How green is my company?

The environmentally friendly accountant is here to stay
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The Independent Online
The growth in interest in corporate environmental accountability seems to parallel the interest that has been shown in corporate governance. Largely unknown at the beginning of the decade, voluntary corporate environmental reporting has progressed considerably in a short space of time to the point where, according to a recent KPMG international survey, three out of four large companies mention environmental issues in the annual report to shareholders, and one in four now issues a separate environmental performance report.

In addition, since the end of April, some 800 companies in Europe have registered under the EC Eco Management and Audit Scheme, or Emas.

The Association of Certified and Corporate Accountants (Acca) has its own Environmental Award scheme, which began in 1991 with the purpose of identifying and rewarding innovative examples of corporate environmental reporting. The success of the UK awards and the growing international recognition of the importance of environmental reporting culminated, in 1996, with Acca and the equivalent bodies in the Netherlands and Denmark, Royal Nivra and the FSR agreeing to join forces on a European award scheme.

In the UK, Denmark and the Netherlands, the number of companies entering for their countries' awards has steadily increased. Similar schemes now operate in Canada, South Africa and New Zealand. It is hoped that schemes in Sweden and Norway will be drawn into the joint European award by next year.

If not yet completely come of age, then environmental reporting is surely well and truly into its adolescence.

Most organisations make an impact on the environment and it is important that they should be trying to assess and reduce that impact, and move away from unsustainability. The accountancy profession can and should try to help.

Environmental compliance is expensive and many companies may see only the costs and not the many financial benefits which flow from being a good environmental citizen.

Those benefits include, but are not limited to, recycling revenues, reduced costs through waste reduction, avoided penalties and taxes (such as the UK landfill tax), enhanced profits through eco-efficiency achievements, new revenue streams through access to new markets, reduced insurance costs and lower borrowing costs.

Financial accountants are well qualified to help companies begin to quantify and report the financial consequences of improved environmental performance. The financial auditing profession is ideally placed to assist in the development of the environmental auditing and verification methodologies which will enhance the level of assurance which users can draw from audited environmental statements.

I think it is significant that it is the accountancy profession in Europe and North America which has led the way in encouraging and developing the practice of corporate environmental reporting.

Acca, Royal Nivra and the FSR have each been active, both on their own account and collectively through the Environmental Task Force of the European Federation of Accountants (FEE), in raising the environmental awareness of accountants.

As far as my association is concerned, however, presenting awards for good practice is only part of our work to further the environmental cause. Acca has just published "A Guide to Environment and Energy Reporting". The publication is a review of current best practice, and is an essential reference text for those approaching environmental reporting and accounting for the first time.

In addition to our research into environmental issues, we are also planning to green the Acca syllabus to make sure that environmental issues play a significant part in the education and training of all Chartered Certified Accountants. Acca is also looking at the area of social and ethical reporting, accounting and auditing.

Corporate governance is a broad canvas which is only partly coloured in at present. With the report of the Cadbury Committee, the accountancy profession in the UK has contributed significantly to the development of a framework for reporting on the financial aspects of corporate governance. The accountancy profession has also been influential in the development of environmental reporting techniques.

Social and ethical issues represent the third element of what John Elkington calls the "triple bottom line" - an overall corporate accountability that is expressed in financial, environmental and social terms.

Working with the newly established Institute for Social and Ethical AccountAbility, Acca hopes to develop a new guidance framework on social and ethical accounting, auditing and reporting - a framework which will complete the corporate governance canvas and which will be highly relevant, both for the new millennium and to the drive towards sustainability in its broadest sensen

Roger Adams is Acca's technical and research head.