The Debate: Behind the corporate greenwash.

Behind the corporate greenwash, by Tony Juniper

The writing on the wall is clear: human rights, poverty, environment and democracy are issues of central importance to business. And corporate environmental and social reporting has thus become fashionable – at least among companies that can read.

No longer is it sufficient to equip shareholders with financial details – a wide range of other stakeholders from local communities to ethical investors and campaign groups increasingly demand non-financial information too. Those companies most obviously challenged have responded fastest.

Bad press, demonstrations and consumer boycotts are generally enough to convince managers that they should act. The environmental and social report is an early and predictable response.

But are the reports any good, and what should they seek to do? Some are reasonably honest, others thinly veiled attempts at corporate greenwash.

But most miss the main point. The environmental and social costs of business performance are not simply issues to be traded off against the legitimate pursuit of profit.

The creation of wealth should rather be integrated with long term sustainable development so that all three aims (environmental protection, social benefit and wealth creation) are achieved simultaneously. This is not the case right now. For example, take the case of BP. The UK’s largest company and seen widely – with some justification – as an environmental leader in the fossil fuel sector. BP publishes extensive and detailed reports and has set targets, but it is still involved in the development of new oil and gas fields on all continents.

These new energy supplies will generate further climate change causing immense damage to the environment and society. Its investment in clean energy technologies is welcome, but by contrast to the resources spent on polluting fuels, paltry.

By all means report – but take a full global view of the impacts and recognise the scale of the challenge. Simply reporting that the profits of the company must be ‘balanced’ against the inevitable costs to the planet’s ecological security is not good enough. Such thinking cuts no ice.

Embracing sustainable development as a core business aim on the other hand, with reports used as a tool for change is quite a different matter.

In this respect, the environmental and social report is but a first step on a long road that leads to radical transformations in how businesses meet their responsibilities to the rest of the world.

• Tony Juniper is the director designate at Friends of the Earth.

  Sustaining responsible growth, says Graham Ward.

  The UK’s energy and utilities companies take sustainability, social and environmental issues very seriously indeed. The reasons are straightforward and were explained at a recent meeting of the British Energy Association, the UK member of the World Energy Council.

  The advantages of sustainable development and of transparent communications were summarised as: reduction of costs through eco-efficiency, reduction of risk, enhancement of reputation, attraction of loyal customers and attraction, retention and motivation of talented employees.

  Positive business action is being taken by energy companies both individually and collectively. For example, the Business Council for Sustainable Energy UK, is moving ahead on overcoming planning obstacles to sustainable energy production, emissions trading and energy efficiency. Individual companies are improving their performance on, inter-alia, waste, emissions, health and safety at work and business ethics.

  Unsung virtues, however, will not bring the best business benefits. Singing the wrong tune and publishing greenwash invites scepticism. What is needed is hard edged information on how a company deals with the issues and clear communication of the results. In October 2001, the ABI published guidelines for reporting on social, environmental and ethical concerns.

  They ask that management to define clear policy commitments and a governance structure; conduct systematic Corporate Social Responsibility risk assessment; identify significant CSR risks; integrate CSR with business management processes; implement effective CSR management systems; review performance and deliver public disclosure. The key principle underlying these guidelines is that CSR should be part of day-to-day activity throughout the business.

  This month sees a new draft of the sustainability reporting guidelines of the strongly supported global reporting initiative. These are intended to assist in presenting a true and fair picture of economic, environmental and social performance and to promote comparability of sustainability reports.

  Is it worth it? To quote from the BEA meeting, ‘sustainable development and transparent reporting lead to stakeholder assurance, trust and confidence together with better management and improved performance’.

• Graham Ward is chairman of the British Energy Association.