Green Reporting

Environmental reporting is becoming more and more common in business. According to a study by the Institute for Environmental Management and the accounting firm KPMG, 35 % of the world’s 250 largest corporations now issue environmental reports. That represents a remarkable change from just a decade ago, when it was hard to find any companies providing detailed data on their environmental performance to the public. Companies are voluntarily embracing “green” reporting because it makes good business sense. Not only does public reporting push companies to be more disciplined about their environmental performance, which, in turn, reduces their environmental risk, it also creates positive PR. Good green reporting can serve as a differentiator in the war for talent—people like working for socially responsible companies—and it can make a company more attractive to customers and investors as well. Moreover, because green reporting puts all business practices under scrutiny, it often helps managers identify cost savings and even new business opportunities. But since environmental reporting is so new, many companies have struggled to get started. They have had to build their reporting processes from scratch, without proven models to guide them. Fortunately, that’s changing. The Global Reporting Initiative, sponsored by the Coalition for Environmentally Responsible Economies (CERES), has published structured but flexible guidelines that promise to bring some much-needed efficiency and consistency to the green-reporting process. (See www.globalreporting.org.) Bristol-Myers Squibb, the health and personal-care products giant, has adopted the guidelines as the basis for its most recent environmental report, with excellent results. (See www.bms.com/ehs.) Its clearly structured report, updated frequently and posted for all to see on its corporate Web site, contains profiles of the company’s worldwide facilities, summaries of its environmental policies and systems, a discussion of relevant stakeholder relationships, reviews of product and operations performance, and an overview of the environmental sustainability of its business. It’s chock full of information—everything from the company’s packaging guidelines to its levels of water use over time. Much more than a collection of dry data, the report gives readers a sense of the seriousness with which the company pursues its environmental goals. Royal Dutch/Shell has also developed first-class reporting procedures but in a very different way. Since 1997, Royal Dutch/Shell has submitted all its environmental reports to external auditors for verification, on the theory that stakeholders are no longer content to take the company’s word for its environmental record. The company has put a lot of time and money into developing verification methods and internal systems for collecting reliable data, and the investments have paid off. The rigorousness of Royal Dutch/Shell’s reporting process and the reliability of its reports have made the company a leader in the world of green reporting. Stakeholders who once were critical of the company now hail it as a trendsetter, and even as a partner, on the road to sustainable development. (See www.shell.com/shellreport.) Bristol-Myers Squibb and Royal Dutch/Shell have taken different paths to building their environmental-reporting capabilities, but they have two vital things in common. They both take green reporting very seriously, devoting substantial resources to doing it well. And they are both reaping important business benefits as a result. Other companies would do well to study their examples.

Green Reporting

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