Environmental reporting

Sept. 19, 2017
There are multiple ways to disclose environmental information

There are multiple ways to disclose environmental information


WITH THE INCREASING global concern for the environment, environmental reporting occupies a significant place within a firm's strategy. Firms, especially those operating in environmentally sensitive industries such as the oil and gas industry, disclose environmental information to improve their image in the eyes of different stakeholder groups and the general public and in turn gain their legitimacy for existence. Thus, environmental disclosure is a tool that can help companies influence and improve society's perceptions about their operations.

Moreover, environmental disclosure is considered an obligation and a stakeholder right, as this type of information is utilized by different groups of stakeholders to assist in decision making. Environmental disclosure is also a medium for managing, negotiating, or manipulating stakeholders. Furthermore, there are several benefits a company could potentially gain as a result of its environmental disclosure, including gaining a competitive advantage over its peers. Investors tend to see companies in a more favorable light when they are open about environmental disclosure. Customers, communities, and employees also have a more positive opinion about companies that willingly disclose this type of information. The end result is an overall positive effect on corporate performance.

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Where do these organizations report their environmental disclosures? Environmental reporting began in the 1970s within corporate annual reports. Companies could communicate environmental information through a number of venues such as annual reports (including supplements to the annual reports or generated at interim dates), environmental reports, social responsibility reports, sustainability reports, corporate websites, activities advertisements and articles, environmental brochure or corporate brochure, booklets or leaflets on the environmental performance addressing the company's activities and products labeling to promote environmental and other concerns, newspaper or magazine, CD reports, television and radio, video tapes, and websites. Companies may also disclose environmental information via seminars or symposia, as well as in meeting with residents in affected communities.

Thus, companies use different reporting media to disclose environmental information. While a company may prefer a certain vehicle for disclosing environmental information, it does not limit itself to one reporting vehicle. Increasingly, companies are using multiple forms of media to communicate environmental information.

Different vehicles send different messages. A company may present a particular type of environmental information on a certain medium, while at the same time it presents another type of environmental information in another medium. Adequate information may not be available in one report, but different reports may, cumulatively, contain sufficient information. Consequently, users of environmental information may not be satisfied by reviewing a single report.

While annual reports are still a common media by which to disclose, more and more companies are disclosing environmental information through separate environmental, social, and sustainability reports. In spite of a growing trend toward publishing stand-alone reports, various stakeholders still pay more attention to annual reports. This is could be due to the characteristics of annual reports, or because obtaining other types of documents is difficult. It is common practice for companies to publish their reports on their corporate websites, making it easy to obtain different reports and information online.

In instances where companies generate stand-alone reports (such as environmental reports), it is more likely that little environmental information will be found in their annual reports today since the information is separately disclosed in stand-alone reports.

Focusing on one medium of reporting, such as annual reports, and omitting other ways of reporting environmental information may lead to an incomplete, unclear, and imprecise picture of the actual state of environmental practices. Therefore, in order to paint a complete picture of environmental aspects, there is a need to read environmental information in various reporting media.

Reading only certain medium may provide only a portion of the overall picture of environmental aspects. To paint a complete picture of environmental aspects, all information disclosed on environmental aspects should be captured. To do so, all communications should be monitored, but practically, capturing all communications in different documents of a company may be problematic, as it is not possible to identify the full range of disclosure mediums.

The question that arises is: what reporting media provide better information on environmental aspects and satisfy the stakeholders' needs?

Literature has shown inconclusive results. Prior research showed variety between companies in using different disclosure media to communicate environmental and social information. While some studies showed that most companies provide environmental information in annual reports, other studies indicated that companies communicate environmental information using stand-alone reports such as environmental reports.

Companies often offer more complete environmental information on their websites than on other media. However, companies communicate such information using various means, including newspapers, magazines, brochures, television, radio, and video. No uniform format of environmental reporting exists among companies.

However, findings indicate that the most commonly used media for environmental disclosure are annual reports, stand-alone reports (i.e. environmental reports, social responsibility reports, sustainability reports), and corporate home pages, whereas other forms of reporting media are not extensively employed.


Annual reports are the main method companies use to communicate their information to various external users and are widely considered the most important source of information about a company. In the context of environmental disclosure, corporate annual reports are recognized as the main resource for environmental data. This is mainly due to: their statutory compliance, regular production, and wide availability; the proliferating trend of environmental disclosure in annual reports and in their certain sections; because annual reports hold the most accessible information source for listed companies, both in hard copies and in e-form; and the fact that users rely on corporate annual reports to obtain both financial and non-financial information because of the high degree of credibility and the high level of confidence on the annual reports as they are being audited continuously.

It is essential that environmental issues are given substantial attention in the annual report. Despite the fact that companies are providing environmental disclosures in regulatory disclosure documents outside the annual reports, annual reports remain the dominant vechicle for such reporting.


In the mid-1990s, separate reports dealing with environmental and social issues emerged and occupied a significant place in the realm of environmental reporting. They are often referred to as environmental reports, corporate social responsibility reports, social and environmental reports, sustainability reports, triple bottom line reports, or health, safety and environment reports. Reports involve disclosing environmental, social, and economic related information are frequently labeled a corporate environmental report or a corporate social report or a sustainability report.

Since the mid-1990s, the number of companies publishing separate environmental, social, and sustainability reports dramatically increased. Outside of the annual report, the most likely medium for environmental disclosure is the stand-alone environmental report.

Currently, publishing stand-alone environmental-related reports is common practice across the industry. Industrially, in an oil and gas context, most major companies draw up corporate responsibility or sustainability reports that highlight the manner in which they are addressing stakeholders' environmental and social concerns. Geographically, in many parts of the world, the tendency to produce separate social and environmental reports is increasing.

Although publication of environmental reports is less widespread than reporting on the environment in the annual reports, the primary focus in environmental reporting tends to be built upon the stand-alone environmental reports--carefully designed and glossy and voluminous documents.

Despite the attention given to environmental reports, they still did not replace the role of annual reports, and instead are often published alongside the annual report. Contrarily, it was argued that the introduction of stand-alone environmental disclosure has resulted in questions concerning the relative significance of annual reports for environmental disclosure. However, the stand-alone environmental reports add value to environmental disclosure and have had a significant impact on total level of disclosure.


In recent years, advances in technology and the ongoing increase in Internet access has resulted in the corresponding increase in web use as a reporting medium. Information concerns environmental performance is widely published on the internet. Thus, the popularity of the internet has encouraged companies to use this medium for environmental disclosure, and it became a common to see sections on corporate websites dealing with environmental issues.

The most obvious advantages of internet-based environmental reporting are: internet is universal access communication channel; internet is better able to communicate with a larger and more divers stakeholders, as by using internet reporting, companies reach a more diverse audience; internet-based environmental reports can be updated easily by the reporting organization; timelines and updating of data, as data can be obtained when required; reduced resource use and costs (for preparer), and 6) users can engage in feedback and firms can effectively keep abreast of respondents' information which helps to develop broader corporate-stakeholders relationships.

The internet has become an increasingly important medium of information disclosure, and its use and importance are increasing for different groups of stakeholders. So, in addition to annual reports and stand-alone environmental reports, reading environmental-related sections on corporate homepages will give clearer picture of environmental aspects of a company.


Companies are increasingly using multiple forms of media to communicate their environmental information, and the number of companies that rely on a single medium is rapidly dwindling. It is well recognized that different environmental reporting media send different messages. Keeping this in mind, it is the limitations of the user that restricts certain media to obtain environmental information. Thus, users of company environmental information should not rely on a single source, but different vehicles of reporting should be reviewed. Since reading all media used by a company to present its environmental information is difficult and time consuming, users of this information can rely on the primary media of environmental reporting, which are stand-alone reports, annual reports, and corporate home pages.


Abdullah Hamoud Ismail, PhD, is a budgeting and expenditures control manager at the Ministry of Oil and Minerals in Yemen. He has more than 15 years' experience in oil and gas accounting and finance. Ismail received a PhD in accounting from the University Utara Malaysia. He is an assistant professor in the Department of Accounting at Alyemenia University and the University of Modern Sciences in Sana'a, Yemen.