Institutes concerned over environmental reporting

DEFRA’s new consultation document for reporting environmental KPIs in annual
reports has been met with caution by the accounting institutes.

The document, produced by DEFRA, intends to help companies manage and report
on their impact on the environment through KPIs, however, both ACCA and ICAEW
have warned about the document’s potential impact upon listed companies.

ICAEW head of financial reporting Nigel Sleigh-Johnson was concerned that the
lengthy document, weighing in at 68 pages, must avoid being viewed as
prescriptive, and remains a guide in its final guise.

‘There are a lot of issues in here for companies to consider, and there could
be room for confusion, even if it’s not mandatory,’ he said.

ACCA executive director-technical Roger Adams expressed fears that the KPIs
suggested are only environmental in nature and do not reflect the full range of
non-financial disclosures that the newly-implemented Operating and Financial
Review will require listed companies to disclose upon.

‘There is a risk that companies may become confused by the new guidance,’
said Adams. ‘The final version of the document should clearly explain to
preparers any significant differences between DEFRA’s new recommendations and
the environmental indicators already recommended in the sustainability reporting
guidelines issued in 2002 by the Global Reporting Initiative.

‘Additionally, KPIs – while useful for quantitative analytic purposes – are
not in themselves substitutes for an intelligent and informed discussion of
business and reputational risk, sustainability strategy and related stakeholder
concerns.’

KPIs have been mapped out for over 50 business sectors, identifying the most
significant direct and indirect environmental impacts of specific sector
activity and industrial processes.

The consultation will end on 19 September.

The consultation paper and an online response form are available at:
www.defra.gov.uk/corporate/consult