The Evolution of Environmental Reporting in the Petroleum Industry in Canada
Authors: Herremans Irene M. , Hershcovis Sandy 
Published: March 2010

Introduction

Pressures from various stakeholder groups have pushed petroleum companies to higher standards regarding environmental performance. While many companies have improved their performance, few have yet to provide adequate communications. With more institutions recognizing the impact that environmental performance has on economic performance, it is essential that the industry communicate what it is doing environmentally. Such communication will ensure that informed decisions are made by both the industry and its stakeholders.

Societal Contracts and Legitimization

Contemporary thinking regards business as a subset of society. Society grants corporations the freedom to manage a significant portion of its scarce resources and gives corporations certain rights through the granting of an implicit charter. With corporate rights come corporate responsibilities, one of which is to produce not only adequate economic output but also environmentally and socially acceptable output. Society needs evidence to form a basis for a decision for renewal of the corporate charter. If the corporation does not provide that evidence, society must use other, perhaps incomplete, sources. If corporate disclosure is constant and credible, it not only lends support for renewal of the corporate charter and survival of the corporation, but it can also ward off government legislation or other negative activities that may act as road blocks in the enterprise's attempt to accomplish its objectives. To legitimize itself the corporation must understand society's expectations and communicate, as well as partake in, behaviour that is consistent with society's definition of a legitimateenterprise of the 2000s.

Based on the work of Blau and Scott(1), Eells(2), and Zenisek(3), Figure 1: The Model for Sustainability depicts a corporation that fits with the ever-evolving demands and expectations of society. The model suggests that three dimensions must remain congruent:the corporation's ideology;the corporation's behaviours; andsociety's demands and expectations. If a gap exists between any of these dimensions, a corporation will not be perceived as legitimate by society and is thereby deemed to be unsustainable.

Communication's Role in the Process

The petroleum industry became shockingly aware of the importance of communication in the legitimization process at the time of the Exxon Valdez oil spill. Exxon as well as the other Alyeska members were concerned about the potential of increased regulation of the industry due to the public outcry of dissatisfaction with the industry's performance. Therefore, Exxon and the Alyeska members attempted to legitimize themselves through increased environmental disclosures in their annual reports(4). Since that time environmental reporting has evolved from statements or short sections of qualitative discussion in annual reports to standalone documents (both hard copy and electronic). The first-stand alone documents were green glossies and newsletters. Now, progressive corporations link their environmental reporting to their environmental management systems, and regard reporting as an important "learning" process in improving environmental performance. However, the evolution continues toward sustainability, recognizing the integration of economic, environmental, and social activities (See Figure 2: Evolution of Reporting Illustration).

Driving Forces

Most early attempts at environmental communication were driven by concern about incongruencies in the Model for Sustainability.