The Measurement Of Environmental Reporting Practices Accounting Essay

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The Triple Bottom Line reporting (TBL) is an accounting framework that incorporates three dimensions of performance: social, environmental and financial. This differs from traditional reporting (financial) frameworks as it includes environmental and social reporting. Environmental reporting is one of the key parts of TBL reporting. Environmental Reporting is an area where our country requires a boost. A lot of work has been done by other developed countries in this area. India is believed to be still at its infancy stage so far as Environmental Reporting (an integral part of triple bottom line reporting) is concerned. The introduction of the ISO 14000 series for Environmental Management Best Practice has introduced environmental issues as part of "Business as usual". So, it has now become an urge for the companies worldwide to report on the Environmental issues and their contribution in safeguarding the Environment. The objective of this study is to investigate the quantity and quality of voluntary environmental disclosures in the annual reports or sustainability reports of the few selected index based Indian companies listed on the stock exchange. The result may serve a base or the path towards better Environmental disclosures in India.

Keywords: Environmental Reports, Sustainability, Disclosures


Triple Bottom Line is gradually gaining importance all over the world. Specially, environmental reporting plays a crucial role in this global warming. Over recent periods, the effect of the individual enterprise on the environment has increased pressure for the business sector to undertake a more responsible and transparent role in this area. The stakeholders are now interested not only to know the mere profit of the company but also what steps the company takes in order to protect the environment, is also taken note of. Now, the stakeholders are keenly interested to know "how much" and "to what extent" each individual company contributes towards the creation of a healthy environment.

In addition, the introduction of the ISO 14000 series for Environmental Management Best Practice has also drawn a way towards better environmental reporting. Now the companies abroad have developed an environmental reporting framework for inclusion in annual reports, supporting integration of economic and environmental performance reports for purposes of sustainable reporting and can be found in the Report by the Secretariat of the United Nations Conference on Trade and Development, 1999.

Over and above this, the March 1999 Global Reporting Initiatives (GRI) Exposure draft (CERES/GRI, 1999) introduced initial disclosure guidelines to link economic, social and environmental performance issues. Subsequent guidelines were issued in June, 2000.

The GRI was established in late 1997 with the mission of developing globally applicable guidelines for reporting on all these three areas, i.e., economic, social and environmental performance, initially for corporations and eventually for any business, governmental, or non-governmental organization (NGO). Convened by the Coalition for Environmentally Responsible Economies (CERES) in partnership with the United Nations Environment Programme (UNEP), the GRI incorporates the active participation of corporations, NGOs, accountancy organizations, business associations, and other stakeholders from around the world. The GRI's Sustainability Reporting Guidelines were released in exposure draft form in London in March 1999.

However, GRI guidelines are voluntary reporting initiatives; hence companies are not obliged to inform GRI of their reporting confirmation. It is, however, to be noted that the GRI guidelines are dynamic and the Exposure Draft issued in March 1999 represents only a primary step in the development of a framework for sustainable reporting. Companies may take it as a way towards better reporting practices.


The main objective of this study is to measure the Environmental Reporting Disclosures of the selected index based Indian companies. In order to evaluate the environmental reporting practices, the categorization contained in the Global Reporting Initiatives guidelines has been used to an extent. However, it also mainly aims at the quantity and quality analysis of the environmental reporting practices of the selected companies whereby, proper environmental reporting practices in India can be arrived at.


TBL may be an emerging concept for the Indian corporate, but it was coined way back. Discussion of the quantification of social and environmental performance is not entirely new and predates Elkington's (1997) book. In 1972, David Rockfeller said that he 'can foresee the day when, in addition to the annual financial statements certified by independent accountants, corporations may be required to publish a social audit similarly certified' (cited in Gray, Owen, et al, 1987, pix).

According to Holsti (1969), content analysis categorises narrative matter into themes, a method consistently used in Corporate Social Reporting research (Adams and Roberts, 1995), Zeghal and Ahmed (1990), Gamble et. al. (1995). Hackston and Milne (1996) and Krippendorff (1980. p. 21) define content analysis as "a research technique for making replicable and valid inferences from data according to their context".

The objective of the study was to determine the following in the annual reports (sustainability reports) and separate environmental reports (if prepared by the selected Indian companies):

Quantity of disclosure, using a sentence based approach (Hackston and Milne, 1996; Buhr, 1998) which were then accumulated into page proportions; and

Quality of disclosures (Gamble et al., 1995; Wiseman, 1982; Guthrie and Parker, 1990; Walden and Schwartz, 1997; Kusumo et al., n.d.).


The nature of the said research work is analytical. This study is based on the Primary Data collected from annual reports downloaded from websites of the selected companies. The study is based for the years 2009-'10 and 2010-'11. Four indexed based companies are selected for the purpose of this study i.e., ITC Ltd., Reliance Ltd., Bajaj Ltd. and Hindustan Unilever Ltd. In order to measure environment reporting practices by selected Indian companies, GRI guidelines were taken as a base. Analysis of the data is based on a few selected categories comprised of in GRI guidelines to have a better measurement.


Freedman and Jaggi (1986), Kelly (1981) and Roberts (1992) are of the opinion that the use of annual reports as a primary communication vehicle for environmental performance serves a better measurement tool. For the purpose of this study also, annual reports or sustainability/ environmental reports are used as a data source.

The point of commencement was to determine if the annual reports included disclosure on environment issues. It was also checked whether separate sustainability/ environmental reports were prepared or the environmental disclosures formed a part of the annual reports.

The annual report information was initially analyzed using a dichotomous variable (Yes=1; No=0). Once it was ascertained that the environmental information was present in the reports, it was necessary to determine how it was to be coded.

As highlighted by Guthrie and Mathews (1985), Hackston and Milne (1996) and pointed out by Milne and Adler (1999), there are no firmly established standards of reliability for content analysis. Research undertaken using content analysis requires:

a classification scheme, defined by Milne and Adler (1999) as a "set of boxes into which to put the data"; and

a set of rules of "what" and "how" to code, measure and record the data to be classified.

Various tables showing the mode of the presence of environmental information, quantum of the content, quality of description disclosed and decision rules have been prepared to have a clear idea about the environmental disclosures and which would serve as a tool of measurement.

Kindly refer Table I it shows the mode of presentation of Environmental Information by the selected companies.

It can be seen from the table I, that ITC Ltd., Reliance Ltd. and Hindustan Unilever Ltd. prepares a separate report viz., Sustainability Report/ Sustainable Development Report and discloses its environmental information therein, while Bajaj Ltd. includes it as a part of its annual report headed as Report on CSR (Corporate Social Reporting).


Kindly refer Table II

The following table exhibits some of the categories which are selected as a tool towards better measurement of environmental information which is based on the GRI guidelines. Further, to have a clear idea, each such category was allotted a score of 10 points making a highest score of 80 points.

Kindly refer Table III

From Table III, it is clear that ITC Ltd., Reliance Ltd. and Hindustan Unilever Ltd. have disclosed almost information for almost all of the categories so studied scoring 80 points each.

However, Bajaj Ltd. is far lower than that of the other selected companies and includes information on only two categories, viz., Profile and Sustain, making a score of 20 points only.


Kindly refer Table IV

Table IV has further been divided into two categories in order to have a clear insight into the content, viz.: Table V which shows the quantity of disclosures "How much" and a score to the content present. While, Table VI shows the quality of disclosures "How measured" and a score, thereof of the selected companies.


Kindly refer Table V

Each category of Table V (viz., sentence, paragraph, half A4 page, 1 A4 page and >1 A4 page) has been allotted 10 points each, which makes an overall score of 50 points.

We can observe from Table V that all the companies have reported >1 A4 page and scored full (maximum) points i.e., 50 points. This in fact, is a positive sign towards a better environmental reporting practices.


A firm providing a combination of discussion on environmental goals and objectives, and outcome in qualitative, non-monetary and monetary terms was considered to be more meaningful to aid stakeholder decisions by linking disclosure, environmental performance, and economic performance (Belkaoui and Karpik, 1989).

Kindly refer Table VI

Each category of Table VI, (viz., monetary, non-monetary, qualitative only, qualitative and monetary, qualitative and non-monetary, monetary and non-monetary and qualitative, monetary and non-monetary) has been allotted 10 points each, which makes a highest score of 70 points and a lowest of 10 points.

It is observed from Table VI that ITC Ltd., Reliance Ltd. and Hindustan Unilever Ltd. has presented its environmental information in qualitative, monetary and non-monetary terms and have scored full 70 points.

While, Bajaj has exhibited its environmental information only in Qualitative and Non-Monetary form and has scored 50 points on the score board.

Kindly refer Table VII

Table VII shows whether the selected companies confirms to GRI-G3 Compliant Application Level A+ or not.

It is observed that Bajaj Ltd. doesn't comply with the GRI-G3 Application Level A+, while the other selected companies do comply the same.


Kindly refer Table VIII

Overall score is made up of the categories studied, qualitative and quantitative information disclosed pertaining to each such category (exhibited by Table III, V and VI) of the selected companies.

Combining the overall scoreboard, it is very much clear that Bajaj Ltd. scored only 120 points, while ITC Ltd., Reliance Ltd. and Hindustan Unilever Ltd. scored same points i.e., 200 points on its disclosure on environmental information.


It has been found out from the scoreboard (Table VIII) that, all the companies have reported on the environmental issues to more or less extent. However, ITC Ltd., Reliance Ltd. and Hindustan Ltd. are found to be better as compared to Bajaj Ltd.

Bajaj Ltd. needs to disclose more information on the environmental issues and also try to comply with GRI-G3 Application Level A+ for even better disclosure.

Although the efforts put in by all the companies in disclosing its environmental information are worth appreciable.


The study considers only few randomly selected index based companies which just gives a brief view of the environmental reporting practices carried out in India. It does not purport to demonstrate the exact results and reporting practices which can be considered as an ideal measure for such reporting.

Also, the study has been taken on for only two years which gives a nut shell view of the environmental reporting practices of the selected companies.

Though efforts were undertaken to ensure coding reliability, there remains a degree of subjectivity in the determination and undertaking of coding practices in content analysis research.