Corporate Social & Environmental Disclosures & Reporting

Background The theme of corporate social responsibility is rather nascent in the Indian context as in the most developing economies. The literature on the subject began in the 1950s and the debate focused on whether the corporations should engage in social activities for public welfare. The debate in the 1970s was restricted to the separate roles of welfare provision by the government and single minded pursuit of supernormal profit by the market players. This view however, focused more on shareholder wealth creation rather than the stakeholder value creation. Until the late 1990s the industry in the Western markets focused more on philanthropy rather than social responsibility. It is only in the 1990s when the countries in the North began to move towards privatization and corporate restructuring social performance was given some emphasis. Since the beginning of the 21st century the focus has shifted to a more comprehensive concept of corporate sustainability. The subtle difference between corporate environmental reporting and environmental reporting stems from the fact that the former is voluntary in nature while the latter is mandatory (1). Across the globe corporate environmental reporting has been voluntary in nature. Netherlands and Denmark had introduced mandatory disclosures way back in 2001. In Europe EMAS (Eco-Management and Audit Scheme), had been voluntary so far. EMAS is a voluntary body designed to promote environmental compliance standard of the companies. It was established by European Regulation 1836/93, which was later replaced by Council Regulation 761/ 101. EMAS' main objective is to reward those companies which go beyond the minimum legal compliance and continuously improve their environmental performance. Self-reporting is required regularly which is reviewed by an environmental verifier delivering the EMAS certification. Most of the listed Indian companies do not have a stand-alone report. These reports are qualitative rather than quantitative in nature. The environmental protection parameters are exposed in detail relating it to the vision, mission and objectives of the company. But financial estimates to follow the stipulated environmental guidelines of the company are never revealed in these reports. The quantitative measures of reducing solid wastes, air and water pollution, and carbon emissions are usually not described in the reports. The reports lack in systematic formulation of Environmental Management System. Environmental policy is qualitatively designed with no environmental targets in a year. Environmental Impact Assessment of different projects is not accounted for in these reports. Environmental management has become important for the companies whose prime objective is to minimize environmental degradation by the companies in various ways like reduction in waste generation, energy consumption and efficient use of resources. This in turn will bring down the cost of the companies. Companies may gain competitive edge over time by a more effective system of environmental management. Thus EMAS is supported by the environmental regulators and companies as well. EMS must satisfy the condition laid down under International Standard BS EN ISO 14001. EMS provides a company with a framework for identifying, evaluating, managing and improving its environmental performance. All internal stakeholders like employees and external stakeholders like contractors, suppliers know their roles and responsibilities to achieve the desired compliance level. The proposed EMAS modification is as follows. * Reinforced environmental reporting--Reporting on core environmental performance parameters has to be mandatory. The areas for core competency are selected as energy efficiency, material resource efficiency, waste emissions and biodiversity/ land use. * Guidance on best practice in environmental management--The Commission initiates the development of reference manual for best practice in environmental management. …