The environmentally-responsible company

In its consultation paper on sustainable business, the Government actively promotes a business approach to sustainable development based on the concept of eco-efficiency.¹³ As an illustration of how the concept can work, it cites the example of flooring company Interface, which now offers what it calls an "evergreen lease" to its commercial customers. Installing carpet squares instead of traditional rolls in clients' offices, allows it to rotate squares to ensure more even wear and replace those in heavy traffic areas more frequently. Customers pay a monthly fee that guarantees them clean, tidy carpets at all times, while Interface reduces resource use and minimises waste.

CORPORATE RESPONSE

Businesses that do not embrace sustainable development will, by definition, not only fail in the long-term, as they consume all the available resources, but adverse media attention, pressure group activities, consumer preferences and the growing interest in ethical investment will eventually marginalise them. Certainly, the example of Shell is a salutary one. Many companies, particularly those where environmental risks are always present, learned from the experience of Shell. Through the 1990s we have seen an increasing number of organisations begin to take a closer look at the risks and responsibilities they face.

Management Review's research confirms that corporate policies on the environment are becoming common, but are largely a development of this decade. We find that 81% of our surveyed organisations have written policies on environmental issues although, as we explore below, the scope of these varies widely. Almost half these policies were developed within the last three years and all but four are products of the 1990s (see figure 5.3 ). The first policy developed was in 1978 by a major pharmaceuticals company.

Environmental policies

As we have seen, most companies now have some sort of policy on the environment. But how much detail these policies include, and what objectives they set, vary widely. Management Review's own research finds that almost all policies cover energy use, recycling and emissions but fewer deal with sourcing materials and labelling products (see figure 5.3 ). Details of the areas covered by corporate environmental policies are shown in figure 5.4 .

Figure 5.3: Environment policies in surveyed organisations

Figure 5.4: Issues covered by corporate environmental policies

n = 29

Apart from these issues, one of the most interesting aspects of written environmental policies is the extent to which their objectives are incorporated as part of everyday management tasks and responsibilities, rather than being a separate, additional feature of the business.

Pressures behind the policies

Organisations in our own survey most commonly claim that it is their own sense of corporate responsibility that has influenced their decision to develop an environmental policy (see figure 5.5). But the pressure of public opinion, expressed through the behaviours and attitudes of customers, employees, shareholders and environmental activists, has played an important part in establishing the idea that organisations have a moral responsibility for the environment.

Figure 5.5: Influences on decision to develop an environmental policy

n = 31

We find that only a minority of organisations admit that the most vocal force for change, environmental activists, have been a significant influence on corporate policy - only just over a quarter of the respondents to this question recognise these lobbyists as a factor in developing their environmental policies.

Nevertheless, such activists have played a significant role in drawing attention to the environmental records of corporations and have influenced the views of customers and employees. For example, Greenpeace's occupation of Shell's Brent Spar oil storage platform became headline news and led to a consumer boycott of Shell's petrol stations in Germany, resulting in an estimated 30% drop in service-station income.¹⁴ Our research shows, however, that companies are much more sensitive to the views of their customers and employees than to environmental activists, with four in 10 respondents taking their views into account in developing their environmental policies.

Management Review also finds, however, that only 28% of the organisations have taken account of the views of shareholders and other potential investors in formulating their policies - the same proportion as have been influenced by environmental activists. It seems likely, though, that this reflects the fact that investors are still much more concerned about companies' financial performance than their environmental records. This finding suggests that the perceived trend towards ethical investment strategies has yet to exert a major influence on corporate policies.

Significantly, legal and regulatory issues are the second most commonly-cited influence on the organisations in our survey, playing a part in the development of environmental policies in almost two-thirds of the organisations in our survey. This shows that government and the European Union can play a particularly important role in influencing the policies and behaviour of companies. A recent example is the new draft Directive on emissions of volatile organic compounds due to be formally adopted by the EU Council of Environment Ministers by the end of 1998. It is estimated that this Directive, which aims to cut emissions of the chemicals that can lead to summer "smogs" by 67% by 2007, will affect over 400,000 companies in the EU in a wide range of manufacturing industries.¹⁵

Setting targets

Environmental targets are a key step on the path to a genuine claim to corporate environmental responsibility. According to employers' group Business in the Environment (BiE), such targets "help make a company's commitment to environmental improvement visible and focus attention on reducing measurable environmental impact."¹⁶ BiE's regular surveys have found that organisations that set targets are clustered in the high-risk sectors, such as utilities, oil, gas, chemical and minerals, and engineering.¹⁷ In 1997, BiE found that more than 70% of FTSE 100 respondents to its survey set environmental targets.

Among organisations surveyed by Management Review, an impressive 79% set targets for progress on environmental issues, reflecting the high level of environmental awareness within our sample. One example of target setting comes from BAA. It publishes key performance indicators on detailed aspects of noise, water quality, energy and water consumption, waste, CFCs and HFCs, health and safety management and accidents for each of its airports, and in summary form for the organisation as a whole. Figure 5.6 shows the summary version from its community and environment report which compares its 1997/98 performance with the previous year.

Figure 5.6: Summary of key environment performance indicators at BAA

Data

The data for key performance indicators has been compiled across the seven group airports operated by BAA in the UK with the exception of noise infringements. These represent the best information available at time of publication and include estimates of performance where verified data are not available.

Data for 1996/97 reported last year has been amended following verification.

Source: BAA

REPORTING ON THE ENVIRONMENT

Overall, two-thirds (69%) of the respondents in our survey produce a regular report detailing the organisation's record on the environment but, of these, only two-thirds are available to the public. Our survey sample contains a preponderance of environmentally-aware organisations and, in the generality of UK business, separate environmental reports are still relatively uncommon. Our analysis of the annual reports of the FTSE 100 finds that even among these large companies, only a quarter publish a separate report. More frequently, however, information on environmental performance is published in companies' annual reports and accounts. Our analysis finds that 83% of the FTSE 100 include some sort of environmental statement in their annual report, although some of these contain minimal detail. British Sky Broadcasting's, for example, states only that:

"The group recognises the importance of environmental responsibility. The nature of its activities have a minimal effect on the environment but where they do the group acts responsibly and is aware of its obligation at all times."¹⁸

Such bland statements do little to inform stakeholders of the steps that the company is taking to deal with the environmental issues it faces. In contrast, growing numbers of organisations are publishing much more detailed information on their environmental records. Blue Circle, for example, first published its new environmental policy in its 1996 annual report and accounts. In its 1997 accounts, it gives details of progress against all of its eight policy commitments and summarises its plans for the future.¹⁹

A summary of our analysis of the FTSE 100 reports by sector is given in figure 5.7. It shows that in some sectors, environmental reporting, whether through separate reports or within the annual report, has become universal for large organisations.

Figure 5.7: Environmental reporting practices in FTSE 100, summary by sector

In its survey of environmental reporting, accountants KPMG outlined the four main benefits that companies gain from reporting on their environmental performance in annual or separate environmental reports:²⁰

As KPMG pointed out in its survey, whether companies choose to provide environmental information in the annual report or in a separate document depends on the intended audience and on why the company wants to report. The annual report is the principle company information source for shareholders and potential investors and a suitable place to publish information about environmental risks, costs and progress towards targets. Employees and customers can be daunted by the annual report and accounts and they may be better reached through a separate publication which focuses more directly on their interests and presents the information in a less intimidating format. Good use of graphics and selected case studies, presented alongside technical data on emissions and targets, can make environmental reports attractive to a much wider audience.

Benchmarking

The trend towards more detailed environmental reporting has been encouraged by the publication of benchmarking studies such as the BiE Index of Corporate Environmental Engagement, the Engaging Stakeholders series published by consultancy SustainAbility in conjunction with the United Nations Environment Programme, and the annual KPMG survey of environmental reporting.²¹ All of these studies advocate dialogue and communication with stakeholders on environmental issues.

The BiE Index and the Engaging Stakeholders series have been widely adopted a way of benchmarking progress towards environmental responsibility. BiE assesses the FTSE 100 companies on the basis of the following 10 parameters:

BiE conducts its assessment on the basis of self-completed survey returns, and ranks companies into quintiles (five ranked divisions) to indicate their levels of performance against the rest of the survey participants. Its 1997 survey ranked companies including BP, Marks & Spencer and NatWest in its top quintile. Organisations in the bottom quintile included Carlton Communications, Imperial Tobacco and Tomkins. One of the most improved companies was Tesco, which increased its score by more than ²⁵ percentage points from its 1996 score to move from the fifth to the first quintile.

The focus of the Engaging Stakeholders series of benchmarking studies takes a different approach to BiE, analysing 100 company environmental reports from 18 countries to identify areas of strength and weakness in company environmental reporting and to highlight examples of best practice. Its 1997 survey reported a "dramatic" improvement in the quality of reports.

For the second year in a row, Engaging Stakeholders gave The Body Shop's report the highest ranking, followed by US firm, Baxter. The Body Shop was praised for its "particularly impressive coverage of fair trade activities and human rights issues, areas rarely tackled in corporate environmental reports", while Baxter was commended for its detailed environmental financial statement which revealed that in 1996, the company's total environmental income, savings and cost avoidance amounted to $104.6 million. Other high-scoring reports included those from British Airways, Neste (Finland), Volvo (Sweden), Tokyo Electric Power (Japan) and the US companies General Motors, Polaroid and Bristol-Myers Squibb.

One of the most widely-used facets of the Engaging Stakeholders series has been the five-part model of stages in the development of environmental reporting. This distinguishes different levels of reporting from stage one -"green glossies"- through to stage five - "sustainability reporting". The study ranks the 100 reports against this model. In 1997, it found that none of the reports satisfied its criteria for stage five, although The Body Shop's Values Report was found to approach this level.²² Most of the reports are clustered at level 4, which has now been subdivided to provide more detailed analysis. Level 4 requires reports to publish full environmental performance data, with clear targets linked to policies and an auditing process. The more advanced stages of level 4 require external verification of data and more detailed financial information, together with benchmarking against sectoral averages.

In addition to these two benchmarking studies, the Association of Certified Chartered Accountants (ACCA) makes awards on an annual basis to companies that display innovative examples of corporate environmental reporting and has also made comments on good practice in environmental reporting (see case study 4).²³ One of its key observations is that good practice is difficult to define because different audiences require varying amounts of detail. In 1997, ACCA judges found that while reporting on the core areas (systems, top management commitment, environmental impacts, actual emissions, targets and, to a lesser extent, verification) was generally sound, there was still scope for improvement. In particular, they identified six areas where companies need to improve their reporting:

Verification

Many organisations that have a track record of publishing environmental reports are now looking to have them independently verified. In our survey, 63% of the organisations that produce environmental reports have had them independently audited.

SustainAbility has found that there is a definite trend towards having company environmental reports independently verified. While in 1993/94 it found that just 4% of reports were verified, its 1997 survey found that the proportion had risen to 28%.²⁶ It concludes that "verification has arrived, but there is still a fair way to go before it is accepted in the same way that it is in relation to corporate financial reporting."

In our survey, we find that most companies use environmental management consultancies, such as Aspinwall & Co, SustainAbility or ERM, to verify their reports while others use the major accounting firms that are rapidly developing expertise in this field.

SustainAbility reports that the scope of verification varies widely, with some simply signing off the report, while others are more challenging and highlight areas where performance needs to be improved. The Body Shop, which achieved the highest ranking in SustainAbility's survey, separately verifies each of the major sections of its report - social, environmental and animal protection. The environmental section in the 1997 report was verified by the British Standards Institution. It clearly states the scope of the verification and how it was conducted, as well as testifying that the report gives a true account of the activities of The Body Shop at the site visited. It also comments on weaknesses found in The Body Shop's environmental management system.

Next step compulsion?

In chapter one, it was noted that Environment Minister Michael Meacher said that he hoped that companies would voluntarily improve their records in this respect, but he made it clear that the Government would legislate if progress were not made. His remarks followed a survey by investment advisers Pensions and Investment Research Consultants (PIRC) which found that only 65% of the top 350 FTSE companies report on environmental issues, and that reporting is ad hoc and that standards vary.²⁷

Management Review's survey finds that the majority of organisations that already report in detail on their environmental performance tend to think that such reporting should be compulsory, with 63% of the organisations answering this question supporting such a move. Supporters of compulsory reporting include The Body Shop International, The Co-operative Bank and British Airways - all leading examples of good practice in environmental reporting. Opponents of mandatory reporting include The Boots Company, Anglian Water Services and Ericsson. One anonymous opponent commented that while mandatory reporting seemed a good idea in theory, he feared that organisations could become the targets of "loony green fringe elements".

Even if the principle of mandatory environmental reporting were to be accepted, there would still be much argument over what information should be included. ACCA has called for the Government to consider making it mandatory for companies to provide detailed information on key environmental impacts, such as energy consumption, emissions and water use, rather than just a broad environmental policy statement.²⁸

Some indication of what an official line might be comes from the Government-appointed Advisory Committee on Business and the Environment (ACBE) which set out an approach to good practice in reporting environmental information in its 1997 report.²⁹ It stresses that a stand-alone environment report is a complement to, not a substitute for, the inclusion of environmental information in annual accounts, and provides detailed guidance on the type of financial and non-financial disclosures that should be made relating to environmental impact.

For example, it suggests that a company's annual operating and financial review should state whether a formal environmental management system is in operation, and the extent to which management action has led to changes in the business's environmental performance. It also suggests that companies include a statement of the business's record as regards compliance with environmental requirements and that it reports on significant infringements. It recommends that environment reports include data that can be benchmarked against other companies and, where possible, that they quantify the financial implications of companies' environmental performance, including fines, prosecutions and compensation paid to third parties.

ENVIRONMENTAL MANAGEMENT SYSTEMS

BiE reports that many organisations that started environmental auditing processes in the early 1990s found that their internal systems and procedures for managing environmental issues were weak or non-existent.³⁰ In recent years, companies have come under increasing pressure to formalise these systems. To be effective, corporate environmental audits and reviews need to be conducted within a structured management system and integrated with overall management procedures.

Such an environmental management system (EMS) is now seen as one of the crucial basic steps to becoming an environmentally-responsible company. The international standard for environmental management systems (ISO 14001, see below) defines an EMS as "the part of the overall management system that includes organisational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy".³¹

The BiE index found that most of the FTSE 100 companies have an EMS, but that in most cases it is verified by internal auditors only.³² Increasingly, however, larger companies are moving towards having their management systems externally verified using either the ISO 14001 standard or the European Union Eco-Management and Auditing Scheme (EMAS).

ISO 14001

ISO 14001 is the voluntary international standard that superseded the British Standard BS 7750 for environmental management in March 1997. It gives companies the opportunity to obtain accredited approval for their environmental management activities to a standard that is recognised worldwide. The standard can be applied by any type of organisation (manufacturing, services or public sector) at any level - site, division or corporate.

The standard does not establish absolute requirements for environmental performance beyond a commitment to comply with all relevant legislation and regulations, and to strive for continual improvement. This means that two organisations carrying out similar activities but having different environmental performance may both comply with the standard.

ISO 14001 requires that the organisation establishes and maintains an environmental management system which meets the following criteria:

EMAS

EMAS is a separate voluntary environmental accreditation scheme available in all EU member states to organisations involved in industrial activities. It differs from ISO 14001 in that it requires the organisation to publish an environmental management statement containing independently validated information relating to its environmental performance.³³

However, the two standards are broadly complementary and the European Commission has now officially recognised ISO 14001 for the purposes of EMAS, although ISO 14001 organisations will need to publish the additional verification statement to qualify.³⁴

Benefits and costs

Organisations investing in EMAS or ISO 14001 accreditation can expect several benefits. Initially, there are public relations advantages in terms of good corporate image and demonstrable concern for the environment. In the longer term, solid environmental management systems will provide more effective risk management, since accredited organisations should achieve a better understanding of the environmental issues concerning their business activities.

Although few organisations insist on ISO 14001 accreditation as yet, it is possible that this will be a future trend because environmental activists are now looking closely at business's supply chains to identify areas where poor standards are being allowed to continue. As a result, in order to protect their own reputations, large organisations are pressurising their suppliers to adopt similar environmental standards to their own - including a certified environmental management system.

Importantly, good environmental management can save money. Organisations that gain a better understanding of the efficiency of their processes can reduce waste and energy consumption, and improve the use of materials and resources.

There are, of course, costs involved in gaining accreditation for an environmental management system. In 1996, the consultancy Environmental Resources Management estimated that: "based on our experience, a 300 employee ISO 9000 [quality management standard] manufacturing site would typically spend 1 to 2 "man" years to get up to speed with ISO 14001, of which raising staff awareness would eat up 30-50%."³⁵

In addition, there are the certification costs themselves, which are in the range of £6,000 to £10,000 per site.

Among our own survey respondents, interest in external accreditation for environmental management systems is high. As many as 31% of our respondents have achieved ISO 14001 or EMAS accreditation for at least one of their operating sites already, and a further 26% plan to do so in the future. Three organisations, including British Airways and The Body Shop International will be adding more sites to those they have already accredited.

Case Study 4
BT talks sustainable development

In the mid 1980s environmental issues did not even appear on BT's corporate agenda. Just over a decade later the telecoms operator has developed a thoroughgoing environmental management programme covering its own operations and its suppliers with guidance from academics, pressure groups, and members of the public.

Now the company is ascending another learning curve to combine environmental management with acknowledgement of its wider social and ethical responsibilities both in the UK and abroad.

ADDRESSING THE ENVIRONMENTAL ISSUE

In 1987, in the wake of privatisation, conscious of the fact that environmental issues were moving up the national agenda, and might be soon a matter for tighter national regulation, BT commissioned a study of its own environmental policy from the consultancy SustainAbility. The study's main finding was that there was no policy nor any environmental coordination across the organisation. As a result, in 1990, BT set up an Environmental Liaison Panel made up of academics, BT managers, customers (including young people), environmental managers from other organisations and campaigners (including representatives of Friends of the Earth and The Council for the Protection of Rural England).

The panel was asked to help BT draw up an environmental policy and suggest areas for environmental management and improvement. At the end of 1990, based on work with the panel, BT signed off and published a formal environmental policy.

In 1991, Chris Tuppen - previously employed as a scientist at the company's laboratories in Suffolk - was appointed as the first environmental issues manager, having spent an increasing amount of time over the previous two years researching the company's environmental impact.

Eight years later, the company has a well-publicised environmental hierarchy starting with a board member - currently the chief executive Peter Bonfield - with overall responsibility for environmental affairs and an environmental champion among the senior management of each operating division in charge of environmental management and achieving targets within the division. They are supported by a 10-strong environmental unit at BT UK as well as divisional environmental staff and by a three-strong corporate reputation and social policy unit at BT plc, responsible for strategic policy.

HITTING TARGETS

BT has always seen its business sector as more part of the environmental solution than the problem, promoting the role of telecommunications in cutting business travel and setting an example through its Workstyle programme in which some 1,200 staff now telework without fixed offices, using videoconferencing and data networks to substitute for travel where possible.

But the growing awareness of the company's own environmental impacts during the 1990s has led to the setting of annual targets for improvement in areas such as waste management, energy consumption and controlling emissions.

One example of progress against these targets is the Directory Recycling Programme (see figure 5.8). Another is the aim, stated in 1996, to reduce energy consumption across BT's network and facilities by 11% over the five years to 2002, building on a 13% cut over the previous five years. In the event, during 1997/98 alone, consumption fell by 8%, though, as environmental issues manager Janet Quigley notes "it was an unusually warm winter".

TRADING PARTNERS

As soon as it began to set and work towards its own environmental improvement targets, BT, prompted by the Environmental Liaison Panel, started looking at suppliers (since it purchases £4.6 billion worth of goods and services each year) and how it could influence them to raise standards. An Environmental Purchasing Panel of academics, environmentalists and managers met from 1993 to 1996 and helped develop standards for suppliers. Now, where a service or product has a significant environmental impact BT asks suppliers about specific management procedures to control these effects but also about broader environmental policies and these factors are taken into account when awarding contracts.

Procurement is one of the areas where the company has to meet specific standards to gain ISO 14001 accreditation and it has sponsored the EU-funded Business Environment Agency to hold workshops for selected suppliers to help them plan their own environmental management systems. "They may not all be able to go for ISO 14001," notes head of BT UK's environment unit Mike Hughes, "because it's not appropriate for every company, but we do want to enhance their environmental understanding and bring them up to our standards."

A NEW STANDARD

Since 1997, many of the previous internal improvement targets have been superseded by BT's decision to go for certification for the international environmental management standard ISO 14001. This standard will require BT to demonstrate a root and branch approach to environmental management throughout the company and the ability to demonstrate continuous improvement year-on-year to maintain accreditation. ("If we don't show improvement, we don't keep it," says Hughes.)

The campaign to promote ISO 14001 started in September 1998 with a presentation by BT's environmental champion on Business TV, the group's twice weekly broadcast for senior management. This was followed by information for all staff in the in-house magazines and on the intranet. A five-minute video has been made showing environmental initiatives across the divisions and will be distributed to all managers to show at team briefing sessions.

In the coming months the environmental team will run a focus campaign on the theme of "managing our environment" to encourage staff to come up with initiatives at work or outside. ("We employ so many people," says Janet Quigley, "we feel if they do something at home or in the community that's as valuable as at work.") The campaign will include prizes and awards for those with the best ideas or environmental work.

Quigley believes that the efforts in raising environmental consciousness among the workforce so far have worked well, but that in the drive for ISO 14001 there is a lot more to do as the standard requires that all employees understand how the company policy relates to their duties.

REPORTING BACK

As BT's work on the environmental issues has grown, so has the amount of information issued to employees, shareholders and the public.

The company produced its first environmental policy report (EPR) in 1992, carrying balanced information on the company's achievements in waste management and recycling and shortfalls in areas such as use of chlorofluorocarbons (CFCs). The document earned the Association of Certified Chartered Accountants (ACCA) award for environmental reporting.

Since then the EPR has grown annually. The 1997 report ran to 32 pages and listed the setting of, or progress against, 28 separate targets in areas such as fuel and energy, procurement, product stewardship and waste. It was supplemented by 14 separate briefings on issues such as refrigerants, telephone refurbishment and transport for those wanting more detail.

Since 1996 the company has published an environmental bulletin EnviroNet, until recently paper-based and produced quarterly by an external writer. This has now been revamped and will be updated monthly on the environmental section of the BT intranet.

In 1997, reflecting the broadening of the corporate environmental team's remit to take in social issues (see below) the company published its first report on sustainable development, looking at telecommunications' likely role in the future of work and the community.

A WIDER AGENDA

As environmental management has become more institutionalised within BT, the company has begun to explore its social responsibilities more widely. Community involvement, in the form of substantial funding and practical support for educational and sporting initiatives has been long established through the Community Partnership Programme; recent projects include supporting the establishment of after-school homework clubs for children with a grant of £150,000.

But as environmental measurement and management have begun to bed down, Chris Tuppen says the emphasis has shifted from seeing the subject as a stand-alone issue to considering it as part of the wider social and ethical responsibilities of any major corporation towards the communities it serves and profits from.

"Now we are in whole new process of understanding sustainable development and the role in society of a telecoms company".

Following its well-established panel procedure, BT set up an "issues exchange" in 1995 on the subject of cultural diversity. After two workshops involving 100 customers and representatives of community groups, and regular meetings by subgroups to discuss issues such as the need to recognise cultural diversity in marketing and communication with the public as well as in employment policies, the exchange's work culminated in the publication of a report "valuing diversity" in 1997. The report made a host of suggestions for future policy which are now being considered by BT management.

Another forum was convened in London earlier in 1998, when 60 people were brought together to advise on the planned redrafting of the company's statement of business practice which contains the ethical principles by which it operates.

Tuppen says that the new statement, due in 1999, and any policies that stem from it, will emphasise the inter-relationship of the environment with economic and social performance, the so-called "triple-bottom line".

LOOKING ABROAD

As BT increases its global presence through international operations and joint ventures, Tuppen says the ethical questions posed by other cultures are becoming a growing priority for his unit.

A workshop this year in Paris discussed BT's social role as a global multinational, with delegates from the United Nations, environmental, economic and trade union bodies, development agencies and small businesses among others.

The issues raised are big ones, says Tuppen, including child labour and women's rights. Should the company, for instance, promote equal opportunities in countries where women have strictly defined cultural roles? "Or if you've got a delivery into the docks in another country and you know if you slip 50 dollars to the guy on the dock you can have it tomorrow, or wait six months if you don't, is that a bribe? When does a facilitation payment, that is the norm in some countries, become ethically incorrect?"

Even when the conclusions are reached, he says there is still the difficulty of being a minority shareholder in a joint venture and needing to persuade native partners that your principle is right.

And the conclusions are not yet reached. The company is still gathering as much information and opinion as possible on the issues. "The environment is a maturing topic in the company now," observes Tuppin, "and especially with the progress towards ISO 14001 it has its own momentum. My job now is strategically thinking about the way it all fits into the idea of sustainable development."

Figure 5.1: The triple-bottom line

The concept of the triple-bottom line has been developed over several years by John Elkington, of environmental consultancy SustainAbility, to provide a means of assessing companies' progress towards a sustainable business.

The three lines focus on a company's contribution to economic prosperity, environmental quality and social justice. In Elkington's most recent work, Cannibals with forks: the triple-bottom line of sustainable business, he looks in details at ways that an organisation might begin to account for each of the three bottom lines. He argues that it is possible to measure progress, but warns that methodology and the indicators that can be used are still evolving. He outlines some of the current thinking on how such a process could be conducted and provides three sets of questions that companies need to consider to assess their progress against the bottom lines of sustainability.

Economic bottom line

Environmental bottom line

Social bottom line

Integrating the bottom lines

Elkington believes that companies will need to consider the relationships between each of the bottom lines - for example, how environmental policies on greenhouse gas emissions can have an adverse impact on social justice by restricting the economic progress of developing nations. The next step, he says, will be to tackle the three bottom lines in an integrated way - for example, by using the concepts of natural, human and social capital when accounting for the economic bottom line. A key area will be "full-cost pricing" where all the costs associated with a product or service are accounted for and reflected in its selling price.

Source: Elkington J (1997), Cannibals with forks: the triple bottom line of 21st century business, (Capstone, Oxford).

Figure 5.2: UK Government's vision of sustainable development

Source: Department of the Environment, Transport and the Regions (1998), Sustainable development: opportunities for change, consultation paper.

Figure 5.8: Rebalancing the books at BT

One of BT's environmental priorities in recent years has been to better manage the thousands of tons of paper directories it publishes and distributes every year. On the production side, the BT has just hit its 1997/98 target of 40% recycled fibre content across all its directories by 2000, and all white page phone books are now printed on paper with 100% recycled fibre content. The phone books were also redesigned in 1996 to cut their pagination and save paper.

To try and cut the wastage of directories at the end of their lives the company began funding a Directory Recycling Project in 1993. The project provides advice, grants and capital equipment for local recycling projects around the UK and this year produced an information pack on recycling for primary schools with a video and wallcharts. There is also a freephone telephone line for members of the public to get information on recycling in their area. Over 40% of directories are now recycled.

¹     Interview with Chris Gibson-Smith, managing director, BP, Channel 4 news, 30 September 1998.

²     The Guardian, 5 June 1998.

³     IRS (1996), "Reversing the sustainable development slowdown", Environment Information Bulletin 53, March 1996.

⁴     Financial Times, 23 July 1998.

⁵     World Commission on Environment and Development (1987), Our common future, (Oxford University Press, Oxford).

⁶     Elkington J (1997), Cannibals with forks: the triple bottom line of 21st century business, (Capstone, Oxford).

⁷     Welford R (1995), Environmental strategy and sustainable development: the corporate challenge for the 21st century (Routledge, London and New York).

⁸     Elkington, see note 6, above.

⁹     Department of the Environment, Transport and the Regions (1998), Sustainable development: opportunities for change, consultation paper (www.environment.detr.gov.uk/sustainable/consult1).

¹⁰    IRS (1998), "The limits of business responsibility in progress towards sustainability", Adam Faruk, Environment Information Bulletin 76, February, pp.15-16.

¹¹    IRS, see note 3, above.

¹²    WBCSD (1996), Eco-efficient leadership for improved economic and environmental performance.

¹³    Department of the Environment, Transport and the Regions, see note 9, above.

¹⁴    The Washington Post, 4 September 1995.

¹⁵    IRS (1998), "The VOC solvent emissions Directive - an industry perspective", Environment Information Bulletin 80, June, pp.9-11.

¹⁶    Business in the Environment (1996), The Index of Corporate Environmental Engagement.

¹⁷    Business in the Environment (1997), The Index of Corporate Environmental Engagement.

¹⁸    BSkyB plc annual report 1998.

¹⁹    Blue Circle plc annual report 1998.

²⁰    KPMG, reported in Financial Times, 23 July 1998.

²¹    Business in the Environment, see note 16, above; SustainAbility (1997), Engaging stakeholders: The 1997 benchmark survey; KPMG, see note 20, above.

²²    SustainAbility, see note 21, above.

²³    ACCA (1998), Environment under the spotlight - current practice and future trends in environment-related performance measurement for business, ACCA Research Report 55.

²⁴    The Body Shop International (1997), Values Report, www.the-body-shop.com

²⁵    SustainAbility, see note 21, above.

²⁶    Ibid.

²⁷    PIRC (1998), Environmental and social reporting: a survey of current practice at FTSE 350 companies.

²⁸    ACCA, see note 23, above.

²⁹    Advisory Committee on Business and the Environment (1997), Environmental reporting and the financial sector - an approach to good practice, (Department of the Environment, London).

³⁰    Business in the Environment (1997), see above note 16, above.

³¹    British Standards Institute (1996), Implementation of ISO 14001: 1996, environmental management systems - specification with guidance for use.

³²    Business in the Environment, see note 17, above.

³³    A detailed discussion of the differences between the two standards appears in Environment Information Bulletin 58, August 1996, also published by Industrial Relations Services.

³⁴    IRS (1997), "ISO 14001 and EMAS", Environment Information Bulletin 67, May 1997, p.7.

³⁵    Environmental Resources Management (1996), ISO 14001: overviews and key developments, briefing document.

³⁶    The number of infringements in 1997/98 is based on a greater number of monitors at the London airports compared with previous years. This increase in the stringency of monitoring means that infringement data for the past year is not directly comparable with that contained in previous environment reports.

³⁷    Figures for C02 include emissions associated with consumption of gas and with electricity from UK power stations, but not aircraft. C02 emissions from aircraft can be found in airline environment reports such as British Airways and SAS.

³⁸    Figures include waste incinerated with energy recovery from Heathrow and Gatwick.