ENVIRONMENTAL REPORTING: EXPANDING IN QUALITY, QUANTITY AND APPLICATIONS

JFS Newsletter No.5 (January 2003)

In recent years, an increasing number of large and medium-sized companies in Japan have started to issue environmental reports. Some local governments and universities have been reporting too.

There is no official definition for what an environmental report is, but typically one will contain key information for disclosure inside and outside the organization, including executive comments, policies, objectives and plans for environmental conservation, the status of environmental management (environmental management system, legal compliance, development of environmental technologies, etc.), and performance of environmental activities (CO2 emission cuts, decrease in waste generation, etc.). Environmental reports are different from publicity brochures aiming to enhance a corporate or organizational image. Most environmental reports are published on paper, but recently some companies publish only on their websites.

Japanese companies started publishing their environmental reports during the mid-1990s, when many started to obtain ISO 14001 certification. It is noteworthy that non-governmental organizations in this country, such as the Valdez Society and Environmental Auditing Research Group, played an important role at that early stage by disseminating information and enhancing people's awareness of environmental reporting.

The purpose of preparing and publishing environmental reports is to facilitate organizations' voluntary activities for environmental conservation and to promote "environmental communication" with various stakeholders. Recently many people in society are starting to recognize the concept of "accountability," in which organizations are believed to be responsible for disclosing their environmental information.

According to the "Survey of Companies for Environmentally-Friendly Activities" for fiscal 2001 by Japan's Ministry of the Environment, covering 2,644 listed companies and 3,716 unlisted companies with 500 or more employees, the percentage of companies that had disclosed their environmental information to the public was 31.1 percent, an increase of 3.2 percent from the previous year. The figure for the listed companies was 38.9 percent, a 11.4-percent increase over the previous year.
Companies Boost Environmental Activities

The number of companies that issue environmental reports has been on a rise. Among the companies in the above survey, 579 companies (20.0 percent) issued such reports in 2001 and 347 other companies (12.0 percent) said they would issue their reports in the following year. More and more companies are expected to publish their environmental reports in the coming years.

The Ministry of the Environment issued "Environmental Reporting Guidelines, fiscal 2000 version" in February 2001 as a guide for companies in creating environmental reports.

The Guidelines cover the rationale and advantages of publishing environmental reports, potential readers and stakeholders, scope and media, basic requirements and principles, and mechanisms to secure reliability, as well as basic items to be included in reports. Publication of the Guideline has further advanced Japanese companies' initiatives to create and publish environmental reports.

The Ministry also published the Guidelines for Environmental Performance Indicators, one of the key elements of environmental reports.

One of the important aspects of environmental reports is "comparability."

Even though many companies publish environmental reports, if their methodologies and bases for calculation of environmental loads are different, it is difficult for readers to compare or analyze such figures. If environmental performance is reported in accordance with such guidelines, quantitative information can be compared among companies. In this sense, the Guidelines are very important for further enhancement of environmental reports. At present the Guidelines are being revised.

Also, the Ministry of Economy, Trade and Industry has published their own guidelines for environmental reporting.

The Ministry of the Environment, in attempt to increase further the number of companies that issue environmental reports, established a "Committee to examine ways and initiatives for promotion of environmental reporting" with plans to report on their discussions toward the end of fiscal 2002 (i.e., in March 2003).

The Ministry is also trying to raise awareness among readers and users of environmental reporting by setting up a "Database for Environmental Reports."
Environmental Ministry to Release Database on Corporate Environmental Reports

The Global Environmental Information Center (Tokyo), mainly managed by the Ministry of the Environment, has a library of environmental reports. Anyone can drop by and take a look.
http://www.geic.or.jp/

In the previous issue, we introduced the Green Purchasing Network, a unique organization that has promoted and supported Japan's "green procurement" movement . In the field of environmental reporting, on the other hand, we have the Network for Environmental Reporting (NER) in Japan.

NER was established in 1998 by companies, organizations, universities and citizens who were interested in environmental reporting, with an aim of promoting and developing environmental communications through environmental reports. In partnership with various stakeholders, NER has been active in holding study groups and symposiums and exchanging and disseminating information on environmental reporting.

At present, there are two awards for environmental reports in Japan. One is the "Environmental Reporting Award" sponsored by the Global Environmental Forum and supported by the Japanese Ministry of the Environment.

The "Environmental Reporting Award" was started in 1997 with the objectives of promoting environmental communication through disclosure of environmental information and promoting proactive initiatives of companies by awarding excellent environmental reports.

Of 293 entries for the "Environmental Reporting Award" in fiscal 2002, 28 reports received an award. The Grand Prix was awarded to Matsushita (Panasonic) for its Environmental Sustainability Report 2002.
http://panasonic.co.jp/eco/

Two among the 11 reports that received the Award for Excellence were: Asahi Breweries' Eco Report 2002

SOMPO Japan's Sustainability Report 2002

The other award system is the "Green Reporting Award," co-sponsored by Green Reporting Forum and publisher Toyo Keizai Inc.

In 2002, the Green Reporting Award Grand Prix was awarded to Seiyu (a department store chain).

The main audiences for corporate environmental reports are customers, shareholders, investors, employees and local residents. An increasing number of companies have started to issue "site reports," published by factories and business units focusing on their surrounding communities. Such site reports are prepared to meet a community's concern for the local environment. Sony, NEC and other companies have been promoting such initiatives for years.

In addition, there are other unique environmental reporting initiatives in Japan. For example, the Toshiba Corporate Research and Development Center issues environmental reports for children.

Waseda University issues environmental reports, one example of environmental reports published by non-company organizations.

The Tokyo Metropolitan Government's Bureau of Waterworks also issues environmental reports.

As one interesting initiative, the Tokyo Metropolitan Government has prepared a framework for "Mini Environmental Reports," focusing on chemical substances, and invites small and medium enterprises (SMEs), shopping malls and groups of small companies to publish their own "mini" environmental reports.

Increasingly, environmental reports have become important as more people turn their attention to "eco funds" and socially responsible investment (SRI). Environmental reports are the main information sources for the screening of SRI funds, corporate ratings and evaluations.

Many companies use their environmental reports as textbook for their employees in environmental education classes. In another example, NEC co-organized a "Meeting to Read the NEC Fuchu Environmental Report" with the City of Fuchu, in cooperation with the Tokyo Metropolitan Government. This meeting aimed at promoting dialogue with the community, using the environmental report as a platform.

Interestingly, some companies in different sectors co-sponsor "Meetings to Read Environmental Reports" with an aim of promoting candid exchanges of opinion.

Suntory (beverage company) and Matsushita (Panasonic) held such a joint meeting in December 2001 for the first time. Employees from both companies in charge of preparing environmental reports explained their respective reports and obtained input from various stakeholders. In 2002, Toyota, Ricoh, Epson and other companies also held such meetings.

Sompo Japan (an insurance company) and Nissan (a automobile manufacturer) plan to hold a joint workshop in February 2003 to discuss their environmental reports with various stakeholders. They expect to hear candid opinions on their reports by comparing sustainability reports 66rom manufacturing and non-manufacturing sectors.

Not only the quantity and use but also the orientation of environmental reports has been drastically changing. In the past one to two years, in particular, a trend toward "sustainability reporting" has been clearly evident. Sustainability Reports define corporate sustainability, including not only environmental aspects, but also economic and social aspects, and communicate them to stakeholders.

According to a survey conducted by NER in June 2002, a third of respondent companies said they already issued sustainability reports and another quarter of companies surveyed said they were planning or considering issuing such reports instead of environmental reports.

In the fall of 2002, the GRI Japan Forum was established, aiming to disseminate Global Reporting Initiative Guidelines in Japan and to send proposals and inputs from Japan to the international GRI organization.

As you can see, there is now a very active movement in the field of environmental reports in Japan. Japan for Sustainability will keep you updated with new developments and initiatives in this field.

The majority of large companies have started to publish English versions of their environmental reports. JFS is now working to create a page of links on our website for visitors to obtain English versions of environmental (sustainability) reports of Japanese companies. We will let you know when it is ready.