2.6). Also, Robin Cook the Foreign Secretary, had supported the drawing up of a social/ ethical code of conduct for operating overseas. High ethical standards are no longer a luxury, but a necessity, according to ING, the Dutch financial group. In the USA, all Fortune 500 companies now have codes of conduct. The membership of the Ethics Officer Association increased from 12 in 1991 to a figure of 570 in 1998. In the UK, by 1998 more than 60% of the top 500 companies had a code of conduct, compared with 18% ten years earlier. In conjunction with the ISEA, the ACCA has now launched a social reporting award scheme. The first cycle of this is now in progess with a deadline for submitting social reports of 29 September 2000. The main objective is to reward organisations that are measuring and reporting their social impacts as part of their business strategy for sustainable development. It follows on from the UK environmental reporting award scheme that has been run by the ACCA since 1991.

48


Table 3.20

UK insurance companies – worst environmental record Company

Score

Equitable Life Scottish Widows Norwich Union AXA Sun Life Clerical Medical Royal Sun Alliance Standard Life Barclays Prudential Assurance Friends Provident Legal & General CGU Allied Dunbar Scottish Equitable

24 23 22 22 21 21 20 19 19 17 14 14 11 10

Note: – the higher the score, the worse the performance in terms of investing in companies with poor environmental records. Source: Friends of the Earth

3.11

Link with financial performance The idea that the financial sector should play a role in sustainable development is argued with increasing urgency within bodies such as the United Nations, the European Commission and the UK government. In the UK, regulations obliging pension funds to state whether they consider environmental or social issues when making investment decisions came into force in July 2000. Any changes of this nature will be implemented through the widening of the Statement of Investment Principles (SIP) required by the 1996 Pensions Act. These new regulations will provide an opportunity for the ‘greening’ of pension funds and at the same time open up new channels for corporate policies and practices to be challenged by environmental groups as well as the financial community. Some of the largest pension funds, such as BT (£29 billion assets) and Universities Superannuation Scheme (£20 billion assets) have already acted. Appropriate instructions have gone out to investment managers to incorporate social, ethical and environmental aspects in the investment decision-making process. The issue is also being taken up by environmental pressure groups such as Friends of the Earth, who launched a name-and-shame campaign against UK insurance companies at the beginning of 2000. For this they questioned the top 14 insurance companies about their environmental and sustainable development policies. Altogether, these companies manage funds worth around £500 billion and own a significant proportion of the UK stock market. The results are presented in a report entitled ‘Capital Punishment’, in which FOE claims that the insurance industry actively supports environmental destruction worldwide by continuing to invest in companies with poor environmental records. The league table of the worst-performing insurers is shown in Table 3.20. The FOE report identifies ‘offending’ companies invested in by insurance organisations, which they deem to be unacceptable because of causing environmental or social damage. These include names such as Chevron, Elf Aquitaine, Rio Tinto, Glaxo Wellcome and ICI. Behind this thinking is the belief that financial markets have a potentially crucial influence on corporate strategy. However, the majority of fund managers to date have not given a high priority to environmental issues. A number of reasons why this happened can be put forward: • • •

the investment community’s inertia; the gulf between the short-term thinking of the financial markets and the longterm outlook needed for sustainable development; investments in developing countries are seen as high-risk;



• • • • •

present accounting methods do not adequately reflect environmental costs, particularly external costs; disbelief that improvement in eco-efficiency can actually reduce costs; concern with taking over environmental liabilities in the event of failure of lenders; lack of quality information; many CERs in their present form would make hard reading for the average city analyst!

Defining environmental actions that make good business sense is not easy. A recent report from Earthscan sets out a number of potential ‘green’ corporate benefits: • • • • • • • •

cost savings; credit ratings; recruitment; employee morale; risk avoidance; stakeholder relations; media attention; public respect.

In each case there is a possible counter-argument. For example, promoting a shiny environmental image may increase exposure and vulnerability to bad publicity. Also, once a company has declared its policy and achievements, it must live up to them. A key question is: do environmental investments lead to savings or to extra financial burden? Whatever the answers, investors would not be acting prudently if they did not try and find out. However, in general it seems unlikely that the attitude of the financial community will change until a link between environmental performance and financial performance (e.g. share value) is established, and it is on this point that a number of bodies are concentrating.

Aspen Institute, USA Since 1993 the Aspen Institute, through its programme Environment in the 21st Century has encouraged leaders of business, government and environmental groups in the USA to engage in a dialogue about developing new environmental management systems. A consistent theme behind these discussions has been the importance of economic drivers, which can powerfully enhance or impede the achievement of national environmental goals. In 1997 it was decided to pursue one particular aspect of the theme, namely, the ways in which financial institutions value (or more commonly, fail to value) environmental management and performance and how they drive business decisions. This new series ‘Valuing Environmental Performance’ reflected the belief that there is a competitive advantage for companies and investors who recognise and act on the convergence of environmental and financial goals. The resulting report does not purport to be comprehensive but is an initial effort to bring to the attention of decision-makers in the corporate and financial sectors the linkages between strategic business decisions and environmental factors. If these linkages can be established, then it follows that environmental factors will influence financial results. However, to convey this type of thinking the report stresses the need for clear, accurate and relevant communication within companies and between companies and the financial community. The report concludes that both companies and investors have a new opportunity to realise financial value from strategic environmental considerations. The importance of environmental considerations relative to factors such as innovation and financial control will vary from sector to sector, from company to company and even from time to time. The stark fact is that environmental issues such as climate change and bio-

50


technology are resulting in profound structural change in some business sectors. Ignoring environmental drivers could mean missing an important element of competitive advantage, both in a company’s planning and assessment by analysts and investors. However, to take advantage of this opportunity companies must do a better job of uncovering the business value in their environmental performance, rigorously measuring the results of that performance and communicating these results both internally and externally in language that the investment community understands. Companies that act first to define the financial–environmental connections could have a profound influence on how the financial community interprets and acts on environmental information when assessing opportunities within a sector and when allocating assets between sectors. The long-term implications for a company’s share price and cost of capital could be significant.

UNEP By Spring 2000, in the region of 260 financial institutions had signed the UNEP statement ‘Banks on Environment and Sustainable Development’, issued at the time of the 1992 Rio Summit. One of the main commitments in the statement is that banks undertake to integrate environmental considerations into business decisions as well as into their own internal operations. A survey found that there is some evidence emerging that would suggest that some change, albeit somewhat limited, may be occurring in the attitude of the financial community to the impact of environmental issues. In cooperation with the Green Alliance, the UNEP contained a questionnaire to signatories of the UNEP statement. Banks in the UK and Canada led the field in terms of number of respondents. The results from this project were presented in a document, ‘Banking on the Future’, and the main conclusions are given below. Internal banking operations This basically means activities concerned with office management and buildings. This is an area where many of the banks can point to strong integration of environmental considerations. Several banks have achieved significant financial savings from reducing consumption of energy and paper. Lending The area of credit risk assessment is where the banks see the greatest opportunity to promote better environmental performance. There is a growing awareness that environmental factors can influence a borrower’s ability to repay a loan. The proposed new wave of liability regulations is causing great concern to both the banking and insurance industries, who fear that huge claims may arise. As a result, certain companies may face difficulties in raising money unless they can satisfy lenders of their environmental credentials. Some far-sighted banks are beginning to extend their interpretation of environmental risk to include more strategic and long-term environmental concerns, for example, the risk that a product will no longer be wanted by society in the future because of its environmental impact. Investing So far, the banks have not developed many new products in the equity sector incorporating environmental considerations. The reasons put forward include a perceived lack of market demand, the high cost of launching and the difficulty of developing acceptable criteria for screening companies for their environmental impact. However, there has been some progress with green and ethical funds. These seek to exclude firms involved in areas such as arms, nuclear power, tobacco, biotechnology and, more recently, genetically modified foods. According to the Mail on Sunday, £2.5 billion was invested in the UK in ethical funds and trusts by mid-1999. The



Ethical Investment Research Service (EIRIS) located in London is one organisation that screens companies for suitability in this area of investment and has now vetted more than 1500 companies. In the USA, the ethical investment market is substantially greater, accounting for a reported $500 billion.

Japan In 1999 for the first time Japanese financial institutions became involved in the UNEP banking initiative. The three companies endorsing the initiative were Nikko Securities, Nikko Asset Management and the Good Bankers Company. In broad terms, these companies are creating investment trusts that invest in companies that have made special efforts to deal with environmental issues. The Japanese Environment Agency has issued draft guidelines for evaluating environmental cost and publicly disclosing environmental accounting information. The guidelines have identified six categories of environmental cost: • • • • • •

3.12

direct costs required to reduce the company’s environmental impacts; indirect costs required to reduce the company’s environmental impacts; costs for reducing environmental impacts incurred from product use and from the product’s associated wastes; research and development costs for improving environmental conservation; costs for external environmental activities with social objectives beyond the company’s direct environmental impacts; other costs.

Cost of environmental reporting One important element, which is very rarely mentioned, is the actual cost incurred in setting up an environmental reporting system and producing the CER. It is obvious that one significant element of cost would be data measurement and gathering. However, if an environmental management system such as ISO 14001 has already been implemented, then much of the work in this respect has already been done. As far as costs are concerned, one section of an environmental reporting survey by EAG Environ, a UK consultant, is devoted to this. Using a comprehensive questionnaire, over 100 reporting companies were contacted and asked for their views on the three issues of drivers, benefits and costs of environmental reporting. The questionnaire was designed to capture cost information from companies with different approaches to environmental reporting. These ranged from companies that carried out in-house CER production to companies that relied totally on external assistance. The survey acknowledges that the potential benefits gained from reporting need to be balanced against the costs of producing the report itself. These costs can be quite high, and can basically be grouped under two categories: •

•

strategic – costs involved in identifying the need for reporting, setting up data and management systems, i.e. one-off costs experienced in the first few years of environmental reporting; implementation – costs associated with data collection, report design, copyrighting, approval, verification, market testing and printing. These costs will be repeated each year.

Splitting the costs in this way allows a better comparison between first-time and established reporters. While only 25% of the participants were able to give cost information, what was obtained was useful to gain some first impressions of the level of costs. The overall approach was to determine the relationship of these costs to both company turnover and number of employees. Taking turnover first of all, the results suggest that there is a minimum threshold cost of environmental reporting of around £26 000. This represents the fixed minimum expenditure necessary to produce a CER. In addition to this figure, a proportion of the

52


Table 3.21

Average cost per employee of environmental disclosure, for different business sectors Sector

Average cost per employee (£)

Pulp & paper Chemicals Mining & metals Consumer goods Utilities Electrical engineering IT/communications Banking

52.3 51.9 29.3 10.1 9.5 3.4 0.9 0.5

Source: EAG Environ

reporting cost will vary with company size. By the time a company turnover of £14 billion per annum was reached, the overall cost had increased to £120 000. Then, as far as the case of the employees is concerned, the threshold minimum cost was set at approximately £30 000, with an additional £0.67 per employee. This would produce a figure of about £100 000 for a CER from a company with 100 000 employees. As expected, the resources invested in environmental disclosure increase with company size, however it is measured. The survey then attempted to compare costs for the different business sectors. These are shown in Table 3.21. The results indicate that those sectors such as banking and communications, which are generally perceived as more environmentally benign, have quite low costs. On the other hand, those companies that are operating within more environmentally sensitive and highly regulated sectors, like chemicals and pulp/paper, spend much more on environmental reporting – around 100 times as much. Part of this difference is no doubt attributable to the fact that industries like these are far less labour-intensive. Once the reporting system was established, some companies were able to decrease the cost of CER production. Reasons given for this are: • • • • •

increased efficiency in data collection and handling with experience; simplification of report format; fewer copies needed following the adoption of the internet as a report provider; tighter controls in the design process; progressively less training.

On the other hand, a number of companies experienced increases in their environmental reporting costs; the reasons given were: • • • •

extra cost of external verification; data requirements more detailed than originally envisaged; need to improve report format; work required to develop internet facility to serve various stakeholders.

For the large multinationals the costs will be significantly greater, particularly where verification has to be arranged in several different countries around the world. Some further information on costs came from the pioneers in the social reporting field. Here, it was confirmed that it is not a cheap exercise. Examples given were Can$100 000 for VanCity, Canada and US$750 000 for Body Shop, UK.

3.13

Lack of comparability The issue of lack of comparability has come up in most of the CER surveys to date. Even in the chemicals sector where environmental reporting is most advanced, comparability is judged to be low, even allowing for the fact that some companies are actively trying to look different. In fact, in the opinion of the authors it really emerges as the major issue to be tackled if environmental reporting is to become established as



a mainstream procedure and CERs are to play their part in moving towards benchmarking companies and ultimately reporting on sustainable development. There are several levels where comparability is desirable: • • • •

with an earlier time period; with other sites in the same company; with other companies in the same business sector; with all other companies.

There are numerous questions to consider. Some of these will now be discussed to illustrate what factors need to be addressed to move forward: •

•

•

•

How can different environmental problems be compared to each other? The severity of environmental impacts will almost certainly vary according to physical, social and economic factors. For example, the impact of effluents in a developing country without municipal water treatment facilities will be more severe, compared to a situation where these effluents are treated in several stages before release to a watercourse. How can environmental performance of quite different business sectors be compared? The classic example here, as measured by direct effects, is to assume that the environmental impact of a company in the service sector is much less than that of a manufacturing company. In truth, however, the indirect effect of a bank, as a source of funding for industrial development, could be very sizeable. How should the environmental impact of suppliers be dealt with? It certainly must be factored in, otherwise certain companies will be able to achieve a better rating simply because they have outsourced some of their requirements. How relevant and how reliable is the data on which companies are assessed? Sources of data can range from predominantly subjective questionnaires to precise scientific measurement. Environmental performance indicators need to be identified and agreed upon, at least on an industry basis. How they are to be measured should be clearly specified. It will always be difficult to compare CERs from large multinationals with those from small and medium enterprises, particularly as the former could be reporting at any one of a number of different levels – site, national, regional, business or corporate.

Even the rating systems being employed to evaluate the quality of CERs can vary a great deal. Detailed results for the criteria used are sometimes not readily made available, and few systems can compare with the impressive 50-point assessment plan devised by the UNEP. The 1999 PIRC survey once again confirmed the lack of standardisation of data. It stated: ‘there is little improvement in the comparability of information provided within sectors.’ Benchmarking against industry norms and best practice is even rarer. Only ten companies (out of the FTSE 350) attempted to compare their performance with their peers.

3.14

Feedback There are many different stakeholders who use the CER to gauge the environmental performance of a company. However, their information requirements and ability to understand what is presented can vary a great deal. Some of the CER providers are trying to provide answers – suggestions range from a suite of reports, each one tailored to specific stakeholder groups, to a comprehensive on-line bank of information from which the user can draw information to suit his individual needs. First, however, there is a need to determine who is currently requesting the CERs and how satisfied they are with what they receive. In this respect, an increasing number of the CERs contain a tear-out ‘feedback’ coupon seeking information on the type of stakeholder involved, level of satisfaction and improvements required.

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4 Environmental reporting guidelines

4.1

The range of guidelines Since the early 1990s, many business, environmental, governmental and accounting organisations have launched guidelines to promote one or more aspects of environmental and sustainability reporting. These have originated mainly from the USA and Europe, and vary considerably in their approach, depth and criteria. Though each has merit for a specific audience, virtually all have been developed in isolation rather than through any form of coordinated process – for instance, the CEFIC guidelines for the chemicals industry. The result has been rapid growth in the volume of information, but little consistency in format and content, leaving many stakeholders, including companies themselves, unable to take full advantage of their reported information. It should be noted that the term ‘guidelines’ is also used to cover the criteria utilised in various initiatives, charters and award schemes. All this has resulted in an assorted array of guidelines, standards and indicators in use, leading to a severe lack of comparability even within sectors. Despite this, current reviews of environmental reporting practice would suggest that the overall quality of reporting is improving. The hope is that a universal standard can be developed, as the stage has now been reached where both CER providers and users acknowledge that environmental reporting would benefit from greater structure and definition. There is no doubt that a formal set of recognised reporting principles and a standardised reporting framework would also help reduce the perceived lack of credibility. In any case, there can be a world of difference between what companies are providing in CERs and what users are expecting. Consideration needs to be given to the need for better-focused stakeholder-related reporting. CER providers would like confirmation that their reports are effective, understandable and addressing the right issues. Users, particularly the increasingly environmentally aware financial sector, are looking for more consistency in the way in which environmental performance is measured and reported, and less technical complexity. A significant input on this aspect of standards was provided by a discussion document issued by the Brussels-based Fédération des Experts Comptables Européens (FEE) in October 1999. This explored what is involved in developing an inclusive environmental reporting framework, and draws from three main inputs: • • •

the FEE recommendations for a set of fundamental assumptions and qualitative characteristics (for the latter, see section 4.13); contents of current guidelines, with a strong leaning towards the UNEP 50 elements model; the March 1999 draft CERES Global Reporting Initiative aimed essentially at a universal standard for sustainability reporting.

The FEE emphasises the need for independent assurance of CERs. It believes this is needed to enhance the quality and credibility of such reports. Assurance engagements on CERs are currently carried out by experts from different disciplines, although accountants undertake a significant proportion of these engagements. The FEE discussion paper identified a comprehensive list of guidelines, shown in Table 4.1. The majority of these guidelines originate from Europe, with UK organisations making the biggest contribution. From the dates given (presumably launch

Table 4.1

Environmental reporting guidelines Organisation

Country

Guidelines

Advisory Committee on Business and the Environment (ACBE)

UK

Association of Chartered Certified Accountants (ACCA) Confederation of British Industry (CBI) Coalition for Environmentally Responsible Economies (CERES) Chemical Industries Association (CIA) Deloitte & Touche (D&T)

UK

USA

Environmental Reporting and the Financial Sector – An Approach to Good Practice (1997) Guide to Environmental and Energy Reporting and Accounting (1997) Introducing Environmental Reporting – Guidelines for Business (1993) Global Reporting Initiative (1999)

UK

Reporting to your Local Community (1995)

Denmark

Danish government

Denmark

Deutsche Institut für Normierung (DIN) European Federation of Financial Analysts’ Societies (EFFAS) EU Eco-Management and Audit Scheme (EMAS) Fondazione ENI Enrico Mattei (FEEM) Global Environmental Management Initiative (GEMI) Institute of Chartered Accountants in England and Wales (ICAEW) International Chambers of Commerce (ICC) The 100 Group of Finance Directors Public Environmental Reporting Initiative (PERI) United Nations Environment Programme (& SustainAbility) (UNEP) World Industry Council for the Environment (WICE) (now part of WBCSD)

Germany

Assessor’s Manual for the Analysis and Evaluation of Corporate Environmental Reporting (1996) Statutory Requirements on Environmental Reporting Guideline Environmental Reports for the Public (1997) Eco-Efficiency and Financial Analysis – The Financial Analysts’ Views (1996) Requirements for the Environmental Statement (1998 revision) Company Environmental Reports – Guidelines Preparation (1995) Environmental Reporting in a Total Quality Management Framework (1994) Environmental Issues in Financial Reporting (1996) The Business Charter for Sustainable Development (1991) Environmental Reporting: the Hundred Group Statement of Good Practice The PERI Guidelines (1992)

UK

Belgium Belgium Italy USA UK France UK USA France

France

Engaging Stakeholders; 2nd International Progress Report on Company Environmental Reporting (1996) Environmental Reporting – A Manager’s Guide (1994)

Source: FEE Discussion Paper, January 1999

dates), it is possible to deduce where the guidance came from in the early part of CER development. From our market research, there are some further guidelines to be added to this list, namely: • • • •

CEFIC, Belgium (environmental reporting); GRI, USA (sustainability reporting guidelines); ICEE, UK (corporate environmental engagement); WBCSD, Switzerland (eco-effeciency indicators).

It is now the intention to review those guidelines found in most frequent use.

4.2

Advisory Committee on Business and the Environment (ACBE), UK The UK government originally set up this advisory committee in 1991. The committee is made up of a number of leading business people, and its main function is to give advice to ministers on specific aspects of the interaction between business and the

56


environment, with particular emphasis on financial implications. A working group has produced a position paper, ‘Environmental Reporting and the Financial Sector: An Approach to Good Practice’. This describes the approach to good practice for businesses to follow in reporting on their environmental performance to financial audiences. These guidelines are directed at all businesses, although the ACBE realises that they are likely to be more applicable to larger, publicly quoted companies than to smaller ones. The point is made that the various stakeholders in a business have differing requirements for information about its environmental performance. The position paper offers some examples of environmental performance having a material impact on financial performance: • • • • •

•

capital expenditures required for compliance with ‘best available technology not entailing excessive costs’ (BATNEEC) process authorisations under EPA 1990; capital expenditure for the remediation of contaminated land; capital expenditures that may result from the need to respond to specific customer requirements – the competitive ‘licence to operate’; revenue expenditure on improved waste management, thereby minimising the burden of landfill taxes; capital or revenue costs in improved management practices, e.g. to attain energy or material utilisation rates per unit of output that match those of comparable competitors; the cost of dealing with unexpected environmental impacts – whether accidental discharges owing to operating error or arising from hazardous processes.

The continuing interest in the promotion of environmental reporting by the UK government is covered in section 2.6.

4.3

Association of Chartered Certified Accountants (ACCA), UK The ACCA is one of the largest professional accountancy bodies in the world, with nearly 200 000 members and registered students in over 100 countries. It is one of the six main accountancy bodies in the UK and is an active member of the FEE and the International Federation of Accountants (IFAC). The ACCA has been a pioneer of open access professional education, and since 1989 has played a significant role in providing accounting, auditing and management education and training programmes in China, Eastern Europe, Russia and the Baltic States. Much of the funding for these projects comes from the European Commission and the UK government. Within the ACCA, there is a strong commitment to examining environmental and social issues in so far as they impact on the accounting profession, industry and the finance sector. It has an active research function covering all aspects of business, small business finance, corporate strategy, financial/environmental reporting, information technology, fiscal, social and ethical issues. The ACCA set up the UK Environmental Reporting Awards (ERAs) scheme in 1991, which at the time of writing had completed its ninth cycle (see section 3.7). The scheme aims to support the development of corporate environmental techniques. The ERAs are now regarded as a major national initiative, which reflects the growth in corporate environmental reporting and increased demand from stakeholders for corporate accountability. The ACCA concept has become the prototype for many other country award schemes, as well as attracting the attention of the UK environment minister to present the awards for four consecutive years. The criteria used by the panel of judges who select the winning CERs are regarded by many as forming one of the lead set of guidelines for environmental reporting. They certainly are very comprehensive and have the advantage of being thoroughly tried and tested over the period the award system has been in operation. However, the ACCA points out that although the criteria are a significant factor for selecting a shortlist, they are not the only issues to be considered. Once the shortlist has been established, there is an assumption that all the shortlisted companies have performed well across most of the criteria. Therefore the panel of judges uses the criteria as a guide, but does not feel constrained to apply a strict point-scoring system. Other



factors are considered and discussed among the judging panel, including current reporting trends and environmental themes, specific sectoral issues, innovative reporting approaches and reporting disclosures that deserve specific commendation. The ACCA is convinced that encouraging companies to carry out environmental reporting is infinitely preferable to the government imposing conditions on them through binding legislation. The ACCA would like to see the voluntary aspect evolve naturally, as opposed to the reporting concept being driven by legislation. The latter is rigid, whereas the former is more capable of development. A key objective of the ERA scheme is to identify and reward innovative attempts to communicate environmental performance, and it is widely regarded as the benchmark in this area. By doing this, it seeks to popularise and improve the practice of environmental reporting, but does not purport to cover good performance itself. Following the success of the ACCA award scheme in the UK, a pan-European scheme was launched in 1997, known as the European ERA (EERA). By 1998, equivalent accountancy associations from six countries were involved: the UK, the Netherlands, Belgium, Denmark, Germany and France. Portugal joined in 1999. The social element of the sustainability concept is now being addressed by a number of companies, and there has been a significant increase in the number of social reports issued. To acknowledge this emerging trend, the ACCA has launched a Social Reporting Award, the first cycle of which began in mid-1999. This new award scheme is designed to encourage best practice in reporting the social accountability issues that face all companies.

4.4

Business in the Environment (BiE), UK Although concerned more with ranking of companies than CERs, this scheme has been included in the guidelines section as it identifies the main attributes of good environmental management. Business in the Community is a non-profit charitable organisation, which set up BiE in 1989. Its mission is to devise and promote practical steps that will support progress towards understanding and apply the principles of sustainable development through action and partnership between the business and its stakeholders. BiE formulated an Index of Corporate Environmental Engagement (ICEE), to rate companies against a set of environmental attributes. From the results, the companies can be grouped in a league table divided into five sections. Since its creation, BiE’s experience in working with companies on environmental issues suggests that managers want to know how they compare with other companies. As an awareness-raising exercise, the ICEE is intended to encourage environmental comparison between companies and so encourage companies to improve standards of environmental management. The ICEE is based on company self-assessment against ten attributes of environmental management, and is designed to test how far companies have equipped themselves with the tools to minimise their impact on the environment (Table 4.2). The definitions for attributes 3, 4, 5, 6 and 7 come from BS 7750 (now part of ISO 14001) and EMAS. Introducing environmental reporting would contribute to the scoring on item 10. The first ICEE rating was carried out on the UK FTSE 100 companies in 1996 using the ten attributes. Since then the rating exercise has been carried out each year. In 1998 the scope was expanded to cover the FTSE 350 companies, and the fourth report covering the 1999 assessment was issued in March 2000. In the first rating cycle, 73% of the UK FTSE 100 companies responded. These are a summary of the findings: companies were well advanced in the adoption of environmental policy (89%) and allocation of environmental responsibilities at board level (80%). This is not surprising, as these are the first and most obvious steps of environmental engagement. Reasonable progress had been made in setting objectives (65%) and targets (60%), and addressing environmental stewardship (62%) and communications (60%). These lower scores than the previous cluster can perhaps be attributed to the greater degree of activity and resource needed to make progress.

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Table 4.2

Table 4.3

Self-assessment of attributes Number

ICEE attributes

1 2 3 4 5 6 7 8 9 10

Corporate environmental policy Main board member with environmental responsibility Formal environmental management system Environmental objectives Measurable targets Internal audit process Employee environmental programme Environmental stewardship of products, processes and services Supply chain programme Environmental communications with stakeholders

Top ten UK ‘green giants’, 1999 Position

Company

Sector

1 2 3 4 5 6 7 8 9 10

Severn Trent BT Cable & Wireless Woolwich Thames Water BP Amoco AstraZeneca Anglian Water Vauxhall Motors Scottish Power

Water Telecommunications Telecommunications Banks Water Oil & gas Pharmaceuticals Water Automobiles Utilities

Source: BiE

At a more advanced stage of environmental engagement is a third cluster that takes in environmental management systems (47%), internal audit procedures (48%) and employee environmental programmes (50%). Less progress was evident on these parameters, as implementation of management programmes like these requires substantial organisational changes. The biggest gap to close was in the creation of environmental programmes with suppliers (38%). Nevertheless, it was reported that there had been some signs of progress since the first supply chain guide, ‘Buying into the Environment’, was published by BiE in 1993. Companies indicated that the required commitment in developing a supply chain programme is long-term. However, BiE remain convinced that in due course supply chain pressures will be activated, in which case the environmental performance of smaller companies will come under scrutiny (see section 3.9). The degree of environmental engagement varied significantly between sectors. It was found that oil, gas, chemicals and utilities were well advanced. In part this can be explained by the environmental sensitivity of the sectors and level of regulation. Many of the companies within retail, services, property and transport are beginning to identify the environment as a competitive issue. This is mainly a consequence of their strong interface with the public and the degree to which customer and media attention can influence their businesses. There is a somewhat scattered level of interest in consumer goods, IT, electronics and engineering, indicating that environmental management has not yet unanimously become a priority. Lastly, as often found in other surveys, the financial sector is the least engaged in environmental issues. This is partly explained as a timing issue and the sector’s reluctance to acknowledge that, apart from lending considerations, it does have environmental impacts, which need to be managed. The company participants identified global warming as the highest priority for measuring environmental performance. Fifty companies reported that they measured carbon dioxide emissions, but only 32 had set targets for reduction of this. The results for the 1999 cycle identified the top ten ‘green giants’, as shown in Table 4.3.



This latest survey by BiE included an additional section covering environmental performance. Companies were asked whether they measure and set targets for their performance in five areas, namely, energy, transport, carbon dioxide emissions, waste and water. As found in the previous surveys, utilities emerged as the most engaged sector, whereas the investment and IT sectors lag behind. The 1999 PIRC Survey also found that the IT groups had the worst environmental reporting record. Good reporting appears to be associated with strict regulation, high environmental impact or a large consumer base.

4.5

European Chemical Industry Council (CEFIC), Belgium The CEFIC is a Brussels-based organisation covering the interests of the eight full and six associate national chemical industry associations in Europe. These associations represent some 40 000 chemicals companies, which employ about 2 million people and account for more than 30% of world chemicals production. The CEFIC also coordinates the development of Responsible Care® in Europe. Responsible Care® is an initiative that originated in the chemical industry in Canada in 1984 and was then further developed in the USA in 1988. Essentially, it is a voluntary industry action programme aiming to demonstrate improvements made in all aspects of performance. A key step is to involve all interested parties, including employees, local communities, suppliers and customers, in order to improve dialogue with a view to improving public perception of the issues and the industry’s attempts to deal with them. The basic guiding principles of Responsible Care® are: • • •

to operate to the best practices of the industry; to assess the actual and potential impact of activities on the health and safety of employees, the public and the environment; to work closely with public and statutory bodies to achieve an acceptably high level of health, safety and environmental protection.

This explanation of the term ‘responsible care’ shows equal emphasis on environment and health and safety. It also lays the ground for the environmental reporting concept, by indicating that companies should ‘make available to employees, customers and the public all relevant information about activities which affect health, safety and the environment’. The first formal Responsible Care® programme for the Western European chemicals industry was launched by the Chemical Industries Association (CIA) in the UK in 1989, followed by UIC, the French chemical association, in 1990. Within a few more years, the chemical industries in most of the European countries had programmes running (see also section 5.6). In 1993, the CEFIC published the first issue of ‘Guidelines on Environmental Reporting for the European Chemical Industry’ in order to promote the publication of annual environmental reports by its members. The guidelines were well received, and a number of member companies proceeded to publish environmental reports, albeit at different levels – local, national, European and international. However, it is now felt by the CEFIC and its members that there is a need to communicate the achievements of the whole of the chemicals industry at national and European level. As a result, in November 1998, new sets of health, safety and environmental reporting guidelines were issued. These offer a common reporting framework for both national chemical industry federations and individual chemicals companies, bringing in health and safety for the first time. The 16 core parameters (Table 4.4) selected by the CEFIC are shown. Judging from CERs produced within the chemicals sector, many of the chemicals companies are already actively following the above guidelines. This applies to about 19 of the 35 CERs examined. A good example is the Tioxide Group, now owned by Huntsman, which is a supplier of titanium dioxide pigment to the paper industry. Now that there is an agreed framework, through the CEFIC, the European chemical industry has committed itself to reporting on all of the 16 core parameters

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Table 4.4

The 16 core parameters selected by the CEFIC Number

Parameter

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Number of fatalities Lost time injuries frequency rate Occupation illness frequency rate Hazardous waste for disposal Non-hazardous waste for disposal Sulphur dioxide Nitrogen dioxide Carbon dioxide and other global warming gases Volatile organic compounds (VOC) Phosphorous compounds Nitrogen compounds Chemical oxygen demand (COD) Heavy metals Other substances that potentially impact human health or the environment Energy consumption and energy efficiency Distribution incidents

Source: CEFIC

specified in these guidelines by the year 2002. If this objective is achieved, it could set an example for other industries to follow.

4.6

Coalition for Environmentally Responsible Economies (CERES), USA The CERES coalition, based in Boston, Massachusetts, was formed in 1989. It brought together 15 major US environmental groups, an array of socially responsible investors and public pension funds representing US$150 billion in invested capital, together with more than 200 Protestant denominations and Catholic orders. The CERES has emerged as a world leader in standardised corporate environmental reporting and promotion of environmental management within companies. From the beginning, a distinctive strategy was the use of shareholder resolutions to initiate discussions on environmental responsibility at the highest corporate levels. The ten CERES principles, originally known as the Valdez principles, remain at the heart of the CERES work, which addresses the concept of sustainability. These principles are: • • • • • • • • • •

protection of the biosphere; sustainable use of natural resources; reduction and disposal of wastes; energy conservation; risk reduction; safe products and services; environmental restoration; informing the public; management commitment; audits and reports.

By endorsing the principles, companies not only formalise their dedication to environmental awareness and accountability, but also actively commit to an ongoing process of continuous improvement, dialogue and comprehensive, systematic public reporting. From the outset, the CERES principles were mainly adopted by companies that already had strong ‘green’ reputations, such as Body Shop. Over the years that followed, the momentum behind the concept continued to build and, by the end of 1997, 46 companies had endorsed the CERES principles, including a number of big business players such as Bank America, Baxter International, Coca-Cola, General Motors and Polaroid. By this time, the CERES company members represented $240 billion in sales revenues per year and employed about one million people.



The CERES places great emphasis on the rising power of information, and potentially sees this as a revolution of the same magnitude as the industrial revolution. This ties in well with a common interest of all their supporters, which is to seek and provide better information about corporate environmental performance. The CERES feels there is mounting evidence of how information drives environmental improvement. In the short period since the emergence of the ‘Right to Know’ movement in the USA, the TRI has served to drive improvement initiatives across a wide array of industrial sectors. In addition, findings from various studies on the Wall Street reaction to environmental information suggest that the stock market will only take note if a persuasive link between environmental performance and shareholder risk can be demonstrated (see section 3.11). The number of CERs published in the USA alone has risen from just a handful to hundreds, demonstrating that companies do see value in publishing their environmental performance data and obtaining information for reliable benchmarking. The CERES already offers specific guidance in environmental reporting, whereby companies follow a given format, which they claim is widely recognised as one of the most comprehensive standardised formats for corporate environmental reporting. It substantiates this claim by pointing out that five out of the top ten reporting companies in the 1997 UNEP CER ranking were also endorsers of the CERES principles. It is now recognised that the big issue for environmental reporting in the future is dealing with the lack of comparability. To answer this challenge, at the beginning of 1997, the CERES set out to implement a new strategic plan. Two important elements of this relating to CERs were (a) improving their leadership in standardised environmental reporting, and (b) reaching a critical mass of companies within targeted industry sectors. A key step to implement thinking in this respect was to announce the start of a major project to be known as the Global Reporting Initiative (GRI). The overall vision behind the GRI was to bring together as many as possible of the numerous initiatives on corporate environmental reporting that have developed independently around the world and to help shape them into a single set of coherent, consistent global standards. In essence this meant that the first major move towards searching for an international CER standard had taken place. The progress on this major initiative is described in some detail in section 8.1.

4.7

Global Environmental Management Initiative (GEMI), USA The GEMI is a non-profit organisation located in Washington, whose membership is drawn mainly from US companies. It is dedicated to improving environmental, health and safety performance worldwide in order to help business achieve environmental excellence. The GEMI’s strategic goals are stated as being to: •

• •

• •

•

effectively use GEMI membership resources to identify, develop and distribute tools that enhance the capabilities of environmental, health and safety (EHS) professionals; conduct benchmarking exercises on EHS activities so that members can learn about best practices for use in their companies; use the GEMI organisation to communicate to and educate GEMI stakeholders about ways that companies can practise and promote leading-edge EHS programmes to improve company performance and public perception; work with other national and international industry, trade and NGOs to promote the value of proactive EHS programmes; use GEMI membership resources to identify, evaluate and educate members and other businesses on key emerging EHS issues and when appropriate develop approaches to these issues; keep the GEMI organisation vital by energising current members and seeking new members who will follow the organisation’s objectives.

In 1994, the GEMI issued a publication, ‘Environmental Reporting in a Total Quality Management Framework’.

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Table 4.5

Principles for environmental management Number

Principle

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Corporate priority Integrated management Process of improvement Employee education Prior assessment Products and services Customer advice Facilities and operations Research Precautionary approach Contractors and suppliers Emergency preparedness Transfer of technology Contributing to the common effort Openness to concerns Compliance and reporting

Source: ICC Table 4.6

4.8

Steps in verification achievement Number

Level of progress

1 2 3 4 5

No action Evaluating practices Developing plans Implementing plans Practice in place

International Chamber of Commerce (ICC), France A further measure of the interest shown by companies in tackling environmental issues was provided by the decision in November 1990 by the International Chamber of Commerce (ICC), based in Paris, to establish a Business Charter for Sustainable Development. Within a year, over 700 companies worldwide had registered support. Approximately 50% of the companies were from Europe, 20% from Latin America and the remainder mainly from North America and Japan. By the late 1990s, the number of companies supporting the ICC initiative had increased to well over 1000. The charter identifies a wide range of principles for environmental management (Table 4.5). As principle 16 is the most relevant with regard to environmental reporting, the full text is given: ‘To measure environmental performance; to conduct regular environmental audits and assessments of compliance with company requirements, legal requirements, and these principles; and periodically to provide appropriate information to the directors, shareholders, employees, the authorities and the public.’

Some companies have utilised compliance with this ICC charter as part of their verification process for acceptable environmental management. A good example of this can be found in the 1998 CER from Novo Nordisk of Denmark, a supplier of enzymes. This shows (Table 4.6) the progress made on each of the 16 principles by means of a five-step rating system. It is pointed out that attainment of step 5 is by no means an end goal but rather a platform from which stems continuous improvement.

4.9

Public Environmental Reporting Initiative (PERI), USA The PERI guidelines, developed between 1992 and 1993, are different from many of the other guidelines in that they were formulated by a group of predominantly US business companies from different industry sectors with input from various stakeholders.



Table 4.7

PERI environmental reporting guidelines Number

Attributes

1 2 3 4 5 6 7 8 9 10

Organisational profile Environmental policy Environmental management Environmental releases Resource conservation Environmental risk management Environmental compliance Product stewardship Employee recognition Stakeholder involvement

The sponsoring companies are identified as: • • • • • • • • • •

Amoco; British Petroleum; Dow Chemical; DuPont; IBM; Nortel; Phillips Petroleum; Polaroid; Rockwell; United Technologies.

In drawing up the guidelines, many aspects of environmental reporting were evaluated. Included was the work of the WBCSD, Deloitte & Touche, the CERES, the Council on Economic Priorities (CEP), the Investor Responsibility Research Center (IRRC) and the GEMI. The fundamental objective in issuing the guidelines is to provide a tool for organisations to produce a balanced perspective on their environmental policies, practices and performance. The intent is to help organisations better meet their stakeholders’ evolving expectations, while recognising the unique characteristics of an organisation’s culture, management system, industry and scope of business activities. The guidelines also provide organisations with a tool to reach as many different audiences as they wish. While it may be difficult for any one report to fully meet the needs of a particular audience, the guidelines will help demonstrate willingness to communicate on the issues. Comprehensive details can be found on the IBM website, where the PERI 10-point plan for producing an environmental report is shown (Table 4.7). The guidelines acknowledge two underlying realities: the merits of continuous improvement and the principle of ‘what gets measured gets managed’. There is a high degree of flexibility offered when using the guidelines to accommodate the unique aspects of organisations, based on different geographical locations, industry sectors, or variations in size, structure or operations. Each reporting company may decide how, when and to what extent, to utilise the individual components.

4.10

United Nations Environment Programme (UNEP), France The UNEP established its Industry and Environment office in 1975 to bring industry and government together to promote environmentally sound industrial development. It is located in Paris and its broad goals are to: • •

encourage the incorporation of environmental criteria in industrial development plans; facilitate the implementation of procedures and principles for the protection of the environment;

64


• •

promote preventive environmental protection through cleaner production and other proactive approaches; stimulate the exchange of information and experience throughout the world.

It was one of the first international organisations to express interest in gauging the progress of environmental reporting, seen as an important contribution in the move towards sustainable development. One of the first steps was the publication in 1994 of a worldwide survey on environmental reporting (see sections 3.1/3.2). CER providers were selected to give a balanced picture of corporate reporting practice across world regions and industry sectors. This survey became a reference point for many of the companies embarking on environmental reporting, particularly because of the comprehensive checklist of 50 reporting elements offered. These were grouped under five main headings: • • • • •

management and system; input/output inventory; finance; stakeholder relations; sustainable development.

The individual elements were based on both reporting practice and what would be needed to meet emerging stakeholder expectations. This set of reporting elements should not be viewed as a reporting standard, but more as a set of basic building blocks that companies can use to construct their reports according to their own priorities. In the absence of a single global reporting standard, this UNEP 50 elements model, substantially unchanged since its introduction, has become one of the most widely used yardsticks for environmental reporting practices. The 1994 survey identified the leading industry codes of conduct being used as guidelines. One very important observation was the striking lack of attention paid to the financial implications of environmental management in all of the codes. For the future, the UNEP’s vision is that environmental reporting must become a worldwide concept if the major environmental issues, most of which are global in nature, are to be addressed. For some time, and particularly since the Rio Conference in 1992, the UNEP has realised that it is fundamentally important to engage the financial community in the environmental debate if the ultimate objective of sustainable development is to be achieved. In this respect, a key step was to introduce the Financial Services Initiative on the Environment, the aim being to integrate environmental considerations into all aspects of the financial sector’s operations. A core part of this initiative was to foster endorsement of both the UNEP ‘Statement by Financial Institutions on the Environment and Sustainable Development’, and the ‘Statement of Environmental Commitment by the Insurance Industry’, both of which commit signatories to incorporating environmentally sound practices into their operations.

4.11

World Business Council for Sustainable Development (WBCSD), Switzerland The WBCSD is a coalition of international companies united by a shared commitment to the environment. It is based in Geneva and started off as the Business Council for Sustainable Development (BCSD) in 1990 to provide a business perspective on economic growth and sustainable development, prior to the Rio Summit in June 1992. In January 1995, BCSD was merged with the WICE (World Industry Council for the Environment) to form the WBCSD, which is now claimed to be the pre-eminent business voice on sustainable development issues. By 1999, it had about 125 member companies, including a number of the largest multinationals, drawn from 35 countries and more than 20 business sectors. There is also an expanding global network of national and regional councils and other organisations, together representing more than 600 companies. The WBCSD sees its overall mission as ‘playing a vital role as an independent international organisation that operates at the interface between business, policy makers and special interest groups’.



The WBCSD is governed by a council composed of the chief executive officers of its member companies, or other very senior officers. Corporate members pledge themselves to support the WBCSD’s work both through their annual subscriptions and by making available to the various work groups their in-house skills, knowledge and experience, along with appropriate human resources. The initial objectives of the WBCSD mission were to: • •

• • •

provide business leadership as a catalyst for change towards sustainable development; work with and encourage policy makers to create the framework conditions required for business to make an effective contribution towards sustainable development; help to make business a respected partner in policy development and implementation; promote a clear understanding of sustainable development in the global business community and challenge business to self-examine its performance in this area; encourage business to develop goals and actions for sustainable development, within their current profit and loss criteria and also within the context of present and future international agreements, governmental policies and fiscal measures.

Without doubt, this forum is playing an important role in the environmental debate. The council members, mainly multinational companies, are, because of their size, collectively responsible for a significant amount of pollution worldwide. However, they have the ability to improve matters by making cleaner technologies more readily available on a world scale. There are two projects of particular relevance to environmental reporting. The first concerns the desire to establish a link between environmental performance and financial attributes such as share value. In this respect, the WBCSD supported a study on financing change, which investigated whether financial markets must always encourage a short-term, profit-first-and-last mentality, or whether they can reward companies that pay particular attention to their environmental responsibilities. The second project, falling within the best practice sector, concerns developing a methodology to measure and report eco-efficiency. If successful, this could help a great deal in improving the lack of comparability found in CERs, which is probably the biggest shortcoming to be addressed. In 1998, the WBCSD conducted an international survey of CERs to see how far companies have proceeded with measuring their environmental performance quantitatively, which will be necessary in the context of achieving sustainable development. The conclusion was that although a number of companies were claiming to support the concept of ‘eco-efficiency’, defined as the unit of value provided per unit of environmental burden, few seemed to be applying it fully in their CERs. The degree of sophistication with which eco-efficiency was handled and communicated varied greatly from company to company. There are a number of reasons why companies should consider measuring key aspects of eco-efficiency performance: • • • •

to track performance and document progress, as well as highlighting areas where improvement may not be possible; to identify cost savings in operations and opportunities for business; to allow investors to analyse environmental performance, as eco-efficiency becomes an emerging criterion for investors; to clearly communicate the company’s progress on sustainability.

A working group has developed an indicator framework outlining the full spectrum from which businesses can define specific measurements that apply to their activities and is working on a set of cross-comparable indicators. These are described as parameters that are universally measurable and easily interpreted across the range of industry sectors, although they will not be of equal relevance to all sectors. For some businesses, additional information might be necessary to explain how certain indicators apply.

66


Companies will need to gather and report quantitative data on their environmental performance in relation to product/service creation and product/service use, together with their economic performance and the functional value of the products and services they generate. The cross-comparable indicators being considered are shown in the accompanying table.

Eco-efficiency indicators Environmental indicators

Value indicators

Total amount of energy use Total amount of materials use Greenhouse gas emissions Ozone-depleting substances emitted Sulphur dioxide and NOx emissions

Mass or number of products Number of employees Sales Gross margin Value added

Source: WBCSD

The draft ISO 14031, ‘Environmental Performance Evaluation’, should provide important guidance to companies in both the selection and design of indicators. The working group now plans to initiate an extended pilot exercise in which a number of member companies will test the proposed indicator framework in their businesses and exchange the experience gained.

4.12

Other guidelines and approaches The 1998 PIRC survey clearly illustrated the issue of the complexity of standards in environmental reporting. It identified close to 20 ‘environmental codes of practice’ in use in the UK alone (Table 4.8). Some of these are not strictly reporting guidelines but amount to declared membership of associations or other bodies. Through these it is implied that a condition of membership is to comply with any guidelines in force within that association. A good example of this is the CIA’s requirement for organisations to provide indicators of performance in order to qualify to use the internationally recognised Responsible Care® symbol. As demonstrated in this chapter on guidelines, there are many views on what CERs should cover. A number of organisations have developed the scorecard approach, whereby the required ideal content is broken down into a number of categories. An example is the scorecard devised by management consultants Deloitte & Touche, which consists of eight weighted categories further divided into forty sub-categories (see Table 4.9). Each sub-category has a number of questions giving points for different responses. Companies are encouraged to assess their own CERs as some of the questions require inside information.

4.13

Design considerations The CER can play an important role in corporate communication strategy, particularly with regard to conveying details of environmental engagement and performance. Good design, editorial approach and layout are very important aspects of overall appeal and accessibility. These are important attributes in engaging the attention of the reader. A key point often overlooked is that there can be a big difference between what the company sees fit to provide and what the reader is expecting to receive. Whereas the annual report is geared predominantly to financial performance, the CER will attract a broader spectrum of stakeholders. One of the biggest problems facing companies providing CERs is that of addressing a widely heterogeneous audience with many different areas of interest. Companies are still trying to determine which stakeholders are most interested in the CERs by inviting readers to submit their details on reply cards provided with the CER. From the designer’s point of view, creating a document



Table 4.8

Environmental guidelines in use in the UK Guideline/code/initiative

Companies

Australian Minerals Industry Code for Environmental Management (AMIC) British Aggregates & Construction Materials Industries (BACMI) Building Research Establishment Environmental Assessment Method (BREEAM) Canadian Environmental Protection Act Guidelines CEFIC Forests Forever Campaign IDEALS (EU) International Hotels Initiative (IHEI) London First Clean Air Charter ‘Making a Corporate Commitment’

Rio Tinto

OECD Guidelines for Transnational Companies Oil Spill Response Limited Public Environmental Reporting Initiative (PERI) Responsible Care® Swiss Emission Standards for Energy Companies UK Round Table on Sustainable Development United Nations Environment Programme (UNEP) WBCSD World Association of Nuclear Operators (WANO)

Tarmac BT, Sainsbury, NatWest, British Land, Barclays

Hammerson Property BP Meyer Cookson Ladbroke NatWest, Sainsbury Boots, Eastern Group, Guinness, Land Securities, National Grid, Sedgewick Unilever Enterprise Oil Sainsbury, Rio Tinto, Thames Water Unilever, Courtaulds, ECC, Albright & Wilson, Laporte, Shell, Elementis, Inspec Lasmo, Wolseley Northern Foods Thames Water, Rio Tinto, HSBC NatWest, ICI, EMI, Powergen, Unilever British Energy

Source: PIRC 1998 Environmental and Social Reporting Survey

Table 4.9

Deloitte & Touche score card for CERs Category

Maximum points

Corporate profile

10

Report design

10

Environmental impact and data

20

Environmental management

20

Finance and eco-efficiency

10

Stakeholder relations

10

Communication

10

Third party statement

5

Sub-categories Corporate context management commitment. Consideration of significant aspects. Environmental policy and commitment. Scope of report. Rationale behind choice of EPIs. Reporting and accounting policy. Description of relatedness/pertinence. Coverage. Inputs and emissions. Waste/residual products. Packaging and transportation. Product stewardship. Land contamination and remediation. Environmental effects. Other significant factors. Environmental goals and targets. Environmental management system. Contingency planning and risk management. Research and development. Life cycle design. Environmental impact assessment. Environmental costs/investments. Environmental liability. Government economic penalties/incentives. Future cost/investments, business opportunities and risks. Employees, customers and consumers. Contractors and suppliers. Regulatory bodies. Voluntary initiatives. Layout and appearance of report. Feedback mechanisms. Verification of report.

that meets the needs of all these people is indeed a challenge, as the last thing that is wanted is to end up with a confusing, unwieldy, reader-unfriendly document. The overall design depends a lot on the intended audience, and very few CERs indicate for whom they are written. Some readers will be primarily interested in lots of hard facts whereas others may well prefer a magazine-type approach. When viewing CERs in relation to other reporting documents, such as annual reports and accounts, it is often obvious from the different appearance that they have been produced in isolation from these mainstream documents. A more cohesive image of the company is achieved if a single design department is employed to produce both types of publication. In order to fall more in line with the conventional annual report, some CERs are adopting the traditional financial reporting structure, with a front section devoted to a general review of the company’s business plus case studies and simple charts. The second section contains technical data, statistics and more detailed charts. This approach caters better for the different levels of audience interest and understanding. The growing length of a number of CERs has led to a data-dense and text-heavy result. This can be resolved by the production of an additional but shorter summary report with links provided to more detailed reports or websites. The inclusion of executive summaries in each CER could also achieve this objective. High data density very often leads to a multitude of incomprehensible headings, making navigation through the report difficult. Increased focus on more frequent and more extensive reporting using the internet presents both opportunities and challenges to reports and verifiers. Report producers must establish the reporting boundaries more precisely, and verifiers will need to ensure that continuous or interim reporting is subject to external monitoring. Currently, web pages on the environment can be all too bland. CERs could present great opportunities for corporate communications by utilising the company’s environmental performance to enhance the company reputation. Visual aids have an important part to play and can certainly help lighten up lots of factual text. However, these should be relevant and should steer clear of ‘green washing’ in the form of delightful landscapes and animals. These all-too-common nature images are unlikely to impress those who have a high degree of environmental awareness, the most likely recipients of the CER, who will see this as devaluing the factual content of the report. Far better to show realistic pictures, such as people in the workplace responsible for improving environmental performance. Good use of bold graphics and large keynote statements would be much more appropriate. There are many desirable features worthy of consideration, among which a clear structure is important, particularly in the case of very long reports. Some CERs can extend to well over 100 pages, in which case a summary document should be considered. From an environmental aspect, long print runs of large reports can be counterproductive if the resultant resource utilisation and pollution is taken into account. Criticism of this type can be answered, to some extent, by offering the CER on-line. However, even here the environmental impact of electronic media needs to be considered. In order to enhance environmental credentials, some companies have seen fit to give details of the paper used to produce the CER, e.g. recycled fibre content and chlorine-free pulp. In some cases, details of the printing process are also given, with mention of soya-based inks and EMAS registered printers. As with financial reporting, it is considered that qualitative attributes have an important part to play with regard to user-friendliness of environmental reporting. The CERES has attempted to identify the main qualitative features with a brief explanation of their relevance: • •

clarity – an important attribute for conveying clear messages on policy, targets and performance; comparability – to ensure monitoring and benchmarking;



• • • • •

relevance – to user groups with diverse expectations and needs; reliability – freedom from bias and material error; timeliness – to identify outcomes and trends in an expeditious manner; understandability – to informed users; verifiability – to enhance credibility of reported information.

While this draws together different qualitative attributes, it also makes clear the complex nature of the task of improving environmental reporting.

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5 The chemicals business

5.1

Definition of chemicals industry sector For the purposes of this handbook the chemicals industry sector is that based around conversion of purified natural resources supplied by others into chemical intermediates. The main chemical activities included are: • • • • • • • • • • • •

Industrial gases; Dyes and pigments; Basic inorganic and organic chemicals; Fertilisers and nitrogen compounds; Plastics; Synthetic rubber; Paints, varnishes and coatings; Printing ink; Fibres; Mastics and sealants; Glues and gelatine; Chemicals distribution.

In general companies whose main areas of activity are in the following areas are not included: • • • • • • • •

Oil extraction, oil refining and distribution; Gas and energy; Consumer products; Human and animal health; Pesticides and fungicides; Biochemistry and agricultural biotechnology; Nutrition; Metals and mining.

Statistics defining the scope of company activities in the chemicals industry sector are derived from the Standard Industrial Classification codes (SIC 24000 (UK 1992), SIC 2800 (US 1987), ISIC 351 & 352 (ISIC Rev 2), ISIC 24 (ISIC Rev 3) and FT/S&P Actuaries World Index Sectors 621 & 622). While the tables and factual statements included in this section are generally based on this code, the discussion is directed towards a slightly narrower grouping to reflect the analyses carried out in Chapter 6. There are two reasons for considering the narrower group in Chapter 6, and it is useful to understand them here. Firstly, the wider groupings taken by other analyses are more applicable to the highly diversified chemicals industry of the 1970s and early 1980s. During the late 1980s and the 1990s, however, the structure changed and the narrower definition is more appropriate to the more specialised groupings that currently exist. The second reason relates to the different emphasis various groupings within the industry put on environmental issues. While the majority of issues will to some degree affect most industries, those which influence sectors extracting natural resources will be weighted differently from those affecting sectors selling directly to the public. These differences in emphasis do influence the way in which sectors approach environmental reporting, and therefore effort has been taken to define the sector in such a way as to make comparison most meaningful.

5.2

Profile of chemicals industry sector Environmental reporting has been in place in the US and Western European chemicals industries since the late 1980s, and it is useful to review the main trends after that date. It was decided to use 1984 as the start date for this period since it was then that: • • •

oil prices halved, initiating a period of rapid growth in the world economy; over 2000 people died following the discharge of methyl isocyanate at Bhopal, India; the World Commission on Environment and Development (the Brundtland Commission) was appointed.

The period 1984–2000 is reviewed considering the headings ‘economy’ and ‘environment’.

Economy 1984 to 2000 As is the case for most of the higher technology industries, chemical demand and production are both dominated by the NAFTA, EU and Asia/Pacific regions. These three regions together accounted for 84% of worldwide production and 81% of sales in 1999, and in no other region does the per capita consumption of chemicals come close to the world average (see Table 5.1). A further table (Table 5.2) also highlights the dominance of the USA, Japan and Germany as producers, and shows how little change there has been in world rankings over the period. Table 5.1

Output, consumption and per capita consumption of chemicals US$ billion, except per capita US$/person Per capita Output consumption consumption Western Europe North America Far East Japan China Other Latin America Central/Eastern Europe Indian Subcontinent Middle East Africa World total

465 394 389 216 77 96 68 60 29 23 19

411 383 418 203 89 126 91 66 35 36 26

1073 1295 237 1620 72 297 192 159 29 181 40

1461

1487

262

Source: ECE Annual Review Table 5.2

World leading producing countries and their market shares Industrial chemicals (ISIC 351) 1990

1996

Country

Market share, %

Country

Market share, %

USA Japan Germany (western) UK France Italy Netherlands Brazil

25.8 16.1 13.7 5.0 4.9 4.5 3.0 2.5

USA Japan Germany (western) France UK Italy Netherlands China (Taiwan)

24.2 15.3 12.9 5.0 4.8 4.1 3.0 2.7

Source: ECE Annual Review

72


Although the chemicals industry experienced the same economic fluctuations as other industries during the period, it tends to be more rapidly affected than most by crude oil prices and political turmoil. By the mid-1980s oil prices had fallen to more acceptable levels and inflation was under control. The chemicals industry grew rapidly and hardly faltered at the time of the stock market crash in 1987. With the growth of profitability during this period there was massive investment, particularly in Japan and the USA (where the higher profitability of the US market also encouraged inward investment). Following the collapse of the Eastern European economies in 1989 there was a short worldwide recession (1990–91), followed by soaring oil prices owing to the Gulf War (1991). The downturn in demand gave rise to over-capacity that started the rationalisation of the chemicals industry. While the oil industry had already undergone rationalisation by way of mergers and acquisitions in response to the oil crises of the 1970s and 1980s, this did not occur extensively in the chemicals industry until after 1990. Although growth in the industry slowed from 1990 onwards, the early 1990s were for most a time of prosperity, with falling unemployment and rising stock markets. In spite of this, individual economies were still having to make quite far-reaching local economic adjustments in order to stay on course. Thus in 1990 Japan increased interest rates to reduce inflation and started an ‘eight-year growth recession’, and in 1992 the UK had to let the value of the pound fall to reverse its recession (see Paul Krugman, The Return of Depression Economics, Penguin, 1999). Even though South-East Asia was growing rapidly and the massive job of rebuilding Eastern Europe was under way, up to the mid-1990s most investment in Third World markets was funded through the IMF and the World Bank, and was directed towards Latin America. The Mexican financial crisis of 1994 brought about significant changes in investment strategy, and coincided with the bottom of the trough in the growth rate of the chemicals industry. From 1995 onwards investment was increasingly directed towards South-East Asia, and to China in particular. The expansion of these economies restored worldwide chemicals production to more usual levels, but consumer confidence elsewhere was low and demand for chemicals was sluggish. This sluggishness changed to uncertainty following the Asian financial crash that started in 1997, was made worse by the Russian crisis of 1998, and continued with renewed concerns about South American currencies. With the US chemicals industry in a slump and the dollar particularly strong against the European currencies, the US chemicals industry entered into a period of much more intense rationalisation, and this soon extended throughout the industry as multinationals sought to maximise shareholder performance. This rationalisation continued to be an important feature of the chemicals industry at the close of the period, as shown in Fig. 5.1. In December 1998 European Chemical News listed over 350 mergers, acquisitions and joint ventures in the sector. Throughout the whole of the period 1985 to 1997 chemicals volume growth rate outstripped the total industry growth rate. In more recent years, however, the chemicals industry has tended to experience lower growth rates (see Table 5.3). For industry in general growth has tended to be most rapid in the higher added value/knowledgebased technological areas. This trend has also been true of the chemicals sector where specialty chemicals outperformed industrial chemicals. Continuing economic uncertainty continued to be a major theme through to 2000.

Environment 1984 to 2000 Although there had been many environmental treaties since the UN Conference on the Human Environment in 1972 (which established the Polluter Pays principle), the lack of agreement on global environmental statistics and the absence of positive scientific evidence on environmental effects encouraged states to take different approaches to legislation and planning, and encouraged businesses to dispose of waste in ‘pollution havens’. Meanwhile public confidence in the areas of safety and environmental protection had been severely damaged by incidents such as Bhopal (1984), and this confidence clearly needed to be restored.



40

30

20

10

0 1990

91

92

93

94

95

96

Figure 5.1

Global spending on chemicals acquisitions, US$ billions. Source: Young & Partners

Table 5.3

Average percentage growth rate of the chemicals industry 1985–1997

EU USA Japan

97

1997

98

99

1998

Chemicals

Total industry

Chemicals

Total industry

Chemicals

Total industry

2.9% 3.2% 4.2%

1.9% 2.9% 2.1%

4.9% 3.3% 3.6%

3.9% 5.7% 4.1%

2.7% -1.2% -4.9%

4.0% 3.2% -7.6%

Sources: ESCIMO, OECD, CEFIC Ecostat, ECE Annual Review

In 1996 the results of a pan-European survey (Tom Burke, Sustaining the Chemical Industry in the 21st Century) indicated that: • • • •

the public’s opinion about the chemicals industry was worsening; the public’s trust in the chemicals industry had not improved; the belief in the chemicals industry efforts to control pollution was not strong; the chemicals industry was not fair and open with its information.

A graph given in the same presentation (Fig. 5.2) shows a steady decline in the percentage of those with a favourable attitude towards the chemicals industry up to 1985. This trend reversed in 1985, and although there was a gradual improvement until 1988, it fell to a very low level in the early 1990s, and after rising slightly in 1993 fell again during the latter part of the period. The fall in public confidence to a trough in the early 1990s reflected a growing public awareness of green issues and concerns, arising out of a number of major incidents associated in the public’s mind with the wider chemicals industry. The increase in the strength of public opinion was certainly making itself felt, and if there is any one underlying theme that marks the environmental climate from 1984 to 1992 it is that the period saw a move towards environmental harmonisation. Much of the credit for this harmonisation, and an improvement in public perception in the late 1980s, stemmed from the World Commission on Environment and Development (the Brundtland Commission), which was appointed to formulate proposals for dealing with global environmental issues. The commission proved very successful in promoting the concept of sustainability, mainly through making economic development central to its proposals for environmental protection. This set the scene for the Montreal Protocol (1987), which agreed targets for bringing about a ban on the use of the major ozone depletors (CCl4, CFCs and HCFCs). This initiative not

74


% 60

50

40 Favourable 30

20

10

0 1979 80

Figure 5.2

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

Favourability of the chemicals industry: general public trends. Source: Tom Burke, British Association for the Advancement of Science, 2000

only required a move away from the use of chemicals and methods of processing that were well understood and relatively cheap, but also necessitated massive research and development into alternatives. Undoubtedly the positive international response to the agreement at this time was in part fuelled by an air of optimism that existed as the worldwide economy grew rapidly in the aftermath of the second oil crisis. However, even as the rate of industrial growth slowed, cooperation continued in response to the environmental problems that arose in the aftermath of the Gulf War and the collapse of the Eastern Bloc economies. Driven by international agreements and the fear of much stricter national legislation, the chemicals industry also moved towards closer unity. With increasing globalisation, and significant investment in those countries with well-developed environmental frameworks, national manufacturer’s federations started to promote a more active approach to self-regulation. Responsible Care® was introduced by the Canadian chemicals industry in 1985 and was rapidly adopted by producers under the auspices of their respective national industry associations, so that by the mid1990s it was arguably the most widely implemented and comprehensive HS&E programme operated by any industry. By 1992 the major chemicals-producing countries had similar environmental legislation, and international trade in hazardous waste was subject to regulation (e.g. the Basel Convention). While organisations such as the World Bank tried to ensure that internationally funded projects were based on sound environmental impact assessments, increased globalisation had increased the power of industry relative to the state, and the depressed state of many Third World economies encouraged individual countries to adopt short-term policies at the expense of the environment. The United Nations Conference on Environment and Development (the Earth Summit) that took place at Rio de Janeiro in 1992 tried to help redress the balance (with mixed results) by encouraging states to take responsibility for policing their own environmental issues. This proved very effective in industrialised countries, which continue to tighten their control, and chemical industry associations played their part through initiatives such as the Voluntary Energy Efficiency Programme (VEEP). Even so, economic considerations have perpetuated the concept of ‘pollution havens’ elsewhere, and the export of low added value processes to less effectively policed economies continues.



The Earth Summit also proved very effective in raising awareness of sustainability issues through its Agenda 21. Again this had mixed results. Industry in general and the chemicals industry in particular took on board its concepts whole-heartedly, developing a whole range of new, ‘green’ products and moving into markets that would better meet their aspiration to become sustainable businesses. Unfortunately, industry was moving at a far greater pace than public, national or international opinion on what sustainability demanded. The European Commission now acknowledges that the formal mechanisms for setting standards are not keeping pace with the needs of industry and the markets. It is therefore encouraging the adoption of voluntary agreements between manufacturers and suppliers, and the use of performance standards wherever possible in technical regulations and for public contracts. Environmental consciousness has been identified as one of the most significant trends of the present era. In the early stages the desire to rectify pollution has resulted in the forcing of fundamental and quite often disruptive changes on industry, with associated high costs. More recently, however, the influence exerted by the environmental pressure groups has waned as the press and the public have witnessed signs of backlash arising from over-zealous demands. Realising this, many of the groups have changed their strategy and are now aiming more at identifying solutions. If there is any one underlying theme that marks the period from 1992 to 2000, it is that the industrialised countries have made a conscious effort to enforce environmental legislation, and because of its high concentration in those countries the chemicals industry has played a major part in reducing pollution.

5.3

Main environmental concerns In the UK, the DETR commissioned the consultants Entec to compare environmental spending across a wide range of industries. The figures from this 1997 report are shown in Table 5.4. As might be expected, it shows the chemicals sector at the top of the spending league, accounting for over 20% of the total, which not only indicates the extent of the pollution problem but also the importance attached to solving it. In addition, the survey attempted to identify the leading current environmental issues across the whole of business and industry. Opinions were sought from a group of so-called opinion formers, which consisted of pressure groups, journalists, academics and government agencies. The results for 1996 and 1997 are shown in Table 5.5. Another input for identifying the key issues, this time on an international scale, came from the 1998 Greenpeace International annual report. In this a breakdown is provided of the campaign spending by Greenpeace, as shown in Table 5.6. The importance of climate change and toxics is confirmed and of increasing relevance to the chemicals industry is genetic modification.

Table 5.4

Environmental expenditure league for UK industries Industry sector Chemicals Paper/printing Food/tobacco Basic metals Energy/water Machinery/equipment Textiles/leather Transport Electrical/optical Other Total

Expenditure (£M)

% of gross output

503 367 327 197 196 178 114 62 51 345

1.36 1.10 0.07 0.56 0.47 0.74 0.66 0.15 0.12

2340

0.56

Source: Entec, UK

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Table 5.5

Survey of environmental issues 1997

1996

Air pollution Water pollution Energy conservation Waste disposal Health and safety

Air pollution Waste disposal Water pollution Global warming Health and safety

Source: Entec, UK

Table 5.6

Greenpeace campaign spending worldwide (1998) Campaign Climate Toxics Oceans Nuclear and disarmament Forests Genetic modification Total

Proportion of total spending (%) 25 20 18 17 12 8 100

The global and more localised issues identified by Greenpeace and Entec show a great deal of commonality, and the three main issues are addressed in more detail under the headings identified by Entec. Before discussing these, it should be remembered that in spite of industry placing an increased emphasis on reducing the effects of particular waste streams and specific pollutants, poor design or operating practice can also result in explosions, spillages and leaks that have severe local and transboundary impact.

Air pollution Public perception of the importance of the differing types of air pollution generated by chemicals industry has changed in focus with time. With the current emphasis on the use of cleaner fuels and occupational hygiene-driven improvements, air acidity (through SOx, NOx) and particulates no longer has the high profile it used to. The current issues that most concern the chemicals industry are emissions of volatile organic compounds (VOCs), ozone-depleting substances, photochemical ozonecreating substances and ‘greenhouse gases’. Photochemical ozone-creating substances and ‘greenhouse gases’ are mainly (but not exclusively) the result of the products of combustion and are considered below under ‘energy conservation’. VOC emissions are an everyday part of our lives, whether it is a petrol tank heating up during the day or the use of pressurised aerosols. Environmentally the chemicals are often toxic in their own right, act as ozone depletors or react with other pollutants to create photochemical ozone. The sheer size of the chemicals industry and quantity of VOCs handled rightly makes them the focus for regulatory control under legislation such as IPPC. While environmental capital investment in the early 1990s was geared towards end-of-pipe techniques for trapping and removing VOCs from waste gases, these systems are costly to install and operate, and often result in a liquid or solid waste stream that has an environmental impact in its own right. In the late 1990s, there was a shift towards thermal oxidation techniques, which are favoured in those countries such as the USA where there is no statutory requirement to report on CO2 emissions. Even so, with increasing pressure for the adoption of clean technology and the use of product life-cycle assessments, the current emphasis is towards replacing volatile solvents and preventing emissions at source. Depletion of the ozone layer became a world issue in the 1950s, and industry has been under particular pressure to eliminate the major ozone depletors (CCl4, CFCs



and HCFCs) since the Montreal Protocol (1987). The chemicals industry has responded well where market position has made it necessary. Thus manufacturers of these chemicals have developed new refrigerants, propellants and fire-fighting chemicals with lower environmental impact, and these have dramatically reduced the ozone-depleting potential of reported emissions. However, replacement of ozonedepleting chemicals within processes, and avoiding their manufacture as a by-product (e.g. N2O) does not appear to have been taken on board so readily.

Water pollution While the public perception is one of water pollution the environmental impact can arise from: • • •

contamination entering water courses, ground water or the sea; effects on water courses and water table through depletion at the point of extraction; high temperature discharges.

While all of these effects are common to a wide range of industries, the chemicals industry is well aware of the potential for contaminating water supplies and takes measures to comply with current legislation to prevent it. These measures are particularly required because of the toxic nature of the raw materials used, and products and by-products produced. Land contamination can arise directly from the burial of waste or following spillage, and water courses can become contaminated during rainstorms or when fighting fires. In addition, aqueous waste process streams are often deliberately introduced into water courses and the sea, albeit usually after treatment. Temperature effects and those due to the abstraction of water are also relevant to the chemicals industry because of its high energy dependence, and these factors will gain an increasingly important focus as chemical pollution issues are addressed. Regulation is an important factor in shaping trends in this area. In the developed world Clean Water Acts define the water requirements, and legislation such as the Superfund Amendments and Reauthorization Act (SARA) in the USA and Integrated Pollution Prevention and Control (IPPC) in Europe ensures that contaminated land is reclaimed, and encourages companies to make use of licensed waste disposal sites. The practice of deep-well disposal is also less widely spread. In the developed countries transfers of contaminated aqueous waste off-site are also generally well supervised by the manufacturers and regulated by the authorities, although water conservation and the extent to which aqueous streams are used as routes for disposing of waste are very much a function of how freely available water is. Thus in those areas in which water is freely available, the generally low levels of treatment charges and fines, and the lack of prosecutions following environmental incidents, mean that there is a climate in which the problem is dealt with after the event, rather than proactively preventing it occurring in the first place. So far most of the discussion has been about the developed world, but the situation is significantly different in poor and arid nations. Large areas of the world are arid, and it is estimated that about 1.4 billion people lack ready access to safe drinking water. In these areas it is important that legislation (that balances the needs of the local area) is enforced, to help ensure its continued availability. The types of conflict that can arise include those that surround water pricing. One move by the UNEP, in an attempt to preserve water, is to promote the modification of the current cost accounting procedures so that water prices reflect full environmental costs. In poorer parts of the world this makes it affordable only to industry, with the effect that industry waste streams become a resource for poor local populations. In a similar manner the EU landfill directive aims to protect the environment against damage by imposing limits on the amount of organic waste such as wood, paper and household rubbish. In the UK, it is estimated that the cost of overhauling and revising waste management activities to comply with the directive could be as high as $7.5 billion. The danger is that the added cost of disposal will encourage companies

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to look towards exporting toxic waste, as occurred in West Africa in the early 1990s, or investing in countries that do not have the same high level of command and control of legislation.

Energy conservation Historically, the energy issue has mainly been driven by fears over fossil fuel depletion. However, climate change started to become an issue following the creation of the World Climate Programme in 1979. The Intergovernmental Panel on Climate Change, an organisation that represents a wide range of international scientists, predicted temperature increases of 1–3°C by the end of the 20th century if greenhouse gases were not curtailed. In spite of the significant reductions in these emissions, all the signs are that this prediction was correct and that we are starting to see changes to the world’s weather patterns, causing heatwaves, storms and widespread flooding. Businesses contribute to global warming by: • • •

heat generation through the consumption of energy at all stages of the production process; combustion releasing carbon dioxide into the atmosphere, which then acts as a greenhouse gas; producing greenhouse gases as a by-product of certain industrial processes or activities, e.g. fermentation.

Because of the seriousness of the climate change issue, probably the most important indicator of environmental performance in the future will become the measurement and control of greenhouse gases, mainly in the form of carbon dioxide. To give some idea of both the total magnitude of the problem and which countries are most responsible, the breakdown of the total world carbon dioxide emissions on a country basis is shown in Table 5.7. This table indicates that in 1990 just three

Table 5.7

Worldwide carbon dioxide emissions (1990 reference point) Country USA Russia China Japan Germany UK India Canada Poland Italy France South Africa Mexico Australia Spain Brazil Korea Netherlands Saudi Arabia Other Total

Carbon dioxide emissions (million tonnes)

% of total

5 430 3 630 2 300 1 060 1 030 600 582 497 436 430 406 362 289 280 232 213 211 198 175 3 239

25.1 16.8 10.6 4.9 4.8 2.8 2.7 2.3 2.0 2.0 1.9 1.7 1.3 1.3 1.1 1.0 1.0 0.9 0.8 15.0

21 600

100.0

Source: Climate Change – A Threat to Global Development, first report submitted by the 12th German Bundestag’s Enquete Commission, ‘Protecting the Earth’s Atmosphere’



Table 5.8

Targets for carbon dioxide emissions for different countries/regions Change

Country/region

Change relative to 1990 (%)

DECREASE

EU* USA Japan Canada New Zealand Russia Ukraine Norway Australia Iceland

-8 -7 -6 -6 0 0 0 +1 +8 +10

STABILISATION

INCREASE

Source: Kyoto Protocol * Plus most Central and Eastern European countries.

countries (the USA, Russia and China) accounted for over 50% of the world’s carbon dioxide figure. In order to help address these issues a Framework Convention was agreed at the 1992 Rio Earth Summit to set voluntary targets for reduction of greenhouse gases. In December 1997, the parties to the 1992 UN Framework Convention on Climate Change met in Kyoto, Japan. A new protocol was drawn up and agreed by 174 parties to the convention. It covers emissions from six greenhouse gases, but the emphasis will be on carbon dioxide, as it is the major contributor to global warming and also probably the easiest to control (Table 5.8). The protocol stipulated an overall 5.2% average reduction of greenhouse gas emissions for the period 2008 to 2012, compared to 1990, for all developed countries. This was a historic move because the Kyoto Protocol made the reduction figures legally binding, once ratified by each national government. To date, however, the Kyoto Protocol has yet to be ratified by some of the parties, and in particular the USA, the largest emitter of carbon dioxide, where there is strong opposition at a number of levels to ratifying the protocol. This is exemplified by George W. Bush’s statement that it is ‘ineffective, inadequate and unfair to America’ because it exempts developing countries (including India and China). The argument is that the current cost advantage enjoyed by these countries would be further exaggerated if countries in the developed world were to assume a disproportionate share of the costs associated with combating global climate change. The irony is that developing countries are forecast to become the largest source of greenhouse gas emissions. The Kyoto Protocol allows for partnerships between countries to be drawn up so that commitments can be undertaken jointly. The member states of the EU created one such partnership and, in June 1998, the European environment ministers held discussions on how the target of 8% reduction would be shared out between member states. A number of factors were taken into consideration, such as future economic growth and the effort required to meet the target. Carbon sequestration, i.e. taking carbon dioxide out of the environment, is not widely discussed in the chemicals industry, although ideas such as removing carbon dioxide from the atmosphere and using it as a raw material for manufactured goods, e.g. cars and in concrete, are under serious consideration in the USA. In a recent report on the prospects for carbon sequestration, the US Department of Energy implied that these technologies could eventually lead to a safe, predictable and affordable way to prevent carbon dioxide building up in the atmosphere. A number of environmentalists are not happy with these ideas. They suggest they are unworkable, risky and will distract attention from more viable strategies such as energy efficiency and renewable energy.

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Table 5.9

EU member state targets for carbon dioxide emissions Country

Change relative to 1990 (%)

Luxembourg Germany Denmark Austria UK Belgium Italy Netherlands Finland France Sweden Ireland Spain Greece Portugal

-28 -21 -21 -13 -12.5 -7.5 -6.5 -6 0 0 +4 +13 +15 +25 +27


Table 5.10

Impact of new energy tax on UK industries Industry sector

Energy tax (£ million)

National Insurance reduction (£ million)

Steel Chemicals Paper Cement Glass Non-ferrous metals

230 175 100 40 20 10

4 25 6 0.6 — —

Source: Daily Mail

The individual country targets finally agreed in the EU are listed in Table 5.9. Following on from Kyoto, the Fourth Conference of the parties took place in Buenos Aires in November 1998, the aim being to clarify key concepts and mechanisms. The most important of these was the ‘clean development mechanism’, which aims to channel funds into developing countries for the deployment of clean technologies. The carbon emission trading mechanism was also discussed. Through this, parties to the convention will be able to purchase permits, which on balance should lead to overall reductions in emissions.

Energy tax The likelihood of an energy tax being imposed on industry across Europe now looks high, particularly with the commitment made by the EU to the Kyoto Protocol. A number of Northern European countries introduced their first environmental taxation systems some years back. Energy taxes involving both industry and households are already in operation in Denmark, the Netherlands, Finland, Norway and Sweden. In Germany, there has been considerable discussion at government level on the case for an energy tax, which is believed to be inevitable in some form. A study carried out by the Berlin-based DIW research institute investigated the likely effects of an energy tax levied on fossil fuels. The good news, which came from the study, was that this ecological tax reform would create between 330 000 and 800 000 jobs over ten years. The bad news was that there would be significant losers, mainly the iron/steel, paper and chemicals industries. More recently, a proposal for carbon dioxide tax has been put forward that would include some form of relief for energy-intensive industries (Table 5.10).



The UK aims to move beyond its Kyoto target of a 12.5% decrease in emissions agreed with the European Commission through a domestic pledge to reduce emissions of carbon dioxide by 20% below 1990 levels by 2010. In the March 1999 Budget, plans for environmental taxes were announced, which would produce £10 billion in 2001/2. These included proposals for an energy tax, officially named the ‘Climate Change Levy’, which it was estimated would produce £1.75 billion of the total environmental tax figure. Knowing this would be controversial, the impact is to be reduced by offering reductions in National Insurance contributions and some concessions, including rebates to the energy-intensive industries. Many of the industry trade bodies, in particular those representing the energy-intensive industries, have expressed serious concerns over the effect of this proposed Climate Change Levy. All of these sectors have been approached by the UK government to explore their interest in voluntary agreements. The Chemical Industries Association is ahead here, having already committed its members to a 20% reduction in unit energy consumption between 1990 and 2005, and having set up the CIA Broking and Trading Agency (CIABATA) to: • • •

5.4

manage and administer the chemicals sector energy agreement for discounts on the Climate Change Levy; provide guidance and comment in emissions trading; coordinate energy efficiency best practice.

Sustainable development With the increasing focus on sustainability reporting it is perhaps useful to consider what sustainability means to the chemicals industry. One of the earliest and probably best-known definitions for sustainable development was offered at the 1972 Earth Summit by the Norwegian Prime Minister Gro Brundtland who chaired the conference. This was as follows: ‘Sustainable development is meeting the needs of the current generation without compromising the ability of the future generations to meet their needs.’

This definition represents the ideal, and few would argue with it on the broadest scale. Since then, however, the process of defining what constitutes sustainable development has been taken over by individuals and groups, leaving definition of the guiding principles to lag far behind. The mere concept of a world based on sustainable principles is at first sight anathema to much of the chemicals industry, using as it does large quantities of non-renewable materials and energy, and producing environmentally unfriendly products and wastes. There appear to be three types of thinking going on: •

•

•

Those companies that are in a position to do so have already redefined themselves to fit the emerging picture. They have developed a focus on fields such as bioengineering (GMOs), biotechnology (enzymes, etc.), biodegradable plastics and alternative fuels. These companies are actively marketing themselves as having defined sustainable policies. Those companies that feel they ought to be doing something and are not quite sure what. They are generally aware of the issues, but don’t see how they need to change. Most of these companies do not mention sustainability as part of an environmental policy, but where they do it is usually in a very general manner. Those companies that have decided the debate is far too esoteric and their job is to ensure shareholder value by whatever means. Provided they continue to be profitable they will be in a position to influence discussion on environmental issues and address those they need to when they arise.

In order to accommodate the various types of thinking there have come into existence other definitions of sustainable development that industry is more comfortable to live with. A typical example is that quoted in the 1996 Health, Safety, and the Environment document from BP: ‘Sustainable development has been described in terms of the triple bottom line: economic prosperity, environmental protection, and social equity and a need for a balance between these objectives.’

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Another, more recent development is the emergence of the concept of corporate sustainability. The global Dow Jones Sustainability Group Indexes (DJSGI) provide one particular forum for financial quantification of corporate sustainability. The sustainability indexes were launched by DJSGI GmbH for those investors wishing to create long-term shareholder value by diversifying their portfolios and investing in companies committed to corporate sustainability. DJSGI components consist only of the 2000 leading sustainability companies worldwide. These include nine leading chemicals companies, six of which produce CERs, as analysed in Chapter 6. These are Bayer AG, Ciba Specialty Chemicals, Degussa-Huls, Dow, DuPont and Norsk Hydro. Financial platforms like this may well prove a powerful force for high-quality environmental reporting in the future. In general terms, the sustainability concept presents a challenge to industry to produce higher amounts of output using lower levels of raw materials, while generating less waste. The businesses that succeed in the future will need to view these challenges as opportunities and act to achieve the objectives while simultaneously improving their competitive position.

5.5

Chemicals industry associations Each country tends to have its own chemical industry association, but there are also three main regional groupings that act to represent area interests. These are the North American Council of Chemical Associations, CIQUIM (South America) and the CEFIC (Europe). The CEFIC is the largest grouping and has 16 full and six associate member federations. Surprisingly, South-East Asia (which produces 30% of the world’s chemicals) is not represented as a region, although the Japan Chemical Industry Association (JCIA) is a member of the International Council of Chemical Associations (ICCA). Not so surprising is the absence of India and China, both of which are already important in the field. The ICCA is the body that brings these national interests together to exchange views. It meets twice yearly, coordinates action and presents an international chemicals industry view to intergovernmental agencies on issues such as HS&E, transport safety, intellectual property, trade policy, and industry efforts to eliminate chemical weapons and diversion to illegal drugs. The chemical industry associations affiliated to the ICCA are: North American Council of Chemical Associations: • • •

American Chemistry Council – USA ( formerly CMA) ANIQ – La Asociación Nacional de la Industria Química, Mexico CCPA – Canadian Chemical Producers’ Association

CIQUIM – O Conselho das Associações da Indústria Química do Mercosul: • • • •

ABIQUIM – Associaçao Brasilera da Indústria Química, Brazil CIQyP – Cámara de la Industria Química y Petroquímica de Argentina ASIQUR – Asociacíon de la Industria Química de Uruguay ASIQUIM – Associación de la Industria Química de Chile

European Chemical Industry Council (CEFIC): Members • • • • • • • • •

FCIO – Fachverband der Chemischen Industrie Österreichs, Austria FEDICHEM – Fédération des Industries Chimiques de Belgique/Federatie der Chemische Nijverheid van Belgïe, Belgium PIBF – Foreningen af Danske Kemiske Industrier, Denmark KT RY – Kemianteollisuus ry, Finland UIC – Union des Industries Chimiques, France VCI – Verband der Chemischen Industrie e.V., Germany HACI – Hellenic Association of Chemical Industries, Greece IPCMF – Irish Pharmaceutical and Chemical Manufacturers’ Federation, Ireland FEDERCHIMICA – Federazione Nazionale dell’Industria Chimica, Italy



• • • • • • •

VNCI – Vereniging van de Nederlandse Chemische Industrie, the Netherlands PIL – Prosessindustriens Landsforening, Norway APEQ – Associação Portuguesa das Empresas Químicas, Portugal FEIQUE – Federacion Empresarial de la Industria Química Espanola, Spain KEMIKONTORET – Sveriges Kemiska Industrikontor, Sweden SGCI/SSIC – Schweizerische Gesellschaft für Chemische Industrie/Société Suisse des Industries Chimiques, Switzerland CIA – Chemical Industries Association Ltd, United Kingdom

Associate members • • • • • •

SCHP – Association of Chemical Industry of the Czech Republic/Svaz chemického prumyslu Ceské republiky MAVESZ – Hungarian Chemical Industry Association/Magyar Vegyipari Szövetség PIPC – Polish Chamber of the Chemical Industry/Polska Izba Przemyslu Chemicznego ZCHFP – Association of Chemical and Pharmaceutical Industry of the Slovak Republic/Zväz chemického a farmaceutického priemyslu Slovenskej republiky CCI – Chemical and Rubber Industry Association/Zdruzenje kemijske in gumarske industrije, Slovenia TKSD – Turkish Chemical Manufacturers Association/Turkiye Kimya Sanayicileri Dernegi

Other countries represented: • • • •

5.6

JCIA – Japan Chemical Industry Association PACIA – Plastics and Chemicals Industries Association, Australia NZCIC – New Zealand Chemical Industry Council CAIA – South Africa Chemical and Allied Industries Association

Chemicals industry initiatives Responsible Care® Worldwide, the most important chemicals industry initiative is the Responsible Care® programme. This programme was developed by the Canadian Chemical Producers’ Association (CCPA) with the aim of demonstrating continuous improvement in the industry’s safety and environmental performance. The programme was taken up in the USA under the stewardship of the Chemical Manufacturers Association in 1988, and since then it has been adopted by 42 national chemical associations. Because of the relatively high proportion of companies that are members of the national associations (CMA members represent approximately 90% of total US chemical production, and CIA members represent 67% of total UK chemical sales) there is a high degree of commitment to the Responsible Care® programme, and it covers 87% of the world’s chemical production by volume. The basic structure of the Responsible Care® programmes is set by the ICCA, and implemented by the national associations in cooperation with the regional federations. Each national Responsible Care® programme contains eight fundamental features that are broken down into milestones (of which there are 23 in all). The last feature to be added was that of verification (incorporated by the ICCA in 1996). They are: 1 2 3 4 5 6 7 8

Guiding principles (3 milestones) Name and logo (3 milestones) Codes and guides (1 milestone) Performance indicators (2 milestones) Communication with interested third parties (4 milestones) Sharing between companies (5 milestones) Encourage commitment (3 milestones) Verification (2 milestones).

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Most national associations make Responsible Care® a condition of membership, and through it members are committed to no accidents or harm to the environment. Participation is usually assessed by requirements to report HS&E data for subsequent compilation of national statistics, and failure to report can lead to expulsion. The ICCA Responsible Care Report (1998) identifies the number of countries implementing the various milestones. They are listed under one of the following categories: • • • •

Initiating Developing plan Implementing plan Elements in place.

The report indicates elements as being in place in more that 50% of the 42 countries for most of the milestones in features 1 and 4, and better than 30% implementation of the milestones in features 5 to 7. The lowest level of implementation is for verification. Only 7% of the countries have begun external verification of compliance and performance, and are making the results public. By observation there is a good deal of commonality in the way in which these fundamental features are interpreted, and a surprisingly high level of common sense of purpose across the regions. Thus we see complementary attempts to restore public confidence, through the ‘Confidence in Chemicals’ initiative in Europe at the same time as the Chemical Manufacturers Association in the USA has attempted to improve its image by changing its name to the American Chemistry Council (ACC). Other examples of cooperation include the joint funding of the Long Range Research Initiative (LRI) by the CEFIC, the CMA and the JCIA, and global involvement in the High Production Volume (HPV) chemicals initiative under the auspices of the ICCA.

Verification As well as showing a relatively low level of implementation, the one fundamental feature of the Responsible Care® programme that does show significant regional variation is that of verification. Assessing implementation of the Responsible Care® initiative at site and company level calls for checking that the Responsible Care® fundamental features have been implemented, and that the systems and practice are in place to sustain continuous improvement. The challenge of effective verification has been occupying federations throughout the world, and the methods by which implementation and performance are judged range from internal self-assessment processes to third-party verification. One result of the verification process is the compilation of company ‘examples of excellence’ for use by the industry in improving its overall performance. Perhaps not surprisingly because it developed Responsible Care®, Canada has arguably the most comprehensive approach. The Canadian Chemical Producers’ Association (CCPA) has made the verification process mandatory once a member company has completed its three-year Responsible Care® implementation process. The verification process involves a three-day visit by a team comprised of two industry experts, an activist (usually from the CCPA national advisory panel) and a citizen selected from the community around each visited site. Other than the newest member companies, all but two have been visited and these were scheduled for early 1999. The CCPA is now field-testing a second round of the verification process, which will be undertaken on the third anniversary of a company’s successful completion of its first verification. In Australia a formal verification protocol was developed with independent auditors. A company site is selected by the PACIA and the site is asked to nominate one of the auditors. Since 1995 some 104 self-assessments have been verified. A similar thirdparty certification process is currently being developed in the UK, and this became a mandatory requirement for CIA members at the end of 2000. Elsewhere in Europe agreement was reached in 1998 for national associations to ensure that the core requirements defined in the CEFIC menu are incorporated into national codes and guidance. National associations are required to develop selfassessment questionnaires that incorporate the CEFIC core set as a minimum, and



companies complete the self-assessment questionnaires at least every three years. Associations collate the self-assessment feedback and use it to benchmark companies’ implementation progress. In the USA a voluntary peer review process called management systems verification (MSV) is carried out. To date approximately 50 companies have completed a Responsible Care® MSV, and efforts are under way to assist companies with low implementation levels. The process is undertaken by trained industry verifiers from other companies and members from the general public.

‘Confidence in Chemicals’ initiative This initiative was launched by the Chemical Industries Association (CIA) in July 1998, on the tenth anniversary of Responsible Care® in the UK. The CIA states that: ‘Existing regulatory processes for chemicals management within the EU are failing to deliver results in a reasonable time frame. The industry is failing to win hearts and minds.’ Since its implementation by the CIA the programme has been taken up in Europe by the CEFIC, and at a global level the ICCA is actively involved. The initiative covers four areas: Chemicals assessment and management This element has been taken on by the ICCA who have produced a draft list of 1200 High Production Volume (HPV) chemicals. The Chemicals Assessment and Management groups of the various industry associations have programmes for gathering information on these chemicals and others already on priority lists. Beyond the Confidence in Chemicals Initiative are a number of related national commitments. These include self-commitment by the German chemical industry under the auspices of VCI to establish a minimum data set for all chemicals (including intermediates). Product stewardship This area is aimed at developing management systems to more actively address product stewardship issues. Long Range Research Initiative (LRI) The LRI is funded jointly by the CEFIC, the CMA and the JCIA over a five-year period in order to ‘regain public trust, enhance reputation and defend its business from a position of strength’. They also define the objectives as being to: • • • •

help understand the way chemicals interact with the human body, animals and the environment; address existing and explore emerging health and environmental issues; enhance scientific understanding so that rational policy decisions can be made; provide the necessary facts to enable our business to react against emotional attacks.

There are six priority areas for research: • • • • • •

environmental and human exposure risk assessment; risk assessment methodologies; chemical carcinogenesis; endocrine disruption; immunotoxicity and allergy; respiratory toxicity.

Stakeholder engagement and communication Promotion of consensus through involving stakeholders in designing and implementing the Confidence in Chemicals initiative.

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5.7

Legislation In recent years, policy making in the environmental field has moved sharply in the direction of more comprehensive and international approaches. In the past, answers to environmental problems have mainly focused on cleaning-up operations. In the future, there will be a significant shift towards development of clean technologies aimed at prevention rather than cure. Tables 5.11 and 5.12 show the laws and regulations of most relevance to the chemicals industry in Europe and the USA. Many of these requirements are covered in more detail in other parts of this handbook, but two pieces of legislation that significantly affect the way in which environmental reporting is carried out are described:

Toxic Release Inventory In the USA two separate pieces of legislation make it mandatory that the Environmental Protection Agency (EPA) maintain a publicly accessible toxic chemical database. The Toxic Release Inventory (TRI) came into being as the EPA’s response to its requirements under the Emergency Planning and Community Right-to-Know Act 1986 (EPCRA). In it are detailed the waste management activities and toxic releases from facilities with more than ten employees that manufacture, process or use more than certain base quantities of any of over 640 currently listed chemicals and chemical categories. Following the implementation of the Pollution Prevention Act 1990 (PPA), TRI reporting requirements changed in 1991 in an attempt to encourage recycling and shift the emphasis towards pollution prevention rather than end-of-pipe treatment measures. It now seems likely that this will also become a mandatory requirement in the EU, and one route would be the introduction of a Pollution Emission Register (PER), which might well form part of IPPC.

Table 5.11

Laws and regulations affecting the US chemicals industry Regulatory requirements Freedom of Information Act (FOIA) (1966) National Environmental Policy Act (1969) Occupational Safety and Health Act (OSHA) (1970) Resource Conservation and Recovery Act (RCRA) (1976) Comprehensive Environmental Response, Compensation and Liability Act (Superfund) (1980) Emergency Planning and Community Right-to-Know Act (EPCRA) (1986) Superfund Amendments and Reauthorization Act (SARA) (1986) Pollution Prevention Act (1990)

Table 5.12

Laws and regulations affecting the European chemicals industry Regulatory requirements Integrated Pollution Prevention and Control (IPPC) Directive Freedom of Access to Information Directive Landfill Directive Eco-Management and Auditing Scheme (EMAS) ISO 14001 Energy tax (under discussion)



IPPC Directive This directive came into force in the EU in October 1996 and is being applied to all new plants from the start date of October 1999, but there is an eight-year transitional period, i.e. up until October 2007, for existing installations. However, a number of other directives, notably those on Access to Information and Transboundary Effects, will to all intents and purposes bind existing installations fairly tightly from now on. IPPC is seen as an important element in achieving the overriding EU policy of sustainable development. The concept takes a holistic approach, covering the effect of emissions on all environmental media – that is, water, air and land. In the UK, a consultation paper was published in July 1997 for implementation of the IPPC Directive, which acknowledges that IPPC is wider than the UK IPC scheme. In addition to emissions of dangerous substances, it covers whole installations, not just processes, as well as dealing with matters such as waste disposal and energy efficiency. An IPPC permit will require the use of best available techniques (BAT) to achieve a high level of environmental performance. The European IPPC Information Bureau (EIPPCB) has been given the task of collecting information on BAT and drafting BAT reference documents (BREFs). Each BREF is expected to contain general information on the sector, data on current techniques, emission levels, consumption of energy and raw materials, and an outline of candidates for BAT. From the latter will be selected ‘reference techniques’, along with an indication of the achievable environmental performance levels. The guidance notes will also identify promising ‘emerging techniques’.

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6 Analysis of corporate environmental reports

6.1

Methodology Overall approach Overall reporting policies on HS&E can vary a great deal. Accordingly, this section describes the overall approach taken when carrying out the analysis. Published CERs and annual reports have been used as the prime documents for each analysis. It is considered that the first request for environmental information will usually be to the company, and only in the absence of a satisfactory response will regulatory authorities be approached. Since statutory reporting requirements also differ by country, the analyses will be most comparable when restricted to information offered to the public by the companies concerned. The objective was to locate approximately 40 CERs and Annual Reports from major companies in the worldwide chemicals industry. It is stressed that only one approach was made to each company, requesting both the CER and the annual report. This was to simulate accurately the response which the average stakeholder would experience, when attempting to obtain information on the environmental performance of the company concerned. Rather surprisingly, obtaining the CERs, particularly from some multinational companies, proved difficult. If no response was received, the latest CER in the file – if there was one – was utilised for the analysis. Otherwise the Internet was used to access reports for those companies whose importance or geographical location made their inclusion desirable. Publishing an annual report is mandatory in most parts of the world, whereas there is no such requirement to publish a corporate environmental report, but even so some of the documents received in response to requests for CERs fell well short of the coverage expected. Sometimes both, sometimes only one, and occasionally neither report was received. Often other publications such as business reviews or product stewardship reports would be received at the same time, or reference would be made to the web site. In these cases the matter is clearly noted under ‘company reporting’. Another surprising aspect is the apparent age of some of the reports. These analyses were carried out between March and September 2000. While not all companies produce annual reports, some of those that do had already issued their 2000 reports. However, other companies, perhaps due to the phasing of their financial years, had not yet issued their reports for 1999. It is recognised that web sites are becoming an increasingly important and powerful method of communication, however, because the information and presentation is constantly changing, comparison becomes quite difficult, even over the relatively short period taken to prepare the analyses. Company reporting information from the Internet has therefore been restricted to those companies that had already decided to move towards this medium as their main method of environmental reporting. On receiving the reports those that fell outside the chemicals sector were put to one side. These included those companies predominantly in the life sciences, oil/energy, and metals/minerals sectors. At this stage, in order to provide a reasonably balanced picture, additional effort was made to obtain reports from the main players. Since the USA and Europe were well represented, effort was also made to obtain reports from other geographical areas. To avoid translation errors only reports issued in English were analysed.

Analysis of CERs Each CER was analysed under the following section headings: • • • • • • • • • •

business profile; company reporting; environmental report; environmental management; health and safety; environmental protection; environmental impact; social responsibility; triple bottom line; environmental contacts.

Each of these sections contains a number of EPIs, giving a total of 39. A ‘yes’ or ‘no’ score is given for each EPI on the right-hand side of each page. Textual amplification is given on the left-hand side, and direct quotations are included where appropriate. As far as possible company abbreviations for Environment, Health and Safety (e.g. EH&S, SHE and H&SE) have been retained in the analyses. It should be noted that, in the company grids, all ratings and information relate only to what appears in individual CERs. No information has been supplied from other sources and authorial comment is confined to paraphrase, and ratings as to whether or not any particular category of information appears in a report. The key to evaluating the quality of environmental reporting lies in the selection of the appropriate EPIs. Those utilised in the analysis framework are mainly derived from the indicators most in use in existing CERs and leading guidelines, in particular those of the ACCA, the CEFIC and the UNEP.

Yes/no rating In this report an overall assessment of the CER is accomplished by determining the degree of utilisation of a wide range of EPIs using a simple ‘yes’ or ‘no’ rating. The criteria for awarding a ‘yes’ or ‘no’ score are given below. While every attempt has been made to make these criteria applicable across the group, there was necessarily a degree of flexibility in their application to cope with the wide range of reporting approaches and detail contained in the reports. In general when interpreting the criteria used for scoring: •

•

•

6.2

The word ‘must’ has been used when it is necessary that the information is included to achieve a ‘yes’ score. A ‘no’ score has be given where the information which ‘must’ be included is not contained in either the annual report or the CER. The word ‘should’ has been used for information that is desirable for completeness, but where it is recognised that there is more than one way in which the criterion may be met. ‘Emergency preparedness’ is one criterion which is dealt with in many different ways in the CER analysed, and for fairness a broad view has had to be taken. Information not contained in the CER will be taken from the annual report or internet report if obvious, but a ‘yes*’ will be scored. This will be treated separately when making inter-company and inter-group comparisons of CERs.

Section headings and environmental performance indicators Ranking by turnover While not strictly EPIs, to assist with the comparison of companies the ranking based on turnover is given in the header at the beginning of the analysis sheet. Turnover is considered to be the best overall measure of the magnitude of the company and in turn is related to its environmental footprint.

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Business profile The business profile section is designed to give an overview of the company, and sets the scene for a comparison between small companies with a turnover of as little as US$350 million, operating in one country, as compared to some of the industry leaders with turnovers of US$40 billion and operating in numerous countries around the world. Turnover The turnover figure will be the same (value of sales) as that quoted on the heading of the report, but in local currency. It needs to be included in the CER so that financial indicators (e.g. environmental expenditure, liabilities and spending in the community) can be put in context with the total activities of the company. Number of employees The number of employees is important when comparing safety figures between companies (e.g. fatalities and lost time accidents). Manufacturing countries To obtain a ‘yes’ score either the countries need to be mentioned by name, or the number of manufacturing sites in each continent has to be given. It is not considered adequate to state that operations are carried out in 50 countries, since regulatory requirements do vary between geographical regions, and distribution does itself pose certain environmental and safety issues. Operations Although reference to specific products by generic name is expected, to obtain a ‘yes’ score it is considered sufficient for the CER to include a list of the chemical market sectors.

Company reporting Annual report The annual report section is provided to identify if the annual report makes reference to the existence of the CER. When there is a combined annual and environmental report this section is also scored ‘yes’. If the annual report makes no mention of the CER it will be scored ‘no’. Internet CER The internet CER section is provided to identify whether the CER is issued on the internet, and if so a ‘yes’ score is awarded. Ideally there should be encouragement to down-load it (e.g. by issuing it in PDF format). Company coverage To obtain a ‘yes’ score, the CER (or the internet report when no CER is available) should discuss the environmental impact from all major businesses other than from acquisitions made within the previous two years. Any indication that major businesses identified in the annual report have not been included or the failure to clearly identify the extent of coverage will generate a ‘no’ score.

Environmental report The environmental report section covers the administrative detail of the CER, such as title, length and format, and how and where various sub-sections, in particular environmental, social and health and safety, are placed in the CER.



Clear dating To achieve a ‘yes’ score, the year date of the report must be shown on the front cover or some other prominent place. Each year To achieve a ‘yes’ score there must be a statement in the CER that it is published each year. Site coverage To achieve a ‘yes’ score, the CER should discuss the environmental impact from all parts of the reporting group. Where the company is geographically widely distributed it is not considered sufficient just to discuss impacts or initiatives in only one or two regions. A ‘no’ score will be given if no mention is made of the geographical diversity of the company. CEO’s foreword The inclusion of a foreword by a board level representative, preferably the CEO, is considered important since it indicates an appropriate level of corporate commitment. Data used The data presented should cover a number of years so that trends can be noted. Two years of recent data for key indicators is the absolute minimum to achieve a ‘yes’ score. It is not considered essential that all data in the report covers exactly the same period. External verification It is evident that many companies have detailed internal auditing procedures. However, given the low level of trust in industry information by the public, there is also a need to have in place independent external verification of the whole of the CER just as the annual report has to be audited. In order to obtain a ‘yes’ score, firm evidence must be provided of the external verification by means of a certificate or by naming the verifier. Reply card Inclusion of an opinion seeking reply card will enable the company to seek comments to improve the design and content of future CERs, and will also encourage stakeholder participation. Ideally the reply card should be attached to the CER, however, a ‘yes’ score will be awarded if a reply card was received with it. Where no CER is received a ‘yes’ score will be awarded if there is encouragement for the reader to contact the company by inclusion of a direct link from the internet report to the appropriate contact.

Environmental management Policy The company should have an agreed environmental policy, set at a very senior level, probably board level. To achieve a ‘yes’ score for policy there has to be a clear statement that details broad objectives for the areas of environmental concern the company is committed to addressing.

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Objectives While it is expected that both group and business objectives will be included in the CER, in order to obtain a ‘yes’ score it is only necessary to specify quantified targets and report progress on group targets for key indicators. Omission of quantified targets for businesses or group secondary indicators, will not necessarily result in a ‘no’ score, however omission of feedback will. Environmental management systems (EMS) While most chemicals companies ‘buy in’ to the Responsible Care® programme, what is being looked for here is the employment of, and a particular intention to work to, a recognised environmental management system such as ISO 14001, the European Eco-Management and Audit System (EMAS) or a management verification system such as that run by the US Chemical Manufacturer’s Association. While it is expected that the company will have a significant proportion (>25%) of its production sites certified, a ‘yes’ score may be achieved with a lower proportion if there is evidence that the company shows a continuous upward trend. Procedures and responsibilities Compliance with a recognised EMS will give the stakeholder confidence that certified and audited sites have appropriate systems. However, it is also considered important that the stakeholder has a broad understanding of the structures and procedures used for managing environmental issues, and that the public sees that individuals are taking responsibility for it. To achieve a ‘yes’ score: • •

•

The group/business environmental structure must be defined. The key roles must be identified. The role holders should also be named and the key accountabilities identified. Since it is difficult without a detailed knowledge of the organisation to know what key roles exist, it will be taken as sufficient to see a role described at group level and one at site level. Management procedures must be outlined. In particular there should be evidence: • of procedures or guidelines at business level supporting the corporate policy; • that data gathering at plant level is carried out in a coordinated manner; • that environmental issues are reported at the highest level within the organisation; • that routine environmental training and internal auditing is being carried out.

Health and safety Traditionally, health and safety matters have mainly been reported on by using methods other than the annual report or the CER. However, the prominence and growing recognition of the subject are illustrated by moves afoot to bring it under the umbrella of environmental reporting, e.g. that by the CEFIC. Fatalities To achieve a ‘yes’ score mention must be made either that fatalities have occurred or that there have been none. When fatalities have occurred, figures should be given for both employees and contractors. Lost time accidents To achieve a ‘yes’ score either the number of employee lost time accidents and the total hours worked, or the ratio of the two, must be reported. Since the definition of what constitutes a lost time accident will vary between companies, this must also be clearly defined.



Occupational illness Ideally statistics for relevant occupational illnesses, noise-related hearing loss and absence from work through sickness should be included in the report. However, to achieve a ‘yes’ score it is considered that no figures need be presented provided there is a clearly defined group-wide strategy for improving occupational health. Transport incidents To achieve a ‘yes’ score the CER must give a figure for transport incidents during the year and provide some commentary on the nature of those incidents, whether injuries or fatalities resulted, and the impact of the incidents upon the locality. Emergency preparedness To achieve a ‘yes’ score the CER should outline the general approach to ensuring the involvement of local statutory authorities in emergency action planning. If this general approach is absent it is considered acceptable to cite examples drawn from each geographical area; however, if not all areas are featured a ‘no’ score will be given.

Environmental protection Supplier involvement Many companies have realised that their total environmental impact is also influenced by how their suppliers operate. A ‘yes’ score will be given where the CER mentions a strategy by which the company is encouraging or insisting that suppliers operate to appropriate environmental standards. Process design The need to eliminate and minimise waste streams and produce environmentally friendly products is fundamental to the production process. To obtain a ‘yes’ score this approach to process design must be clearly recognised in the CER. Factors included in the assessment will include product safety, the use of renewable raw materials, efficient processes, and manufacturing techniques and energy sources designed to minimise environmental impact. Recycling While recycling is an integral part of waste minimisation, the environmental value of a positive approach to recycling will be recognised by awarding a ‘yes’ score. The company must provide figures, or otherwise demonstrate in the report that it actively seeks to re-use waste streams from either its own or from other companies’ processes in order to reduce raw-material and energy usage. Environmental expenditure Inclusion of a figure for environmental expenditure is a guide to the degree of financial commitment the company is prepared to make towards protecting the environment. Although it is expected that the report will contain separate capital and operating expenditure, historical trends, financial targets and ancillary data (e.g. total capital expenditure and environmental liabilities), to achieve a ‘yes’ score it is considered adequate to include either overall environmental expenditure or a figure for environmental capital for a single year. Prosecutions, fines and liabilities Fines and environmental liabilities are considered key indicators because of the potential impact on both the long- and short-term financial health of the company. It

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has proved unwieldy to attempt to separate fines from prosecutions. To obtain a ‘yes’ score either the absence or occurrence of prosecutions and fines must be mentioned. Where fines have been incurred the number and circumstances must be reported. Failure to report financial liabilities will not result in a ‘no’ score. Downside reports Companies are quite prepared to report on the positive side of environmental activities. However, it is most important that the negative side is also reported. Figures presented under some other headings (e.g. fines, fatalities) are of themselves downside reports, but to obtain a ‘yes’ score here the CER must include downside information that need not otherwise be included. If there is no flavour that downside information is being fairly reported in the CER a ‘no’ score will be given.

Environmental impact The environmental impact section details the load that is placed on the environment by the company’s operations. Production volume Production volume is included since it is important in helping to assess changes in environmental impact from year to year, and in making comparisons between companies. To achieve a ‘yes’ score it must be possible to easily identify the production volume figures for the years for which data is presented. Energy usage In order to achieve a ‘yes’ the company must present absolute figures for energy consumption for two or more years. Water consumption In order to achieve a ‘yes’ the company must present absolute figures for water consumption for two or more years. Emissions to water To obtain a ‘yes’ score comparative figures for two or more years must be given for the discharge of chemicals to water. Some indication must also be included of the approximate split for these compounds between for example those imposing a high oxygen demand, inorganic salts, toxic compounds and heavy metals. Emissions to land To obtain a ‘yes’ score comparative figures for two or more years must be given for the disposal of hazardous waste. The discussion should include burial to land, deep-well injection and incineration, both within company and via third parties, but these do not necessarily need to be mentioned in order to obtain a ‘yes’ score. Emissions to air To obtain a ‘yes’ score comparative figures for two or more years must to be given for the discharge of chemicals to air. Some indication must also be included of the approximate split for these compounds between for example acid gases, VOCs and toxic gases. Transport effect A key part of the emissions to air, often overlooked, is the gaseous emissions resulting from the fuel used in vehicles for transport both of raw materials to the



manufacturing plant and finished product to the customer. A ‘yes’ score is given if there is a recognition that this aspect of energy use must be brought into the overall emissions equation.

Social responsibility The importance of the presence of social responsibility reporting is underpinned by the anticipated move towards sustainability reporting, which will require a consideration of social issues. It is a very subjective EPI. To obtain a ‘yes’ rating, there must be evidence in the CER of company expenditure on social and community issues or projects, over and above that which would normally be expected to maintain good public relations. It is expected that two or three separate projects or initiatives will be reported, but those included must reflect the geographical diversity of the company.

Triple bottom line The triple bottom line heading has been included to identify the three-fold importance of environmental protection, social responsibility and economic performance in providing a sustainable future. A ‘yes’ score will be awarded where it is obvious that the company accepts that appropriate expenditure on environmental protection and supporting communities is a positive force for sustainability.

Corporate environmental contacts The corporate environmental contacts section identifies the way in which the company facilitates further inquiry. Ideally a number of named HS&E contacts, their addresses, telephone numbers and e-mail addresses will be given, and there will be reference to a corporate website. A ‘yes’ score will be awarded if there is either a named individual with address, or the HS&E role is named and the address given. This address must be contained in the report itself. It is not considered sufficient only to include this contact address on the reply card, nor is it considered sufficient only to include an address, telephone number, e-mail address or website. For consistency and ease of access the style of the telephone numbers given in the CERs analysed has been altered where necessary to international format.

6.3

Analysis of global chemicals industry CERs A detailed analysis for each of the following company CERs is now given:

Company

Environmental report title

Air Products and Chemicals Inc.

‘The Road to Zero Emissions and Zero Injuries: a progress report 1999’ Annual Environmental Report 1998 Environment, Health and Safety 1999 Annual Report Responsible Care 1998 Environment, Safety and Health Report Responsible Care Report 1999 Health, safety and environment review for employees 1998 Environment, Health and Safety 1998 Environment, Safety, Health ESH: Clariant’s position Responsible Care Annual Report 1999 Environmental Report 1998 Public Report 1999 DSM Responsible Care Progress Report 1999 Sustainable Growth 1999 Progress Report

Akzo Nobel Ashland Inc. BASF Bayer The BOC Group Ciba Specialty Chemicals Clariant Dainippon Ink and Chemicals Degussa-Huls Dow Chemical Company DSM DuPont

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DuPont Herberts Eastman Chemical Company Elf Atochem EniChem Henkel Hickson International Plc ICI Kemira Methanex Neste Norsk Hydro Perstorp PPG Industries Rhone-Poulenc Sasol Solutia UK Ltd Solvay Sumitomo Chemical Tioxide UCB Union Carbide Corporation Wacker

Facility Environmental Statement 1999 Wuppertal 1999 Responsible Care Report Environmental Report 1998 1999 Report – Health, Safety and Environment Environment, Safety, Health 1998 Health Safety and Environmental Report 1998 Group Safety Health and Environmental Performance Report 1998 Environmental Report 1999 Responsible Care Report 1999 Corporate Environmental Report 1998 Environmental Report 1999 Environmental Report 1999 Environment, Health and Safety Progress Report October 1999 Health, Safety and Environmental Report Environmental Report 1998 1998 Annual Review including Environmental Statement 1999 Review and Prospects 2001 Responsible Care Environmental Performance Report 1998 Annual Report 1999 (contains one-page Env. Rept) Responsible Care Progress Report 1999 Environmental Report 1997/1998



USA

Air Products and Chemicals Inc. Ranking by turnover (1 to 35): 23 Business profile

Business profile

In 1999 Air Products and Chemicals Inc. had a turnover of US$5000 million and employed 17 400 people in over 30 countries worldwide. The head office is in Allentown, USA, but neither the annual report nor the CER identify how many production sites there are, nor their location. The business is divided into two sectors: Gases and Equipment generates 60% of the turnover and supplies industrial gases (oxygen, nitrogen, hydrogen, argon and helium), specialty gases (including HyCO products), cutting and welding gases and equipment for air separation and gas treatment. It is organised around three market sectors: Chemical and Process Industries, Electronics, and General Industries and Metals. Chemicals is organised in three divisions: Polymers, Performance Chemicals and Intermediates, and products include emulsions (adhesives/coatings), polyvinyl alcohol, amines, surfactants and polyurethanes.

Turnover No. of employees Manufacturing countries Operations

Company reporting

Title Annual Report 1999 Page 64 Format A4

Annual report: both the annual report and a short summary of the CER were received. As well as presenting financial data the annual report discusses stakeholder relationships and reviews the performance of the two groups. The section titled ‘Shaping Our Destiny’ includes some environmental performance data and discusses work with local communities. The ‘Review of Operations’ reports specific SHE initiatives.

YES* YES* NO YES*

Company reporting Annual report Internet CER Company coverage

YES YES NO

Internet CER: the full CER is issued on the internet. Company coverage: while group reporting in the USA is undoubtedly comprehensive, international reporting is less so, and it is unclear to what degree the short CER and the internet report represent the environmental impact of the whole group.

YES = included in CER YES* = not included in CER, but found in annual report or internet CER NO = information not provided


Air Products 1


Environmental report Air Products only produces the full CER on the internet. This analysis has been based on the short published summary, although where appropriate reference is made to the full internet report. Each year: there is no statement that the CER is produced annually. Site coverage: there is insufficient information in the CER to judge whether the approach taken has been even-handed. CEO’s foreword: the CER includes a foreword by John Jones (President and Chief Operating Officer) and H.A. Wagner (Chairman of the Board and CEO).

Title ‘The Road to Zero Emissions and Zero Injuries: a progress report 1999’ Page 6 Format Booklet

Environmental report Clear dating Each year Site coverage CEO’s foreword Data used External verification Reply card

YES NO NO YES YES NO YES

Data used: a ‘yes’ score has been awarded since the CER reports environmental data for three key indicators every year between 1987 and 1998, and two injury rate indicators, which are also reported for 1999. External verification: there is no evidence that the CER has been externally verified. Reply card: no reply card is provided, although the internet report encourages the reader to respond, and the contact page is one specifically for Responsible Care® issues.

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Air Products 2 Current practice in environmental reporting: the chemicals industry




Policy: Air Product’s Environmental, Health and Safety policy is included in the CER. It contains six broad statements covering:

Policy Objectives EMS Procedures/responsibilities

• • • • • •

compliance with regulations; continual improvement; plant design and operation; product and process design and development; open discussion; active participation in Responsible Care® and similar initiatives.

YES YES YES YES

Objectives: under continual improvement the EH&S policy states: ‘with the ultimate goal of zero injuries and zero emissions of toxic substances’. Progress against the injuries target is further discussed under ‘lost-time accidents’, and again the emissions target is further discussed under ‘environmental impact’. No business-specific targets are included in the CER or annual report. EMS: the short CER only discusses how Air Products discharges its obligations under the six Responsible Care® codes of management practice. However, the internet report identifies that two sites in Europe achieved ISO 14001 certification in 1999 and that the corporate headquarters and two US plants were inspected under the Chemical Manufacturers’ management verification system in 1998. Procedures/responsibilities: the CER makes reference to the existence of an EH&S management system which • • •

‘puts necessary processes and procedures in place; ‘assigns responsibility for compliance; ‘and audits on site performance’.

It also states that ‘the EH&S management process is overseen by a committee of senior operating and EH&S executives. The committee . . . • • • •

‘approves goals and provides strategic direction; ‘defines policies for reaching those goals; ‘makes sure we have the resources to do the job; ‘and evaluates progress’.

The internet report goes somewhat further, and describes seven centres of excellence and employee networks. Between the two reports it is considered that sufficient information is provided to award a ‘yes’ score.


Air Products 3


Health and safety

Health and safety

Fatalities: no mention is made in the CER or annual report of the absence or occurrence of any fatality.

Fatalities Lost time accidents Occupational illness Transport incidents Emergency preparedness

Lost time accidents: the lost time injury rate rose to a peak of 0.25 per 200 000 hours in 1994, then fell sharply to 0.1 per 200 000 hours in 1996. For the three years following the rate was reasonably constant, increasing from 0.14 to 0.17 per 200 000 hours worked during 1999. The recordable injury rate was at a peak of 1.7 per 200 000 hours in 1993. Since then it fell steadily to 0.9 per 200 000 hours in 1998, and rose slightly to 1.06 per 200 000 hours worked during 1999.

NO YES NO NO YES

Occupational illness: in the discussion on how it discharges its obligations under the Responsible Care® Code on Employee Health and Safety, Air Products states: ‘we perform all the tasks which that goal requires: identifying hazards, preventing unsafe conditions, maintaining employee health, and fostering better communications on health and safety issues’. Even so a ‘no’ score has been awarded since neither the short CER nor the internet report identifies any group-wide strategy for reducing occupational illness. Transport incidents: a ‘no’ score has been awarded since no figures are given for the number of transport incidents, or their nature. Emergency preparedness: a ‘yes’ score has been awarded since Community Awareness and Emergency Response (CAER) is reported in the short CER, and specific mention is made of the use of community advisory panels in that process. The internet report also includes three examples under its Responsible Care® discussion on CAER.

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Environmental protection


Supplier involvement: there is good evidence that Air Products is working with suppliers to improve safety, although there is little evidence of a strategy to encourage or insist that its suppliers work to other environmental standards.

Supplier involvement Process design Recycling Environment expenditure Prosecutions & fines Downside reports

Process design: although no examples are given in the CER, a ‘yes’ score has been awarded since the discussions on pollution prevention, process safety and product stewardship give the flavour of strong emphasis on environmental protection through process design. This is supported in the annual report where the CCARTM (Closed Cycle Air Refrigeration) system, LEAN Enterprise for waste reduction and productivity improvement, and elimination of CFCs from polyurethane foams are reported.

YES YES NO YES NO NO

Recycling: no mention is made of recycling as a particular approach to reducing environmental impact. Environmental expenditure: in 1999 Air Products spent US$27.2 million on operating expenses directly attributable to environmental protection, and US$7 million on capital expenditure to control emissions and reduce waste. Prosecutions & fines: a ‘no’ score has been awarded since, although a 6% reduction in the number of environmental incidents is reported, no mention is made of any prosecutions or fines, or their absence. The annual report identifies accrued liabilities of US$19.4 million in 1999 for environmental investigation and non-capital remediation costs, and US$7.5 million capital spent on a specific site. Reimbursements from third parties are also stated. Downside reports: apart from reporting the increase in injury rates, neither the short CER nor the internet report have the flavour of ones in which the downside is being reported.


Air Products 5


Environmental impact


Production volume: no production volume figures are reported against which to assess the releases.

Production volume Energy usage Water consumption Emissions to water Emissions to land Emissions to air Transport effect

Energy usage: no figures are given for energy usage. Water consumption: no figures are given for water consumption.

NO NO NO YES YES YES NO

TRI discharges to all media: Air Products file annual figures to the US federal government on Toxic Release Inventory (TRI). The internet report lists releases of each reported chemical for 1998 by media. In both the internet and short CER comparative figures are presented for the past ten years for air-sensitives, releases to the environment and for discharges from Air Products’ facilities (including transfers for off-site treatment). Emissions to water: a ‘yes’ score has been given since TRI data is provided for the USA, and some COD data is included for international operations. Emissions to land: a ‘yes’ score has been given since toxic releases in the USA are included in the TRI data provided. Emissions to air: between 1987 and 1989 the discharges of chemicals originally listed in the TRI fell sharply from 400 000 pounds to 150 000 pounds. Since then the figures have steadily fallen to their present level of approximately 50 000 pounds. Reference is also made in the internet report to some international operations. • •

greenhouse gases: although other greenhouse gases are included in the TRI data provided, no figures are given for CO2 emitted; transport effect: no mention is made in the report of the environmental effects of transport operations.

Social responsibility


No mention of social responsibility is made in the CER, but a ‘yes*’has been awarded since the annual report does discuss relationships with the community. Through the Air Products Foundation more than US$5 million is spent on charitable contributions worldwide, in the areas of education, health and human services, community and economic development, and arts and culture. An example of work carried out in schools is also given.


Triple bottom line

Triple bottom line

The inclusion of the discussion of stakeholder relationships in the annual report provides a very strong link between the business, society and the environment.

Triple bottom line

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YES*

YES*


Environmental contacts


A ‘no’ score has been awarded since no named individual or EH&S role is given as a contact. The short CER does, however, provide the following contact addresses:


NO

Air Products and Chemicals Inc: 7201 Hamilton Boulevard Allentown, PA 18195-1501 Tel: (610) 481-4911 Air Products Europe Hersham Place Molesey Road Walton-on-Thames Surrey KT12 4RZ Tel: 011 444 1932 249200 Air Products Asia 9 Temasek Boulevard #28-01 Suntec Tower 2 Singapore 038989 Tel: 011 65 332-1610 Internet: www.airproducts.com


Air Products 7


The Netherlands

Akzo Nobel Ranking by turnover (1 to 35): 9 Business profile

Business profile

Akzo Nobel has its headquarters in Arnhem, the Netherlands. In 1998 it had a turnover of Eur 11 256 million. There are 292 production sites employing 69 000 people in 70 countries worldwide, and although the operating countries are not named, the annual report does identify that 64% of the workforce work in Europe, 15% in North America, 7% in Latin America, 11% in Asia/Pacific and 3% in other regions. Although there are cases studied in the CER that indicate the nature of company activities, the full scope of operations of the four main sectors can only be determined from the annual report:


• • • •

YES YES NO YES*

Pharma: prescription drugs, hospital supplies, veterinary products and pharmaceutical intermediates; Coatings: coatings, adhesives, printing inks and resins; Chemicals: paper and polymer chemicals, surfactants, catalysts, industrial chemicals, intermediates and specialty chemicals; Fibres: data for the fibres business is included in the CER. In July 1998 Akzo Nobel acquired Courtaulds, and since January 1999 the fibres business has operated as Acordis (a standalone company).

Company reporting Annual report: the 1998 CER was first received with the 1999 annual report, and it these documents on which the analysis is based. The annual report reviews the overall business, describes in detail activities carried out by the individual sectors, and presents the financial accounts. Within the overall review health, safety and environment are discussed, and progress against three company-wide environmental targets, and safety performance is reported. A ‘no’ score has been awarded since no mention is made in the annual report of the existence of the CER.



YES NO YES

Internet CER: there is no internet report. Instead the website has an area allocated to ‘Community’ where the reader is encouraged to request information about the environmental report via e-mail. Company coverage: the CER states that ‘this report presents aggregate safety and environmental performance data from the 292 Akzo Nobel production facilities worldwide that were financially consolidated as at January 1998’.



Akzo Nobel 1


Environmental report The CER is clearly laid out. It starts with an overview and policy statement, continues with a series of articles describing how Macro Porous Polymers have been used to purify water, and concludes by presenting HS&E data. Each year: the title of the CER indicates that it is produced each year. Site coverage: the large number of sites in the group makes reporting difficult. Overall the approach appears even-handed. CEO’s foreword: the foreword has been signed by Rudy M.J. van der Meer (Member of the Board).

Title Annual Environmental Report 1998 Page 27 Format A4


YES YES YES YES YES NO NO

Data used: data for key indicators is given for 1997 and 1998, and many of the indicators have data for the past five years. Data is presented in both tabular and graphical forms. External verification: there is no indication that the CER has been externally verified. Reply card: no reply card was included. Environmental management


Policy: the HS&E policy statement given in the CER is reproduced in full: ‘Concerns for health, safety and environment is an integral part of Akzo Nobel’s business policy. ‘Akzo Nobel actively supports the guiding principles of the Business Charter for Sustainable Development of the International Chamber of Commerce, the Responsible Care® program of the chemical industry and the Coatings Care® program of the paint and printing ink industry. ‘In addition to compliance with regulatory requirements, we pursue the following objectives in close cooperation with our distributors, customers and suppliers.


• • •

YES YES NO NO

Health: Akzo Nobel seeks to conduct its activities in such a way as to prevent harm to the health of its employees and other stakeholders; Safety: Akzo Nobel strives to prevent any injuries at work; Environment: Akzo Nobel protects the environment by preventing or minimising environmental impact of its activities and products through appropriate design, manufacturing, distribution, use and disposal practices’.

Objectives: three group targets for 2000 are identified and reported on. They concern lost time accidents, heavy metals releases to water and discharges of organic compounds to air. The targets and progress to date are discussed under the appropriate heading elsewhere in this analysis. EMS: no mention is made in the CER of any recognised environmental management system. Procedures/responsibilities: neither the CER nor the annual report describe the structure, practices and procedures used for managing HS&E, and no roles or accountabilities in this area are defined.

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Akzo Nobel 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: during 1998 there were two fatalities due to an explosion in Malaysia, and one due to a traffic accident in Italy.


Lost time accidents: in 1998 there were 542 injuries resulting in the loss of one day or one shift of work. The frequency rate has fallen from 1.55 lost time injuries per 100 employees in 1994 to 0.8 in 1998. These figures are against the group target of a frequency rate of less than 1 by 2000. In 1998 only the coatings business had not achieved this target.

YES YES NO NO NO

Occupational illness: no figures are given, nor is there any mention in the CER of any group-wide strategy for reducing occupational illness. Transport incidents: other than identifying the fatality due to a traffic accident, no mention is made of other transport incidents. Emergency preparedness: no mention is made in the CER of any groupwide strategy for emergency preparedness. Environmental protection


Supplier involvement: no mention is made in the CER of any group-wide strategy for encouraging suppliers to confirm that their own environmental standards are in place.


Process design: the CER does describe process improvement initiatives as part of the focus on MPPE water purification technology.

NO YES YES NO NO NO

Recycling: recycling is mentioned as part of the cost justification of the use of Macro Porous Polymers for end-of-pipe waste water treatment. Environmental expenditure: overall capital expenditure is identified for each division in the annual report, but expenditure on HS&E is not specifically identified. No mention of environmental expenditure is made in the CER. Prosecutions & fines: in 1999 Eur 235 million was provided for environmental costs. This includes provision for pending litigation. No details are given of any fines or details of prosecutions in either the CER or the annual report. Downside reports: a ‘no’ score has been awarded since there is no real evidence of any downside reporting.


Akzo Nobel 3




Production volume: no information is provided on production volumes against which to assess discharges.


Energy usage: group fuel consumption fell from 36 000 TJ in 1997 to 34 000 TJ in 1998, of which 4400 TJ was as gas. At the same time electricity consumption (mostly purchased) rose slightly, to 9600 million kWh. Steam consumption was stable at 13.6 million tonnes of which 6.5 million were purchased externally in 1998. A table is also presented that shows a 24% improvement in energy efficiency in the Netherlands since 1989.

NO YES YES YES YES YES NO

Water consumption: there has been a steady fall in total water consumption, from 704 million m3 in 1994 to 541 million m3 in 1998. Consumption is listed by source, and in 1998, 458 million m3 came from surface water, 47 million m3 from drinking water supplies and 37 million m3 from boreholes. Emissions to water: figures are given in the CER for discharges to surface water and to external treatment plants. The combined figures are given below. For discharges to external treatment plants efficiency factors are not given in the report. Water treatment using Macro Porous Polymers is the subject of a feature article in the CER. • •

•

•

COD: during 1998 discharges increased from 20 450 tons to 21 600 tons; Nitrogen and phosphorus: during 1998 discharges of nitrogen fell from 2100 tons to 1800 tons, while phosphorus discharges rose from 180 tons to 193 tons; Heavy metals: there is a group target to reduce discharges of heavy metals to less than 60 tons by 2000. In 1994 the figure was 66 tons. This fell to 53 tons in 1997 and to 32 tons in 1998, this latter reduction being mainly attributed to divesting the soda ash business at Delfzijl. In 1998, 87.5% of the load came from the fibres division; Organics: in 1998 discharges of chlorinated organics were 560 tons, and of non-chlorinated organics were 6600 tons. These figures are relatively unchanged from 1997.

Emissions to land: the CER identifies the quantities and disposal routes for both hazardous and non-hazardous waste in 1997 and 1998. The figures include disposal by incineration. There is also a group target to reduce total waste to less than 255 000 tonnes by 2000. In 1994, 301 000 tons of waste were disposed of. By 1997 this had fallen to 210 000, but rose in 1998 to 245 000 tons owing to the inclusion of a newly acquired site and higher discharges from the Pharma and Coatings businesses. In 1998, 65 400 tons of the waste was as hazardous waste, and 43% of the total came from the chemicals group. Emissions to air: • • •

NOx: during 1998 discharges fell from 2330 tons to 2260 tons; SOx: during 1998 discharges fell from 8460 tons to 8040 tons; VOCs: there is a group target to reduce discharges of organic compounds to air to less than 19 000 tons by 2000. In 1994 this figure was 22 400 tons. During 1998 discharges fell from 19 000 tons to 18 600 tons, 70% of which was from the fibres division, and 500 tons of which were as chlorinated organics;

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Akzo Nobel 4 Current practice in environmental reporting: the chemicals industry


•

•

greenhouse gases: no mention is made of greenhouse gases other than CO2 discharges, which are reported along with the other emissions to air; CO2 discharges fell from 2.1 million tons in 1997 to 1.8 million tons in 1998. The reduction is partly attributed to divesting the soda ash business at Delfzijl; transport effect: no mention is made of any environmental impact arising from transportation.



No mention is made in the CER of how Akzo Nobel discharges its social responsibilities, but there is a section in the annual report which describes how:


• • • •

YES*

funds were made available for the relief of victims of the Turkey earthquake; the Community Relations programme outlines criteria for sponsoring and donations; the Education Fund financed a number of projects in Vietnam, Indonesia and China; science and the arts are regularly supported.

Triple bottom line

Triple bottom line

Although economics, social responsibility and the environment are all discussed to some degree in the annual report, a ‘no’ score has been awarded because of the absence of a positive link. This aspect is not discussed in the CER.

Triple bottom line



A ‘no’ score has been awarded since no environmental contact role or name is given in the CER. However, the following corporate contact address is given both in the CER and the annual report:


NO

NO

Akzo Nobel NV Velperweg 76 PO Box 9300 6800 SB Arnhem The Netherlands Tel: +31 26 366 4433 Fax: +31 26 366 3250 Internet: http://www.akzonobel.com


Akzo Nobel 5


USA

Ashland Inc. Ranking by turnover (1 to 35): 12 Business profile

Business profile

In 1999 Ashland had a turnover of US$6800 million and employed 23 000 people worldwide. Its head office is in Covington, USA. Neither the annual report nor the CER clearly state the number and location of the manufacturing sites, most of which appear to be in the USA, since there is no mention of any elsewhere. The CER does indicate that 150 sites have been classed as medium to higher risk for auditing purposes. The business is arranged in four divisions. Approximately 35% of turnover comes from chemical manufacture and 45% from distribution: APAC: America’s largest highway construction contractors; Ashland Distribution: North America’s largest distributor of plastics and chemicals. Also distributes fine ingredients; Ashland Specialty Chemical Company: specialty chemicals manufacturer for automobiles, ships/boats, kitchens and bathrooms; Valvoline: car care products including motor oils, appearance products, antifreeze, performance products and automotive chemicals. In addition, Ashland owns 38% of Marathon Ashland LLC (petroleum refining and marketing) and 58% of Arch Coal Inc.


Company reporting

Title 1999 Annual Report Page 58 Format A4

Annual report: copies of the annual report and CER were received. The annual report only contains a short paragraph on environmental issues, but it does invite the reader to send for a copy of the CER. It also includes a section dealing with Ashland’s involvement with the community. Internet CER: the website has an area titled ‘For the Environment’, which in turn directs the reader to the environmental annual report, EH&S commitment, chairman’s challenge awards and a section on cleaning up the River Sweep. The internet report is identical to the CER, but is not in an easily downloaded format.

YES* YES* NO YES


YES YES NO

Company coverage: there is insufficient information in the annual report and the CER to assess the extent of company coverage. In addition, specific EH&S data is not reported as it is regarded as being confidential by APAC Inc., since it is regarded as giving Ashland a ‘proprietary competitive advantage’. Data on 1998 emissions reported under the US Environmental Agency’s Toxic Release Inventory programme covered 22 Ashland Specialty Chemical facilities, 14 Valvoline facilities and 42 Ashland Distribution facilities.



Ashland 1


Environmental report The CER is a simple document that discusses Ashland’s group-wide progress under the headings ‘Pollution Prevention’, ‘Product Stewardship’, ‘Safety’, ‘Emergency Planning and Response’, and ‘Compliance’. It also discusses progress within the divisions; and concludes with sections titled ‘Contributing to Society and Striving for Economic Value’. Each year: the title of the report includes the word ‘annual’. Site coverage: the CER contains insufficient information about sites to assess whether the approach is even-handed. CEO’s foreword: the report contains a letter from Paul W. Chellgren (Chairman and CEO).

Title Environment, Health and Safety 1999 Annual Report ‘Moving Forward’ Page 14 Format A4 Landscape


YES YES NO YES YES NO NO

Data used: historical data presented mostly covers two years, although the number of indicators presented is limited. External verification: there is no indication that the report has been externally verified. Reply card: no reply card was received.

114

Ashland 2 Current practice in environmental reporting: the chemicals industry




Policy: Ashland does not see the policy statement to be important enough to include in the CER, although it is on its website, i.e: ‘In recognition of the company’s responsibility to protect and maintain the quality of the environment and the health and safety of employees and the public, it is Ashland’s policy to:


• • • •

YES* YES NO NO

conduct its business in compliance with environment, health and safety laws and regulations; integrate environment, health and safety activities fully into business planning and operating practices; continuously improve environmental, health and safety performance; and regularly report progress on the same.’

Objectives: Ashland does state a corporate goal of eliminating occupational injuries and illnesses among employees. This goal is not time-related. The CER also includes divisional goals for OSHA recordable frequency, transport incidents and spillages. These are reported again elsewhere in this analysis. EMS: Ashland Distribution and Ashland Specialty Chemical are stated to be ‘industry leaders in implementing the Responsible Care® Codes of Management Practice’. Even so a ‘no’ score has been awarded since no mention is made of any involvement in the Management Verification System run by the US Chemical Manufacturers’ Association. Procedures/responsibilities: the web page presents a set of guiding principles to help intepret EH&S policy, but virtually no information is given about the structure, procedures and responsibilities used to implement this policy and principles. The CER does report on a group-wide audit programme carried out by corporate audit teams. Each of the 150 medium to higher-risk sites are audited every three to five years, and in 1999 Ashland carried out 47 of these audits. The remaining sites in the group undergo a corporate team audit on a rotating basis.


Ashland 3


Health and safety

Health and safety

Fatalities: no mention is made of the absence or occurrence of any fatality.


Lost time accidents: Ashland has a corporate goal to eliminate occupational injuries and illness. For APAC the target date is 2003. In 1999 Ashland’s group OSHA recordable frequency rate was 4.87. The rates in the divisions were: • • • • •

NO YES YES YES YES

APAC – stated to be less than 9.7 (target in 2003 is zero); Ashland Distribution – fell from 2.7 in 1998 to 2.17 in 1999 (target in 2001 is 1.8); Valvoline – increased from 2.24 in 1998 to 3.25 in 1999 (target in 2003 is 1.68); Valvoline Instant Oil Change – increased from 9.74 in 1998 to 11.55 in 1999 (target in 2003 is 7.16); Ashland Specialty Chemicals – fell from 2.43 in 1998 to 2.32 in 1999 (target in 2001 is 1.8).

Occupational illness: the section titled ‘safety’ includes discussion of health checks for employees. These are mainly periodic, however, for those ‘who work in industrial areas routinely monitored for exposure to chemicals, dust and noise’. Transport incidents: a truck collision rate is given for Ashland distribution. This fell from 3.4 to 2.8 incidents per million miles during 1999 (target for 2001 is 1.7). Figures are also given for the frequency of transportation related releases. These are: Ashland Distribution: the rates for bulk products carried by Ashland Distribution’s own road tankers fell from 5.1 to 2.7 incidents per 10 000 shipments during 1999 (target in 2001 is 2.6). During the same period the rate for packaged products carriers by the company’s own lorries fell from 3.4 to 2.8 incidents per 100 000 shipments (target in 2001 is 3.3). Incidents involving bulk contract carriers also fell from 12.9 to 7.9 incidents per 10 000 shipments (target in 2001 is 6.5), while those for packaged contract carriers increased from 40.9 to 58.0 incidents per 100 000 shipments (target in 2001 is 20.5). Ashland Specialty Chemicals: in 1999 incidents involving bulk contract carriers increased from 10.1 to 19.4 incidents per 10 000 shipments (target in 2001 is 5.1), while those for packaged contract carriers increased from 105 to 160 incidents per 100 000 shipments (target in 2001 is 52.8). Emergency preparedness: the CER has a section on emergency planning and response that discusses liaison with local emergency response teams and includes a chart showing the number of emergency response drills carried out in the four divisions in 1998 and 1999. Approximately 90 took place within Ashland Distribution, 50 in Ashland Specialty Chemicals, 40 in Valvoline and 25 in APAC. Eighteen facilities are covered by the EPA Risk Management Program regulations.

116





Supplier involvement: there is no indication from the report of any group-wide strategy to encourage suppliers to work to appropriate environmental standards.


Process design: the CER includes a section titled ‘Product Stewardship’, which discusses the approach to introducing new products and reformulation of old ones to eliminate hazardous compounds. Examples given include a less toxic corrosion inhibitor for ships’ boilers and child-resistant packaging. The report also states: ‘we work to control releases by upgrading facilities or modifying processes’. Examples include upgrading underground piping and upgrading shut-off systems to reduce spills.

NO YES YES YES YES YES

Recycling: the report states that Ashland ‘reduce waste by recycling or reusing materials’. As an example a graph is presented showing the quantity of asphalt recycled in 1997, 1998 and 1999. In 1999 the figure was 2 million tons. Other recycling initiatives include concrete, cardboard, wood pallets, steel drums, plastic bottles, oil, antifreeze and cleaning solvents. Environmental expenditure: in 1999 Ashland spent US$6.3 million on environmental operating and capital expenses. In 1999 Ashland also spent US$23 million on land remediation. Prosecutions & fines: a chart shows Notices of Violations (NOVs) and fines paid. In 1999 Ashland received approximately 20 NOVs from the US Environmental Protection Agency, 50 from the Department of Transportation, 12 from the Occupational Health and Safety Administration and 40 from the Mine Safety and Health Administration. Total fines paid were approximately US$30 000. APAC Inc has a target to have no compliance violations by 2003. In 1999 Ashland provide for a reserve of US$166 million in relation to future environmental assessments and remediation. Downside reports: the CER includes reports on Ashland’s compliance record and the number of non-contained releases, and a ‘yes’ score has been awarded since the general tone is one of a report in which the downside is being reported.


Ashland 5




Production volume: no figures are given for production volume.


Energy usage: no figures are given for energy usage. Water consumption: no figures are given for water consumption. TRI discharges to all media: Ashland reports discharges under the US EPA Toxic Release Inventory programme. Between 1987 and 1997 discharges to all destinations fell from 3 million to just over 1 million pounds. In 1998 the total discharges increased to 5.7 million pounds. Most of this increase was due to the inclusion of Ashland distribution in the reporting group (4 million pounds), although emissions from Ashland Specialty Chemical have increased from just over 1 million to just under 2 million pounds.


Emissions to water: discharges are covered under ‘TRI discharges to all media’. Emissions to land: discharges are covered under ‘TRI discharges to all media’. Emissions to air: discharges are covered under ‘TRI discharges to all media’. • •

greenhouse gases: the CER does not present any figures for greenhouse gases; transport effect: no mention is made of any emissions from transport.



In 1999 the Ashland Inc. Foundation provided US$3 million to sponsor events and programmes. Two-thirds of the money was spent in educational organisations, with most of the remainder being donated to civic and social groups and in response to natural disasters. Other areas of funding include donations to the arts and environmental organisations. Specific groups receiving aid are named in the report. Separate to the Ashland Foundation, funding was undertaken to assist economic development in Ashland, Ky, following the head office move to Covington, Ky.


Triple bottom line

Triple bottom line

The CER includes sections titled ‘Contributing to Society’ and ‘Striving for Economic Value’ that discuss social responsibility and economic performance. A ‘yes’ score has been awarded because these elements fit well in the environmental report, but the link made in the section titled ‘Presidents’ Message’ (which discusses sustainability) could be stronger.

Triple bottom line

118


YES

YES




A ‘yes’ score has been awarded since the contact address given in the CER is:


YES

Environmental, Health and Safety Department 5200 Blazer Parkway Dublin, OH 43017 Tel: (614) 790-3333 Fax: (614) 790-6080 e-mail: [email protected] web site: www.ashland.com The corporate address given in the annual report is: Ashland Inc. 50 E. RiverCenter Boulevard Covington, KY 41011 Tel: (606) 815-3333 The annual report invites the reader to send for the CER at: Ashland Inc. PO Box 2219 Columbus, OH 43216 Attention: EH&S


Ashland 7


Germany

BASF Ranking by turnover (1 to 35): 3 Business profile

Business profile

In 1998 BASF had a turnover of DM 54 000 million and a workforce of 106 000 people. Its headquarters are in Ludwigshafen, Germany and it has over 100 major production sites worldwide. These are shown on a map in the CER, and are named in the annual report. Starting from basic chemical building blocks the company is highly integrated, working in five main operating segments: Chemicals – petrochemical feedstocks and intermediates, bulk inorganics, plasticisers, specialty chemicals, fertilisers; Plastics and Fibres – polystyrenes, polyurethanes, engineering plastics, nylon fibres and chemicals, polyolefins; Colorants and Finishing Products – dyes for textiles and leather, printing inks, raw materials for paints, and glues, automotive and industrial paints and coatings; Health and Nutrition – pharmaceuticals, fine chemicals and agrochemicals; Oil and Gas – exploration and refining of crude oil and gas.


Company reporting


Annual report: BASF produces an annual report and regional annual reviews as well as the Responsible Care® Report. Within the annual report is a separate section on environment, safety and energy. In this reference is made to the CER as well as reporting on specific activities and initiatives. Internet CER: the website includes an area for environment, health and safety in which the CER is available as a pdf file.

YES YES YES YES


YES YES NO

Company coverage: a ‘no’ score has been awarded on company coverage because the numbers of sites for which data has been collected or categories of sites that have not been included (e.g. recent acquisitions) are not stated.



BASF 1


Environmental report The report is arranged in sections titled ‘BASF and its principles’; ‘Product Stewardship’; ‘Health and Safety at work’; ‘Plant Safety and emergency response’; ‘Environmental Protection’; ‘Transport Safety and Dialogue’. Environmental data is presented in a section titled ‘Facts and Figures’ at the end of the report. Each year: there is no clear statement in the CER that this is an annual report. Site coverage: the spread of articles in the report and the approach to reporting data on a geographical basis give the report the flavour of evenhanded coverage.

Title Responsible Care. 1998 Environment, Safety and Health Report Page 43 Format A4


YES NO YES YES NO NO YES

CEO’s foreword: the CER includes a foreword by Dr Jürgen Strube (Chairman of the Board of Directors). Data used: a ‘no’ score has been awarded since: •

•

many headings only give data for 1998. Owing to the general absence of historical data or of any quantified targets, progress is often impossible to assess (N.B. where historical data is included some goes back to 1988); the basis on which data is compiled is unclear, and statements such as ‘The data acquisition cycle varies from country to country’ contained in the description given under ‘Atmospheric Emissions’ confuse rather than clarify.

External verification: there is no sign that the contents of the report have been verified by a third party. Reply card: two reply cards with space for questions and a tick list for copies of reports are included.

122

BASF 2 Current practice in environmental reporting: the chemicals industry




Policy: the report includes corporate guidelines that BASF describes as its Basic Law. These guidelines are broad statements of intent to make continuous improvement in the areas of:


• • • • •

YES YES YES YES

sustainable development and Responsible Care®; product design, production, storage and marketing; help for customers; environmental protection; obligations to employees and society.

The impression is given by the report that this is the full extent of the guidelines and policy established at corporate level. Objectives: the report does not specify any group targets. A ‘yes’ score has, however, been given since there are six specific environmental and safety targets set in 1996, and a further three set in 1998, and progress of each is reported on. EMS: a ‘yes’ score has been awarded since the report does convey an intention to work towards the use of recognised environmental management systems. The references to EMS in the report are: •

•

a statement that ‘BASF Canada will be getting ready for the second audit in the summer of 1999, while BASF Corporation will undergo third party verification for the first time in 1999’; certification of Mangalore site to ISO 14000.

Procedures/responsibilities: six regional coordinators for Responsible Care® support local management, which has its own HS&E structure. The coordinators are named in the report and their duties are described. They are: Joseph P. Nailo, based in the USA Ian Collinson, based in the UK Dr Utz Tillman, based in Germany Odilon Ern, based in Brazil Shane Burke, based in Australia Dr Hans Joachim Geelhaar, based in China. Individual BASF sites and companies are responsible for defining and implementing Corporate Guidelines. ‘The Board of Executive Directors has required Responsible Care® implementation to be verified on a regular basis with local management.’ It is not clear from the report what these levels of auditing are. Local initiatives supporting these procedures include: • • •

Europe – an issue management system has been set up around an HS&E database that is accessible group-wide; Asia – a team has been set up to promote the Responsible Care® concept, and enable the spread of good practice; NAFTA – the organisation of a Responsible Care® conference involving employees from Germany to spread best practice.


BASF 3


Health and safety

Health and safety

The only health and safety data presented is for the number of safety and environment audits carried each year between 1988 to 1998.



NO NO YES NO YES

Lost time accidents: no information is provided on lost time accidents. Occupational illness: the report includes an article on BASF’s worldwide Occupational Medicine and Health Protection programme and auditing system, and describes the use of an ‘Industrial Hygiene Exposure Assessment’ procedure at 23 sites in the USA, Canada and Mexico. No data is presented. Transport incidents: a ‘no’ score has been given since no data is provided on either the safety of BASF operations or on environmental incidents. This is in spite of inclusion in the report of a separate section on ‘Transport Safety’. In it articles describe the introduction of a safety and quality evaluation scheme for shipments of ammonia and naphtha by sea, and there is a discussion on the role of the new European Inland Shipping Inspection System (EBIS). Emergency preparedness: the report includes a separate section on ‘Plant Safety and Emergency Response’, which has articles on: • • •

BASF’s role in providing technical expertise to the European Transport Accident Information and Assistance Scheme (TUIS); its involvement in the provision of a mobile chlorine absorption unit for use following chemical spills resulting from transport incidents; a new data management system for safety data sheets at Wintershall.

A ‘yes’ score has been awarded in spite of the lack of discussion on emergency preparedness from other geographical areas.

124





Supplier involvement: BASF has recently completed a one-year trial of a new environmental and safety evaluation process for suppliers. This two-stage process is based on risk analysis/risk reduction methodology followed by a site inspection.


Process design: product design and testing, and the use of renewable resources are discussed in the report under the heading ‘Product Stewardship’. Process improvements are discussed under the heading ‘Environmental Protection’. Examples given include: • • • •

YES YES YES YES NO NO

the use of pentanes to replace CFCs in expanded polyurethane foams; the use of carbon dioxide rather than HCFCs in blown polystyrene manufacture; the use of water-borne coatings to reduce solvent emissions; alternatives to chromium in the tanning industry.

Recycling: within the section on ‘Environmental Protection’ the report describes BASF’s approach to recycling, and the example given is of selling solvent stripped from a waste stream. Elsewhere articles feature recycling polyurethane foams and hydrogen chloride. Environmental expenditure: during 1998 DM 246 million was spent on capital expenditure and DM 1514 million was spent on operating expenditure. This latter figure quoted is after deduction of any credits for recycling products and for electricity and steam generated. Some mention is made of research costs, and there is also more detailed information on the costs of developing and carrying out environmental testing on agrochemicals (under the heading ‘Ecotoxology’). Prosecutions & fines: no mention is made in the report of any prosecutions or fines, although the annual report identifies provision of 255 million Euros against environmental liabilities. Downside reports: no mention is made in the report of any accidents, injuries or environmental incidents, and there is no other downside reporting.


BASF 5






Energy usage: in 1998, 33.3 million MWh of energy were generated and 10.1 million MWh were purchased. Coal Fuel oil Natural gas Wastes/other fuels

9% 5% 49% 37%


Water consumption: in 1998, 1880 million m3 were used. Of this 1570 million m3 were uncontaminated and discharged directly into the environment, 250 million m3 was from production and 55 million m3 other sources. Emissions to water: specific initiatives in controlling emissions to water mentioned in the report include the modernisation of a wastewater treatment plant in Brazil and the removal of nitrogen from effluent at BASF Schwarzheide. •

•

•

COD & AOX: the total COD discharged during 1998 was over 45 000 tonnes. This compares with a figure of nearly 30 000 tonnes in 1993, with most of the increase occurring during 1997 and 1998; nitrogen and phosphorus: 10 000 tonnes of inorganic nitrogen and 450 tonnes phosphorus as phosphates were discharged during 1998. The nitrogen figure was similar to that in 1997 and shows an increase over 1996; heavy metals: 60 tonnes of heavy metals were discharged to water in 1998. No breakdown in composition is given nor is comparative data available for other years.

Emissions to land: figures are presented for ‘production and other waste’, and the volumes sent to each destination (on- and off-site disposal by incineration or landfill) are identified. During 1998 approximately 700 000 tonnes of wastes were disposed of by landfill (34%) or energy recovery/ incineration (66%). Emissions to air: it is unclear how accurately the data represents the 1998 situation. The report states ‘Data on the German Group companies are recorded regularly . . . and are compiled to form an emissions inventory every two years. Since 1996 the inventory is to be compiled every four years. The inventory data were last collected in 1996.’ The 1998 figures were: • • • • • •

•

CO: 31 234 tonnes; NOx: 19 520 tonnes; SOx: 10 117 tonnes; VOCs: 15 000 tonnes; VICs: 1000 tonnes; greenhouse gases: energy related carbon dioxide emissions were 10.7 million tonnes during 1998. Nitrous oxide emissions were 27 400 tonnes. Other greenhouse gas releases were comparatively small in volume and potency; transport effect: no mention is made of the effects of transport on atmospheric emissions.

126





It is BASF’s stated aim ‘all over the world, our goal never changes; we want to conduct frank and constructive dialogue and bring our company’s interests into harmony with those of society’. The report features articles on general activities such as:


• • •

NO

community advisory panels which have been set up in North America to address major issues and respond to concerns; open days; paper, glass, plastic and aluminum recycling scheme in Brazil.

In spite of these reports a ‘no’ score has been given since there is little in the report to indicate that BASF spends money on projects directly for the benefit of the community. Triple bottom line

Triple bottom line

While the report emphasises BASF’s commitment to sustainable development and Responsible Care®, it fails to make a cogent link between the economy, environment and society.

Triple bottom line



No individual or role is named as an environmental contact. The nearest to such a contact is the address given on the reply card:

Contact address

NO

NO

BASF Aktiengesellschaft ABT. ZOA/MM C100 D-67056 Ludwigshafen Germany website: www.basf-ag.de


BASF 7


Germany

Bayer Ranking by turnover (1 to 35): 2 Business profile

Business profile

Bayer has a turnover of DM 54 900 million and has 140 000 employees. Its headquarters are at Leverkusen, Germany, and there are 170 production sites, and ‘companies and agencies in virtually all countries in the world’. A map shows the location of the major sites. Bayer aims for technological leadership in its core activities through research. In order of reducing turnover its core activities are: polymers (rubbers, plastics and coatings), healthcare (pharmaceuticals, non-prescription drugs and diagnostics), chemicals (organic and inorganic intermediates and specialty chemicals), agrochemicals and photographic chemicals and services.


Company reporting


Annual report: a copy of both the annual report and the CER were received. Bayer’s annual report is very much a financial report. Although a separate section discusses Responsible Care® issues, and environmental liabilities are mentioned. Internet CER: the website includes an area for ‘Corporate PolicyEnvironmental Protection and Safety’ that directs the reader to the internet report as a pdf file.

YES YES YES YES


YES YES YES

Company coverage: company coverage in the CER is good, with data on 150 of the 170 sites (this figure was 80 in the 1997 report). No data has been included from the 15 sites closed or sold during 1998.



Bayer 1


Environmental report After a short introduction to the company and its environmental management systems, the bulk of the report makes interesting use of ‘Features’, ‘Reports’ and ‘News’ articles to describe its accomplishments and present its views under the headings ‘Product Stewardship’, ‘In-Process protection’, ‘Sites’, ‘Safety’ and ‘Dialogue’. The remainder of the report presents data and achievements against targets, and a historical overview of environmental protection at Bayer since 1901. Each year: the first report was issued in 1995 and the second in 1997. There is no statement that a CER is issued annually in the future.

Title Responsible Care Report 1999 Page 81 Format A4


YES NO YES YES YES YES YES

Site coverage: reporting is reasonably even-handed across the geographical areas. CEO’s foreword: the CER includes a foreword by Dr Manfred Schneider (Chairman of the Board of Management). Data used: data is given for five years between 1990 and 1998, either as absolute data or as percentages compared to a 1990 baseline. Most of the comparisons are made between the years 1990 and 1998, and progress towards the targets set for 2000 is described. External verification: carried out by Arthur D. Little. Random inspections of six sites in different countries (two visited, four by telephone) to assess the completeness of the methods of recording data, and consistency during transfer for consolidation. Bayer has implemented their recommendations from the last validation. 1999 recommendations are to improve information flow within Bayer, to include noise emissions in the questionnaire, and to compile data on below-ground information in more detail. Reply card: a reply card is included. This also contains a list of the publications that can be obtained either as a one-off issue or by subscription (some in nine languages).

130

Bayer 2 Current practice in environmental reporting: the chemicals industry




Policy: while Bayer’s commitment to safety and environmental protection is clearly stated throughout the report, the policy statement is not particularly comprehensive. It states: ‘It is company policy to employ the best environmental protection technologies as efficiently as possible.’


YES YES YES YES

Objectives: year 2000 targets are quoted for most of the indicators, and not just the key ones. There is also often a statement of whether or not Bayer is likely to meet these targets. EMS: discussion of recognised environmental management systems is limited to ISO 14001, and worldwide only 11 out of 170 production sites are certified to ISO 14001. Even so, a ‘yes’ score has been awarded since there is a continuing improving trend, with the recent certification of sites in Thailand, Germany and Morocco. Procedures/responsibilities: responsibility fordecision-making lies with the board of management or the board committee for technology and the environment. Business groups are responsible for implementing board decisions and complying with regulations. The central committee on environmental protection, and other central groups, provide the board with information and also advise the businesses. Dr Attila Molnar is named as the individual responsible for safety and environmental protection on the board of management of Bayer AG. Every business group also has its own environmental and protection and safety unit, and there are specialists at plant level. There is strong evidence of routine internal auditing.


Bayer 3


Health and safety

Health and safety

Fatalities: no mention is made in the report of any of fatalities occurring, or their absence.


Lost time accidents: a ‘yes’ score has been given although figures were not collated across the whole group until mid-1998. Data is included for the whole year for Bayer AG, Bayer Corporation and the Baytown site US. The information given does show that: • •

• •

NO YES NO NO YES

in the second half of 1998 group data indicated a frequency rate of 5.1 accidents resulting in 1 day’s absence per million working hours; Bayer AG reportable accidents fell from 8.5 per million in 1990 to 2.4 per million in 1998, while the German chemical industry average fell from 21.9 to 14.7 over the same period; in the USA Bayer Corporation’s TRIR at 1.36 is below the American Chemical Manufacturers’ average; the external verification report identifies that Bayer ‘records occupational safety data for contractors working on its sites’.

Occupational illness: no mention is made of occupational illness in the CER. Transport incidents: while the external verification report identifies that Bayer records ‘safety-relevant data covering the whole transportation process’, this data is not discussed in the CER and a ‘no’ score has been given. Emergency preparedness: while emergency provisions are not prominent in the report, specific exercises are mentioned that indicate that emergency preparations are an integral part of the EMS and that Bayer involves the local communities in them.

132





Supplier involvement: a ‘no’ score has been given since there is no apparent strategy in place to encourage suppliers or insist they have a responsible approach to environmental protection.


Process design: a substantial part of the CER is devoted to discussing the twin issues of product stewardship and in-process environmental protection, which together form the basis for responsible process design. While some of the articles discuss the benefits of existing products, there are articles on developing new products (including the potential uses of biodegradable plastics), improving existing processes, alternative methods for end-of-pipe treatment and investing in solar power.

NO YES YES YES NO YES

Recycling: a number of examples are given where recycling is used. One interesting article is on the treatment of cooking fats to provide an alternative to diesel fuel. Environmental expenditure: from 1990 to 1998 capital expenditure on environmental protection fell from DM 600 million to DM 251 million. This reduction is stated to be due in part to completing restructuring the Uerdingen and Leverkusen sites and in part from the benefit being derived from research into improved processes. Over the same period the amount spent on environmental operating expenses has remained relatively constant, and in 1998 was DM 2200 million. It is expected that capital expenditure will rise to DM 420 million in 2000 to meet costs associated with new production facilities, while operating costs are expected to remain constant. Prosecutions & fines: the annual report identifies that in 1998 DM 593 million had been provided for environmental protection relating to future landscaping, landfill and land remediation and that ‘sufficient provisions have been made for such commitments’. No mention is made of prosecutions, fines and liabilities in the CER. Downside reports: the section titled ‘Site’ in the CER describes the need to clean up contamination land on the Rhine and in Argentina, and the section titled ‘Safety’ features articles on accidents at Wuppertal-Elberfeld and Dormagen.


Bayer 5




Changes in data reporting identified in the 1999 report include recording of individual parameters for VOC, VIC and COD in line with CEFIC recommendations.


Production volume: no figures are quoted, but the data should be viewed against a 29% increase in production volume since 1990.


Energy usage: worldwide energy consumption has remained relatively stable since 1990 at about 170 petajoules, resulting in a reduction in energy consumption per sales of 18%. There has been a shift away from coal and natural gas towards purchased electricity and steam. Water consumption: total wastewater volume has remained relatively stable since 1990 at about 2.3 million m3 per day. During the same period the discharge of cooling water/process water per sales volume fell 26%. Emissions to water: year 2000 targets for these emissions were set in 1996. In many cases these had already been improved upon during 1998: •

•

• •

COD & AOX: COD loading has fallen from 77 000 tonnes in 1990 to 48 000 tonnes (also year 2000 target) in 1998, primarily due to the sale of citric acid production facilities. In the same period AOX loads have fallen from 200 tonnes to 112 tonnes (target 95 tonnes); dissolved inorganic salts: loading per sales volume fell 26% between 1990 and 1996, then rose slightly in 1998. It is expected that this ratio (and hence the total volume) will continue to rise as new facilities are brought on line and the use of incineration increases. The year 2000 target is 21% of 1990 level; nitrogen and phosphorus: The combined load per sales volume fell 68% between 1990 and 1998 to below the year 2000 target; heavy metals: The total load fell from 65 tonnes in 1990 to 32 tonnes in 1998. Zinc and arsenic have been included in the report for the first time, and of the heavy metals identified only chromium had not yet reached the year 2000 target.

Emissions to land: total waste volumes have fallen by 13% since 1990 in spite of increased sales volume, and in spite of increased volumes from external sources in recent years. In 1998 the total solid waste produced was 2.1 million tonnes, 1.1 million tonnes as waste from chemical production, 860 000 tonnes as other waste and 110 000 tonnes from external sources. Of this waste, 36% was recycled, 14% incinerated for waste heat recovery and the remainder was landfilled. Emissions to air: •

•

•

•

CO: annual discharge has fallen from 13 700 tonnes in 1990 to 9300 tonnes in 1998 against a year 2000 target of 9500. Further reductions are expected as measures are introduced at the Uerdingen site; NOx: annual discharge has fallen from 18 400 tonnes in 1990 to 12 200 tonnes in 1998 against a year 2000 target of 12 000. Most of these reductions were realised before 1996 and now appear to have levelled off; SOx: since 1990 discharge has fallen by 63% to the 1998 level of 7700 tonnes. Most of the reduction has taken place in Western Europe following the change away from high sulphur fuels; VOCs: annual discharge has fallen from 245 000 tonnes in 1990 to 14 000 tonnes in 1998 against a year 2000 target of 9600. This downward trend is mainly a consequence of improvements in the USA.

134



• •

•

Further reductions in Europe are expected to enable the year 2000 target to be reached; VICs: emissions have remained relatively constant at a level of around 1300 tonnes per year since 1992; greenhouse gases: the measures being taken to reduce CO2 and N2O emissions are discussed in a feature article within the body of the report. This report discusses the Kyoto Protocol and quotes German national targets and Bayer’s 2005 target for CO2. In common with much of the industry this CO2 reduction is a function of both improved energy efficiency at the point of use and improved generating efficiency through the wider use of natural gas. The data highlights: • CO2 emissions have reduced per sales volume by 26% since 1990. The total figure of 9.6 million tonnes discharged in 1998 meets the year 2000 target and includes figures for CO2 generated during energy production and incineration; • N2O emissions in 1997 were 6 million tonnes; transport effect: no reference is made to discharges to air resulting from transport operations.



Bayer’s links with local communities and other groups are mainly described in the section entitled ‘Dialogue’. A ‘yes’ score has been given, since there are at least four articles from various geographical areas describing work with and in the community. Of particular note is support provided to a reforestation project in Thailand, and a butterfly conservation programme in Australia.


Triple bottom line

Triple bottom line

The CER report demonstrates a reasonably strong connection between economic realities and the cost of environmental protection, but there is less adequate coverage of social issues and little attempt to link the three.

Triple bottom line

Corporate environmental contacts


The main intended contact is that on the reply card (which is liable to be used or lost). This address is:

Contact address

YES

NO

NO

Bayer AG IM Medienservices Attn. Frau Herriger Gebaude D201 D51386 Leverkusen Germany The internet website address is: http//www.bayer.com An address is also given within the body of the report for obtaining films relating to responsible care.


Bayer 7


UK

The BOC Group Ranking by turnover (1 to 35): 21 Business profile

Business profile

In 1999 BOC Group had a turnover of £3300 million. Although the number of employees is not clearly stated, it is approximately 40 000 (the annual report states that ‘Through its merger with PresMed, Afrox Healthcare now employs 10 000 people, around a quarter of the Group’s total’). The head office is in Windlesham, England, and it is ‘a producer of industrial gases in over 50 countries’ (not named). The business is reported in the annual report under three business sectors; Gases (82% of turnover), Vacuum Technology and Distribution Services. The business review in the annual report has different headings, which more closely reflects the way the business is being restructured. These are: Industrial and Special Products: cutting and welding gases, LPG in cylinders, medical gases, hydrocarbon propellants. Afrox produces welding products and is the largest supplier of healthcare services in South Africa; Process Systems: the supply of industrial gases (mainly oxygen and nitrogen) either as packaged units or as more specialised units; BOC Edwards: special gases; vacuum, abatement and chemical dispensing systems all mainly for semiconductors; Applied Gas Solutions: supply of gases and systems for small and medium users, either as packaged units or on-site generation, LoTOx and Loprox air and water oxidation systems; Distribution Services: develops supply chains with key customers (e.g. Marks and Spencer).


YES* NO NO YES*



BOC 1


Company reporting Annual report: the annual report and an electronic copy of the environmental review for employees were received. The annual report starts with a business review that includes a section titled ‘Our Environment’. This describes environmental achievements during the year. The director’s report on the financial statements also includes a section titled ‘Safety and environment’. Both these sections mention an annual environmental survey. There is no mention in the annual report that the results of this survey are issued for public consumption, although the environmental review for employees includes a section on environmental reporting in which it states ‘we file publicly available reports with various agencies. Examples include the US Environmental Protection Agency, the UK Environment Agency, the Norwegian SFT . . . and the Irish Environmental Protection Agency.’

Title Annual Review and summary financial statements 1999 Page 28 Format A4


YES NO NO

Internet CER: the BOC website does not contain an internet report on HS&E issues, but it does have a web page which features the BOC Foundation for the Environment. Company coverage: there is no clear statement or understanding of the degree to which the environmental report reflects the total scope of group activities. Environmental report This is the first review of HS&E issues published for employees. It includes the major elements contained in HS&E reports prepared for the public, although it does assume a base level of knowledge of the business. Each year: there is no clear statement that this report is to be issued annually. Site coverage: there is little discussion on specific sites, but a ‘yes’ score has been awarded since there are a number of photographs with captions, which appear to reflect the geographical diversity of the company. CEO’s foreword: the report includes a foreword by Dr Deb Chatterji (Managing Director, Technology) and an introduction by Danny Rosenkranz (CEO).

Title Health, safety and environment review for employees 1998 Page 17 Format A4 Landscape


YES NO YES YES YES NO NO

Data used: historical data for the key indicators is generally presented for five years. External verification: the environmental report has not been externally verified. Reply card: no reply card was received with the report, and there is insufficient encouragement on the website to warrant awarding a ‘yes’ score.

138

BOC 2 Current practice in environmental reporting: the chemicals industry




Policy: there is an HS&E policy statement in the CER. It identifies the broad objectives, states what BOC requires from employees, and identifies some of the behaviours BOC expects from its managers.


YES NO YES NO

Objectives: three group objectives are clearly stated in the introduction. They are to have no accidents, cause no harm to people and do no damage to the environment. A ‘no’ score has been awarded since none of the objectives are time-related and the last two are not measurable. EMS: the CER states that ‘all BOC businesses are working to implement our international Environmental Management System standards’. The intention to work to a recognised EMS is clearly demonstrated, since in 1997 four sites were certified to ISO 14001, and the 1999 annual report states ‘during the year a further seven sites have achieved certification to ISO 14001’. Procedures/responsibilities: the group loss prevention executive council recommends policies and strategies to the board, oversees implementation, monitors progress and promotes best practice. Reference is made to the BOC Group Environmental Management Manual, which defines minimum standards and methods of implementation. Other than this the procedures for implementing policy, and specific roles and responsibilities are unclear. Health and safety

Health and safety

Fatalities: there were six fatalities amongst employees in 1998. Three of these were as the result of vehicle accidents.


Lost time accidents: the lost workday case rate (LWCR) rose to a peak of approximately 0.7 injuries per 200 000 in 1994, then fell steadily to 0.5 injuries per 200 000 in 1997. During the same period the total recordable case rate fell from 1.5 injuries per 200 000 to 1.2 injuries per 200 000.

YES YES YES YES YES

Occupational illness: while the group occupational health function only routinely monitors health and hygiene at UK sites, a ‘yes’ score has been awarded since there does appear to be a clearly defined group-wide strategy for improving occupational health. The occupational health function provides an advisory service to businesses worldwide, and is partaking in worldwide initiatives in manual handling and avoiding noise-induced hearing loss. Others are proposed in occupational stress and drugs at work. Transport incidents: a section in the report is devoted to a discussion of vehicle incidents and prevention initiatives. The truck avoidable incident rate fell from 6.2 incidents per million miles in 1993 to 4.7 incidents per million miles in 1995. Since then the rate has settled at around 5.2. During the same period the car avoidable incident rate fell from 3.9 incidents per million miles in 1993 to 3.2 incidents per million miles in 1995, then remained constant. Emergency preparedness: a section of the report describes BOC’s major hazard review programme and its approach to issuing licences appropriate to the level of risk the site is capable of managing. While the involvement of local statutory authorities is not discussed the group-wide nature of the programme, together with mention of the Exercise BOC Alert in the USA, warrants a ‘yes’ score.


BOC 3




Supplier involvement: there is a statement that BOC encourages suppliers to be safe and environmentally responsible. The company has a stated strategy of working through industry trade associations to improve industry wide standards.

Supplier involvement Process design Recycling Environment expenditure Fines Downside reports

Process design: the report gives several examples of products that reduce environmental impact. It also identifies that electricity is the principal component of the air separation process, and that ‘we constantly strive to improve the energy efficiency of our plants’. Even so a ‘no’ score has been awarded since only one example of a process improvement is given (changing a cleaning system to reduce ozone emissions), while at the same time the report includes a number of examples where tail-end treatment has been used to reduce emissions.

YES NO YES NO NO YES

Recycling: it does appear that BOC is actively seeking to reuse waste streams in order to reduce raw material and energy usage. Examples are given in the report of a process for sulphur recovery, recycling gases from semiconductor manufacture, and marketing lime sludge to the building industry and as a soil conditioner. Environmental expenditure: the report contains a statement that over 10% of R&D expenditure is aimed at developing solutions for customers’ environmental problems. Other than this no figures are given for environmental expenditure. Prosecutions, fines and liabilities: no mention is made of the absence or occurrence of any fines or prosecutions. Downside reports: the CER does give the impression the downside is being reported. It includes a graph and discussion of compliance incidents, which is regarded as a downside report even though the discussion identifies a downward trend. There were 220 incidents in 1992/3 but these fell sharply in 1993/4. Following higher figures in the next two years, there were 101 complaints in 1996/7.

140







Energy usage: since 1990 the energy efficiency of processes for the production of industrial gases had improved 6%, and the annual energy consumption was between 8 and 9 TWh. Water consumption: no group-wide figures are given for water consumption.

NO YES NO YES YES YES YES

Emissions to water: a graph is included for discharges of pollutants to water from BOC gases. Between 1992/3 and 1995/6 discharges fell from 2000 tonnes to 1000 tonnes, but rose in 1996/7 to 1400 tonnes. No breakdown is given for the major pollutants. Emissions to land: a graph is included for disposal of hazardous waste. Between 1993/4 and 1994/5 discharges fell sharply from 50 000 tonnes to 15 000 tonnes, then more slowly to 10 000 tonnes in 1996/7. Emissions to air: no figures are given for total emissions to air. •

•

•

ozone depletion: a graph is included for emissions of ozone-depleting substances. Between 1992/3 and 1996/7 emissions fell steadily from 120 tonnes to 60 tonnes. Separate discussion identifies that the figure in 1991 was 340 tonnes, and that the figures include CFCs; greenhouse gases: The report discusses the effects of greenhouse gases emitted by electricity generators, but no figures are given for CO2 or other greenhouse gases; transport effect: a ‘yes’ score has been awarded since BOC recognises the potential impact of transport operations. It states the ‘major issues affecting BOC relate to energy consumption and transportation’. The Distribution Services business has equipped a fleet of vehicles to run on natural gas, with reductions during an 18-month trial of 69% nitrogen oxides, 89% particulates, 32% CO2 and 90% hydrocarbons.



A ‘yes’ score has been awarded since, while there are no specific examples, the CER includes discussion of the activities of the BOC Foundation for the Environment. This is an independent body funded largely by BOC to support practical demonstrations of means of reducing pollution in the UK.


Triple bottom line

Triple bottom line

The report fails to make any cogent link between social responsibility, economic and environmental performance.

Triple bottom line


YES

NO

BOC 5




The contact given is:


YES

Group Environmental Protection Department The BOC Group Chertsey Road Windlesham Surrey GU20 6HJ England Tel: +44 (0) 1276 477222 Fax: +44 (0) 1276 471333 Internet: http://www.boc.com

142



Switzerland

Ciba Specialty Chemicals Ranking by turnover (1 to 35): 19 Business profile

Business profile

In 1998 Ciba had a turnover of CHF 7900 million and employed 24 500 people. It has major subsidiaries in 40 countries worldwide. These are named in the Business Review. ‘Ciba Specialty Chemicals is a leading company dedicated to producing high-value effects for our customers’ products.’ Its business is arranged in four divisions: Additives: for polymers, coatings, lubricants, printing inks, photographic films and paper. Since April 1998 also includes water treatment chemicals; Colors: colours for inks, paints, plastics, textiles and fibres; Consumer Care: whiteners, anti-microbials, specialty colours and fabric finishes; Performance Polymers: epoxy resins and other thermosets.


Company reporting

Title Business Review 1999 Page 24 Format A4

Annual report: a copy of the 1999 Annual Report and 1998 CER were received. The annual report is split into separate business and financial reviews. There is no specific discussion of HS&E issues or an environmental report in either of these reviews, although the financial review does include mention of environmental liabilities and capital investment. Internet CER: the website does not have an area devoted to EHS issues, however the CER is available under publications as a pdf file. Company coverage: in 1997 the CER contained data on 47 sites. For 1998 the number has been increased to 62 ‘which provides us with more than 95% of the total EHS data for the company’. Those not reported on are a newly acquired site in Germany and four small formulation sites which are to be included in the 1999 report.

YES YES YES* YES*

Title Financial Review 1999 Page 40 Format A4


NO YES YES



Ciba Specialty Chemicals 1


Environmental report Ciba Specialty Chemicals have decided only to publish a full EHS report every two years. ‘In the meantime we have decided to publish and interim EHS report containing data for the year.’ This interim report is a simple document comprising a foreword by the chairman; a statement of achievements and challenges; and presentation of the data. Each year: although it is not stated that the interim report is to be a regular occurrence the phrasing is such to warrant a ‘yes’ score. CEO’s foreword: the report contains a foreword by Rolf A. Meyer (Chairman and CEO), and an overview of achievements and challenges from Hans-Ulrich Muller (Executive Vice-President Law and Environment) and Peter Donath (Global Vice-President Environment, Health and Safety).

Title Environment, Health and Safety 1998 Page 7 Format A4


YES YES NO YES YES NO NO

Site coverage: a ‘no’ score has been awarded due to the lack of any information about the geographical diversity of the company. Data used: this is the third year of operation as Ciba Specialty Chemicals. Data is gathered using Ciba’s SEEP (Safety, Energy and Environmental Performance) system, and it is stated that ‘this report generally follows the recommendations made by CEFIC’. Comparative data is presented for all indicators for 1997 and 1998. Data from joint ventures has been reported in full and not scaled to percentage holding, and CO2 discharged during the generation of bought-in electricity has been included. External verification: there is no indication that the report has been externally verified. Reply card: a reply card is not included. Environmental management


Policy: a policy statement is not included.


Objectives: no targets are defined.

NO NO NO NO

EMS: apart from saying that 1998 saw the first chemicals site in Italy to achieve EMAS certification, no mention is made of any other recognised EMS. Procedures/responsibilities: a ‘no’ score has been awarded since no attempt is made to define the HS&E structure or procedures. The Executive Vice-President Law and Environment (Hans-Ulrich Muller) and the Global Vice President Environment, Health and Safety (Peter Donath) are named, but their roles are undefined.

144

Ciba Specialty Chemicals 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: there were 3 fatalities in 1998, one in Basel (Switzerland), one at Grenzach (Germany) and one at Santa Monica (Goa).


Lost time accidents: the frequency of accidents fell from 22.2 per 1000 employees in 1997 to 16.6 per 1000 in 1998. Over the same period the days lost per million hours worked also fell from 164 to 126. The CEO is personally informed of any lost time accident within 24 hours of it occurring.

YES YES NO YES NO

Occupational illness: no mention is made of occupational illness. Transport incidents: the report indicates that during 1998 there were no significant accidents (spills or leaks) during transportation of Ciba’s products. Emergency preparedness: although safety issues and transportation incidents are discussed, no specific mention is made of any group-wide strategy for ensuring an appropriate level of emergency preparedness. Environmental protection


Supplier involvement: the CER does not mention any attempt to encourage or insist that suppliers confirm that their own environmental standards are in place.


Process design: during 1998 guidelines and guidance notes were issued to support product stewardship responsibilities, and a guidance note on Sustainable Product Design has been drafted. However, a ‘no’ score has been awarded since the CER does not present any evidence by which to judge whether these initiatives are already an integral part of Ciba’s environmental protection strategy.

NO NO YES YES* NO NO

Recycling: the CER states ‘it is our objective to minimise loss of solvent and to recycle and reuse as much solvent as possible’. Figures presented show that 513 000 tonnes of solvent were recycled in 1998, while a further 40 000 tonnes were incinerated, some for the generation of steam and hot water. Environmental expenditure: a ‘yes*’ score has been awarded since no information is given in the CER, but the Financial Review states that CHF 61 million were spent in 1999 (CHF 55 million in 1998) on environmental protection and improvement. Prosecutions & fines: a ‘no’ score has been awarded since no information is given of any fines or prosecutions. The Financial Review identifies provisions of CHF 789 million to meet ‘currently known and anticipated environmental claims and liabilities relating to the company’s past operations’. Downside reports: the CER does not contain any downside reports.






Production volume: the performance indicators for 1997 and 1998 should be viewed in the light of a stable production volume of 1.15 million tonnes.


Energy usage: overall consumption remained relatively constant during 1998 at 17 300 terajoules. Nearly 60% of this energy is purchased as natural gas, the majority of the remainder being purchased as electricity or steam.

YES YES YES YES YES YES NO

Water consumption: the consumption of domestic and process water has remained virtually constant during the year at 1 million and 20 million m3 respectively. Cooling water usage has however fallen from 86 million m3 in 1997 to 76 million m3 in 1998. Much of this reduction has been due to the closure of a boilerhouse (as part of a change from generated to purchased steam). Emissions to water: in line with CEFIC guidelines Ciba’s contribution to the load discharged from shared treatment facilities has been calculated. Efficiency factors are not provided and increases in heavy metal concentrations are not discussed. • • •

•

COD & AOX: a single figure is given for ‘organic load’, which fell from 14 200 tonnes in 1997 to 13 500 tonnes in 1998. Dissolved inorganic salts: discharges fell from 221 000 tonnes in 1997 to 199 000 tonnes in 1998. Nitrogen and Phosphorus: nitrogen discharges fell from 1460 tonnes to 1400 tonnes during 1998. During the same period phosphorous discharges increased from 43 tonnes to 101 tonnes. The report suggests this apparent increase is due to underestimation at one site for 1997. Heavy metals: figures are given for discharges of: Mercury/arsenic – both < 0.01 tonnes Cadmium – up from 0.03 tonnes to 0.12 tonnes in 1998 Nickel – up from 0.1 tonnes to 1.15 tonnes in 1998 Chromium – down from 23.9 tonnes to 18.4 tonnes in 1998 Zinc – up from 3.5 tonnes to 7.2 tonnes in 1998 Copper – up from 2.5 tonnes to 4.2 tonnes in 1998.

Emissions to land: the report defines waste that is classified as hazardous, and includes non-hazardous waste for the first time. The quantity of hazardous waste recycled has remained constant at about 650 000 tonnes. In 1997, 31 000 tonnes were sent for landfill, but this increased to 53 000 tonnes in 1998 mainly as a result of cleaning up a newly acquired site in the USA. The quantity of hazardous waste sent for thermal treatment (incineration and wet air oxidation) also increased from 224 000 to 265 000 tonnes. 75 000 tonnes of non-hazardous waste were generated, but no breakdown of disposal is given. Emissions to air: • •

•

•

146

NOx: disharges fell from 1091 tonnes in 1997 to 1039 tonnes in 1998. The fall is attributed to technical improvements in steam boilers. SOx: discharges fell from 282 tonnes in 1997 to 248 tonnes in 1998. The bulk of these emissions is stated to come from one site which currently uses heavy oil as a fuel. VOCs: discharges of halogenated VOCs fell from 90 tonnes to 53 tonnes during 1998, while those of non-halogenated VOCs fell from 2662 tonnes to 2151 tonnes. Greenhouse gases: CO2 discharges due to in-house steam generation are listed separately from those attributable to power generation (20%

Ciba Specialty Chemicals 4 Current practice in environmental reporting: the chemicals industry


•

of which is purchased). The total figure was fairly constant between 1997 and 1998 at about 1.2 million tonnes. Ciba state that they do not make any CFCs or HCFCs, and that any discharges of these substances will be fugitive emissions from refrigeration and fire extinguishing systems. Other greenhouse gases are not mentioned. Transport effect: no mention is made in the report of the environmental impact made by transportation.



The CER does not contain any reports or discussion by which to judge the degree to which Ciba is involved in projects or initiatives for communities.


Triple bottom line

Triple bottom line

The CER makes a reasonably strong link between environmental performance and economic/business success and estimates that annual savings of CHF 15–20 million can be realised from energy and materials savings. A ‘no’ score has been awarded however, because of the absence of any discussion on social responsibility

Triple bottom line



The environmental contact is:


NO

NO

YES

Peter Naish Group Environment, Health and Safety Fax: +41 61 636 46 70 The corporate address is given as: Ciba Specialty Chemicals Inc. Klybeckstrasse 141 CH-4002 Basel Switzerland An additional corporate contact is given as: Tracy Elms Corporate Communications Tel: +41 61 636 44 44 Fax: +41 61 636 30 19 The internet address is http://www.cibasc.com




Switzerland

Clariant Ranking by turnover (1 to 35): 24 Business profile

Business profile

Clariant was formed out of Sandoz in 1995, and expanded by integration with the Hoechst specialty chemicals business in 1997. In 1999 Clariant had a turnover of CHF 9300 million and employed 29 000 people. Its head office is in Muttenz, Switzerland, and it has 38 principal manufacturing plants in 14 countries. The business is organised in six divisions: Textile, Leather and Paper Chemicals: textile dyes, textile chemicals, paper chemicals and leather chemicals; Pigments and Additives: organic pigments for paints and dyes, ink pigments, polymer additives and flame retardants; Masterbatches: highly concentrated pigment and additive preparations for technical plastics, spin dying and packaging; Functional Chemicals: detergents, additives for detergents, intermediates for the personal care market, specialty chemicals for the construction, mining and petroleum industries; Life Science and Electronic Chemicals: pharmaceutical and agrochemical intermediates, specialty intermediates based on pigment preparations, photoresists and products for the semiconductor industry; Cellulose Ethers and Polymerisates: cellulose and emulsion powders for coatings, mortars, building materials, insulation, adhesives, and tin for the pharmaceutical and food industries. Polyvinyl alcohol/butyral for adhesives, paper, textile processing, inks, paints and laminated glass.


Company reporting


Annual report: a copy of the annual report and the CER were received. The annual report contains a business review as well as the financial statements, and contains a two-page review of environment, safety and health.

YES YES YES* YES

Company reporting Internet CER: the website has an area allocated to the environment, and this gives access to a copy of the CER in pdf format.

Annual report Internet CER Company coverage

YES YES NO

Company coverage: the CER is so general that there is no reason to say it is not representative of the group. However, a ‘no’ score has been awarded in view of the absence of any information about the group it is based on.



Clariant 1


Environmental report The report reviewed is a simple document that presents Clariant’s position on major environment, safety and health (ESH) issues. Although the document is undated, the website refers to the document as having been issued in March 2000.

Title Environment, Safety, Health ESH: Clariant’s position Page 15 Format A4

Environmental report Each year: the report appears to be a ‘one-off’ document, not scheduled for regular updating. Site coverage: although there is little site-specific information, the references that do appear suggest the CER has an even-handed approach. CEO’s foreword: the foreword takes the form of specific questions that are answered by Dr Reinhard Handte (Chief Operating Officer).

Clear dating Each year Site coverage CEO’s foreword Data used External verification Reply card

NO NO YES YES NO NO NO

Data used: although the CER states that ‘All Clariant sites compile a set of 40 relevant ESH key figures, which are consolidated annually for the divisions and the Group’, none of these figures are presented in the CER. External verification: there is no evidence that the CER has been externally verified. Reply card: no reply card was received with the CER, and comment through the website does not encourage comment on EHS matters or direct the reader to an EHS contact.

150

Clariant 2 Current practice in environmental reporting: the chemicals industry




Policy: ESH policy is stated in the form of 11 ‘Corporate Principles for Environment, Safety and Health’. As well as defining an overriding objective to protect people and the environment, this policy statement identifies Clariant’s commitment to:


• • • • •

YES NO YES YES

setting and taking suitable measures to reach protection goals; continuous improvement; group-wide adherence to local laws, local provisions and Clariant standards; the use of risk assessment; informing stakeholders;

and describes: • •

the use of cost benefit analysis; the role of the units, ESH management and employees in supporting, preventing and limiting incidents.

Objectives: the use of group objectives is mentioned in the policy statement, and elsewhere under ‘ESH Strategy’. However, the CER does not identify what any of these objectives are. EMS: reference is made to participation in programmes such as the EMAS and ISO 14001 as being helpful, but no sites are named in the report as having taken part. Procedures/responsibilities: the CER includes a simplified organogram showing the ESH structure, and defines the roles of the various ESH functions at group, divisonal, company and site level. Responsibility for implementing policy lies with the operating groups at divisional and company level. They also provide support and guidance to individual sites. The group ESH function defines group strategy, provides guidelines, monitors consistency within the group, checks on operational functions, develops training modules and coordinates emergency management. The CER states that approximately 150 audits of 500 units (including warehouses and laboratories) are made annually. The annual report identifies that 97 audits were carried out in 1999, together with a further 38 ‘Legal Compliance Audits’. Health and safety

Health and safety

Fatalities: there is no mention of the absence or occurrence of any fatality in either the CER or the annual report.


Lost time accidents: the figures quoted are taken from the annual report. The lost time accident frequency rate rose from 2.59 incidents per 200 000 working hours in 1996 to 2.72 in 1997, then fell to 1.75 in 1998. The lost work day frequency rate was static at 37.4 days per 200 000 working hours 1996, then fell to 22.2 in 1998.

NO YES* YES NO YES

Occupational illness: the CER includes a statement that: ‘At the larger sites the factory medical service helps care for the worker’s health, while the smaller sites work with external medical examiners.’ Transport incidents: while there is some discussion on the choice of safe transport methods, no figures are given for transport incidents. Emergency preparedness: one of Clariant’s corporate principles for environmental safety and health relates to controlling and limiting consequences of incidents.


Clariant 3




Supplier involvement: the CER states that: ‘Clariant requires suppliers to provide company information on quality and safety and environmental protection. “We also make a brief evaluation of ESH performance in the course of our normal visits to a company, and this goes into the final assessment together with the supplier’s own statement.”’


YES YES YES NO NO YES

Process design: the CER describes the role played by ESH in Clariant’s ‘Integrated Product Policy’. Environmental protection aspects of new products and packaging are discussed, as is the use of chemical productivity indicators to assess environmental efficiency. By way of example, the development of a chromic acid aqueous oxidation is described and savings on energy and sulphuric acid are quoted. Recycling: although no figures are given, Clariant includes examples that indicate a positive attitude towards recycling as a means of reducing environmental impact. These are: • • •

using reusable containers for transporting liquid dispersions; using recyclable packaging; participation in programmes for the return of packaging to suppliers.

Environmental expenditure: no figures are given for expenditure on the environment. Prosecutions, fines and liabilities: no mention is made of the absence or occurrence of any fines or prosecutions. Downside reports: the CER includes an article that describes an accident resulting from a failure to ensure that a solvent was water-free. Other articles give the impression that the downside is being reported. Environmental impact


No environmental impact data is given in the CER.


Production volume: no figures given. Energy usage: no figures given. Water consumption: no figures given.

NO NO NO NO NO NO NO

Emissions to water: no figures given. Emissions to land: no figures given. Emissions to air: no figures given. • •

greenhouse gases: no figures given; transport effect: no mention is made of the environmental impact of transport emissions.

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Clariant 4 Current practice in environmental reporting: the chemicals industry




In the CER Clariant defines its position on social responsibility in terms of adhering to current legislation and requirements of international organisations (the ILO is quoted, as is Clariant’s position on child labour). Work factors having social effects on employees (e.g. redundancy, dismissal and working patterns) are also discussed, but no examples are given of any projects primarily designed to benefit local communities.


Triple bottom line

Triple bottom line

The CEO’s foreword identifies that Clariant is ‘developing a sustainable, future-proof “cradle to grave” ESH approach in the whole business process’. The CER does not make any strong link between the three elements of the triple bottom line.

Triple bottom line



Neither the CER nor the website identify a corporate environmental contact. The reader is referred to:


NO

NO

NO

Clariant International Ltd Corporate Communications Rothausstrasse 61 CH-4132 Muttenz Switzerland Tel: +41 61 469 6969 Fax: +41 61 469 6999 Internet: www.clariant.com Individual company names, addresses and phone numbers are also given in the annual report.


Clariant 5


Japan

Dainippon Ink and Chemicals Ranking by turnover (1 to 35): 15 Business profile

Business profile

In 1999 The Dainippon Ink and Chemicals Group (DIC) had a turnover of ¥984 billion and employed 26 000 people worldwide. The head office is in Tokyo, Japan, and the group has subsidiaries and affiliates in 46 countries. The groupwide locations and operations can only be derived from the annual report. DIC operates in four business areas, the domestic and overseas activities of which are separately reported in the annual report: Graphic Arts: printing inks; pre-press supplies (film, etc.) and equipment; pigments and pigment intermediates; imaging and reprographic products (toners etc.). In general the overseas activities are undertaken by Sun Chemical; Polymers and Related Products: synthetic resins; resin and polymer intermediates; resin products; adhesives; emulsions; plasticisers; fluorochemicals. In general the overseas activities are undertaken by Reichhold; Specialty Plastics and Compounds: engineering and high performance plastics; colourants; molded plastic products; Other: decorative boards; home interior components; water treatment plants; pressure sensitive adhesives, papers and films; pesticides; health foods; sweeteners; special films.


Company reporting


Annual report: a copy of both the annual report and the CER were received. The foreword to the annual report refers to Dainippon’s commitment to the environment, and in particular to adhering to Responsible Care® principles and to pursuing ISO 14001 certification. There is also a section on safety and environmental protection that discusses many of the general issues included in the CER under the heading ‘domestic’. Issues relating to ‘overseas’ operations are also discussed.

YES* YES* YES* YES*


YES YES NO

Internet CER: the website has an area allocated to Responsible Care® that includes the CER. Company coverage: the CER received only covers the operations in Japan. In 1998 the operations had a turnover of ¥430 000 million and employed 6500 people at 18 major plants. The locations of these plants are shown on a map.

YES = included in CER YES* = not included in CER, but found in annual report or Internet CER NO = information not provided


Dainippon 1


Environmental report The CER starts by describing the way in which Dainippon addresses environment, safety and health issues, then presents performance data, discusses product stewardship and relations with the community, gives a historical overview from 1973 to the present, and concludes with a list of environmental and safety awards received. Each year: this is the third CER, and as described in the title it is issued annually. Site coverage: although there are no site reports, individual sites are identified in connection with ISO certification and environmental and safety awards, as well as more specific (e.g. energy saving) initiatives. The result is that the CER has the flavour of having an even-handed approach.

Title Responsible Care Annual Report 1999 Page 16 Format A4


YES YES YES YES YES NO NO

CEO’s foreword: the CER includes a foreword by Koso Okumura (President). Data used: historical data is generally presented for eight years. External verification: there is no indication that the CER has been externally verified. Reply card: no reply card was received with the CER. Environmental management


Policy: the CER includes both Dainippon’s guiding ‘Principle and its Policy’. The Principle states: ‘As a responsible corporate citizen, Dainippon Ink And Chemicals, Incorporated (DIC), recognizes that care for the environment, safety and health (ESH) is fundamental to the management of the company. DIC is committed to the concept of sustainable development and contributes to society by creating environmentally sound products and technology.’ The policy includes ten statements in the areas of continual improvement, regulations, product stewardship, ESH management, customer safety and open dialogue.


YES YES YES YES

Objectives: three of the performance indicators (CO2 emission, energy consumption and solid waste) have goals relating to the year 2010. EMS: in 1998 three plants were certified to ISO 14001. This brings the total certified in Japan to 13. Procedures/responsibilities: organograms, supported by description, are used to describe the ‘Environment, Safety and Quality Control and Responsible Care®’ organisations. The director of environment, safety and quality control is shown as being responsible overall to the president, and is supported by ESH groups at both corporate and divisional level. Each plant has its own environment, safety and quality control department or section. Responsible Care® is directed companywide by an environment and safety conference that includes the executive vice-president and senior management and meets three times each year. The audit system is overseen by the Responsible Care® Review Committee. Two levels of audit are described. Internal audits are reviewed annually and top executives carry out annual inspections of all plants and laboratories.

156

Dainippon 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: the CER does not mention the absence or occurrence of any fatality.


Lost time accidents: in 1998 there were two lost time accidents, giving rise to a labour accident frequency rate of 0.23 accidents per million hours worked, and a labour accident severity rate of 0.012 work days lost per thousand hours worked. Figures are given each year since 1990. While there is no obvious trend in frequency rates, the severity rate increased to a peak of 0.15 in 1996, and has fallen sharply since then.

NO YES NO YES YES

Occupational illness: no mention is made of any groupwide approach to improving occupational health. Transport incidents: Dainippon outlines the rapid emergency response system for transportation incidents, and identifies that in 1998 there was one incident. This is described more fully in the CER. Emergency preparedness: specific mention is made in the CER that each plant conducted emergency response drills during the year, but no mention is made of the involvement of local statutory authorities in emergency action planning. Environmental protection


Supplier involvement: no mention is made of any strategy by which suppliers are encouraged to operate to appropriate environmental standards.


Process design: there is an extensive list of solvent free and low volatility products, and others that are in some way ‘environmentally friendly’. Other product stewardship activities mentioned include gathering safety data, preparing material safety data sheets (MSDSs) and carrying out screening tests. A ‘no’ score has, however, been awarded since the CER does not clearly recognise the need to improve existing and develop new processes to reduce environmental impact.

NO NO YES YES NO YES

Recycling: although no figures are presented, a ‘yes’ score has been awarded since the discussion on waste states ‘the effective promotion of recycling led to a decline’, and making artificial boards from waste plastic is given as an example. Environmental expenditure: in 1998 DIC spent ¥620 million on capital expenditure related to the environment, ¥310 million related to safety, and ¥643 million related to energy saving. A breakdown of ESH operating expenditure is given in the form of a pie chart. DIC also invested ¥3.9 billion in environmental preservation and safety-related activities. Prosecutions & fines: no mention is made in the CER of any fines or penalties. Downside reports: the CER includes mention of the causes of the two accidents resulting in injury and of an incident involving the release of bromine. The overall flavour of the report gives the impression that the downside is being reported.


Dainippon 3




Production volume: no figures are included for production volume.


Energy usage: this is presented as an index based on the ratio of energy used per unit production to that used in 1990. From 1990 to 1994 energy efficiency was relatively constant. Since 1994 it has improved by approximately 10% compared to a target of 20% by 2010. Co-generation systems have given the improvements since 1996.

NO YES NO NO YES YES NO

Water consumption: no figures are included for water consumption. Discharges to all media: Dainippon reports emissions of 90 compounds under the JCIC Pollutant Release and Transfer Register.In the three years since 1996 the quantity discharged fell 46%, from approximately 2000 tons to 900 tons. Emissions to water: a ‘no’ score has been awarded since although figures are given for only COD no breakdown of pollutants is given: •

COD: this is presented as an index based on the ratio of COD discharged per unit production to that discharged in 1990. Since 1990 COD discharges had fallen approximately 35%.

Emissions to land: the CER reports the volume of waste disposed of through burial by outside companies. Although not clearly stated, it is implied that the figures include both hazardous and non-hazardous waste. Between 1990 and 1998 the quantity disposed of fell from approximately 13 000 tons to 8000 tons. The target of 9000 tons by 2010 has already been achieved. A ‘yes’ score has been awarded even though it is not clearly identified that all hazardous waste (other than that incinerated) is disposed of by external companies. Emissions to air: emissions of specific gases are presented as an index based on the ratio of quantity emitted per unit production to that emitted in 1990: •

•

•

•

•

•

dioxins: Dainippon operates two incinerators each having a capacity of over 200 kg/hr. Dioxin emissions that are below both the current standard and that proposed for 2002 are quoted in the CER; NOx: NOx emissions per unit production fell to a minimum in 1994 (55% of the 1990 figure) and have since risen to 80% of the 1990 figure. No target is quoted; SOx: SO2 emissions per unit production fell by 60% in 1991, and have since fallen to approximately 25% of the 1990 figure. No target is quoted; VOCs: the CER includes the statement that ‘DIC does not use any chemical substances, materials or solvents known to be harmful to the ozone layer. Accordingly, the company does not emit any ozonedamaging substances’; greenhouse gases: CO2 emissions per unit production have fallen steadily by approximately 15% since 1990. The target for 2010 is for a 20% reduction. No mention is made of other greenhouse gases; transport effect: no mention is made of emissions from transport.

158

Dainippon 4 Current practice in environmental reporting: the chemicals industry




The CER includes a short section on interaction with the local community. This makes reference to:


• • •

NO

the Responsible Care® in DIC’s annual report 1997, which is handed to visitors; reporting Responsible Care® activities at JRCC meetings; voluntary work carried out by employees.

It does not include any evidence of company expenditure on social and community issues or projects. Triple bottom line

Triple bottom line

The annual report links economic and environmental performance, but fails to make a strong link with social responsibility. No link is made in the CER.

Triple bottom line



The environmental contact is:


NO

YES

Environment, Safety and Quality Management Dept. Dainippon Ink and Chemicals, Incorporated DIC Building, 7-20, Nihonbashi 3-chome Chuo-ku Tokyo 103-8233 Japan Tel: +81 (3) 3272-4511 Fax: +81 (3) 3272-3855 Internet: www.dic.co.jp


Dainippon 5


Germany

Degussa-Huls Ranking by turnover (1 to 35): 13 Business profile

Business profile

Degussa-Huls employs 45 000 employees worldwide, and has a turnover of DM 24 000 million. The company (formed by the merger of Degussa and Huls) was registered in February 1999 and is 62.4% owned by Veba AG. The headquarters is in Frankfurt-am-Main, Germany, but the geographical distribution of the production sites is unclear. The annual report states ‘we have production facilities in 27 countries’. The activities carried out by the company and its subsidiaries are split between four sectors: Health and Nutrition (pharmaceuticals, dental products, feed additives and super absorbants); Speciality Products (coating materials and colourants, industrial and fine chemicals); Polymers and Intermediates (methacrylates, PVC, plasticisers, phenol and solvents); Performance Materials (silicon derivatives, fillers, pigments, precious metals and catalysts).


Company reporting

Title Annual Report 1998/99 Page 98 Format A4

Annual report: the annual report has a separate heading titled ‘environmental protection and safety’. In it the environmental report is discussed, and some of the detail from it is included, together with discussion on the financial costs of environmental protection and a description of how the HS&E system is managed. Internet CER: the website includes an area for Responsible Care®, and the CER is available as a pdf file.

YES YES NO YES


YES YES YES

Company coverage: a ‘yes’ score has been given for company coverage since data is presented for 70% of the group (based on employees) even though only five of the countries identified in the annual report as having production sites are included in the reporting group. There is a stated intention to extend this coverage.



Degussa-Huls 1


Environmental report The report starts with a brief discussion on the position following the merger, gives a history of environmental protection since 1873, then goes on to describe environmental policy and objectives. This is followed by a detailed discussion of the sites and products, a section titled ‘Dialogue’, and the report concludes with HS&E data. Each year: there is a statement that Degussa’s environmental report has been published annually since 1995. This is taken to imply that its publication will continue. Site coverage: the reporting area covers Germany, Belgium, Austria, Canada and the USA. Issues and activities at Degussa-Huls’ ten largest sites in Germany and the three largest sites abroad are discussed in some depth, as are those at seven subsidiary companies based in Germany. However, a ‘no’ has been given for all-site coverage since there is little detail of sites other than Mobile in the USA, and none at all on the site or sites in Canada.

Title Environmental Report 1998 Page 79 Format A4


YES YES NO YES YES NO YES

CEO’s foreword: the CER includes a foreword by Dr Uwe-Ernst Bufe (President). Data used: the indicators for which data is presented are chosen based on CEFIC recommendations and graphs are given showing the main performance indicators for each year since 1994. In addition, a very clear and interesting presentation is given (in the form of a mass balance) of the major input and outputs for energy generation, production processes and water resources. It usefully shows how (for example) 3 million tonnes of oxygen are taken from the air for energy generation, and nearly 1 million tonnes are taken for production processes. This clarity would not be readily available otherwise. External verification: there is no evidence that the report has been externally verified. Reply card: two reply cards are attached to the report encouraging both comment and requests for the previous year’s CER.

162

Degussa-Huls 2 Current practice in environmental reporting: the chemicals industry




Policy: currently there are two sets of corporate guidelines. That from Degussa is a full page of close type subdivided under headings such as ‘Taking the Initative’ and ‘A long-term commitment’. The one from Huls is more concise with eight bullet points. Both policies cover a similar area, and there is a stated intention to put together common guidelines for the merged company.

Policy Objectives EMS Procedures/responsibiliites

YES YES YES NO

Objectives: the report states that: ‘By annually defining concrete objectives, specific deadlines and a system of performance evaluation . . . we strive to achieve our “zero” targets.’ Companywide and site-specific Responsible Care® goals are given in the report, both new ones for the merged group, and ones ongoing at the time of the merger. Their presentation is very clear and the method of indicating the status of ongoing targets (achieved, partly achieved or not achieved) is excellent. There are four companywide targets, two relating to safety guidelines and procedures, one to occupational health procedures, and a quantitative target for accidents. There are also many sitewide targets, which vary in quality from site to site, but in general they are quantitative. Overall 30 of the 39 targets set for 1998 were achieved. Later in this commentary (except for the companywide target for accidents) site-specific targets will only be used as examples when discussing environmental indicators. EMS: a ‘yes’ score has been given since 13 of the former Huls sites and one of the former Degussa sites in Germany has been validated under the EMAS. No mention is made of any of the sites in the USA or Canada taking part in MSV, but it is stated ‘that Group-wide certification under ISO 14000 also represents an alternative’ to extending EMAS within Europe. Registration under ISO 14000 is a year 2000 target for Stockhausen. Degussa-Huls sees participation in the EMAS scheme as having the benefits of: • • •

improving staff awareness of their responsibilities; making company environmental systems more efficient; leading to relaxed legal stipulations for reporting and documentation.

Procedures/responsibilities: the intended HS&E management structure for the merged group is outlined, but currently transitional arrangements are in place, and it is not clear what the reporting arrangements and accountabilities are within the current organisation. The clearest statement in the report is that ‘The responsibility for product safety will continue to lie with the directors of the operational divisions’. Internal auditing is taking place, and during 1998 ten occupational health safety audits were conducted at former Degussa sites.


Degussa-Huls 3


Health and safety

Health and safety

Fatalities: one employee died on the way to work and one contractor died as the result of a fall during 1998.


Lost time accidents: the accident rate has fallen from 12 accidents per 1000 employees in 1994 to 8 in 1998 (year 2000 target 5).

YES YES NO YES YES

Occupational illness: although Degussa-Huls has the draft of a worldwide programme for occupational health and several sites have occupational health initiatives, a ‘no’ has been given since no general mention is made within the report of any existing strategy to reduce the effects of occupational illness. Transport incidents: in Europe during 1998 there were 16 distribution incidents (as defined by the Association of the German Chemical Industry – VCI) out of approximately 400 000 shipments. These included three spills of over 200 litres of dangerous goods, and two spills of over 1000 kg of non-hazardous goods. Emergency preparedness: although there is no general discussion of emergence preparedness in the report, there is sufficient indication to award a ‘yes’ score. There are a number of site initiatives ranging in complexity from joint fire fighting arrangements at Witten to the risk management programme at Mobile.

164





Supplier involvement: while mention is made of cooperation and communication with suppliers being an important aspect of product stewardship, no examples are given, nor is any mention made of encouraging suppliers’ environmental awareness. Elsewhere in the report the use of high quality raw materials is put forward as a means to waste reduction. This does not encourage a sense that suppliers are involved in product life cycle analyses.


NO NO YES YES NO YES

Process design: the report states: ‘Degussa-Huls regards its obligations to Product Stewardship as the fundamental basis for manufacturing and marketing products’. It features a number of new products having environmentally attractive features, and does give some general examples of improved processing techniques (e.g. the use of oxygen in combustion processes). However, most of the examples given (‘e.g. a container valve system was developed to facilitate the safe discharge of containers’) are such that the emphasis is on improving product design rather than addressing environmental issues. Recycling: recycling is given prominence in the report. The integrated nature of the Marl site is emphasised, where residues are used as feedstock for the synthesis gas and sulphuric acid plants, and waste HCl is used for methyl chloride production. In 1998 it is estimated that 20 000 tonnes of material were recycled internally, 78 000 tonnes externally. Figures are also given for the quantities of wastes used to generate energy both internally and externally. Environmental expenditure: expenditure on environmental protection rose to a peak of DM 200 million in 1996, and has fallen since then to DM 109 million in 1998. During the same period environmental operating costs have risen from DM 448 million to DM 570 million. Prosecutions & fines: the annual report caters for 172 million Euros of accrued liabilities for environmental protection and land remediation. Neither these figures nor any relating to fines and prosecutions feature in the CER. Downside reports: during 1998 fires each giving rise to internal damage in excess of DM 1 million occurred. One was at the vinyl chloride plant in Marl and the other in a metal refining plant at Pforzheim. Neither caused injury to people.


Degussa-Huls 5




Production volume: the report includes a line graph over the period showing trends in certain factors as a ratio against production volume. This graph has proved difficult to comment on, so when considering the absolute discharge figures given below they should be viewed against a rise of 7% in production volume from 1994 to a level of 7.3 million tonnes in 1998.



Energy usage: energy usage fell from 66 200 terajoules in 1994 to 61 800 terajoules in 1998. This represents a 7% fall in absolute terms and a 12% reduction per tonne of production. Water consumption: total water consumption has remained relatively constant since 1995 at about 220 million m3, and the split between drinking water, ground water and surface water has also remained stable. Emissions to water: the construction of a biological treatment plant for wastewater is under way at Weissenstein, and should impact significantly on COD and nitrogen levels: •

•

•

COD & AOX: COD fell from 1994 to 1996, but has risen since then to its current level of 2000 tonnes/annum. 20% of the load comes from the Weissenstein site. From 1994 to 1998 AOX levels fell 58% mainly as a result of the replacement of halogenated solvents; nitrogen and phosphorus: nitrogen levels have risen 37% since 1994. Again 25% of the load is from the Weissenstein site, but there have been recent increases at Lulsdorf and Marl owing to a change in product mix; heavy metals: at 6.9 tonnes/annum the 1998 figure is 31% lower than in 1994. Heavy metal emissions are dominated by zinc, the discharges of which have remained relatively constant, so most of the reduction comes from lower levels of lead, nickel, chromium and copper.

Emissions to land: Degussa-Huls states that a comparison for the data for 1997 and 1998 with that from previous years is impossible owing to the changes in waste categorisation. In 1998, 21 000 tonnes of special waste was disposed of, 63% of it by incineration externally, 18% internally incinerated, 14% on external landfill and 5% on own landfill. 89 500 tonnes of other production waste were disposed of and 151 000 tonnes of building rubble and soil were either recycled or disposed of. Emissions to air: • • •

•

•

CO: from 1994 to 1998 discharges of CO fell by 17% to 10 339 tonnes/annum; NOx: from 1994 to 1998 discharges of NOx fell by 30% to 6693 tonnes/annum; SOx: from 1994 to 1998 discharges of SOx fell by 22% to 3759 tonnes/annum. While most of this reduction was a result of a move away from high sulphur fuels, part was due to changes in metallurgical refining processes and part to improved scrubbing efficiency; particulates: discharges fell from 1994 to 1996, but have increased since then to a level of 366 tonnes in 1998. 30% of these discharges arise from carbon black production; VOCs: from 1994 to 1998 discharges of VOCs fell by 29% to 1435 tonnes/annum. The compounds contributing to these figures are given in a single substance list of emissions. Those having discharges in

166



• •

•

excess of 80 tonnes in 1998 are dimethyl ether, methyl methacrylate, cumene, vinyl chloride and methanol; VICs: from 1994 to 1998 discharges of VICs (including ammonia, chlorine and HCl) fell from 152 to 122 tonnes/annum; greenhouse gases: no specific mention is made of greenhouse gases, although details are given of CO2 discharges. Other greenhouse gases are included as part of the list of single substance emissions. In 1998 CO2 discharges were just under 4 million tonnes, which represents a 12% reduction since 1994, compared to a 7% reduction in energy usage over the same period. Most of the improvement is attributed to the shift towards natural gas as a fuel, although the purchase of electricity has almost doubled over the same period; transport effect: no mention is made of the environmental impact of transport associated with distribution.



The report has a section titled ‘Dialogue’ which describes the use of the intranet and an in-house magazine to assist communications with employees. Open days were also held in 1998 at Rheinfelden, Antwerp and Mobile to improve public relations with the chemicals industry, and the Lulsdorf site was put forward as a site on which to base case studies for schools. Apart from educating the public there is little evidence from the report of expenditure outside the plants on initiatives designed to benefit the environment or local communities.


Triple bottom line

Triple bottom line

While ‘Unequivocally committed to the principle of Sustainable Development’ the report fails to make a cogent link between economic and environmental performance and social responsibility.

Triple bottom line



A ‘no’ score has been awarded as no individual or EHS role is identified as a contact. The contact given in the report and on the reply card is:


NO

NO

NO

Degussa-Huls AG Communication and Corporate Relations Weissfrauenstr 9 D-60287 Frankfurt am Main Tel: +49 69 218 36 18 Fax: +49 69 218 36 49 E-mail: [email protected] Internet: http://www.degussa-huels.de Contact addresses are also given for subsidiary companies, and one useful inclusion is the environmental hotline telephone numbers for the Phenolchemie and Vestolit subsidiaries.


Degussa-Huls 7


USA

Dow Chemical Company Ranking by turnover (1 to 35): 4 Business profile

Business profile

In 1999 the Dow Chemical Company had a turnover of US$18 900 million and employed 39 000 people within 14 business units at 123 manufacturing sites in 32 countries. A map showing the location of the sites is included in the CER. The head office is at Midland, USA. The products made and services offered are reported in the annual report under six main headings: Performance Plastics: adhesives, sealants and coatings; enginering plastics; epoxy products; fabricated products; and polyurethanes; Performance Chemicals: specialty chemicals (surfactants, synthetic oils, rubbers; specialty monomers) and emulsion polymers based on latex; Agricultural Products: herbicides and seeds; Plastics: polyethylene, polystyrene; polypropylene catalysts for polymerisation; Hydrocarbons and Energy: benzene; butadiene; butylene; cumene; ethylene; propylyene; styrene; and steam and power.


Company reporting

Title: 1999 Annual Report Pages 55 Format A4

Annual report: both the annual report and the CER were taken from the internet. The full title of the annual report is ‘Transformation – The Dow Chemical Company 1999 Annual Report’, and a very successful attempt is made to integrate environmental and sustainability discussions into what is still primarily a business and financial review. These discussions include: • • • •

EH&S performance as a key part of Dow’s cultural change, with reference to specific indicators; an overview of key indicators; the move towards more sustainable products; highlights of the year under the headings ‘EH&S’, ‘Giving back to our communities’, and ‘Accelerating value growth’.

YES YES YES YES


YES YES YES

Reference is made in two places to the ‘1999 Public Report’. Internet CER: the Dow website includes a section titled ‘Dow Public Report 2000’, which directs the reader to pages for ‘Responsible Care®’, ‘EHS Goals for 2005’, ‘Sustainable Development’, ‘Reports & Speeches and Debates & Dilemmas’. The ‘1999 Public Report’ is available in pdf format. Company coverage: data reported in CER is stated to be global, and there is no reason to suppose that any sites have been specifically excluded other than acquisitions made in the previous three years.



Dow 1


Environmental report The CER is Dow’s ‘first attempt to move beyond pure Environment, Health and Safety (EH&S) and financial reporting’. Following an introduction to the company, the report is arranged in sections on the economic, environmental and social progress and challenges; and concludes with a section titled ‘The Road Ahead’. It is available in seven languages. Each year: there is no clear statement that the CER will be issued every year, but reference is made to quarterly and annual updates available at the website. Site coverage: the CER contains examples and photographs of sites throughout the world, and together with the discussion on ‘geographic landscape’ the overall impression is one of a report in which an evenhanded approach is being taken.

Title Public Report 1999 Page 52 Format A4


YES YES YES YES YES NO YES

CEO’s foreword: the CER includes a foreword by William S. Stavropoulos (President and CEO) and L.J. Washington, Jr (Vice-President, Environment, Health and Safety, Human Resources and Public Affairs). Data used: data is presented for at least three years, and for some indicators for as many as seven or eight. The data is mostly presented as bar charts, often with a superimposed line showing intermediate targets. The graphs are clearly dated, but the years shown vary between graphs, and it is not always easy to reconcile the dialogue with the data shown. External verification: no external verification report is included in the CER. There is a separate heading titled ‘External Council on 1999 Public Report’ which instead contains two endorsements from consultants used to ‘help shape our thinking’. Reply card: the CER states ‘we encourage you to let us know what you think in the attached response card, or to send your comments through the Internet’. The website contact page has EH&S as a specific category for inquiries.

170

Dow 2 Current practice in environmental reporting: the chemicals industry




Policy: ‘Dow’s Core Values and EH&S policy’ are included in the report. In the EH&S policy Dow states: ‘Our goal is to eliminate all injuries, prevent adverse environmental and health impacts, reduce wastes and emissions and promote resource conservation at every stage of the life cycle of our products. We will report our progress and be responsive to the public.’


YES YES YES YES

Objectives: group environment, health and safety goals were defined in 1996 (‘EH&S Goals for 2005’). Annual and quarterly updates are available on the internet. Goals not discussed elsewhere in this analysis include: •

•

•

fully implement codes of management practices globally by 1997 (>99% compliance with codes other than product stewardship and distribution); promote the Responsible Care® ethic among major associations, customers, suppliers and policy makers to advocate global regulatory harmonisation. No figures are presented for progress against this goal, but appropriate examples of initiatives are included in the report; incorporate principles of sustainable development and eco-efficiency into business strategies. No figures presented for progress against this goal.

EMS: in line with Dow’s stated commitment to Responsible Care® the corporate headquarters were visited in March 1999 as part of the voluntary management verification system. The CER refers to the main points raised in the audit report, which is also available on the internet. Dow participates in similar schemes in Canada and Australia. In Europe auditing is part of ISO 14001 and the EMAS requirements. No figures are presented concerning the number of sites audited or certified. Procedures: a corporate environmental advisory council (CEAC) was formed in 1991 to help think through the EH&S policies. The names of the chair and nine current external members of the council are included in the report. Supporting the policy are six codes of management practice covering the areas of: • • • • • •

product stewardship; distribution; Community Awareness/Emergency Response (CAER); pollution prevention; employee health and safety; process safety.

The ‘14 global businesses are directly accountable for their own EH&S performance’. Every business has an EH&S product leader, and every Dow product has a local steward. Together they work to ensure products meet standards. Dow’s ‘People Success System (PSS)’ is considered key to its goal to ‘maintain an empowered workforce where every employee knows what to do, how to do it, and wants to do it’. EH&S is listed as one of the areas in which employees gain skills, and the learning systems in place are discussed in detail.


Dow 3


Health and safety

Health and safety

Fatalities: one contractor and one employee died in 1998. The figures presented do not include fatalities for new acquisitions or mergers, or for Dow employees involved in commercial airline crashes.


Lost time accidents: •

•

YES YES NO YES YES

during 1998 there were 1.12 reportable incidents per 200 000 hours (as defined by OSHA, both for employees and contractors). This was 33% less than in 1997. The EH&S goal for 2005 is 0.24 incidents per 200 000 hours; the US Day Away from Work Case (DAWC) rate fell from 0.31 in 1997 to 0.18 in 1998.

Occupational illness: the EH&S goal for 2005 is to reduce injuries and illness per 200 000 work-hours by 90%. No progress against this target is reported, and there is no evidence of a groupwide strategy for improving occupational health. Transport incidents: there are global targets to reduce motor vehicle incidents. During 1998 there were 3.70 accidents per million miles. This represents a slight reduction on 1997. The EH&S goal for 2005 is 2.5 per million miles (a 50% reduction on 1994). Emergency preparedness: during 1999 in the USA Dow completed obligations under the 1996 regulations to have risk management plans in place. Dow also participated in public discussions about risk management/emergency preparedness at 12 named sites in the USA in 1999, and similar meetings were held in Canada.

172





Supplier involvement: although global standards for the purchase of materials are mentioned, no specific approach is noted for ensuring that suppliers meet acceptable environmental standards.


Process design: the CER includes articles which discuss the creation of products having lower environmental impact. (e.g. target-specific agrochemicals and biodegradable plastics from corn starch). Life cycle analysis is also discussed.

NO YES NO YES YES YES

Recycling: no figures are given for recycling, and there is no evidence from CER report that Dow considers recycling to be an important way to reduce environmental impact. Environmental expenditure: figures for capital expenditure on EH&S are given for all years since 1985 both in US dollars and as a percentage of the total capital expenditure. For the last year quoted (1998) the figures were US$110 million and 6.5%, respectively. No figures are included for operating expenditure on EH&S. Prosecutions & fines: global fines paid during 1998 were US$638 000. Most of these occurred in the USA. Since 1996 the amount paid in fines and the number of notices of violation (NOVs) and compliance orders have significantly reduced. Downside reports: as well as identifying failures to achieve interim goals, the CER reports on the environmental incidents, and identifies a number of global targets for 2005: •

•

•

•

reduce the number of process safety incidents (fires, explosions and significant chemical releases) to 12. This goal is a 90% reduction on the 1994 figure, and in 1998 the number of incidents had already been reduced to 66; reduce the number of incidents with Dow products at customer facilities. In 1997 and 1998 the figures for Europe and North America were 155 and 126, respectively. It is planned to set a global reduction target in 2000; reduce loss of primary containment incidents (leaks, breaks and spills) (2005 goal 75%). Data is given for years 1992 to 1998, and it is stated that the 1998 figure is 502 incidents above the 2005 target of 136. The graph is confusing; reduce incidents during shipment of products to customers (2005 goal 90%). These have remained fairly constant since 1995 at 0.3 incidents per 10 000 shipments (2005 goal 0.06).


Dow 5




Production volume: since 1990 production at Dow’s 11 largest sites has increased from 84 000 million pounds to 112 000 million pounds in 1998. There has been a 10% increase since 1994.


Energy usage: the EH&S goal for 2005 is to reduce energy use per pound of production by 20%. Since 1994 this ratio has remained relatively constant at around 2800 BTU/pound of production.


Water consumption: against the EH&S goal for 2005 to reduce the amount of wastewater generated by 50%, discharges have remained fairly constant since 1994 at about 2.8 tons per ton of production. TRI discharges to all media: the following group targets and progress are reported: •

•

•

reduce the total amount of waste generated (to air, water and land, but excluding salts). Down 18% since 1994 (2005 goal 50%) at about 0.023 tons per ton of production; reduce discharges of priority compounds to air and water. The total figure was over 1100 tons in 1998: • persistent, toxic, bioaccumulative compounds (PTBs) down 69% (2005 goal 75%); • chlorofluorocarbons down 81% (2005 goal 75%); • known carcinogens down 30% (2005 goal 75%); • high-volume toxins down 63% (2005 goal 75%); • dioxins – not reported (2005 goal 90%); reduce discharges of chemical emissions to air and water. Since 1994 down 19% (2005 goal 50%) to just under 26 000 (of which 20 000 tons is to air) in 1998.

Emissions to water: discharges to water are reported as part of discharges to all media. Emissions to land: discharges to land are reported as part of discharges to all media. Emissions to air: discharges to air are reported as part of discharges to all media: • •

•

VOCs: a subset within Dow’s group of priority compounds, VOCs have been reduced from 19 600 tons in 1994 to 13 700 tons in 1998; greenhouse gases: Dow reports on climate change and gives both absolute figures for discharges of CO2 (approx 20 million tons in 1998), CFCs (55 tonnes in 1998) and CO2 equivalents of HCFCs (15 million tons in 1998). No specific goals have been set for the reduction of greenhouse gases; transport effect: the effect of transport on air emissions is not mentioned.

174





A target has been set to have 80% of the local population with a favourable attitude towards Dow. Part of the strategy towards achieving this goal is proactively encouraging employees to participate in community advisory panels (CAPs), of which Dow has involvement with 26 worldwide. Over and above this, examples of initiatives primarily intended to benefit communities are also given in the CER. These include:


• • •

co-partnering the Saginaw Bay Watershed Initiative; products and financial support for the Habitat for Humanity programme in Manila; support given to local students and schools.

Triple bottom line

Triple bottom line

The CER includes a ‘To Do List’ containing eight points based on responsible care guidelines. Within this list:

Triple bottom line

•

•

YES

YES

a sustainability index is used that brings together economic, environment and social elements. It is Dow’s stated intention to expand education in this area through workshops; ‘the Dow scorecard’. is also described. This balanced scorecard will be deployed at corporate, business and value centre levels within the company starting in late 1999, and will be used to drive future goals and activity.



The only contacts identified in the report are:


NO

the website www.dow.com and regional phone numbers. These are: Europe North America Pacific Latin America

31-20-691-6418 800-258-2436 852-2-879-7373 55-11-5188-9000


Dow 7


The Netherlands

DSM Ranking by turnover (1 to 35): 20 Business profile

Business profile

In 1999 DSM had an annual turnover of 6.3 billion Euros and employed 22 000 people. Its head office is in Heerlen, the Netherlands, and it has more than 200 sites worldwide. These are shown on a map. DSMs activities are arranged in 15 business groups in three areas:


• • •

YES YES YES YES

Life Science Products: fine chemicals; anti-infectives; food specialties; bakery ingredients; Performance Materials: elastomers; engineering plastics; coating resins; composite resins; engineering plastic products; Polymers and Life Sciences: polyethylene; polypropylene; hydrocarbons; fibre intermediates; melamine; agrochemicals.

Company reporting Annual report: a copy of both the annual report and the Responsible Care® progress report (RCPR) were received. Some sites also produce environmental reports, but none of these were received. Safety, health and the environment feature in the annual report, and some key performance indicators are given. Reference is made to the RCPR.

Title Annual Report 1999 DSM N.V. Page 80 Format A4


YES YES YES

Internet CER: the website has an area specifically allocated to Responsible Care®, and the CER is issued on it. Company coverage: global data is reported for all sites other than the newly acquired Gist-brocades sites. Data is also separately reported for 39 sites employing 50 or more people.



DSM 1


Environmental report The theme of the 1999 Responsible Care® report is ‘Contractor Safety’. As well as specific sections on this topic the CER includes sections on ‘Safety, Health, Environment, Sustainable Entrepreneurship and Responsible Care’. It also presents a ‘Company Profile and Review by site’, and includes ‘Emission data’ and a section titled ‘Where it still went wrong’. Each year: the section on reporting in the description of the SHE management system clearly states that the Responsible Care® progress report is an annual report. Site coverage: the inclusion of individual site reports, and detailed reporting of specific incidents gives the impression of even-handedness.

Title DSM Responsible Care Progress Report 1999 Page 56 Format A4



CEO’s foreword: the CER includes a foreword by Peter Elverding (Chairman of the Managing Board of Directors). Data used: global data is generally quoted for six years. Site data is quoted for four years. External verification: the CER includes a verification statement by Deloitte & Touche Certification B.V. The process involved: • • • • • • •

random checks on the reliability of data; appraisal of the principles of data compilation and reporting; evaluating important estimates used in the RCPR; appraising the general picture; establishing that the information is adequate, realistic and meets the needs of society; appraisal based on the UNEP Technical Report No. 24, 50-point checklist; random visits to sites in Europe and North America.

The statement confirms that the RCPR conforms to good environmental reporting practices. Reply card: no reply card was received with the CER, and the website is not designed to allow easy access to ask questions.

178

DSM 2 Current practice in environmental reporting: the chemicals industry




Policy: there is no statement that details the scope of the areas of environmental concern the company is committed to addressing. Instead the objectives under the heading ‘Policy’ are:


• • •

YES YES YES NO

‘an injury free working environment. DSM is convinced that all accidents can be prevented; ‘no occupational diseases or health problems attributable to DSM’s activities; ‘ongoing evaluation and improvement of working methods, processes, products and services to ensure that these are safe and acceptable from the point of view of employees, customers, the community and the environment’.

Objectives: a ‘yes’ score has been awarded since targets are given for some of the key parameters. EMS: Ten of the sites for which individual reports are presented are certified to ISO 1400, and further sites either have units certified or are preparing for certification. Procedures/responsibilities: the CER describes the company EMS, which is based on ISO 9000 and ISO 14000. It is stated that ‘the details of the system may differ from company unit to company unit’. This EMS has eight main elements: policy; plans; organisation and communication; rules and procedures; education, instruction and training; audit and inspection; measurement records and analyses; and reporting. In spite of the detail contained under these headings the reader is not left with a clear picture about how the organisation is structured, what the procedures are or who is responsible for what. The inclusion of named individuals in the site reports is reassuring, but it is not clear whether they fulfil a defined SHE role. Health and safety

Health and safety



Lost time accidents: between 1987 and 1999 the global frequency rate for lost workday cases fell from 2.5 cases per 100 employees per year to 0.21 cases per 100 employees per year. The target for 2000 is 0.1. This figure does not include the former Gist-Brocades. If this is included the frequency rate rises to 0.65. Regional frequency indices are also given.

NO YES YES YES YES

Occupational illness: occupational health is extensively reported on. The only figures given are for sickness absence, and this is reported on a regional basis. ‘Risks associated with heavy physical work, exposure to chemical substances and noise, as well as psychological factors such as pressure of work’ are systematically analysed at each site. Transport incidents: reference is made to the introduction of a system for recording transport and distribution incidents, and to an explosion in a tanker in Northern France. It is not clear if this was the only incident as no figures are given. Emergency preparedness: reference is made in the site reports to local authority involvement in approving emergency plans.


DSM 3




Supplier involvement: a ‘yes’ score has been given since the report includes a separate discussion on improving the safety of contractors.


Process design: ‘Like other companies today, we are continuously working on “cleaner” production processes that need less raw materials and consume less energy’. By way of examples mention is made of the use of GMOs in fermentation processes, and a new process for the reaction, purification and separation of antibiotics in a single piece of equipment. More specific examples can be found as part of the site reviews.

YES YES YES NO NO YES

Recycling: there is strong evidence of the positive use of recycling as a means to reduce environmental impact. In 1999, 82% of the total waste generated was recycled, and an example is given of a plant that has been set up in Augusta, USA, to recycle nylon carpets to produce caprolactam. This has resulted in savings of 70 000 tonnes of petroleum. Environmental expenditure: no mention is made of any environmental expenditure. Prosecutions & fines: no mention is made of the absence or occurrence of any fines or liabilities. Downside reports: a section titled ‘Where it still went wrong’ brings together the downside reports. It points to the large number of employees involved in accidents, and describes the major explosions, fires, incidents and environmental releases. Complaints are separately reported. In 1999 there was a 75% increase in the number of complaints, mostly through discharges of dust and soot, odour and noise.

180







Energy usage: since 1989 the total energy used by DSM has increased from just under 90 PJ to 100 PJ. Since 1989 the global energy efficiency (per unit production) has improved by 16% against a target of 20% by the end of 2000.


Water consumption: no historical data is given. In 1999 ground water consumption from the major sites was 14 million m3. Emissions to water: •

•

•

COD & AOX: global COD discharges increased from approximately 4000 tonnes in 1985 to 7000 tonnes in 1999. During the same period AOX rose from a very low level to a peak of 200 tonnes in 1997, and has since been reduced to approximately 30 tonnes in 1999; nitrogen and phosphorus: global nitrogen discharges fell from 3000 tonnes in 1985 to 2000 tonnes in 1999. Phosphorous discharges fell from 150 tonnes in 1985 to a low level in 1996, then increased to 250 tonnes in 1997. Since then discharges have fallen to 200 tonnes; heavy metals: After falling to a low level in 1995 heavy metal discharges have remained relatively constant at around 6 tonnes.

Emissions to land: • •

total waste: the total quantity of waste discharged to landfill fell from 32 000 tonnes in 1998 to 28 000 tonnes in 1999; hazardous waste: the quantity of hazardous waste discharged to landfill fell from 7000 tonnes in 1998 to 2700 tonnes in 1999. The quantity of waste incinerated and recycled is also given.

Emissions to air: • •

•

•

•

•

CO: global emissions increased from approximately 12 000 tonnes in 1985 to 16 000 tonnes in 1999; NOx: global emissions fell from approximately 25 000 tonnes in 1985 to 10 000 tonnes in 1995, and have fallen since then to approximately 7000 tonnes in 1999; SOx: global emissions fell from approximately 7000 tonnes in 1985 to 4000 tonnes in 1995, and have fallen since then to approximately 800 tonnes in 1999; VOCs: emissions fell from approximately 9000 tonnes in 1985 to 4000 tonnes in 1995, and have remained relatively constant at this level since then; greenhouse gases: a section specifically discusses DSM’s approach to greenhouse gases, and participation in ‘an Energy Efficiency Benchmarking Covenant’ scheme. Figures for CO2 emission show an increase from 7.1 million tonnes in 1989 to 7.4 million tonnes in 1998. There was no net increase in 1999. Nitrous oxide is mentioned as a byproduct of nitric acid and caprolactam production, but no figures are given for its emission; transport effect: no mention is made of emissions from transportation.



Social responsibility does not form a major element of the CER, and no examples are given of any company expenditure on social and community issues or projects.



NO

DSM 5


Triple bottom line

Triple bottom line

The CER includes a section titled ‘Sustainable Entrepreneurship’. ‘For us at DSM this means focusing on the environmental effects of our operations and on the safety of our employees and the neighbouring communities.’ A ‘no’ score has been awarded since the CER fails to make a strong enough link with economic performance and social responsibility.

Triple bottom line



Although no one individual or named SHE role is identified as the corporate contact, a ‘yes’ score has been awarded since the CER encourages the reader to contact the individuals named in the site reviews.There are too many of these to list here, so the corporate contact freepost address is given. It is:


NO

YES

DSM, Corporate Safety, Environment, Health & Technology, Antwoordnummer 110, P.O. Box 6500, 6401 JH Heerlen, The Netherlands Tel: (+31) 45 57 87132 Fax: (+31) 45 57 87112 e-mail: [email protected] Internet: http://www.dsm.nl

182



USA

DuPont Ranking by turnover (1 to 35): 1 Business profile

Business profile

In 1999 DuPont had a turnover of US$27 000 million and employed 97 000 people worldwide. The head office is in Wilmington, USA, and the group operates in 65 countries. The countries are not named, but the operations are described in the annual report: Agriculture and Nutrition: herbicides; fungicides; insecticides; seeds; soy protein; soy fibre; microbial testing products; Nylon: intermediates; polymers; fibres; Performance Coatings and Polymers: nylon, acetal, polyester, polyimide and EPDM engineering plastics and elastomers; industrial and powder coatings and inks; Pharmaceuticals: in the areas of virology, cardiovascular/thrombosis and neurology; Pigments and Chemicals: titanium dioxide; industrial chemicals (aniline, HCN, amides and amines, sodium, lithium and sulphur products); performance chemicals (fabric protectors, lubricants, oxidising agents); Pioneer: newly acquired seed business specialising in corn and soya; Polyesters: staple and filament fibres for clothing, bedding and insulation; polyester films for films and packaging; resins for plastic containers; Specialty Fibres: stretch clothing based on Lycra®; non-woven products; advanced fibres; Specialty Polymers: polymers for the information and optical markets; specialist packaging polymers; fluoropolymers.


Company reporting


Annual report: since this is the world’s largest chemicals company it was felt important to include an analysis of the CER even though no published annual report or CER were received. They were therefore both taken from the internet. The annual report reviews business activity in the ‘Management Discussion and Analysis’ of the results. Part of this discussion is given to ‘Environmental Matters’, but largely concerns itself with the financial implications. The 1999 DuPont sustainable growth report is mentioned in the annual report.

YES* YES NO YES*


YES YES NO

Internet CER: the CER is issued in pdf format on the internet as part of an area of the website dealing with safety, health and the environment. Company coverage: although there is no reason to suppose that there are exclusions from the ‘global’ reporting group, a ‘no’ score has been awarded since the CER does not give any indication of the size of the group or the way in which subsidiaries, affiliates, acquisitions and divestments have been treated. YES = included in CER YES* = not included in CER, but found in annual report or internet CER NO = information not provided


DuPont 1


Environmental report The report is quite short. As well as containing comments from the CEO it includes information in the areas of policy/commitment, performance data, societal and shareholder value, and environmental costs, fines and penalties. Each year: there is no clear statement that the report is issued annually. Rather it is stated that ‘we will measure and regularly report to the public our global progress in meeting this Commitment’. Site coverage: there is insufficient information in the CER to assess whether the approach being taken is even-handed.

Title Sustainable Growth 1999 Progress Report Page 8 Format A4


YES NO NO YES YES NO YES

CEO’s foreword: there is a foreword by Charles O. Holiday, Jr (Chairman and Chief Executive Officer and Chief Safety, Health and Environmental Officer). Data used: historical information is clearly presented for a minimum of five years. The figures are often difficult to interpret from the charts. External verification: there is no indication that the CER has been externally verified. Reply card: since the CER was taken from the internet no reply card was available, but the reader is encouraged to ask questions, and there is easy access through the internet to both international and national contacts.

184

DuPont 2 Current practice in environmental reporting: the chemicals industry




Policy: the policy is described under the title ‘The DuPont Commitment’. It starts by stating:


‘We affirm to our stakeholders, including our employees, customers, shareholders and the public, that we will conduct our business with respect and care for the environment. We will implement those strategies that build successful businesses and achieve the greatest benefits for all our stakeholders without compromising the ability of future generations to meet their needs. ‘We will continuously improve our practices in light of advances in technology and new understandings in safety, health and environmental science. We will make consistent, measurable progress in implementing this Commitment throughout our worldwide operations. DuPont supports the chemical industry’s Responsible Care® initiative as a key program to achieve this Commitment.’

YES YES NO NO

Objectives: two corporate objectives are stated in the CER: • •

zero injuries, illnesses and incidents; zero waste and emission.

Neither of these objectives are time-related, and progress towards the waste and emission target is only partly reported. A ‘yes’ score has been awarded mainly because a target has been quoted for greenhouse gas emissions in the year 2000 and progress towards it is reported. EMS: no mention is made of DuPont’s involvement in any recognised environmental management system. Procedures/responsibilities: there is very little information on how DuPont implements its ‘Commitment’. The CER states that the board of directors and CEO ensure policies are in place to meet it, and that the businesses are responsible for ensuring compliance. No information is given on roles or responsibilities. Health and safety

Health and safety



Lost time accidents: a chart is given showing global frequency rates for OSHA recordable injuries. At DuPont the figure has varied between approximately 0.5 and 1.0 injury per 200 000 hours. In 1998 and 1999 the figure was nearer 1.0.

NO YES YES NO NO

Occupational illness: a ‘yes’ score has been awarded because the CEO’s report specifically mentions disappointing results in the area of ‘ergonomic injuries caused or aggravated by the work environment’, although there is no mention in the CER of a strategy for improving occupational health and no figures showing the incidence of specific illnesses. Transport incidents: the CER includes a chart showing transportation incidents. The figures are difficult to interpret but appear to be very low (one or two incidents each year since 1993). A ‘no’ score has been given since the nature or effect of those incidents is not described. Emergency preparedness: although ‘The DuPont Commitment’ identifies that the company will involve the local communities in emergency planning, no evidence is provided that indicates it is taking place.


DuPont 3




Supplier involvement: although DuPont commits to working with suppliers to achieve a similar level of product stewardship, no evidence is provided of a strategy that ensures it is taking place.


Process design: although DuPont commits to continuously improve processes and develop new and existing products to reduce risk and impact, no examples are given.

NO NO YES YES YES YES

Recycling: although recycling is specifically mentioned in ‘The Dupont Commitment’, no strategy for waste reduction or examples are given. However, a ‘yes’ score has been given since figures can be derived for the USA from TRI data. Environmental expenditure: the CER includes a global figure for pre-tax expenditure on environmental operating activities. This fell from US$900 million in 1992 to US$560 million in 1998. 77% of the cost was incurred in the USA, and costs included remediation accruals. The annual report identifies that in 1999 capital expenditure on environmental projects was US$180 million. Figures are also given for expenditure on: • • •

previously accrued environmental activities (US$60 million in 1998); accrual for remediation activities (US$80 million in 1998); accrual for future remediation activities (US$460 million in 1998).

Prosecutions, fines and liabilities: the number of environmental fines incurred by DuPont rose to a peak in 1994, and since 1996 has been steady at around 20 per year. The value of fines and penalties has fluctuated, and in 1998 was US$260 000. Downside reports: on balance the report does give the impression that the downside is being reported. The CEO’s report states that ‘1999 was not one of our better years’, and identifies the number of vehicle accidents and occupational injuries as being areas of particular concern. During 1999 there was one major incident, although its nature and impact are not reported.

186





Production volume: the CER does not include any figures for production volume, although it is reported that this has increased by 28% since 1990.


Energy usage: a chart showing energy consumption relative to 1990 is included. Usage has remained relatively static since 1990. No figures are given.


Water consumption: no figures are given. TRI discharges to all media: the CER includes a chart showing Toxic Release Inventory data for the USA (N.B. 300 new compounds were added to the list in 1995). The total waste generated fell from approximately 700 million pounds in 1992 to 400 million pounds in 1996, then rose to 500 million pounds in 1998. Releases to air, water and land (excluding deep-well injection) have remained reasonably constant at around 40 million pounds each year since 1992. Emissions to water: these figures are included in TRI discharges to all media. Emissions to land: Hazardous waste: overall there has been a 30% reduction in hazardous waste since 1990. DuPont presents figures for each region for 1990 and each year since 1995. •

• •

•

in the USA, Canada, and South America the quantity of waste fell from 2400 million pounds in 1990 to 2000 million pounds in 1995 and 1600 million pounds in 1998; in Europe the quantity of waste fell from 120 million pounds in 1990 to 50 million pounds in 1995 and 30 million pounds in 1998; in Asia and the Pacific the quantity of waste fell from 7 million pounds in 1990 to 1 million pounds in 1995, then increased to 24 million pounds in 1998; in Mexico the quantity of waste remained stable at 200 million pounds between 1990 and 1995 then increased to 250 million pounds in 1998.

In the USA approximately 50 million pounds of TRI hazardous waste was disposed of by deep-well injection. Emissions to air: a chart shows global emissions of air toxics and air carcinogens. There has been a 65% reduction in air toxics since 1987, and the figure in 1998 was approximately 25 million pounds. There has been an 87% reduction in air carcinogens since 1987. The figure for 1998 cannot be interpreted from the chart. •

•

greenhouse gases: no specific figures are included for discharges of CO2, but the CER does include a chart showing global emissions of greenhouse gases. There has been a 20% reduction in the Kyoto basket of gases since 1990 against a target of 45% reduction by 2000. The figure for these gases as CO2 equivalents was 150 billion pounds in 1998. Figures are also given for the reduction in global greenhouse gas emissions including CFCs; transport effect: no mention is made of emissions from transport.


DuPont 5




The CEO’s foreword talks about an ‘intensified focus on “corporate social responsibility” ’, and participation in community outreach, and charitable giving. The CER also includes a section titled ‘Creating Societal Value’ that includes pictures which are used to illustrate actions taken from the ‘To Do List for the Planet’.


Triple bottom line

Triple bottom line

The title of the report reflects the theme of DuPont becoming a sustainable growth company. A ‘yes’ score has been awarded since the CEO’s foreword examines what sustainability means to DuPont in terms of the environment, society and the shareholders, even though the CER fails to make a strong link between the three.

Triple bottom line



A ‘yes’ score has been awarded since the contact address given in the CER is:


YES

YES

YES

DuPont Sustainable Growth Progress Report 1007 Market Street Nemours Building – Room N9004 Wilmington DE 19801-9989 USA Internet: www.dupont.com

188



Germany

DuPont Herberts Ranking by turnover (1 to 35): 29 Business profile

Business profile

The environmental report reviews the activities of the Wuppertal Works 1 & 2 that formed the administrative headquarters and manufacturing sites of the Herberts Group. In 1998 the group had a turnover of DM 3000 million in 1998 and employed 7500 people worldwide. In 1999 Herberts were sold to DuPont, and its integration resulted in a 34% increase in sales of the Performance Coatings business. The Performance Coatings & Polymers business is involved in the production of nylon, acetal, polyester, polyimide and EPDM engineering plastics and elastomers; and industrial and powder coatings and inks. The Wuppertal sites are primarily involved in the production of automotive coatings and refinishes, electrical insulation and adhesives.


Company reporting


Annual report: The environmental report received related specifically to DuPont Herberts. No annual report was received, but since the business is a part of the larger group for which the 1999 DuPont annual report was available, this section has been scored as if it was DuPont. (see DuPont analysis). Internet CER: there are websites for both DuPont and DuPont Herberts. The 1999 DuPont sustainable growth report is issued on the DuPont website. The Wuppertal environmental statement does not appear as an Internet CER.

YES YES YES* YES*


YES NO YES

Company coverage: this is a site report and as such is scored ‘yes’.



DuPont Herberts 1


Environmental report The report includes a short business review, describes policy and the environmental management system, and concludes by presenting data and goals. Each year: the report is not issued annually. ‘The next environmental Statement will be published in the first half of 2002’. Site coverage: the report deals with both sites in an even-handed manner. CEO’s foreword: there is a foreword by Dr Peter Schnur (Director of Operations, Site Manager Wuppertal and Head of the Service Division 2) and Dr Frieder Krauß (SHE – Manager).

Title Facility Environmental Statement 1999 Wuppertal Page 19 Format A4


YES NO YES YES YES YES NO

Data used: historical information is clearly presented for a minimum of three years. External verification: the report has been verified by Mr Horst Glenz and Mr Michael Sperling, for Gerling Cert, Umweltgutachter GmbH, Cologne. The environmental statements for 1997, 1998 and 1999 are declared valid based on investigations of site installations, relevant documents and interviews. The policy, EMS, environmental programme, audit methodology and statement conform with the standards and requirements of EEC 1836/93. Reply card: no reply card was received with the report. Environmental management


Policy: Herberts has ten guidelines that help define the company culture, and the corporate policy on environmental protection, health and safety provides rules of conduct in the area of ecology. The policy has statements covering the areas of:


• • • • • • •

YES YES YES YES

dialogue environmental protection product responsibility health/occupational medicine safety at work plant safety and hazard aversion transport safety.

Objectives: 13 goals are identified for completion during the three years following this CER. Most of these goals are reported again within the body of the report. EMS: both sites were registered under the EMAS in 1996 and to ISO 14001 in 1997. Support is being given to other sites within the group to obtain certification to ISO 14001. Procedures/responsibilities: the company EMS is described, the structure is shown in an organogram, and reference is made to a handbook that documents procedures. The role of the environmental protection and safety departments and of the head of SHE are outlined. There is also additional discussion on auditing, training and other procedural initiatives.

190

DuPont Herberts 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety



Lost time accidents: a table is given showing: • • •

number of injuries resulting in 1 day lost time per 100 employees. The figures fell from 1.24 in 1996 to 1.26 in 1998 (2002 target is 0.65); number of days lost per 100 employees. The figures fell from 0.32 in 1996 to 0.22 in 1998 (2002 target is 0.15); number of accidents resulting in 4 days’ lost time per 1000 employees. The figures have remained constant since 1996 at 5.4 (2002 target is 3.0).

NO YES YES YES YES

Occupational illness: the CER refers to the role of the occupational medicine department and inclusion of its activities in the management system. No figures are given showing the incidence of specific illnesses. Transport incidents: transport safety is given a separate heading within the CER. Although no figures are included for transportation incidents, there is evidence that they are collected. Emergency preparedness: ‘Alert and Hazard Aversion’ are included as a separate element of the safety, health and environmental protection policy, and as a section under the discussion of the EMS. There is a stated intention to involve local regulatory authorities, and discussion of mock training scenarios warrants the award of a ‘yes’ score.


DuPont Herberts 3




Supplier involvement: although there is recognition in the CER that suppliers need to be more involved in the SHE system (‘we have started a survey of suppliers in order to take environmental aspects into consideration when placing orders in the future’) there is currently no system in place.



Process design: the CER includes extensive discussion of water-borne coatings and identifies the development of a new water-borne 2K clearcoat and other high-solid systems with reduced environmental impact. There is also recognition of the value of good process design. The use of computercontrolled, closed systems is cited as having made major contributions to recent improvements, as has the replacement of liquid ring pumps with dry running pumps. Recycling: recycling is only touched on in the discussion, but a ‘yes’ score has been awarded since figures are given that show an increase in recycling from 6600 tonnes in 1996 to 7300 tonnes in 1998. Environmental expenditure: the CER includes both capital and operating expenditure on environmental protection. Each area has costs broken down against waste management, water protection, noise abatement and air quality management. Capital investment rose from DM 11.9 million in 1996 to DM 20.5 million in 1997, then fell to DM 17 million in 1998. Operating expenditure rose from DM 8.6 million in 1996 to DM 9.4 million in 1997, then fell to DM 8.5 million in 1998. Prosecutions & fines: no mention is made of the absence or occurrence of any fines or prosecutions. Downside reports: the CER includes a table of figures for neighbourhood complaints and a chart showing noise measurement figures at three locations. There were 17 complaints in 1998 compared with 19 in 1996. Eight of these were for smell and eight for noise. Noise measurements show a downward trend since 1993. While the figures and presentation are ‘upbeat’, overall the report does give the impression that the downside is being reported.

192





Production volume: production volume increased from 108 000 tonnes in 1996 to 121 000 tonnes in 1998.


Energy usage: figures are given for electricity, natural gas, fuel oil and heavy fuel consumption: • • • •

electricity usage has risen from 37 000 MWh in 1996 to 41 000 MWh in 1998; natural gas usage has increased from 6.2 million m3 in 1996 to 8.4 million m3 in 1999; fuel oil usage has increased from 110 tonnes in 1996 to 450 tonnes in 1998; heavy oil usage has stopped (was 2700 tonnes in 1996).


Water consumption: water consumption has increased from 137 000 m3 in 1996 to 168 000 m3 in 1998. Emissions to water: the volume of effluent and sludge requiring treatment fell from 8700 m3 in 1996 to 5800 m3 in 1998. •

• •

COD & AOX: total COD fell from 41 tonnes in 1996 to 26 tonnes in 1998. It is stated that organic halogen compounds ‘are always below official limits’; Nitrogen and phosphorus: it is stated that ‘these are not yet monitored’; Heavy metals: it is stated that heavy metals ‘are always below official limits’.

Emissions to land: total waste volume rose from 3300 tonnes in 1996 to 3600 tonnes in 1997, then fell to 3300 tonnes in 1998. There is a target to reduce the waste index from 9 to 8 by 2001 (it is assumed that the waste index is the ratio of waste to production expressed as a percentage). Emissions to air: a chart shows total carbon emission. It is assumed that this relates to discharges to air. These fell from 500 tonnes in 1989 to 300 tonnes in 1995. In 1996 and 1997 the figures were relatively constant, but they fell to 230 tonnes in 1998. There is a target to reduce this figure to 180 tonnes by 2002. • • •

•

SO2: emissions fell from 55 tonnes in 1996 to 0.4 tonnes in 1998; NO2: emissions fell from 27 tonnes in 1996 to 9.4 tonnes in 1998; greenhouse gases: CO2 emissions fell from 22 200 tonnes in 1996 to 19 500 tonnes in 1998. A ‘no’ score has been awarded since there is no mention of any other greenhouse gas; transport effect: no mention is made of emissions from transport.



The CER includes a section titled ‘Public Relations’ that refers to initiatives to educate and inform the public, particularly following registration to EMAS. No examples are given of any expenditure on projects primarily intended to benefit the local community.


Triple bottom line

Triple bottom line

A ‘no’ score has been awarded since although the CEO’s foreword examines what DuPont Herberts as a successful company can do for the environment, no strong link is made in the CER between the benefits of good environmental performance on the success of the company or of the link with social responsibility.

Triple bottom line


NO

NO

DuPont Herberts 5




A ‘no’ score has been awarded since no H&SE role or individual is named as the contact. The contact address given in the CER is:


NO

DuPont Performance Coatings Herberts GmbH & Co. KG Post Office Box 42271 Wuppertal Tel: +49 (0) 202/529-0 Fax: +49 (0) 202/529-28 00 Environment line: +49 (0) 202/529-66 55 Internet: www.dupont.com/coatings

194



USA

Eastman Chemical Company Ranking by turnover (1 to 35): 22 Business profile

Business profile

In 1999 Eastman had a turnover of US$4600 million and employed 147 000 people worldwide. Its head office is in Kingsport, USA, and as well as having four sites in the USA there are manufacturing facilities in Argentina, Canada, Hong Kong, Malaysia, Mexico, the Netherlands, Singapore, Spain and the UK. Recent acquisitions have added Belgium, China, Germany and Ireland to the list. The products made are listed in the CER, although the wider view of activities described below is taken from the annual report. Through 1999 the business was operated in three segments, Specialty and Performance; Core Plastics; and Chemical Intermediates. In the first quarter of 2000 the business was reorganised into two major groups:


•

•

YES* YES YES YES

Chemicals: fine chemicals; performance chemicals and intermediates; chemicals and specialty polymers to the inks, coatings, adhesives, sealants and textiles industries; Polymers: container plastics; specialty plastics; and fibre products.

Company reporting Annual report: a copy of both the annual report and Responsible Care® were received. The management discussion within the annual report includes a section titled ‘Environmental’, but consists only of reports on environmental liabilities and expenditure. No mention is made of the existence of the CER. Internet CER: the Responsible Care® report is issued both as a published version and as an internet report in pdf format.

Title Letter to Shareholders and 1999 Annual Report Page 55 Format A4


NO YES YES

Company coverage: a ‘yes’ score has been awarded for company coverage since all sites mentioned in the annual report (except for those recently acquired) are included in the Responsible Care® report.



Eastman 1


Environmental report The report starts with an overview that includes discussion of safety figures, TRI data and community relations, and presents the corporate measures and goals. There are then separate reports for four sites in the USA, and company reports covering Asia/Pacific, Europe/Middle East/Africa and Latin America. Each year: there is no clear statement that this is an annual report. Site coverage: a ‘no’ score has been awarded since selected data only is given for most of the non-US sites.

Title 1999 Responsible Care Report Page 20 Format A4


YES NO NO YES NO NO NO

CEO’s foreword: there is a foreword by Earnie Deavenport (Chairman and CEO). Data used: historical data is presented for US indicators for up to ten years, but a ‘no’ score has been awarded since data for the other sites (where presented) is generally only for 1998, making it impossible to predict a trend. External verification: there is no indication that the Responsible Care® report has been externally verified. Reply card: no reply card was received with the Responsible Care® report, and the website does not encourage contact on environmental issues. Environmental management


Policy: the CER states ‘it only makes sense that our corporate HSE policy is based on the guiding principles of CMA’s Responsible Care®’. The HSE policy is not given in the report.


NO YES YES NO

Objectives: the CER identifies three global and three US corporate measures and goals. Five of these goals are reported elsewhere in this analysis. The remaining corporate target is to reduce the number of CMA (US) reportable process safety incidents from 6 in 1996 to 5 in 1999. The figure for 1998 was 5. EMS: a ‘yes’ score has been awarded since reference is made to a three-day review of Eastman’s processes for managing HS&E performance as part of the CMA’s voluntary management systems verification programme. This included visits to two sites and interviews with employees, customers, suppliers, local neighbours and emergency responders. No reference is made to participation in any recognised EMS outside the USA. Procedures/responsibilities: no information is given in the report about the HS&E organisation structure, or of any roles and responsibilities in place for implementing HS&E policy. Mention is made, however, of assessing compliance with the policy worldwide every three years, and of various awards including recognition of three sites as OSHA Star sites.

196

Eastman 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: there is no mention in the report of any fatalities, or of their absence.


Lost time accidents: a graph is given which shows that the injury frequency rate in the USA fell from approximately 3 injuries per 200 000 exposure hours in 1993 to under 2 injuries per 200 000 exposure hours in 1998. Global targets are also given to reduce: •

•

NO YES NO YES YES

the OSHA recordable annual incident frequency rate (involving treatment beyond first aid). The figures in 1989 and 1998 were 9.14 and 1.65 incidents per 100 employees, respectively, against targets of 1.5 in 1998 and 1.0 in 2000; the lost workday out rate (where work is missed). The figures in 1989 and 1998 were 0.75 and 0.07 incidents per 100 employees, respectively, against a target of 0 in 1999.

Occupational illness: no mention is made in the report of any incidence of occupational illness or of its absence. Transport incidents: a graph is presented which shows the number of distribution incidents per 1000 shipments. This fell from 0.36 in 1992 to 0.29 in 1994, but has shown a generally upward trend since then to the current level of 0.37. Emergency preparedness: no general strategy is discussed for ensuring that the local communities are involved in emergency response planning, However a ‘yes’ score has been awarded since two initiatives are mentioned in the site reports. These are: •

•

the formulation of risk-management plans, and implementation of a rapid telephone notification system for the area surrounding Longview; an emergency drill exercise with Jurong Fire Brigade.


Eastman 3




Supplier involvement: there is no mention of any group-wide initiative for encouraging suppliers to work to appropriate environmental standards.


Process design: product stewardship and Eastman’s voluntary participation in the EPA High-Production Volume Chemical Challenge Program is discussed. There is also a global target to reduce the quantity of raw materials used from 1.28 pounds per pound in 1996 to 1.26 in 2000 (N.B. the figure for 1998 was 1.24 pounds per pound). A ‘no’ score has been awarded since no particular approach has been identified, and there is no evidence of a strategy of reducing environmental impact through improved process design.

NO NO YES YES YES* NO

Recycling: there is a reasonable amount of evidence of a positive approach to recycling. The Kingsport, USA site recycled 1780 tons of cardboard, paper and plastic in 1997 and 1500 tons in 1998. In Mexico, Eastman’s involvement in community-based initiatives has resulted in recycling 170 tons of polyethylene teraphthalate. There is a similar scheme in Argentina. Environmental expenditure: the annual report identifies that global capital and operating costs relating to environmental protection rose from US$190 million in 1998 to US$220 million in 1999. A graph is given in the CER, which shows environmental expenditure in the USA each year between 1988 and 1998. Prosecutions & fines: the annual report discusses a civil penalty of US$2.8 million in respect of an alleged violation relating to hazardous waste incineration prior to 1997. Provisions for environmental liabilities are contained in the annual report under ‘other long-term liabilities’, which for 1999 were US$156 million. Downside reports: while there are many aspects of Eastman’s performance it can be proud of, the general flavour of the report does not suggest the downside is being even-handedly reported.

198





Production volume: no figures for production volume are given in the report.


Energy usage: no figures are given for energy usage, although examples of various energy reduction initiatives are given in the site reports. These include: • • •


reducing cooling water circulation by 2500 gallons per minute to allow shutdown of a large pump at Batesville; awards at Kingsport for improved building design and insulation of piping; announcement of a co-generation facility at Longview.

Water consumption: no figures are given for water consumption. TRI discharges to all media: releases and transfers of individual substances in the USA are reported in the Toxic Releases Inventory (TRI). Figures for total releases and transfers are given for each year since 1988. Between 1988 and 1994 total emissions fell from 62.5 million pounds to 12.3 million pounds. Since 1994 the figure has remained constant. Emissions to water: included in the TRI discharges to all media. In the site reports there are graphs that present the results of testing the White, Congaree and Holston rivers for aquatic life. Emissions to land: there is a corporate target to reduce the total quantity of waste in the USA (excluding that used for energy production) from 0.144 pounds per pound of product sold in 1995 to 0.072 pounds per pound in 2005. The figure for 1998 was 0.123 pounds per pound. Hazardous waste: there is a target to reduce the quantity of hazardous waste in the USA (excluding wastewater) from 685 million pounds in 1995 to 342 million pounds in 2005. The figure for 1998 was 549 million pounds. Incineration: Incineration initiatives are mentioned in the CER. These include: • •

a reduction in the amount of waste incinerated at Kingsport of 12 million pounds; improvement of combustion efficiency at Longview.

Emissions to air: between 1988 and 1994 emissions to air in the USA fell from 61.9 million pounds to 11.9 million pounds. Since 1994 the figure has fallen to 10.9 million pounds; • •

greenhouse gases: no mention is made in the CER of the emission of CO2 or other greenhouse gases; transport effect: a ‘yes’ score has been awarded since there is some degree of recognition that transport effects must be brought into the overall reporting system. The Eastman Chemical Container Plastics business is a partner in the operation of a new railway link which will reduce road traffic by between 7500 to 10 000 shipments per year from the Workington site.


Eastman 5




The CER includes several examples that indicate Eastman does spend money on projects primarily to benefit the community. These include:


• • • •

YES

opening two nature trails and an interpretive centre to the public at Batesville; initiating projects to enhance wildlife habitats in East Texas; tree-planting in Malaysia; the reintroduction of seals and dune preservation in the Netherlands.

Triple bottom line

Triple bottom line

No attempt is made in the CER to make any connection between economic and environmental performance, and social responsibility.

Triple bottom line



No HS&E role or individual is named as a contact. The only contacts given are an information line on 1-423-229-CARE.


NO

NO

Internet: www.eastman.com The corporate address is taken from the annual report. Eastman Chemical Company 100 North Eastman Road PO Box 511 Kingsport, TN 37662-5075 USA

200



France

Elf Atochem Ranking by turnover (1 to 35): 11 Business profile

Business profile

Elf Atochem had a turnover of F 57 300 million in 1998 and employed 34 000 people worldwide in 25 countries. The CER indicates that the group operates in over 50 countries, mainly in Europe, North America and Asia, but also in Latin America, Africa and Australia. Although some products are discussed in the CER, the full scope of the business is given in the annual report. There are three divisions:


• • •

YES YES YES YES*

Basic Chemicals: petrochemicals, commodity plastics, chlorochemicals and fertilisers; Intermediate and Fine Chemicals: acrylics, thiochemicals, peroxides and fluorinated products; Performance Products: electroplating, adhesives, additives, polymethylmethacrylate and technical/functional polymers.

Company reporting Annual report: a copy of the annual report and the CER were received. As well as presenting the financial statements the annual report contains a business review in which some environmental highlights are reported. These mention certification of several sites to ISO 14001 and the conclusion of a marketing agreement for a low ozone-depleting solvent. There is also a separate section on HS&E issues, which includes safety figures, reports on environmental management and describes Elf Atochem’s approach to product stewardship.



YES YES YES

Internet CER: the CER is issued on the website as a pdf file. Company coverage: company coverage appears comprehensive. The CER states: ‘the present Report relates primarily to Elf Atochem’s European sites, and does not include its American subsidiary Elf Atochem North America which publishes its own Report’.



Elf Atochem 1


Environmental report The CER describes HS&E policy and approach to management, presents data then concludes with three sections presenting Elf Atochem’s approach to sustainable development, product stewardship and dialogue with the public. Each year: the CER states that ‘the Company has published an Environmental Report every year since 1993’. Site coverage: the report covers 61 major industrial sites. A ‘no’ score has been awarded since detailed figures are often only quoted for the 35 French sites, and the report does not give the impression of an even-handed approach.

Title Environmental Report 1998 Page 45 Format A4


YES YES NO YES YES YES NO

CEO’s foreword: the CER includes a foreword by Jacques Puechal (Chairman and CEO). Data used: a ‘yes’ score has been awarded since the key performance indicators are generally quoted for 1997 and 1998, and many are quoted for the previous ten years. External verification: the CER contains a declaration by PricewaterhouseCoopers, which was based on study of documents and resources used by the Safety Environment Division. They confirm that: • • •

the procedures allow reliable consolidation; the procedures were applied with integrity; the calculation method has been consistent from year to year.

Reply card: no reply card was received with the CER.

202

Elf Atochem 2 Current practice in environmental reporting: the chemicals industry




Policy: the CER contains Elf Atochem’s ‘Safety and Environment Policy’. In it is stated Elf Atochem aims to be at the forefront of the chemical industry in terms of environmental protection. The policy is divided into six sections covering:


• • • • • •

YES YES YES YES

principles, guidelines plans, procedures and auditing; environmental impact reduction and performance indicators; risk assessments and environmental impact statements; land contamination; Responsible Care®, Engagement de Progres® and product stewardship; dialogue with stakeholders.

Each section describes the way it approaches these HS&E issues, and although the policy is different from most in the industry a ‘yes’ score has been awarded. Objectives: progress against group targets set in 1993 was reported in detail in the 1997 CER. Those for air and water were achieved, while that for waste fell slightly short (no figures given). New targets are included in the 1998 CER for air, water and waste for completion in 2000. These targets are quoted under the ‘environmental impact’ heading of this analysis. EMS: Elf Atochem states that its environmental management policy was in place before ISO 14001 or the EMAS were introduced, but ISO 14001 has been chosen as its worldwide standard, and registration under the EMAS is sought when specific reasons dictate. To date 13 sites have been certified to ISO 14001 and four sites to the EMAS. Procedures/responsibilities: ‘Safety and Environmental protection at Elf Atochem begin with internal rules, known to all concerned, which define the principles applicable to all production sites’. The guidelines are set at group level by the Safety and Environment Division, which has two departments, one for plants and the other for products. Each subsidiary has its own HS&E manager, and each site (depending on size) has one or more HS&E managers. Sites adapt the guidelines to suit their size and nature, and yearly action plans are produced, which detail the objectives and required measures. The CER states that ‘methods for identifying sources of emissions and wastes are in place on all sites’, and that ‘regular safety and environmental audits are carried out at each plant by the site’s own management and by Safety Environment and Transport inspectors’.


Elf Atochem 3


Health and safety

Health and safety

Fatalities: no mention is made in the CER of the occurrence or absence of any fatalities.


Lost time accidents: lost time accidents among employees fell from 9 per million working hours in 1988 to 3.9 in 1998. During the same period the rate for contractors fell from 35 to 11.5.

NO YES NO YES YES

Occupational illness: there is no indication from the report of a groupwide strategy for improving occupational health. Transport incidents: a section of the CER titled ‘Safety and Environmental Awareness in Transport’ gives examples that include Elf Atochem’s founding role in the Chemical Distribution Institute (CDI) and the launch of the International Chemical Environment (ICE) programme for the prevention of transport accidents. Two transport incidents are reported in the CER for 1998: • •

derailing of two vinyl chloride monomer rail tankers in France; the leak of a highly odorous chemical in England.

Emergency preparedness: emergency plans are stated to be ‘in place throughout the company and are reviewed and tested regularly’. Articles describe training programmes run in conjunction with the local communities at Fos/Port-de-Bouc and Grande Paroisse.

204





Supplier involvement: while suppliers are mentioned in the CER there is no indication of a group-wide approach to ensuring that suppliers apply appropriate environmental standards.


Process design: product stewardship is discussed in detail in the CER, and is broken down under the headings research and development; product design and formulation; the logistics chain; products use and customer assistance; end of life. There is also extensive discussion on the use of clean technology both for new plants and the refurbishment of existing ones. Examples are given at all stages, which demonstrates an approach to increasing environmental protection through process design.


Recycling: figures included in the discussion of waste indicate a strong commitment to reprocessing and recycling. Examples given in the CER include: • •

plant specifically installed for cracking residues from acrylic products at Carling; reuse of polystyrene foam chips from packaging.

Environmental expenditure: in 1998 Elf Atochem allocated Eur 245 million towards implementing its Safety and Environment Policy in Europe. Of this figure 30% was for capital projects, 70% for operating, 60% was for safety and 40% for protecting the environment. Prosecutions & fines: no mention is made in the report of any fines or prosecutions, or of their absence. Downside reports: the CER includes articles that discuss: • • •

odour issues at the Carling and Bouches-du-Rhone plants; noise impact at the Pierre-Benite plant; land remediation at L’Estaque, Douvrin, Vendin and Premont.

Overall the impression is that downside information is being fairly reported.


Elf Atochem 5




Production volume: the data given should be viewed against production volumes of 11.7 million tonnes in 1997 and 13 million tonnes in 1998.


Energy usage: Elf Atochem uses an energy performance indicator (EPI) to monitor energy performance. Each product is given a standard for energy usage, and actual performance is monitored against the standard. Since 1980 the EPI has improved by 20%. The breakdown of energy sources is given (43% from electricity, 51% from gas and 6% from other fuels).


Water consumption: water consumption for Elf Atochem and its main subsidiaries fell from 106 million m3 in 1994 to 88 million m3 in 1997. The figure for 1998 was 85 million m3. Emissions to water: discharges from the 35 French sites are presented as a UIC (Union des Industries Chemiques) water index. Since 1988 this index has fallen 40% to a value of 20 (1% less than the 1997 figure). Tonnage discharges given below are figures for the whole group of 61 sites: • •

•

•

COD: discharges have fallen 42% since 1992 to 8100 tonnes in 1998; nitrogen and phosphorus: discharges of nitrogen have fallen 54% since 1992 to 1600 tonnes in 1998. During the same period phosphorous discharges fell by 66% to 340 tonnes; heavy metals: discharges have fallen 45% since 1992 to 13 tonnes in 1998. This figure is split between Zn/Cu/Ni (10 tonnes) and Hg/Cd/Pb/Cr/As (3 tonnes); specific substances: Elf Atochem has identified 19 substances that are characteristic of its activities, the main contribution to which comes from trichloroacetaldehyde. There is a group target to reduce emissions of these to less than 39 tonnes by 2000. In 1992 the figure was 200 tonnes, in 1997 58 tonnes and in 1998 49 tonnes.

Emissions to land: the figures given in the CER are difficult to interpret. The main ones given for the reporting group in 1998 are: • •

Non-hazardous waste – 52 500 tonnes; Hazardous waste: • generated by Elf Atochem sites – 275 000 tonnes; • processed or recycled – 534 000 tonnes; • processed or recycled on-site – 482 000 tonnes.

There is a group target to eliminate the use of on-site landfill for hazardous waste by 2000. In 1997 the figure was 10 500 tonnes, virtually unchanged since 1992. In 1998 the split of disposal routes for hazardous waste was: Off-site landfill On-site landfill Off-site incineration On-site incineration

6% 1% 13% 80%

Elf Atochem has established a waste index by which it measures progress made in waste reduction. The weightings given encourage on-site treatment and incineration rather than external treatment and landfill. Historical figures of this index from 1989 onwards are also included for the 35 French sites. These show a 24% reduction over the period. Emissions to air: • •

CO: 13 500 tonnes were emitted in 1998; NOx: group discharges have dropped 27% since 1992. Between 1988

206



•

•

• •

•

and 1998 discharges from the 35 French sites fell from 14 000 tonnes to 8000 tonnes. 60% of these emissions are from fuel, the remainder being primarily from nitric acid production; SOx: group discharges have dropped 30% since 1992. Between 1988 and 1998 discharges from the 35 French sites fell from 25 000 tonnes to 15 000 tonnes. 75% of these emissions are from fuels, the remainder being primarily from sulphuric acid production; VOCs: group VOC discharges were 12 000 tonnes in 1998, the main contribution to which came from chlorinated compounds and olefins. This total includes the 16 substances that Elf Atochem has identified as being characteristic of its activities. There is a group target for these 16 substances to reduce emissions to less than 4220 tonnes by 2000. In 1992 the figure was 145 000 tonnes and in 1997 6300 tonnes; VICs: group discharges have dropped 55% since 1992; greenhouse gases: the CER includes a discussion on greenhouse gases. In 1998 CO2 and N2O emissions were 10.6 million tonnes CO2 equivalent, approximately 5% less than the 1990 figure. Other gases are mentioned, but no figures are given. In a similar manner to energy, Elf Atochem also uses a carbon emissions index (CEI) to monitor reductions in CO2. Since 1980 the CEI has improved by 50%; transport effect: no mention is made in the CER of any emissions from Elf Atochem’s own transport.



The CER contains a discussion titled ‘Dialogue’ in which it reports on open days, schools liaison initiatives and wider initiatives that demonstrate that Elf Atochem is keen to inform the public. However, a ‘no’ score has been awarded since no projects are reported that appear to demonstrate that Elf Atochem is trying to directly benefit local communities.


Triple bottom line

Triple bottom line

The triple bottom line is not specifically mentioned in the CER, and there is no real sense in which the report makes a cogent link between the three elements of economic success, environment and social responsibility.

Triple bottom line



No HS&E role or individual is identified as a contact, although those responsible for compiling the CER are given.


NO

NO

NO

The only address given in the CER is the corporate one, i.e: Direction des Relations Extérieures/Direction Sécurité Environnement 4/8, cours Michelet-La Défense 10-92800 Puteaux (France) Tel: +33 1 49 00 80 80 Fax: +33 1 49 00 83 96 Internet: www.elf-atochem.com


Elf Atochem 7


Italy

EniChem Ranking by turnover (1 to 35): 25 Business profile

Business profile

The Eni Group primarily operates in the oil and energy sector, but has been included in chemicals since in 1999 Eur 4000 million of the group’s Eur 31 000 million turnover came from petrochemicals. EniChem employs 14 000 people worldwide. Its head office is in Milan, Italy, and there are 14 production sites in Italy, eight elsewhere in Europe and one in Texas, USA. In the CER the sites are shown on a world map. EniChem’s expertise lies in petrochemicals, and over half of its production is of ethylene, propylene, elastomers and polystyrene. The market sectors are: Olefins and Aromatics: ethylene, propylene, butadiene, benzene, toluene and xylene; Intermediates: cumene, phenol, acetone, alphamethylstyrene, alkylphenols, cyclohexanol, caprolactam, acrylonitrile, dimethylcarbonate derivatives; Polyurethanes and Chloralkali: MDI, TDI, propylene and ethylene oxide and derivatives, polyols, polyurethane systems, chlorine and derivatives, caustic potash and soda; Styrenics and Engineering Plastics: ethylbenzene, styrene, polystyrene, SAN, ABS, alloys and thermoplastic blends; Elastomers: styrene-butadiene rubbers and latexes, thermoplastic rubbers, nitrile rubber, ethylene-propylene rubber, polychloroprene rubber.


Company reporting

Title Annual Report 1999 Page 115 Format pdf

Annual report: only the CER was received as a published copy, so that references to the annual report are taken from the web copy. As well as presenting group financial statements the annual report contains a review of group activities that also includes separated sections on HS&E and community relations. Reference is made to the CER. Internet CER: the website includes a section on ‘Health Safety and Environment’, and the CER can be accessed on the web in pdf format.

YES YES YES YES


YES YES YES

Company coverage: the information included on the map of production sites implies that all petrochemical production sites are included in the environmental reporting group.



EniChem 1


Environmental report The CER is directed towards EniChem activities only. It is divided into three sections. The first is arranged as a series of single-page summaries of company-wide, general and environmental information. The second part comprises group environmental data, and the third is devoted to individual site reports. Each year: this is the eighth edition of the HS&E report, but there is no clear statement that it is published annually. Site coverage: the site reports are presented in a structured format that makes for a very even-handed approach, but a ‘no’ score has been awarded since reports are included for only 15 of the 23 sites.

Title 1999 Report – Health, Safety and Environment Page 64 Format A4


YES NO NO YES YES YES NO

CEO’s foreword: the CER includes a foreword from the Chairman (Fabrizio d’Adda). Data used: the key EPIs all have data for a number of years, generally 1989 and the four years from 1996 to 1999. This data is mostly given in the form of charts accompanied by figures. In some cases the figures are difficult to interpret. External verification: the CER contains a verification statement by Ernst & Young that covers the whole of the report. The methodology included visits both to the Environmental and Safety Unit involved in collecting data and preparing the report, and to three production sites. The statement concluded that the CER provides ‘clear and exhaustive data and information on EniChem’s environmental performance’. However, inconsistencies were noted in the assessment of pollutants in wastewater, and differences identified in the way atmospheric emissions from tanks were calculated between sites. The statement recommends the inclusion of production-related indices to improve clarity. Reply card: no reply card accompanied the CER. Environmental management


Policy: the CER includes an environmental policy statement that begins: ‘The Company intends to guarantee the safety and health of employees, populations, contractors and customers, as well as to safeguard the environment and protect public welfare . . .’ It then continues by identifying seven guiding principles it considers mandatory.


YES YES YES NO

Objectives: the key EPIs all have target figures for 2003, and progress against these is clearly reported. EMS: EniChem plans to have all its production sites certified to ISO 14000 by 2001 and to follow this by EMAS registration. To date nine sites were certified to ISO 14000 and one site registered to the EMAS. Procedures/responsibilities: the CER does include a section titled ‘Environmental Audit’ that identifies the key role of internal auditors, and a section on training that emphasises the financial commitment, particularly to safety training. Even so, although reference is made to EniChem’s internal EMS, there is no clear definition of responsibilities within the organisation or of procedures designed to ensure compliance with the guiding principles outlined in the policy statement.

210

EniChem 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: no mention is made in the CER of the absence or occurrence of any fatality.


Lost time accidents: INAIL frequency and severity indices are given in the report. The number of accidents per million hours worked fell from 17.6 in 1993 to 6.24 in 1997, but since then has risen to 7.2. The severity index fell from 0.49 in 1993 to 0.17 in 1998, then rose in 1999 to 0.19.

NO YES YES NO NO

Occupational illness: a section of the CER titled ‘Health’ describes the occupational health provision made by EniChem. This includes figures for expenditure (Eur 515 per employee, 60% on preventive medicine and 40% on first aid). It also describes initiatives to control and monitor workplace exposure. No figures for occupational illness are included. Transport incidents: no mention is made of any incidents. Emergency preparedness: although safety training is discussed, the CER does not mention any strategy for ensuring local involvement in emergency action planning. Environmental protection


Supplier involvement: no mention is made of any initiative to encourage suppliers to work to recognised standards of environmental protection.


Process design: the CER includes a general discussion on R&D involvement in environmental impact reduction through process design and EniChem’s involvement in improving product safety through the High Production Volume (HPV) and Long-range Research (LRI) Initiatives. Examples of initiatives to reduce environmental impact through improved process design are given in the site reports. These include a new process for propylene oxide, new elastomers for tyres and fitting new pump seals, and floating roofs on tanks to reduce fugitive emissions.

NO YES YES YES NO NO

Recycling: ‘For the first time a graph reports trends in recovered waste’. Within the site reports examples are also given of recycling initiatives. These include the use of VOCs in vent emissions for power generation and returning laboratory samples to production. Environmental expenditure: in 1999 Eur 132 million was spent on investment in environmental protection and Eur 132 million on current expenses. Four sections of the report discuss EniChem’s remediation activities. The first two of these examine restoration initiatives on abandoned sites. Financial costs are given for two of the nine sites identified, and a detailed account is given of how Eur 34 million was spent at one of these sites (Cesano Maderno). A third report describes the ‘Risk Fund for Past Environmental Costs’ and another activities under the title ‘Soil Protection’. Prosecutions & fines: the CER does not mention prosecutions or fines. Downside reports: while the CER is written in a style which does not over-emphasise EniChem’s achievements, the absence of any examples of downside reporting warrants awarding a ‘no’ score.


EniChem 3




Production volume: a ‘yes’ score has been awarded as production volumes are given for 1998 and 1999 in the section titled ‘Energy’. Production remained stable at 8.3 million tonnes. No production figures are given for previous years.


Energy usage: charts are given for electrical and thermal energy usage over time. Third party sales have been steadily increasing while net energy consumption fell from 2.4 million toe (tonnes of oil equivalent) in 1996 to 2.2 million toe in 1998. In 1999, however, net energy consumption rose to 3.1 million toe in spite of constant production levels. The discussion on the reasons is confusing.


Water consumption: water consumption has fallen from 188 million m3 in 1996 to 161 million m3 in 1999. The 2003 target is 170 million m3. Emissions to water: in addition to the figures given EniChem is authorised to dump 3300 tonnes/annum of calcium carbonate sludge into the sea. • • • •

COD: discharges fell from 6000 tonnes in 1996 to 5000 tonnes in 1999. The 2003 target is 4500 tonnes; nitrogen: discharges fell from 500 tonnes in 1996 to 300 tonnes in 1999. The 2003 target is 307 tonnes; phosphorus: discharges fell from 103 tonnes in 1996 to 74 tonnes in 1999. The 2003 target is 72 tonnes; heavy metals: discharges fell from 3900 kg in 1996 to 2600 kg in 1998, then rose to 3700 kg in 1999. The 2003 target is 3400 kg.

Emissions to land: the CER includes a separate section titled ‘Waste Management’ that describes legal requirements and internal procedures. Hazardous waste: discharges fell from 124 000 tonnes in 1996 to 99 000 tonnes in 1999. The 2003 target is 96 000 tonnes. While most of this waste is treated internally, external landfill accounted for 7000 tonnes in 1999, and 13 000 tonnes went for external treatment. Non-hazardous waste: Discharges fell from 98 000 tonnes in 1996 to 76 000 tonnes in 1998, then rose to 80 000 tonnes in 1999. The 2003 target is 78 000 tonnes. Emissions to air: charts show CO, NOx and SOx emissions both from processes and from power generation. It is unclear from the chart if the first of the two accompanying figures is a total that includes the figure for process emissions, and the figures quoted below assume that it does. •

•

•

•

CO: total discharges fell from 4500 tonnes in 1996 to 2000 tonnes in 1999. The 2003 target is 1300 tonnes. In the same period discharges from processes fell from 1600 tonnes to 800 tonnes; NOx: total discharges fell from 18 000 tonnes in 1996 to 15 000 tonnes in 1999. The 2003 target is 11 000 tonnes. In the same period discharges from processes fell from 4800 tonnes to 3100 tonnes; SOx: total discharges fell from 87 000 tonnes in 1996 to 39 000 tonnes in 1999. The 2003 target is 23 000 tonnes. In the same period discharges from processes fell from 1500 tonnes to 800 tonnes; VOCs: the chart separately shows emissions of POCPs (elsewhere explained as potential ozone-forming chemicals) and other VOCs. It is unclear if the first of the two accompanying figures is a total figure or just relates to POCPs. The figures quoted below assume that it is a total figure.

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EniChem 4 Current practice in environmental reporting: the chemicals industry


• • •

Total discharges fell from 6000 tonnes in 1996 to 4000 tonnes in 1999. The 2003 target is 3500 tonnes. In the same period VOCs (other than POCPs) fell from 3000 tonnes to 2000 tonnes; VICs: emissions have remained relatively constant at around 80 tonnes/annum since 1996. The 2003 target is 60 tonnes; greenhouse gases: CO2 discharges fell from 10.2 million tonnes in 1997 to 9.3 million tonnes in 1999; transport effect: no mention is made of discharges resulting from transportation.



The CER includes a section titled ‘Talking About the Environment’ that describes its approach to developing more open dialogue with local communities, particularly in conjunction with the ‘Open Doors’ initiative within the Responsible Care® programme coordinated by Federchemica. A ‘yes*’ score has been awarded because although the CER does not include examples of expenditure on projects for the benefit of local communities, the annual report describes projects supported by the Eni Group. These include healthcare projects in Angola, Azerbaijan and Kazakhstan, infrastructure projects in Africa and cultural projects in Italy.


Triple bottom line

Triple bottom line

The CER does not attempt to make a link between environmental and economic performance, and social responsibility, although the website does have a page devoted to the Enrico Mattei Foundation that conducts research on issues linked to sustainable growth.

Triple bottom line





YES*

NO

YES

Health, Safety and Environment Department EniChem SpA Piazza Boldrini 1-20097 San Donato Milanese Italy Tel: +39 02520.32641; +39 02520.42130 Fax: +39 02520.32677; +39 02520.42819 Internet: http://www.eni.it


EniChem 5


Germany

Henkel Ranking by turnover (1 to 35): 10 Business profile

Business profile

In 1998 the Henkel Group had a turnover of DM 21 300 million, and employed 56 600 people. ‘Henkel operates 210 production sites around the world.’ Three-quarters of these sites, a large proportion of which are in Europe, are named in the report. Operations are split into six main business sectors: Chemical Products: oleochemicals (fatty acids and their derivatives, food and feed additives, vitamin E, carotenoids); care chemicals (for cosmetics, pharmaceuticals, detergents and cleaners); and organic specialty chemicals (base materials and additives for plastics, paints, coatings, etc.); Surface Products and Systems: products and systems for the application of surface treatments; Adhesives: consumer and craftsmen adhesives (pastes and adhesives for home use); industrial and packaging adhesives; engineering adhesives (high-performance sealants and systems); Cosmetics and Toiletries: skin, dental and hair care products, perfumes and fragrances; Detergents and Household cleaners: fabric, furniture, bath/toilet, kitchen and plant care products; Industrial and Institutional Hygiene: products, appliances and systems for the cleaning needs of industrial and institutional customers in the food, beverage and agricultural sectors.


Company reporting

Title: Our 122nd Year 1998 Page 76 Format A4

Annual report: the 1998 annual report and CER were received together with a review covering 1999. The annual report includes a half-page discussion of environmental matters. In it the cost of protection is highlighted and reference is made to the SHE report. It also points to 15 SHE standards that have been published for the first time. Internet CER: Henkel’s website contains comprehensive coverage of SHE issues. The CER is available as a pdf internet report.

YES YES YES YES


YES YES YES

Company coverage: a ‘yes’ score has been given for company coverage since the CER states the reporting sites ‘account for 83 per cent of the entire Henkel Group’.



Henkel 1


Environmental report The report starts with the CEO’s preface, presents the SHE standards, then describes the group’s activities and its SHE management system. A dialogue chapter (new to the report) discusses genetic engineering, presents safety statistics and discusses relations with the community. Further discussion and objectives are presented both under business sector headings and geographical area. The report concludes with the environmental data. Each year: there is a clear statement that this is an annual report (the eighth). Site coverage: a ‘yes’ score has been given for all-site coverage, since using geographical distribution as an approach to presenting activities in the CER does suggest an even-handed approach.

Title Environment, Safety, Health 1998 Page 60 Format A4


YES YES YES YES YES NO YES

CEO’s foreword: the CER includes a foreword by Dr Hans-Dietrich Winkhaus (President and CEO) and Dr Wolfgang Gawrisch (Corporate Vice-President for Research/Technology). Data used: the sites contributing to the data are named. Data is presented for five years (including 1998) in absolute values. External verification: there is no indication that the report has been subject to external verification. Reply card: two reply cards are attached. There is a small space for comments, the remainder of the card being taken up with a list of publications that can be requested.

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Henkel 2 Current practice in environmental reporting: the chemicals industry




Policy: the 15 SHE standards presented in the report effectively form a policy statement. ‘Together with 55 associated guidelines, (not presented) these standards define Henkel’s SHE policy’. The standards indicate group policy on all main areas of activity and have headings such as ‘Workplace’ and ‘Distribution’.


YES YES YES YES

Objectives: one group objective is stated, that of having carried out audits on 136 sites by the year 2000. Objectives are also stated both for individual product divisions, and for 49 sites. Work carried out to date is reported against each target. Because of their diverse nature specific objectives will only be used as examples in this commentary when discussing performance indicators. The objectives for the product divisions tend to be rather general. The exceptions are those for the Detergents/Household Cleaners division, which are specific, measurable and time-related. Site objectives are generally of an excellent quality. EMS: 17 sites are certified to ISO 14001 and seven sites to the EMAS. The Surface Technology, Adhesives and Henkel-Ecolab product divisions have general objectives to obtain group-wide verification to the EMAS and/or ISO 14001. Fifteen further sites have objectives to obtain certification to ISO 14001 during 1999 and 2000. When discussing its approach to certification Henkel states: ‘If such certificates yield market benefits, the Henkel Group companies take advantage of this opportunity.’ Procedures/responsibilities: an organisational chart for SHE is presented and the President and CEO (Dr Hans-Dietrich Winkhaus) and the Corporate Vice-President for Research/Technology (Dr Wolfgang Gawrisch) are named. Each company is part of a business sector whose head sits on the Henkel group management board. Each sector has its own SHE officers with corporate, regional or local responsibility. Additionally, the Research/Technology division provides a corporate role that both supports the business sectors, and works with them through: • •

the product stewardship communication forum – set up to examine the safety of products; the SHE coordination circle – set up to formulate policy and currently developing the SHE audit system.

Many sites have already integrated the SHE standards and guidelines into their management procedures, and there is a commitment to complete this integration throughout the group in 2000. The report includes an extensive discussion on the role of audits. These are coordinated and supervised centrally, and in 1998 55 audits were carried out, bringing the total since 1992 to 92.


Henkel 3


Health and safety

Health and safety

Fatalities: in 1998 one employee fell to his death in Indonesia.


Lost time accidents: figures are presented for accidents (resulting in 1 day lost time) per 1000 employees for either specific companies or countries. The figures vary from 7 accidents per 1000 employees at SidobreSinova, France to 60 accidents per 1000 employees in Australia. A ‘yes’ score has been given even though the figures presented only cover 60% of the workforce. The report states: ‘Henkel will be collecting such occupational accident data from a larger number of Group companies in the future.’

YES YES NO YES YES

Occupational illness: although the company medical service is well established in Germany, and checklists have been prepared to facilitate the application of occupational health principles throughout the group, there is no common system in place at this point of time, nor is any data presented in the report. Transport incidents: while the report indicates that not all the data necessary for a quantitative assessment is available, there is a statement that: ‘In 1998 there were no serious distribution incidents resulting in serious personal injury or environmental damage due to the accidental release of Henkel products.’ Emergency preparedness: there is a standard for emergency preparedness and response which states ‘the (emergency) plans are reviewed and tested regularly’. Although the report does not describe any group-wide format for constructing or testing these plans, emergency plans are checked during audits, and the number of sites audited suggests an adequate level of preparedness.

218





Supplier involvement: the standard states: ‘Henkel evaluates the SHE performance of its suppliers and contractors and encourages them to strive for safety, health and environmental standards equivalent to its own.’ In spite of this the report does not suggest there is a strategy in place by which this will be routinely brought about.


NO YES NO YES YES YES

Process design: the section ‘Product Stewardship’ includes examples of the environmental benefits resulting from product improvements and the use of renewable materials (e.g. the replacement of mineral oils with biodegradable oils in release agents). A separate section, ‘Environmentally Compatible and Safe Production’, looks geographically at production issues and includes examples of benefits from more process-related improvements (e.g. reducing packaging by increasing product density). A ‘cradle to grave’ analysis of the life of detergents is also presented, which links product design with COD and energy useage. Recycling: a ‘no’ score has been given inspite of the quantity of hazardous waste recycled rising from 114 000 tonnes in 1994 to 187 000 tonnes in 1998. This is because the increase of 46 000 tonnes during 1998 is attributed to just one site, and there is no evidence from the report of a strategy for recycling as part of a group-wide approach to reducing the environmental burden. An interesting article features a department of a German site that acts as a residual materials broker. Environmental expenditure: total environmental expenditure has risen slightly between 1994 and 1998. During this period operating costs have increased proportionately more (from DM 245 million to DM 275 million) while capital and R&D expenditure have fallen. These latter figures were DM 35 million and DM 82 million, respectively, in 1998. Prosecutions & fines: a ‘yes’ score has been given since the report includes a statement ‘that there were no cases of non-compliance with legal regulations’. This is taken to mean that there were no successful prosecutions. The report also includes a discussion on detecting historical contamination at newly acquired sites but does not mention ongoing liabilities. Downside reports: in 1998 for the first time data on complaints was collected from the 88 sites based on the same defined criteria. 57 complaints concerned odour, 18 concerned noise and 16 concerned dust. Elsewhere the report identifies remedies to specific complaints and shortcomings found during audits. One such example quoted resulted in a written warning for the site manager.


Henkel 5




Production volume: production increased from 4 million tonnes in 1994 to 5.4 million tonnes in 1998.


Energy usage: energy consumption rose from 21 800 terajoules in 1994 to a peak in 1997. In 1998 the figure was 25 183 terajoules, which represents a 15% increase over a period when production rose by approximately 34%.


Water consumption: water consumption has remained constant at around 26 000 m3 since 1994. Wastewater discharges over the same period have fallen slightly from 15 900 to 14 556 m3. The difference between the two figures is stated to be due to evaporation and the volume of water leaving the system in products. Emissions to water: a ‘yes’ score has been given even though discharge figures for nitrogen and phophorus are not included: •

•

COD: there has been a steady decline in COD from just under 12 500 tonnes in 1994 to just under 9000 tonnes in 1998. Just over threequarters of the sites in the group do not discharge wastewater directly to surface water. Henkel states: ‘it was assumed that, on average, 70 percent of the waste water load from these indirect dischargers is degraded or eliminated in municipal or jointly operated sewage treatment plants’; heavy metals: the figures for zinc are presented separately. These indicate a reduction from 3800 tonnes in 1994 to 2400 tonnes in 1997. The increase to 3100 tonnes in 1998 is stated to be due mainly to changes in production conditions at one site, and emissions at this site were brought back to their original level by the end of the year.

Other heavy metal discharges (Pb, Cr, Cu, Ni) fell from 1600 tonnes to just under 1200 tonnes over the same period. Emissions to land: the quantity of waste sent for disposal has remained relatively constant over the period at about 120 000 tonnes. Since 1994 the quantity of waste classed as hazardous increased from 10 000 to 28 000 tonnes, with a corresponding fall in that classed as non-hazardous. Emissions to air: the following figures are stated to be provisional, since not all data had been evaluated at the time the CER went to press: •

• • • •

•

NOx: discharges rose from just under 3400 tonnes in 1994 to a peak of 3644 tonnes in 1997. The figure for 1998 was just under 2500 tonnes, and the reduction is attributed to a switch in energy sources in Eastern Europe and China; SOx: discharges rose from 5800 tonnes in 1994 to a peak in 1997. The figure quoted for 1998 was 6490 tonnes; Dust: the discharges (which include aerosols) increased from 623 tonnes to 730 tonnes over the same period; VOCs: apart from a fall in 1996 VOC emissions have remained relatively constant over the period and in 1998 were 838 tonnes; greenhouse gases: CO2 emissions are almost all energy-related. They have risen from 1.8 million tonnes in 1994 to 2.2 million tonnes in 1998, and the figure does include an estimate of CO2 generated during the production of bought-in energy. No global discharges of other greenhouse gases are mentioned in the report; transport effect: the report does not discuss the environmental effects of carrying out distribution operations.

220





In a separate heading ‘Social Component of Sustainable Development’, Henkel acknowledges its social responsibilities, and identifies:


•

•

YES

worldwide examples of social sponsorship (help for flood victims, child and youth work, etc.). ‘The Henkel Group donates several million DM annually in this way’; eco-sponsorship in Germany (ecological development and promotion of environmental awareness). Budget not stated.

Triple bottom line

Triple bottom line

In the sections titled ‘Sustainable Development and Shareholder Value’, and ‘Social component of Sustainable Development’ the report establishes a strong link between economic, environment and social factors, and quotes Sustainable Asset Management, who describe Henkel as a ‘sustainability leader’.

Triple bottom line



The corporate communications contacts are:


YES

YES

Mailing address Henkel KgaA Corporate Communications D-40191 Dusseldorf Germany Phone: +49 211 797 3533 Fax: +49 211 798 4040 e-mail: [email protected] The Environmental Protection and Safety contact is: Phone: +49 211 797 3837 Fax: +49 211 798 2551 e-mail: [email protected] The internet address is: http://www.henkel.com


Henkel 7


UK

Hickson International Plc Ranking by turnover (1 to 35): 34 Business profile

Business profile

Hickson International has its head office in Castleford, England. In 1998 Hickson’s had a turnover of £227 million and employed 1400 people worldwide. It has two divisions: Organic Chemicals: has manufacturing operations in the UK and the USA, and focuses on contract manufacture (agrochemicals, coatings, personal care and pharmaceuticals), and fine chemical intermediates (pharmaceuticals, pigments and detergents); Protection and Coatings: has manufacturing operations in the UK, the USA, France and Italy, and makes chemicals for timber used in construction and furniture manufacture.


Company reporting


Annual report: a copy of the annual report and the CER were received. The annual report has a separate section on HS&E, and mentions capital investment on environmental protection and energy efficiency improvement measures at Castleford. It also states that ‘We publish an annual HS&E report that is freely available.’ Internet CER: the CERs for 1996 to 1999 appear on the website as pdf files.

YES* YES* YES YES


YES YES YES

Company coverage: although company coverage is not specifically discussed in the CER a ‘yes’ score has been given since all major companies are mentioned in the CER, and there is no reason to suppose that any major parts of the business have been excluded.



Hickson 1


Environmental report The report is a simple document, which starts by describing the business, stating the policy, describing how it is being implemented, then provides figures as measures of performance. Each year: although it is stated in the annual report and on the web page that the HS&E report is published annually, there is no similar mention in the CER. Site coverage: a ‘no’ score has been given for ‘all-site coverage’ since with so few sites coverage would not be onerous, and while some of these other sites are mentioned, most of the discussion is about Castleford.

Title Health Safety and Environmental Report 1998 Page 8 Format A4


YES YES* NO YES YES NO NO

CEO’s foreword: the CER includes a foreword by David J. Wilbraham (CEO). Data used: Hickson has chosen to present data on six performance indicators. This data is provided for 1994 to 1998. External verification: there is no statement that the information contained within the report has been verified by a third party. Reply card: no reply card is included. Environmental management


Policy: the health, safety and environment policy was issued in 1996 and is to be reviewed in 1999. It is accorded a full page within the document, and has the following main elements:


• • • • • •

YES NO NO NO

commitment to seek constantly to improve health and safety performance; commitment to prevent any adverse impact of operations on the environment; goals will exceed statutory obligations in anticipation of future requirements; all processes, procedures and practices will be audited to ensure compliance; product risks will evaluated and managed; all employees will be given the appropriate training.

Objectives: although broad strategies are outlined for improving energy, waste and capital expenditure, no quantified environmental or financial performance targets have been included in the report. EMS: while there is a stated commitment to ‘Responsible Care®’ there is no evidence of the use of any recognised environmental management system. Procedures/responsibilities: the HS&E policy is stated to be ‘reinforced with more specific policies, procedures, training and communications programmes at individual sites as appropriate’. The annual report also describes the existence of operating policies at individual sites. Mention is made of the Responsible Care Supervisory Board, which helps develop strategies for HS&E matters, and monitors compliance, and of the introduction in 1998 of a new Responsible Care Audit system. There is also good evidence that internal auditing has been taking place. Even so a ‘no’ score has been given since there is no attempt to describe the HS&E reporting structure or roles other than that of Peter Abel (Director of Health, Safety, Environment and Quality Affairs).

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Hickson 2 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: there is no mention of the absence or occurrence of any fatality. There is, however, the following statement: ‘almost all reportable accidents continue to be related to slips, sprains and abrasions’, which seems to imply that there were none.


NO YES NO YES YES

Lost time accidents: figures are quoted for injuries that result in more than 3 days’ absence from work (own employees only). There were 17 Reportable Lost Time Accidents (RLTA) compared to 21 in 1994. The frequency quoted is per 100 000 man-hours worked, and this figure has fallen from 0.69 in 1994 to 0.62 in 1998. 1998 was the third successive year without a reportable lost time accident at Hickson DanChem and Hickson Timber Products, and during the year Hickson and Welch passed 500 000 man-hours without an RLTA. Occupational illness: no mention is made of occupational illness or noise-related hearing loss. Transport incidents: these are clearly presented in the report. There were two incidents, both involving the spillage of preservatives or coatings, neither of which caused any hazard to the public. Emergency preparedness: planning for emergencies is stated to be ‘an essential part of our safety management programme’, and reference is made to major exercises carried out at the two largest sites (Danville, USA and Castleford, UK) in 1998.


Hickson 3




Supplier involvement: no mention is made of any discussions with suppliers.


Process design: while product design is mentioned (the award to Hickson Timber Products for a water-based metal-free product) and the report states: ‘We continue to pursue strategies aimed at minimising all waste’, the CER presents no real evidence of a strategy for environmental protection based on process design.

NO NO YES YES YES YES

Recycling: the report specifically mentions both recycling waste to generate heat, and (after reprocessing) as ingredients for industrial use. No examples are given. Environmental expenditure: capital expenditure on environmental improvements has gradually reduced from its peak in 1995 to £1.75m in 1998. This latter figure represents 11.6% of total capital expenditure. It is stated that future expenditure will be maintained at a level to ensure regulatory compliance. No figures have been given for operating expenditure on environmental matters. Prosecutions & fines: the annual report identifies £4.7 million as the ‘ongoing cost of environmental remediation programmes and legal costs incurred on the wood preservative chemical spill’. Both the CER and the annual report describe this spill in Tennessee in 1994, where civil action has recently resulted in an award of $8.4 million against Hickson (under appeal). In the CER details are also given of an unauthorised discharge of surface water at Pasadena, USA resulting in a $16 000 fine. Downside reports: complaints have fallen from the peak of 47 in 1995 to the current level of 7 (N.B. the same as the 1994 figure). Distribution incidents are at their lowest level ever (2 against 6 in 1997). While the way they are presented is ‘upbeat’, a ‘yes’ score is given.

226





Very little information is contained in the report about Hickson’s impact on the environment. No figures are reported for emissions to water or air, although they are given for hazardous waste. Specific mention is made in the report of a new effluent plant under construction at Hickson and Welch (Castleford), and the installation of a sprinkler system with fire–water storage in Italy.


YES YES NO NO YES NO NO

Production volume: a ‘yes’ score has been awarded since volumedependent performance indicators are presented both in tonnes and as a weight ratio to sales volume. Energy usage: energy consumption fell from 1784 million GJ in 1994 to 1386 million GJ in 1998. During the same period the ratio fell from 21.97 GJ/tonne to 11.01 GJ/tonne saleable product. Water consumption: no figures are presented in the report for water consumption. Emissions to water: no figures are given for discharges to water. Emissions to land: the total tonnage of hazardous waste shipped from Hickson’s sites has increased from 9306 tonnes in 1994 to 22 488 tonnes in 1998. During the same period the quantity shipped per tonne of saleable product has increased from 0.114 to 0.179 tonnes. Hickson state that: ‘this does not mean that we are generating larger amounts of waste. It is because the regulations have changed over the same period of time to include more materials as hazardous.’ Emissions to air: no figures are given for any discharges to air. Hickson DanChem is mentioned to be the first site in Virginia to receive a whole-site permit for emission of organic solvents. Greenhouse gases: no figures are given for any discharges of CO2 or any other greenhouse gases. Transport effect: no figures are given for any emissions from distribution operations.


Hickson 5




The CER includes a section titled ‘Responsible Neighbours’, in which initiatives within local communities are described. Although no figures for expenditure are given, a ‘yes’ score has been awarded since the report describes projects such as the initiation of a literacy programme at Castleford.


Triple bottom line

Triple bottom line

The discussion starts to explore the link between social responsibility and environmental issues, but a ‘no’ score has been given because the report fails to make the link with economic performance.

Triple bottom line




Contact address

YES

NO

YES

Peter Abel Director of Health, Safety, Environment and Quality Affairs Hickson International Plc Wheldon Road Castleford West Yorkshire WF10 2JT England Tel: +44 (0) 197 755 6565 Fax: +44 (0) 197 766 8037 Internet: www.hickson.co.uk

228



UK

ICI Ranking by turnover (1 to 35): 5 Business profile

Business profile

In 1999 ICI had a group turnover of £9286 million and employed 60 000 people. Its head office is in London, England, and has manufacturing sites and offices at over 200 locations worldwide. The annual report describes the businesses in more detail and names the manufacturing countries (approximately 50). The company is in the process of changing its product portfolio from bulk chemicals to specialty products. This shift in focus has included the disposal of certain explosives and polymer film businesses, and the acquisition of specialty producers in the areas of adhesives, electronics, personal care and home improvements. Over 10 000 products are manufactured, and they are grouped as:


• • • •

YES YES YES* YES

Speciality Chemicals: adhesives, sealants, food products, pharmaceuticals, fragrances, catalysts and detergents; Coatings: paints and package coatings; Materials: polymers for fabrication, inks, insulation, furniture, footwear; Industrial Chemicals: petrochemical derivatives, halo-chemical derivatives, pigments, explosives.



ICI 1


Company reporting Annual report: copies of the 1999 annual report, 1999 annual review and 1998 CER were received. The annual report includes a section on safety, health and environment in which it discusses SH&E expenditure and liabilities, and refers to ICI’s Responsible Care Management System (RCMS). In the annual review a section on safety, health and environment presents a three-page summary of progress made towards meeting environmental targets, including trend data for key performance indicators. A ‘yes’ score has been awarded since the annual report directs the reader to the website and annual review, and this latter identifies that in 1999, ‘this year, for the first time, ICI’s Safety, Health and Environment Report is published exclusively on our web-site’. Internet CER: the 1996, 1997 and 1998 CERs are issued on the internet in pdf format. The 1999 internet report takes the form of a series of web pages having similar content to the 1998 CER under the title ‘Safety, Health and Environment’.

Title: Annual Report and Accounts and Form 20-F 1999 Page 106 Format A4

Title: Annual Review – 1999 Issue Page 36 Format A4


YES YES YES

Company coverage: although the CER does not name the sites included in the data, a ‘yes’ score has been given for company coverage since: • •

the report identifies that waste and emissions from Crosfield and the retail operations of ICI Paints are not included; the external verifier states ‘these exclusions are unlikely to have a material effect on the trends shown by the ICI Group data’.

230

ICI 2 Current practice in environmental reporting: the chemicals industry


Environmental report The report is clearly indexed and set out. It tracks progress made towards meeting ICI’s SH&E 2000 targets, and features articles on how ICI manage safety, health and environment, and the company’s involvement in community and conservation issues. For the first time the report also includes articles on how ICI views important issues. The subjects covered in this report are climate change, chemical management and endocrine disruption. The CER states that ‘a copy of the report is sent to every shareholder and is distributed to employees world-wide’. Each year: the CER states that this report is ‘the eighth in a series of annual publications’.

Title: Group Safety Health and Environmental Performance Report 1998 Page 28 Format A4



Site coverage: the range of geographical areas reported on suggests an even-handed approach. CEO’s foreword: the CER contains a foreword by Charles Miller Smith (Chairman). Data used: data is presented for 1995 and 1998. The 1995 baseline has been revised in this report to reflect businesses divested in late 1997 and 1998. External verification: an independent report by KPMG is included. The methodology used was that of a review rather than an audit, and monitored compliance with ICI Group, ICI Paints and ICI Specialties SH&E reporting guidelines, based on: • •

interviews with management; inspection of documentation.

No visits to sites, or reviews of procedures for generating data at site level were undertaken. Reply card: a reply card was not received with the CER.


ICI 3




Policy: the stated group policy is: ‘ICI Group will ensure that all its activities world-wide are conducted safely; the health of its employees, its customers and the public will be protected; environmental performance will meet contemporary requirements, and that its operations are run in a manner acceptable to the local communities.’


YES YES NO YES

Objectives: group SH&E targets are set and published every five years. Each business has annual SH&E performance objectives and is required to have an improvement plan. Group targets for the year 2000 are defined in the CER for all key indicators. They are of excellent quality and are clearly reported against. They include the following main environmental targets: • • •

total compliance with local regulations and consents; avoid any loss of containment and prevent any spills; halve the Environmental Burden (EB) in four categories.

Where appropriate these targets will be identified in this analysis as part of the discussion of the performance indicator. No business objectives are specified. EMS: the annual review states ‘that the main process by which ICI manages SHE issues and seeks to meet its objectives is the Responsible Care Management System (RCMS)’. While the RCMS is stated to comply with the US and UK Responsible Care® codes, ISO 14001 and the ICC (International Chamber of Commerce) Business Charter for Sustainable Development, it is not of itself a recognised environmental management system, and therefore a ‘no’ score has been awarded. Procedures/responsibilities: the group defines overall policy, sets standards and objectives, defines procedures and responsibilities and gives advice. In the case of subsidiaries, the board of that company is responsible for defining an SH&E policy that meets local and group requirements. Business units are responsible for providing management guidelines and appropriate systems for ensuring compliance. Each unit or site assesses its own compliance against group standards. Three levels of auditing are carried out (operational, specialist and management). Data is gathered throughout the year and used for internal management reporting and for the CER. Each international CEO and regional business chairman is required to provide the ICI board and ICI audit committee with an annual report that indicates by exception the state of compliance and actions required to address exceptions. Dr Frank Rose is named as ICI Vice-President, Group Safety, Security, Health and Environment. No individuals are named in SH&E roles lower down the organisation.

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ICI 4 Current practice in environmental reporting: the chemicals industry


Health and safety

Health and safety

Fatalities: during 1998 four employees and four contractors died.


Lost time accidents: during 1998 there were 134 serious injuries resulting in the loss of three or more days. This represents a rate of 0.102 per average working life, against the year 2000 target of

Current Practice in Environmental Reporting: The Chemicals Industry

Fine Chemicals: The Industry and the Business

Fine Chemicals: The Industry and the Business

Fine Chemicals: The Industry and the Business

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Organic Chemicals: An Environmental Perspective

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