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Just the facts: making sense of corporate environmental reports.

Not long ago, the idea of a corporate "environmental report" was a glossy brochure featuring a duck-filled lake, a tree-filled forest, and a bunch of smiling kids playing on the beach. If the company was really brave, it might picture its factory - but always surrounded by nature's finest.

It's a different story now. Today's corporate environmental reports are filled with good news and bad, bar graphs, pie charts and columns of data. The pretty pictures haven't exactly disappeared, of course. And the glitzy, feel-good brochures still exist. But, increasingly, they're being supplemented by more sober documents that reveal some, if not all, of a company's secrets.

Or do they? As with conventional annual reports, companies can pretty much put whatever spin on things their communications departments dream up. Did this year's fines levied by the Environmental Protection Agency (or the state equivalent) drop to "only" $5 million? Then celebrate the company's "continued positive trend in compliance." Was there no improvement from last year's release of toxic chemicals? Then report on the "leveling off of emissions."

Still, a growing number of companies deserve credit for their candor, including many not known for their clean, green image. More than 200 companies have issued annual environmental reports, says Jonathan Naimon of the Washington, D.C.-based Investor Responsibility Research Center, and that includes only reports published in English. Leading the pack in publishing the most sophisticated reports are chemical companies - Monsanto, Dow, DuPont, Ciba Geigy, and all the rest. With good reason. Their public images have suffered greatly in the age of environmentalism. Besides, public reporting is not only a good idea; it's required for members of the Chemical Manufacturers Association under its Responsible Care initiative.

Monsanto, for example, is widely acknowledged as having raised the performance bar for corporate environmental reporting. Since it began in 1991, the company's reports have been lauded for their candor, but also for their accessibility.

This doesn't come easy. Helping the public understand the significance of, say, worldwide emissions of trichloroethane into the air, ground and water takes some doing. Monsanto relied on focus groups to learn what worked best. One revelation: A long, credible report lacked readability, while a short, readable report lacked credibility.

It's not just chemical companies. Among those issuing reports recently are banks, textile and clothing companies, and telecommunication and pharmaceutical giants. Even Wal-Mart is preparing its first-ever report. And then there are smaller, eco-hip companies like Patagonia, Esprit, Aveda and The Body Shop.

Some of the reporting companies are signatories of the Ceres Principles, which require companies to publicly disclose information about their operations and emissions. Ceres - whose reporting format is based on input from companies as well as community activists and environmentalists - is responsible for some of the very first company reports, and for improving the state of the art. "It's not just something where a company can say, "'I'm knocking off this report,'" says Ceres Executive Director Joan Bavaria. "We're trying to find a way to ensure quality; there are still some real puff pieces out there."

Bavaria's last sentiment leads to the inevitable cynical musing: How much of what a company reports can we really believe? According to Naimon, who tracks companies' environmental performance for institutional investors, the quality of information is getting better and better. Much of the data included is also reported to the government; that doesn't ensure that it's true, but it increases the odds.

How can you tell if a report is credible? To really know, you'd have to delve deep into company operations, but here are some tips to help you find the best reports:

* Look for information about worldwide operations. That way, you know that, "It's not just the office employees in Seattle who are doing the recycling," as Naimon puts it;

* Look to see whether and how they've dealt with your favorite issue. If you care about virgin forests and all they talk about are toxic emissions, you may want to discount the report a little;

* Look for steady improvement. Most significant polluters are making substantive cuts in emissions - 20 percent, 30 percent or even more a year. Watch multi-year trends;

* Give credit to companies that report what their big challenges are - what they're not yet doing right;

* Look for indications about how much a company is spending on its programs. If it doesn't say, it's likely the company is giving lip service to the environment;

* Give high marks to companies that report on what they're using as well as what they're wasting - the amount of energy, water and other resources used to produce the goods they sell.

Finally, use common sense: Does the document look and feel like a truthful report, or more like a public relations snow job? In the end, your gut instinct will speak volumes.

CONTACTS: Investor Responsibility Research Center, 1350 Connecticut Avenue NW, Suite 700, Washington, DC 20036-1701 (202)833-0700; CERES, 711 Atlantic Avenue, Boston, MA 02111/(617)451-0927.

JOEL MAKOWER is editor of The Green Business Letter in Washington, D.C.
COPYRIGHT 1996 Earth Action Network, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Makower, Joel
Date:Mar 1, 1996
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