Mining companies dominate Environmental Reporting Award

The Silver Award was won by Western Deep Levels, while Samancor took Bronze. The Awards are based on an evaluation of the annual reports of companies. The reports are subject to close scrutiny on 27 environmental reporting criteria devised by the Department of Accounting of the University of Pretoria.

The Award is made by the one of the world's leading business and advisory firms, KPMG, in association with the University.

According to Professor Charl de Villiers of the University of Pretoria, increasing pressure by interest groups on businesses to report on the environmental effect of their activities has lead to the development of quantitative and objective measurements. This serves as the basis for evaluating environmental information in the financial reports of listed companies.

KPMG's Wayne Visser says that, while there has been some improvement in the number of companies reporting on the impact of their businesses on the environment, too many still report only because they feel coerced to do so, or begin to feel the heat of public pressure.

"Companies should be reporting in a spirit of true transparency, thereby giving substance to their constitutional obligation to honour the public's environmental rights. This would also bring them in line with the principles of Integrated Environmental Management, Open Information and Full Cost Accounting enshrined in the new Environmental Management Policy of South Africa," he said.

Among the 27 questions that form the checklist on which the reports are judged are those dealing with financial statistics, qualitative measures, past, present and future performance. These include:

• Does the corporate policy/mission statement mention a policy/mission regarding the environment?

• Are the company's environmental objectives disclosed?

• If so, does the company set measurable targets so that environmental performance achieved can be compared to the objectives?

• Is mention made of the environmental impacts and risks of the business?

• Is mention made of any negative aspects of environmental activities?

• Is mention made of an environmental audit and, if so, is it externally appraised?

• Is there an indication of how often an audit is conducted?

• Are the accounting policy notes regarding environmental accounting disclosed?

• Is there any quantitative non-monetary disclosure?

• When financial information is disclosed, are comparative figures given?

• Have any transfers been made to a reserve for future environmental expenditure?

The vast majority of companies that made it into the Top 50 are in the mining sector. This is due to more stringent requirements which have been applied to the mines in the 1990s to implement Environmental Management Programmes and set aside environmental rehabilitation funds or provisions.

Amongst the significant findings to emerge from the study is a strengthening of environmental governance structures within companies.

For example, the Top 50 companies reported that 28% (45% for high impact companies) and 60% (85% for high impact companies) have assigned environmental responsibilities to executive and senior management respectively.

Of the Top 50, those in perceived high environmental impact sectors (mining, steel, oil and chemical) featured the greatest environmental information in their annual reports, with 92% making reference to the natural environment. Seventy-seven percent reported on the environmental impact or risk of their activities.

In respect to the general sample of JSE-listed companies, those which disclosed information on the natural environment in their annual reports in 1997 increased by nearly a third from the previous year - from 26% in 1996 to 34% in 1997.

Media contact:

Wayne Visser

021-423-8940

083-455-1684