The first corporate environmental reports appeared only a decade ago but, like so many other things in this field, they have evolved steadily. Both the quantity and quality of today's reports have improved significantly. Hundreds of companies now publish annual environmental reports.
What sets the current crop of reports apart from their predecessors is their growing sophistication in both form and content. While the earliest versions were akin to glossy celebrations of a company's environmental commitment, the newest ones offer far more substance. So carefully researched and targeted are these efforts that some companies have opted for several versions: print, video, and online.
Getting to this level of sophistication is no small task. For that matter, neither is the entire reporting process, which can be time-consuming and expensive. Perhaps that's why most such reports still come from the largest companies; the price may be perceived as too high and the benefits too low for many mid-sized and smaller firms, as well as for bigger ones in the least-polluting sectors. Even executives from some large "dirty" companies privately question whether issuing environmental reports is worth the time and trouble to reach what seems to be a handful of activists and investors.
Shortening the learning curve may help these executives profit from the self-knowledge and insight a well-constructed environmental report can bring. Indeed, the greatest beneficiaries of these efforts may be within the company.
Where to find help? How to avoid reinventing the wheel? There are a handful of organizations and publications that offer assistance, but there's nothing like the hard-earned wisdom of real-life companies. We've combed reports and talked to a wide range of veterans to find the key ingredients of the most successful efforts.
And while we garnered dozens of suggestions, tips, and advice along the way, we've boiled it down to a half-dozen key steps:
1. Determine whether you need an environmental report.
This may seem obvious, but it isn't. Some companies face more environmental issues than others. Those in the retail, financial, and service sectors generally deal with a minimum of waste streams -- and relatively few public and regulatory pressures. It may be that a freestanding environmental report is not the best means for such firms to reach their target audiences.
Before undertaking a full-fledged report, "Make sure that significant outside groups are truly concerned with your environmental performance," says John Willson, vice president of environmental, health, and safety consulting at Arthur D. Little.
At German-owned BASF, for example, executives decided against issuing an environmental report in the U.S. even though their parent company issued one in Germany. Instead, environmental information is disseminated to employees and local community leaders via a company newsletter.
Smaller companies may have other options. "I firmly believe that these reports are not something that everyone needs to do," says Eastman Kodak's Maria Bober Rasmussen, who chairs a reporting committee for the Global Environmental Management Initiative. "If you have 50 employees, why not just have a meeting and talk to everyone face to face? Or if you are located in a small community, why not give a tour of your plant and explain your initiatives, rather than mail a report? If shareholders are your principal target, think about adding a chapter to your regular annual report."
2. Target your audiences and their information needs.
Clearly, this will also help you determine the format, including whether the stand-alone report even makes sense. What audiences are you most interested in reaching? List the key messages you'd like to communicate to each audience.
Even better is to do some market research. Chevron conducted a survey of employees who work with external groups, from the public-affairs folks to lobbyists. "We asked them, 'What are the people you deal with most interested in? What questions are you asked most often?' " says Ed Spaulding, project manager in the Environmental Policy Development Group.
Each group has its own informational needs:
- Employees want to know about job safety and job security, and they want to have pride in their employer's environmental efforts.
- Investors want to know how environmental initiatives will affect financial performance, both in the short term and long term. They want to see how investments in waste-minimization will reduce costs and risks. Usually, they would prefer to know bad news now than be surprised later on.
- Community members want to know the health effects of operations outside company walls and what companies are "giving back" to local communities, in the form of donations, volunteer efforts, and other support.
- Customers want to know about overall environmental commitment and how it may affect product quality, cost, and safety.
- Activists want specific, quantitative analyses of environmental performance -- and acknowledgment of environmental issues yet to be addressed.
- Government agencies may want to know about regulatory compliance.
- Suppliers want to know how environmental policies may affect purchases.
And there are other audiences -- including the media -- whose concerns echo those of community members, activists, and investors.
3. Consider the format.
Not all of these groups need be addressed -- at least not by a single document. And that raises another key issue: Would several, targeted reports be more effective than an all-purpose one?
So far, most companies have opted for the all-in-one approach. But Kodak's reporting has evolved into three communications: a full-blown, 25-page annual environmental, health, and safety report that includes performance data; a shorter version, comprised of the first eight pages of the larger report, that discusses the people and projects behind Kodak's EH&S efforts in broad terms; and a simple black-and-white newsletter targeted to the community around its Rochester, N.Y., headquarters. The company is one of several that has plans to put its report on the Web.
Creating separate reports for different audiences need not be complex or expensive. Northern Telecom Vice President Elizabeth Rose found a cost-effective means of creating separate reports for its foreign-based employees. The 1994 progress report includes a pocket into which translated versions of the text can be inserted. "I couldn't afford to do six different editions, but a lot of our employees in different geographies would like it in their own language," she says, "so this is my solution."
4. Study what others have done.
This level of complexity does not happen overnight. For first-timers, a single report probably will be enough of a challenge.
Still, size, scope, and format are key considerations. Should it be a colorful, glossy work of art, or a just-the-facts kind of thing? Should it be long and exhaustive, or short and to the point? Perhaps most important: What information should you impart? Help with that question may come from examining the rich lode of reports already published, as well as from reporting guidelines:
- CERES, the Coalition of Environmentally Responsible Economies, has created its own reporting standard for companies that have endorsed CERES principles. Among the companies that have produced CERES-based environmental reports are Bethlehem Steel, Ford Motor Company, General Motors, Polaroid, and the Sun Company.
- GEMI, whose members principally represent large manufacturers, has published a useful primer called "Environmental Reporting in a Total Quality Management Framework," which links the TQM continuous-improvement cycle ("Plan-Do-Check-Act") to internal measurement and reporting of environment performance. However, GEMI doesn't recommend any specific format for environmental reports.
- PERI, the Public Environmental Reporting Initiative, was created by an ad-hoc group -- including Amoco, Dow, DuPont, IBM, Northern Telecom, Polaroid, and United Technologies -- with the aim of standardizing reports. It lays forth what its drafters call 10 "core components" of a comprehensive report.
Keep in mind that these are merely guidelines, not rigid road maps, for designing a format. Chances are you will want to create your own format, perhaps pulling bits and pieces from the above organizations as appropriate.
Perhaps the best strategy for deciding on format is to look at as many existing reports as possible. Make lists of things you like and don't like, from their size and scope to the various devices used to impart information. Chevron's Ed Spaulding says he looked at more than 100 reports from other companies, noting the worthy components of each.
5. Gather and crunch the data.
The real benefit of producing an environmental report is not to disclose information but to help your company measure and analyze its own performance.
This is the hard part, of course: prodding managers and department heads for data; using that data to measure, track, and analyze trends in environmental performance; and persuading the powers that be to disclose data that previously had been proprietary.
One of the better efforts in this regard comes from Novo Nordisk, the Danish biotech company. In addition to tracking consumption of raw materials, energy, and water, for example, it offers an "eco-productivity index," balancing materials used against goods produced. (Copies are available from Novo Nordisk of North America; fax requests to: 212-986-6499.)
Another exemplary effort comes from Monsanto. It's environmental report combines simple pie charts and bar graphs with more extensive tables showing worldwide releases of toxic emissions by plant and by chemical. (To obtain a copy, call 314-694-2915, or fax a request to 314-694-6572.)
Still another innovative report comes from Baxter Healthcare Corp. It presents most of its data in a graphic, four-page foldout in the middle of its 32-page report. Baxter is also one of the few to effectively present environmental data in financial terms, including the detailed costs of compliance, the savings or cost avoidance from environmental initiatives, and the opportunity for additional savings from future environmental efforts. (To obtain a copy, call 708-948-4953, or fax a request to 708-948-3660.)
The effort, done well, is usually worth it. "The commitment to do these reports has pushed us to gather data we didn't before," says Leah Haygood of WMX Technologies. That data has helped the company make efficiency improvements, she says. Haygood adds that making the data understandable takes work: "Measuring environmental performance is not easy to do, but that is an important part of being able to manage programs."
6. Elicit feedback.
There was unanimity on this issue among those we interviewed: Give readers a means to ask questions, provide comments, or request additional copies of your report. Postage-paid reply cards are the most common device. Toll-free numbers, electronic bulletin boards, and old-fashioned suggestion boxes are other tried-and-true methods of spurring responses.
Sometimes creativity is in order. WMX, disappointed with its reader response, now offers to make a donation to an environmental group for each response card received.
Whatever the means of response, the idea is to make your environmental report an exercise in continuous improvement -- using all available resources to improve each new edition, and each new edition to improve your use of all available resources.