The British Library was today host to the ACCA UK awards for Sustainability Reporting, where eleven organisations were rewarded for reporting on the social and environmental impacts of their activities. NHS Purchasing & Supply, the Co-operative Bank plc and Royal Mail Group plc were among the winners.
The Awards ¿ for Environmental, Social and Sustainability (both social and environmental) Reporting – were presented by Elliot Morley MP, Minister for Environment and Agri-Environment, DEFRA. All report entries were judged by an expert panel including DEFRA and DTI officials, auditors and academics.
First speaker was Rosemary Radcliffe CBE, Chair of the Operating and Financial Review (OFR) Working Group – which has presented its findings and recommendations on what information should be included in companies’ new OFRs. Radcliffe outlined the implications of the OFR for companies¿ annual reports and accounts, and the future role of stand-alone environmental and sustainability reporting. She expressed her view that preparers of OFRs will face a ¿formidable test¿ when trying to argue that matters including employment policies and environmental matters are not relevant to their business strategy and risks. Radcliffe also revealed that the draft regulations for mandatory OFRs will be out for consultation next month.
Also speaking at the ceremony, Baroness Barbara Young, Chief Executive, Environment Agency, discussed the importance of environmental reporting and transparency to UK business. As well as calling for higher fines for corporate environmental crimes – stating that many businesses write off such fines as a ¿normal business expense¿ – Young also chose the event to reveal preliminary results of new Environment Agency research to establish the extent and quality of environmental disclosures in the annual reports and accounts of the 570 companies in the FTSE All-Share Index. Key findings include that although 85% of companies made at least one reference to the environment, less than 5% of the disclosures were in the audited sections of the report and accounts ¿ the majority instead being ¿pigeon-holed¿ in a separate CSR section, with little or no cross reference to the discussion on business risks in the operating and financial reviews.
Baroness Young also ¿named and shamed¿ William Morrison supermarket chain, which, despite being in the FTSE 100, makes no reference to environmental issues, nor produces a separate environmental report ¿ unlike 95% of the FTSE 100. Baroness Young commented: ¿The overall picture now is one of lack of consistency and comparability in environmental disclosures across the FTSE all share index companies ¿ it is no wonder city analysts find green issues difficult to factor into their advice to investors¿.
Young, like ACCA, expressed concern that not only do current OFR proposals fail to make disclosure of environmental impacts and performance compulsory, but also that environmental disclosures will be reliant on an assessment of their materiality ¿taken in good faith and honest judgement¿ by individual Directors. There are, however, no incentives to ensure honesty and good faith and no sanctions to help prevent dishonesty and bad faith.
Andrew Harding, Executive Director ¿ ACCA UK, said: "ACCA is pleased to have received so many strong entries for this year¿s UK Awards which recognise that sustainability reporting helps all stakeholders to gauge non-financial risk and identify poor performance. If used properly, non-financial reporting also helps organisations to control weaknesses and minimise the risk of ethical misconduct. There is, however, a long way to go. Many more organisations should be reporting in this way and those that do still have room for improvement.
¿For example, the Awards judges¿ report highlighted that many more sustainability reports should disclose the lobbying positions taken by organisations on key public policy issues. Such disclosures demonstrate the level of internal commitment to sustainable development values and principles.¿