From the onset it was important to highlight the distinction between environmental reporting and corporate environmental reports (CERs) as one form of environmental reporting. Mandatory environmental reporting existed for sometime. An example of this is the USA Toxic Release Inventory (TRI). Currently, most CERs are the result of voluntary disclosure, and in the case of EMAS, companies are required to prepare an environmental statement annually, which should be designed for the public. However mandatory schemes to regulate and encourage the disclosure of environmental information along the lines of CERs and EMAS environmental statement are rare.
In Europe, countries among them Denmark and The Netherlands have recently introduced mandatory reporting requirements for both the public and the government. Few others are introducing demands on companies to disclose selected environmental information in annual reports, stimulated by the recent European Commission’s recommendations of 30 May 2001 to member states to take appropriate action to promote the disclosure of environmental issues in the annual accounts and annual reports of companies.
Four schemes -the Danish, Dutch, Norwegian and Swedish – were selected for review. They do not necessarily represent schemes for mandatory CERs but have various elements of a CERs framework; mostly designed to improve public access to corporate environmental information.
The schemes are analysed from a number of perspectives including the legal framework, administration and enforcement, scope, verification and audit requirements, and rules on content. The conclusions that can be drawn from this analysis are limited to the design of the schemes. There is little that can be said about the efficiency or effectiveness of these schemes within the scope of this report. However it would be interesting to evaluate the schemes on economic efficiency and effectiveness.
We notice significant variation among the four schemes in the legal approach taken to institute mandatory requirements for environmental reporting. This variation in approach signals different objectives in terms of the content and target companies, and subsequently it impacts the administration and enforcement of the schemes.
The target companies in nearly all schemes are those subject to environmental permitting process or fall under activities covered by national environmental laws. The only exception to this is the Norwegian scheme, which requires all companies to report on environmental issues in the annual accounts. The law in The Netherlands restricted the obligation to companies in sectors and of a size that have the largest environmental impact (around 250 companies).
All schemes seem to set rules on content. Some are more detailed than others. On a generic level the categories of disclosure covers both a management statement, and quantitative data on emissions and waste. Some schemes do require information about environmental impacts of products, e.g. the Danish and Norwegian schemes. Regarding verification, schemes set under the environmental law framework (Danish and Dutch) stipulate the need for verification but fall short from implementing this obligation.
Overall it is difficult to conclude about the effectiveness and efficiency of these schemes. This requires examining the schemes in terms of stated objectives and realized ones. A relevant question in this context is whether any of these schemes represent the most efficient choice to create the desired changes in corporate environmental behaviour or improve public access to environmental information.
The action for increasing the number of reporting companies and improving the quality of reports perhaps rests not on direct regulation only but also on indirect and demand stimulatory measures. An illustration of this is the recent changes in pension fund regulations in many European countries. These changes require pension fund managers to declare to what extend they consider environmental and social issues in their investment decisions. This is expected to increase the pressure on companies to improve their environmental disclosure practices through demand pressure.
In our conclusion about corporate public environmental reporting and the regulatory scene in Europe, we support the cautionary remark by (Skillius & Wennberg, 1998) about the danger of patchwork of unrelated national regulations that would force for example multinationals to develop data-gathering structures for their mandatory national and voluntary corporate environmental reporting. This would be very costly and probably also inefficient. One way to avoid this is for national governments and businesses to support international efforts on global standards such as the Global Reporting Initiative (GRI).