NEWS JOURNAL OF THE ASIA PACIFIC CENTRE FOR

ENVIRONMENTAL ACCOUNTABILITY

Volume 4, No. 2, June 1998

Contents Page No.

Editorial 2

Feature ArticlesCorporate Fiduciary Duty and the Case for Stakeholder Statutes 3Lorne Cummings

A Summary of the Parliament of Victoria, Public Accounts and Estimates 6Committee Report on Environmental Accounting and Reporting (March 1998)Roger Martin

OECD Views Australia’s Environmental Performance – Some Messages for 8Environmental Accounting.Roger L Burritt

Regular FeaturesBusiness and the Environment Corporate Environmental Reporting - A Nordic Experience: 12Dan Atkins - Environmental Services, Deloitte & Touche, Denmark

APCEA Branch Reports 14

Watching the Web 15

News and Issues 16

Environment Extra! 18

Published with the assistance of the Faculty of Business and the Department of Accounting and Finance,Victoria University of Technology, Melbourne, Australia

Sponsored by the National Institute of Accountants, Australia

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EDITORIALWelcome to the second edition of the APCEAnews journal for 1998.

The United Nations initiated world environmentday (5 June) has come and gone once moreand one hopes that governments and largecorporations will continue to be moreaccountable for actions which have impacts onthe natural environment. The United Nationshave designated 1998 as the International Yearof the Ocean. As oceans make up 70 percentof the Earth’s surface and nearly 3.5 billionpeople reside in coastal areas and depend oncoastal and marine habitats for their survival,the importance of ensuring the oceans areprotected is paramount.

This edition includes a number of importantarticles in relation to environmentalaccountability. Lorne Cumming’s piece onstakeholder statutes takes a legal perspectiveon environmental accountability. Roger Martinhas written a timely summary of the VictorianGovernment’s Public Estimates Committeereport into ways and means of accounting forthe environment. It is important that theenvironment not be seen purely as a commoditywhich has a dollar market value thus allowing itto be “bought” and “sold”. Roger Burritt haswritten an informative essay on how the OECDviews Australia’s environmental performance.Once again we also welcome Dan Atkin’scontribution. This time giving us an insight intoenvironmental accounting from a Nordicperspective.

The editors were disturbed to hear aboutCSEAR founder Rob Gray’s illness andrelieved to learn that he is on the mend.

Thanks to the subscribers who have paid up forthis year. The $AUD20 yearly subscription islevied to cover the costs of producing anddistributing the journal. It is not too late if youstill wish to subscribe!

I would also invite all our readers to contributearticles of interest at any time for considerationfor the journal. Send cheques (payable to theVictoria University of Technology) and anyarticles for consideration, to Gary O’Donovan,Department of Accounting and Finance,Victoria University of Technology, F005Footscray Campus, Box 14428 MCMC,Melbourne, Victoria, 8001, Australia. Ifpossible could articles be sent via email.

Gary O’Donovan EditorPhone: 61-3-9688-4331Fax: 61-3-9688-4901email: garyod@dingo.vut.edu.au

EDITORIAL BOARDGary O’Donovan (editor) - Victoria Universityof Technology, AustraliaRoger L Burritt - Australian NationalUniversity, AustraliaProfessor M.R. Mathews - Massey University,New ZealandKathy Gibson - University of Tasmania,Australia

This news journal is published by the VictoriaUniversity of Technology branch of APCEA. Copyright, June 1998

APCEA home page web site:http://www.efs.mq.edu.au/accg/apcea/index.html

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CORPORATE FIDUCIARY DUTY AND THE CASE FOR

STAKEHOLDER STATUTESLorne Cummings

Hazardous business practices can, if leftunchecked, result in disastrous consequencesfor all concerned. environmental accidents suchas Ok Tedi in Papua New Guinea, oil spills inTasmania and Western Australia, demonstratehow concern solely for wealth maximisation forshareholders, under the concept of ‘fiduciaryduty’, can result in harm and distress for other‘stakeholders’ affected by corporate decisions.Perhaps there needs to be some explicitrecognition of the rights of particularstakeholders in corporate decision making.

“The Corporations Law as it currently stands,does not prevent directors from taking intoconsideration the interests of constituents otherthan shareholders. The fiduciary duty ofdirectors is owed to the corporation as awhole, as distinct from a shareholder”, asSibylle Krieger, a commercial litigation partnerfrom Law firm Clayton Utz points out. Sec232(2) & (4) of the law requires a director toact honestly and exercise care and diligence inthe discharge of his or her duties in thecorporation’s circumstances. However, this hastraditionally been seen as maximising wealth forshareholders, and there does not exist to date,any laws at the state or federal level, similar tothose in the United States, which permitdirectors to consider the interests of other“stakeholders” in formulating corporatedecisions.

Past court cases have ruled on creditors andemployees in determining the application ofdirectors duties to creditors and employees ofan organisation. In the case of Walker vWimborne (1976) 137 CLR 1, the High Courtheld that “the directors of a company indischarging their duty to the company must takeaccount of the interests of its shareholders and

its creditors”, and held the directors liable forloans made by the company to othercompanies in the group where there was noprospect of repayment. Although rights againstthe directors do not exist when the company issolvent.

Additionally, in Ring v Sutton (1979) 5 ACLR546, it was held that directors breached theirduty to creditors when their company lentmoney at less than market rates. In NewZealand, a Court of Appeal held that this wasparticularly so in cases where the company isinsolvent, or of doubtful solvency, or if apayment or contemplated payment wouldjeopardise its solvency (Nicholson vPermakraft (NZ) Ltd. [1985] 1 NZLR 172).Director’s duties toward creditors have alsobeen held to exist in numerous other casesthroughout Australia and New Zealand.Corporations Law requirements here state thatdirectors have a duty to prevent insolventtrading by a company, and that this duty isbreached if debts continue to be incurred whenthere are reasonable grounds for it to becomeinsolvent (sec 588G). These duties extend toboth secured and unsecured creditors.

The courts have clearly held that directorsshould not consider the interests of employeesahead of those of the company. In the case ofParke v Daily News Ltd. (1962), directors ofa newspaper intended to distribute the surplusproceeds on the sale of a newspaper, towardemployees as compensation for dismissal.However, it was held that the proposedpayments were not reasonably incidental in thecarrying on of the business of the company, andwould have been detrimental to shareholdersbecause the employees were no longer inemployment. No legal judgements have been

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forthcoming which seek to consider the rightsof other stakeholders against shareholders.However the recent High Court ruling on thewaterfront dispute between Patrick Stevedoresand the Maritime Union of Australia, questionsthe companies ability to undertake decisionsbased on purely financial concerns without firstacknowledging the rights of workers.

Although some would argue that to act in theshareholders interests in maximising profit, is toact in society’s interest through economic andsocial benefits which accrue as a result ofprofitable enterprises, a direct connectionbetween shareholder satisfaction and socialbenefits may take longer to eventuate. This maypose problems in the short term betweenfulfilling shareholder obligations, and adheringto broader social requirements. For example,companies may delay or refuse to upgrade tomore environmentally conscious and saferbusiness practices and processes, because ofconcerns over higher capital expenditure costs.This situation can become even more profoundwhen a company is facing financialrestructuring, and pressure from shareholdersto reduce expenditure and improve returns.Decisions made in these circumstances oftenare short-term oriented, and ignore longer termbenefits from improved business practices. Thatis, the financial benefits of adopting moreenvironmentally friendly manufacturingprocesses and reducing business risk, may notbe immediate compared to the financial effectsof not having to outlay capital expenditure. Thiscan likely lead to an increase in the risk ofenvironmental accidents.

This is even more profound in smallercommunities that rely predominantly on largeemployers for economic survival and theprovision of services. One way of addressingthis problem, is for governments set in placestakeholder statutes, similar to those alreadyenacted in the United States, that permitdirectors to considers the interests of otherstakeholders when making decisions which

affect the allocation of resources. The form andthe extent to which this occurs is anotherquestion. The statute can be in the form of ageneral checklist of issues that directors shouldconsider when making decisions, or moreprofound statements of enforceable rights,which may be impossible in practice.

Orts (1992) states that twenty-nine U.S statesto date have enacted legislation that permitsdirectors to consider constituencies other thanshareholders in performing their duties.Polonsky and Ryan (1996, p. 8) state thatunder the Pennsylvania Statute, corporations;

“may in considering the best interests of thecorporation, consider the extent they deemappropriate [the effects on any action uponany or all groups affected by such action,including shareholders, members,employees, suppliers, customers andcreditors of the organisation, and uponcommunities in which offices or otherestablishments of the corporation arelocated” (Pennsylvania, #515(a)(1)),

“are not to consider any corporate orgroup interest as “dominating orcontrolling” (Pennsylvania, #515(b)),

“are not to act in any way solely because ofthe benefit of that action on an acquisitionor the price paid to shareholders on anacquisition” (Pennsylvania, #515(c)).

Twenty-two of these statutes have beenenacted between 1987 and 1990. Polonskyand Ryan (1996, p. 7) state that these twenty-two statutes were enacted following a 1986judicial decision in the Delaware SupremeCourt in the case Revlon Inc. v MacAndrews& Forbes Holdings Inc. The court in theRevlon case declared that directors actedimproperly in not considering a takeover bid byone company ‘Pantry Pride’, instead favouringanother company ‘Forstmann Little’, withwhich Revlon tried to bind itself to via a sale

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agreement, despite Forstmanns’ bid being lessfavourable to shareholders. The Revlon casetherefore established a duty for a corporationto be sold to the highest bidder when there is adecision by a board to sell the company.

The passing of stakeholder or (constituency)statutes that followed the Revlon decision mayindicate a willingness by the states to enshrinethe interests of stakeholders into legal rights, inthe wake of the precedent that was establishedfavouring shareholder wealth maximisation. Inaddition, it has been suggested that“stakeholder statutes were a fundamentalreaction to the institutionalisation of themarkets” (Karmel 1993, p. 1157), and were asolution to the fallout from large organisationalfinancial dealings and restructuring whichcharacterised the late 1980’s. These ‘cowboytactics’ led by leveraged buyouts and otherforms of debt financing, eventually led to manyfailed enterprises, which not only led toemployee retrenchments, but also a tarnishedcorporate image. These statutes are thereforebeing seen as providing a new corporategovernance model based on giving a broaderfocus to director duties. The same argumentcannot be lost here in Australia, given thecurrent environment of financial restructuring,and cutbacks in traditional services to the bush,be it via banking or telecommunications, whichadd to already existing fears and concernsabout the effect of global change onemployment, the environment, and thecommunity in general.

The view however, of some within the U.Slegal fraternity, has been that stakeholderstatutes are being used as anti-takeover devicesin order for existing directors to maintaincontrol, rather than as an alternativeperspective on corporate governance, and thataccountability to a clearly defined group isforgone under a stakeholder model. They havebeen seen as jeopardising the exclusive benefitof shareholders to be the primary focus of thedirectors, and for reducing shareholder ability

to sue management. Critics have argued thatfiduciary duties should only accrue to residualclaimants if they have ability to maximise thevalue of the corporation, and that to extendthese duties beyond traditional claimants, woulddevalue existing fiduciary arrangements, andcreate legal confusion. Furthermore, there is theconcern is that any stakeholder laws becomenothing more than a marketing tool bycompanies. The Pennsylvania Stakeholder Lawhas been seen as a kind of “economic folkmedicine, akin to wearing a bag of garlicaround your neck to ward off colds orvampires” (Cassel, 1997).

Despite these concerns, extending directors’duties beyond traditional claimants such asshareholders will require a consideration as towhether the benefits of existing emphasis onwealth creation, outweigh the costs that resultfrom not taking into account the interests ofconstituents which are not bound by fixedcontracts to the firm, such as environmentalgroups and the community in general. Does afinancial stake override a social stake? Doreturns on investment take priority over qualityof life, and the right of the community to live insafer, environmentally friendly neighbourhoods?Corporate downsizing and rationalisation maylead to detrimental social effects, and questionsas to the safety and reliability of existingmanufacturing practices. Ultimately what isneeded, according to Krieger “is a profoundcultural shift by shareholders toward therecognition of the longer term benefits inembracing stakeholder concerns”. Although thisis important, reliance on the market may not besufficient in the current environment, whereinvestment returns and profitability are beingmore widely embraced than ever before.

Community fears of a lack of justice and equitywill be alleviated somewhat by knowing that therights of stakeholders have at least beenrecognised by government as being asimportant as traditional firm constituents.

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ReferencesCassel, A., [1997], Andrew Cassel Column,The Philadelphia Inquirer, November 191997.

Karmel, R. S., [1993], “Implications of theStakeholder Model”, The GeorgeWashington Law Review, Vol. 61(4), April,pp. 1156-1176.

Lipton, P., and Hertzberg, A., [1995],Understanding Company Law, LBCInformation Services, Sixth Edition, Sydney.

Orts, E. W., [1992], “Beyond Shareholders:

Interpreting Corporate ConstituencyStatutes”, The George Washington LawReview, Vol. 61(1), pp. 14-135

Polonsky, M. J., and Ryan, P. J., [1996],“The Implications of Stakeholder Statutes forSocially Responsible Managers”, Businessand Professional Ethics Journal, Vol.15(3), pp. 1-35.

Sexton, E., [1998], “Australia: Business – AsInvestor Power Grows, It’s a Case of Who’sShares Win”, Sydney Morning Herald, 25April.

Lorne Cummings is an accounting academic at Macquarie University in New South Wales. Forfurther information Lorne can be contacted on: Lorne.Cummings@efs.mq.edu.au

A SUMMARY OF THE PARLIAMENT OF VICTORIA,PUBLIC ACCOUNTS AND ESTIMATES COMMITTEE

REPORT ON ENVIRONMENTAL ACCOUNTING AND

REPORTING (MARCH 1998)Roger Martin

This paper, prepared by Professor RG Walkerof the University of New South Wales,explores the extent to which Victoriangovernment (and to a small extent)non-government organisations do, could andshould report about the environment, and theireffects on it. The paper focuses on existingpractices here and abroad, and some of theproblems in expanding the reporting ofenvironmental matters. It then asks forresponses to 30 questions in relation to whatreporting 'should' be performed.

The first matter considered is nationalenvironmental accounting on a financial basis,noting some of the inadequacies of GDP asmeasure of well-being. A 'green' GDP isrejected because of the problems of

measurement, lack of methodology andaggregation of disparate data. Extending theSystem of National Accounts (SNA) issupported as the most promising technique fortaking the environment into account. Satelliteaccounts alongside and linked to the existingnational accounts plus physical indicators onenvironment-economic interrelationships(materials and energy flows, discharges, landuse change, etc). Existing approaches of theUN, the EC, France Germany and Norway aresummarised.

The approach used by the Australian Bureau ofStatistics in the 1996 National Balance Sheet isnoted as not being of particular use, merelycalculating net financial values for marketedproducts from government land.

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The questions concern reliability and usefulnessof available information and usefulness ofreports, if produced.

Australia's experience with State of theEnvironment (SoE) report "as a report card onthe condition of the environment and naturalresource stocks" (ie. the physical indicators) isconsidered next. Some discussion follows ofmodels used at various levels of government,the shortage of reliable information andproblems of relevance/usefulness of informationpresented. "The initial exercises may wellreveal how little is known about significantissues" - but you have to start somewhere,don't you?. The questions concern mainly forwhom, at what level of government, and howoften reports should be prepared.

The last section predominantly concernsenvironmental performance reporting, bothfinancial and non-financial, by governmentorganisations. Financial reporting of

environmental expenditure is presented as oftendifficult to separate out and not necessarilyuseful or representative of an organisations'environmental performance. Supplementarydisclosures of non-financial environmental dataand details of policies and systems are the mainfocus.

Reporting by private sector organisations inVictoria is considered a possibility, butcompulsory reporting seems to be ruled out fornow on the grounds that corporations law is afederal responsibility and it is radical to requiremajor environmental disclosures at present.Reporting on service efforts is assessed as alimited but growing aspect of public sectorreporting.

The "service efforts and accomplishments"(SEAS) approach from the US with muchdescriptive explanation of data presented, isconsidered as a possible way forward.However the suggestion is made that reportingof performance indicators by individualgovernment agencies is much less useful thanwhole of government reporting. The questionsconcern auditing and disclosure of expenditureand liabilities, and to what extent and how oftenshould environmental performance be reported.

Paper is available from Victorian publicaccounts and estimates committee. Phone (03)9651 3551, fax 9651 3552, email:paec@parliament.vic.gov.au.

Roger Martin can be contacted on emailaddress: rmartin@vision.net.au

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OECD VIEWS AUSTRALIA’S ENVIRONMENTAL

PERFORMANCE – SOME MESSAGES FOR

ENVIRONMENTAL ACCOUNTING.Roger L Burritt

In April, 1998, a report on the first review ofAustralia’s performance in environmentalmanagement by the Organization for EconomicCooperation and Development (OECD) wasreleased to the public. Comments are madehere on the general findings of the OECDreport and some implications for environmentalaccounting.

Background.The report recognises several characteristics ofAustralia which have an impact on the way theenvironment is perceived. First, it is anecologically unique continent, characterised bymega-biodiversity. Second, it is a fullydeveloped, highly urbanised, federal countrywith growing links to many developingcountries in the region. Australia has aneconomy based more on natural resources thanmany other OECD countries, with agricultureand mining accounting for over 61 per cent ofexport earnings derived from trade incommodities.

Finally, pressures on the environment andnatural resources from agriculture,manufacturing, the energy sector, transport andmining continue to grow, constituting a majorchallenge for Australia.

Early environmental policy responses weredirected at limiting the local impact of naturalresource exploitation and large developmentprojects. As environmental issues have grownin importance on Australia’s policy agenda, thedebate has centred on the CommonwealthGovernment’s constitutional power to protectthe environment and on the need forintergovernmental co-operation within Australia

on environmental matters, with sharing ofresponsibilities and the development of a moreconsultative approach to conflict resolution.

After the adoption of the National Strategy forEcologically Sustainable Development in theearly 1990s, efforts are now directed atbreathing life into Australia’s sustainabledevelopment policy agenda and meeting thechallenge of integrating the practice ofsustainable development into economic andsectoral decisions. Sectoral strategiesconsistent with ecologically sustainabledevelopment have recently been completed foragriculture, forestry, waste, biodiversity andwater. State and local governments have themain responsibility in addressing issues such aswater, air and waste management, land use,transport planning and natural resourcemanagement.

Some implications for environmentalaccounting.The OECD report sets out the baseline forassessing future environmental progress, andexamines Australia’s environmentalperformance in three areas:

1. implementation of environmental policies;2. integration of environmental concerns and

economic decisions;3. international co-operation on environmental

protection.

It also assesses the extent to which Australia’sdomestic objectives and internationalcommitments are being met, based on thecriteria of environmental effectiveness and

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economic efficiency. Each of these is examinedin turn below.

1. Implementation of environmentalpolicies.

The current approach to environmentalmanagement in Australia is often described asa partnership approach. It uses a mix ofregulatory, economic and voluntary instruments,with voluntary measures and agreementsbetween governments, industry and communitygroups playing a central part. For instance,corporate environmental management drivesenvironmental progress in the mining industry.Voluntary programmes, such as theGreenhouse Challenge initiative, open the roadto greater private sector involvement moregenerally. The approach to environmentallicensing is case by case, and there are widedifferences among States in enforcement and inthe availability of information on compliance.Substantial efforts are being made to developregimes that allow regulators to avoid devotingtoo many resources to inspections and directiveaction. The water reform agenda emphasisestrue-cost water pricing; in addition, innovativeand effective economic instruments are beingused in other areas, such as performance bondsto cover mine site rehabilitation costs. TheGreat Barrier Reef Marine Park Authority, theMurray-Darling Basin Commission and theBoard of Management of Uluru-KataTjuta areexamples of sound place-based andpartnership-based environmental management.

The OECD identifies a need for Australia tostrengthen the effectiveness of environmentalpolicies. It suggests that there is significantpotential for improving the effectiveness andefficiency of environmental management, by:

i) setting environmental standards withinthe country, such as those currentlybeing defined as National EnvironmentProtection Measures;

ii) expanding the use of economicinstruments, such as product charges,deposit refund systems and emissiontrading regimes; and

iii) integrating these instruments into thegeneral partnership approach.

According to the OECD, the user paysprinciple is not being applied extensivelyenough and should cover all expenditure onenvironmental protection, notably for wastemanagement and waste water treatment.

On environmental reporting issues the reportrecognises that despite progress in reporting onthe state of the environment, environmentalmonitoring and environmental data in Australiaare often inadequate in terms of coverage andconsistency. The Commonwealth State ofEnvironment Report for 1996 bears thisobservation out. The OECD indicates that thislack of information weakens the capacity totrack environmental progress, formulate cost-effective policies and measure environmentalperformance. Environmental accountants canonly applaud the OECD view that betterenvironmental data, indicators, monitoring andreporting are necessary so the public anddecision makers can better understand thesituation and address the most pressingproblems.

Another area where Australia falls short is incorporate environmental reporting. The OECDsuggests that a mandatory approach to somereporting issues is justified. In the words of thereport: “There is scope to expand reporting bycompanies on their environmental performanceand the impact of their activities. Progress indeveloping the National Pollutant Inventory isimportant in this respect. The introduction ofmandatory reporting should be taken ahead.Several OECD countries have alreadyestablished such reporting on continuous andaccidental emissions (e.g. through PollutantRelease and Transfer Registers).”

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In a third area of concern to environmentalaccountants operating in the public sector,attention is drawn to the finance gap betweenlocal government responsibilities for pollutionabatement and control and the expenditurelevels required to meet these responsibilities.Of the 1 per cent of GDP expended in thisarea, mostly related to water and wastemanagement, 68 per cent of the total is publicexpenditure. Most of this public expenditure isfunded by State/Territory and localgovernments and by households throughvarious charges. In contrast with localgovernments, which can spend up to 33% oftheir budgets on environmental matters, theCommonwealth Government accounts for lessthan 1 per cent of total recorded public sectorenvironmental expenditure. Not surprisinglythen, “Local authorities have expressedconcern about their capacity to finance neededenvironmental investments and operatingexpenditure in the current climate of reducedpublic budgets.” The Commonwealth is notthere to pick up the gap. This gap is one of thedrivers for research being undertaken atAPCEA (ANU) and for the internationalconference and tandem workshop beingorganised for February 1999 on the subject ofan ‘environmental accounting standard for localgovernment’.

2. Integration of environmental concernsand economic decisions.

Unfortunately, the OECD ignores the potentialfunction of environmental accounting at thenational level in the integration of environmentalconcerns and economic decision making. Forexample, when drawing conclusions, themeasure of economic progress used by theOECD remains expressed in terms of GDP,instead of using some environmentally adjustedmeasure of economic performance such asSEEA. The following is typical when referringto economic growth “Australia’s GDP hasincreased by 35 per cent over the past tenyears and its population by 14 per cent, higherthan the OECD averages. Though some

decoupling of environmental pressures andeconomic growth is taking place, it is a weakdecoupling, with environmental pressuresgrowing more slowly than GDP rather thandecreasing.”

The implication is that economic growth is stillmeasured by the OECD in terms of GDP andthat all the criticisms by environmentalists andecological economists of GDP as a measure ofeconomic growth have been cast aside. Clearlythere is a need for pressure to brought to bearon the OECD to implement a system that theUnited Nations would like to see introduced onan international basis. How ironic this situationis, as the OECD calls upon Australia to:

· consider improvements in institutionalmechanisms to more fully and consistentlyintegrate environmental considerations intoeconomic decisions at all levels ofgovernment;

· develop quantitative targets and timetablesto further the implementation of theNational Strategy for EcologicallySustainable Development; and

· continue to strengthen co-operativeworking relationships among theCommonwealth, the States/Territories andlocal government, and explore the mostefficient and effective structures for co-ordination between State and localgovernment and among local authorities.

A question here of getting ones own house inorder first – in terms of the non-use of anenvironmental accounting framework by theOECD.

3. International co-operation onenvironmental protection.

Following Kyoto, Australia’s environmentalmanagement reputation at the international levelhas been severely dented. Much remains to bedone to implement broad national strategies,

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especially when there are conflicts amonggroups of economic actors or betweeneconomic development and natureconservation. Greenhouse gases have been tothe fore in developing a poor external image atthe international level, but sluggish commitmentto other environmental matters has alsooccurred. In the words of the OECD:“Australia has been slow to join theinternational liability and compensation regimein case of oil spills, and it ratified the LondonConvention with some delay. It was one of thefew OECD countries to ask for a two-yearexemption on the banning of industrial wastedisposal at sea. While Australia now strictlycontrols exports of hazardous waste fordisposal, it only recently began such controls onrecyclable hazardous waste. In the area ofofficial development assistance, Australia is stillcommitted to the UN target of 0.7 per cent ofGNP, but its actual aid is decreasing and isnow at 0.27 per cent. Australia’s achievementsrelated to climate change appear likely to fallshort of its initial goal. CO2 emissions haveincreased since 1990, and, as in many otherOECD countries, they continue to do sobecause the most effective measures either arenot applied or will take a long time to produceeffects. Furthermore, Australia, with itsabundant cheap fossil fuel resources, haspleaded special circumstances as a largeexporter of fossil fuels and energy-intensiveproducts.”

The OECD recommends that consideration begiven to the following proposals:

· deepen bilateral and regional co-operationto protect the environment, notably in thearea of land-based sources of marinepollution;

· expand efforts to protect the marineenvironment, and to promote sustainabledevelopment in coastal areas, through co-operative action among relevant authorities;

· increase the volume of environmental aidto developing Pacific and Asian countries,

with a view to helping them carry out morefully their responsibilities under global andregional conventions;

· further develop policy guidelines,programmes and objectives on Australia’sresponse to the challenge of global climatechange, and make greater use of regulatorymeasures and economic instruments toenable Australia to meet cost-effectively itscurrent and future targets concerningclimate change.

In summaryAll parties concerned to improve environmentalaccountability within Australia should take noteof these and other key recommendations madeby the OECD, as these will have a bearing onthe direction of future environmental initiativesin Australia. At the same time contemplation ofsuch recommendations as : “continue andstrengthen efforts to apply public informationand participation principles, including access toenvironmental information, timely responsesand access to courts; and, expand publicreporting from companies on theirenvironmental performance, both as part ofvoluntary commitments and through corporateenvironmental management reports” willprovide a ray of hope to any environmentalaccountants who are beginning to feel that thereach of rationalist economic thought hascompletely permeated the nation’s cerebralmembranes of late.

Detailed recommendations from the OECD canbe downloaded from the OECD web site at

http://www.environment.gov.au/portfolio/esd/intergovt_unit/OECD/oecd.pdf.

For further information Roger can be contactedby email on :Roger.Burritt@anu.edu.au

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tended to be the energy and oil andchemicals sectors, the lower rankedperformers were generally from thefood, metallurgy and mining, andconstruction sectors.

· Overall the quality of reports were foundto have increased although notsignificantly in comparison to theCorporate Environmental ReportingSurvey - a NordicSurvey, September1996 conducted byDeloitte & Touche. Theareas which generallyscored quite wellincluded the sections onCorporate Profile,Communication andReport Design. Areasfor development werefound to be the Financeand Eco-Efficiency section and the ThirdParty Verification of CER’s.

· There has been an increase in thenumber of companies seekingverification of their environmentalreports.

This survey has yet to be publicly released butwill be available in July/August. Copies of thisreport and the CER Score Card can beobtained by contacting me on the belowmentioned details.

Other studies performed in recent times in thisarea throughout Europe include the UNEP“1997 Benchmark Survey”. This was acomprehensive report which ranked the top100 CER’s using a set of criteria whichincluded some differences to that used by theDeloitte & Touche survey. The results foundthat the Body Shop was the highest report andscored very well in the ethical criteria, theremaining companies were a grouped a lotcloser together, with Baxter ranked second

followed by Neste, Novo Nordisk and BritishAirways. Baxter has an innovative section onfinance and the environment, as they haveattempted to classify the savings generated fromtheir organisation’s environmental initiatives.

What we should expect to see in the futureClearly environmental reports are still in thedevelopment stage and much refinement andimprovement will occur over the next few

years. Included below aresome observations as towhat we can expect to seein the forthcoming years:

1. The development ofenvironmental performanceindicators should continueto emerge as a critical partof an organisation’senvironmental managementprogram. The work being

conducted by the WBCSD focussing ondeveloping eco-efficiency indicators. i.e.relating environmental and financialperformance is very interesting andtogether with the ISO 14031 materialsprovides a good guideline for companies.

2. The growing attention by the financialcommunity on assessing theenvironmental aspects of companies.Currently, there is still a large gap withthe information that companies areproducing and the information which isrequired by the investment community tobase their decisions on. Various workinggroups are currently trying to bridge thisgap.

3. The development of the triple bottomline concept (environment, social, andeconomy) is receiving increased attentionand recent efforts by companiesincluding Shell and General Motors aresetting the scene for furtherdevelopments in Corporate Reporting.

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Both GM and Shell have

recently released their values reports (i.e.Environmental and Social Aspects), theyboth appear to be very detailed andshould provide a basis for othercompanies to follow.

4. Both the UNEP and Deloitte &Touche survey’s concluded on recentincreases over the past few years in theamount of companies seeking verification

of their environmental reports, we shouldexpect to see this trend continue in theforthcoming years.

Dan is a senior consultant for DeloitteTouche Tohmatsu - EnvironmentalServices, Denmark and can be reachedat dan.atkins@deloitte.com

APCEA BRANCH REPORTSVictoria Universityof TechnologyThe Department ofAccounting andFinance at Victoria

University of Technology and the RiverBasin Management Society recently co-sponsored a one day seminar on“Accounting for the Environment”. Theseminar was held on 9 June 1998 at theFootscray campus of the VictoriaUniversity of Technology. A list of thespeakers and the title of theirpresentations follows:

An Introduction to EnvironmentalManagement Accounting Issues, TrevorWilmshurst, Victoria University ofTechnology

Environmental Accounting for UtilityCompanies, Kathy Gibson, University ofTasmania

Cost Allocations and Water Pricing,Roger Burritt, Australian NationalUniversity

Economic Evaluation of CatchmentManagement Projects, Mike Read,Read Sturgess

Flora and Fauna Guarantee, DiannaPatterson, Director Flora and Fauna,Department of Natural Resources andEnvironment, Victoria

A Users Perspective of EnvironmentalFinancial Reporting, Jeff Faux, VictoriaUniversity of Technology

Financial Reporting and EnvironmentalAccounting: Shall the Twain Meet?,Gary O’Donovan, Victoria University ofTechnology

The seminar attracted approximately 40attendees and was well received. Ifreaders would like copies of the papers,they can be purchased at a nominalcharge from: Keiran Croker, Melbourne Water, 684Doncaster Rd, Doncaster Vic 3108.Phone: (03) 9840 5704, Fax: (03) 98405 7 1 0 , e m a i l :keiran.croker@melbwater.com.au

For any further information regardingAPCEA’s activities through VictoriaUniversity of Technology, contact GaryO’Donovan on Ph: (03) 9688 4331 oremail: garyod@dingo.vut.edu.au

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Australian National UniversityRoger Burritt reports that APCEA areorganising an International Conferencetitled "Acting Locally ThroughEnvironmental Accounting" inconjunction with the Australian Centrefor Regional and Local GovernmentStudies (ACRLGS) at The University ofCanberra. This event will run betweenFebruary 15th to 17th, 1999 in Sydney,Australia. The target is between 250 and400 delegates.

The aim is to identify and explore therange and structure of financial andphysical measures which are and can beused by local authorities and theirstakeholders to assess and enhance localenvironmental performance.

The format will emphasise plenarysessions, with both national andinternational speakers supported bypanel discussions Local Governmentswill be encouraged to submit posterdisplays on their application of a range ofenvironmental accounting practices. Thisconference will also be the main vehiclefor launching the training materialsoutputs of a Local GovernmentDevelopment Program (LGDP) projectinto environmental accounting for localgovernments.

A second, related conference"Developing an EnvironmentalAccounting Standard for LocalGovernments: Towards a GlobalStrategy" is being developed as a tandem

event to the above conference, runningfrom February 18th to 19th, 1999. Thetarget here is for around 100 to 120delegates, of which some 30 to 50 willbe invited by the conveners, with thebalance open to the public. The inviteddelegates will primarily berepresentatives of international bodies,Commonwealth and state governmentagencies, and the accountancyprofession; supported by localgovernment practitioners and academicswith a research background in this field.The aim of this event is to consider theprospect and merit of using the extensiveand unique experience gained from theLGDP project as a catalyst fordeveloping an Environmental AccountingStandard for Local Governments.

Here it is envisaged the format willemphasise workshops where delegatesdebate the development of a strategicprocess and its elements.

For further information contact either:Roger L Burritt,Senior Lecturer, Department ofCommerceand Co-ordinatorAsia Pacific Centre for EnvironmentalAccountability (APCEA),The Australian National UniversityCanberra, ACT 0200, AustraliaTelephone: 02 6249 3670Fax: 02 6249 5005Email: Roger.Burritt@anu.edu.auor Dick Osborn on email:rco@management.canberra.edu.au

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WATCHING THE WEBA s i a P a c i f i c C e n t r e f o rEnvironmental Accountability(APCEA)

web addresshttp://www.efs.mq.edu.au/accg/apcea/index.html

Our own APCEA web site is up andrunning thanks to Lorne Cummings atMacquarie University. The site containsdetails of APCEA’s charter, informationon forthcoming conferences, including aninternational conference titled "ActingLocally Through EnvironmentalAccounting" which is being convened byAPCEA (ANU) in conjunction with theAustralian Centre for Regional and LocalGovernment Studies (ACRLGS) at TheUniversity of Canberra. This event willrun between February 15th to 17th,1999 in Sydney, Australia (see newsfrom branches earlier in this edition formore details). The site also containssome links to other environmental websites.

I n t e r n a t i o n a l C o r p o r a t eEnvironmental Reporting Siteweb addresshttp://home.wxs.nl/~folmolen/mjv.htm

This is one of the most comprehensivesites for those interested in corporateenvironmental reporting issues. The user

can choose from a number of pagesincluding an introduction to the site,international section, international webdirectory, international environmentalnews as well as many links to otherenvironmental sites.

One section also contains currentresearch papers from both an academicand corporate perspective. Anotherinteresting section entitled “AwardsGallery” lists awards and criteria for thejudging of the awards bestowed uponcorporations for various environmentalinitiatives and performance.

Environmental News Network (ENN)web address:http://www.enn.comThe Environmental News Networkproduce a daily news letter whichincludes issues concerned withenvironmental and education. While thecontent is primarily North Americanfocussed, it does contain many issueswhich relate to environmental issues of aglobal nature.

The news letter is delivered by email andis free. Registration details are availableon the web site.

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NEWS AND ISSUESCurrent Environmental Accountingand Reporting ResearchDuring the recent European AccountingAssociation (EAA) Annual Conferenceheld in Belgium during April and theBritish Accounting Association (BAA)Conference held in Manchester in April,a number of papers on environmentalaccounting and reporting werepresented. Below are the authors, titleof the papers, and where available, emailaddresses of the authors, for those whomay interested in contacting them.EAA papers:

Denis Cormier and Michel Magnan:Universit Quebec a Montreal. De te rminants o f Corpora teEnvironmental Reporting Strategies andtheir Impact on Investors Assessment.

C. Deegan and M. Rankin: University ofSouthern Queensland. deegan@usq.edu.auThe Environmental ReportingExpectations Gap: Australian Evidence.

G.R. Frost: University of Newcastle,Callaghan.cmgrf@cc.newcastle.edu.auEnvironmental Reporting PracticesWithin Australian Extractive Companies:An analysis of theInfluence ofCorporate PublicExposure.

R.C.W. Eken,N.C.H.J. Vanden Kieboom:M a a s t r i c tUniversityr.eken@berfin.u

nimass.nlEnvironmental Disclosures in the AnnualReport: An Analysis by Branch ofBusiness in the Netherlands.

C.L. Gonzalez, F.C. Fenech, F.J.C. Gonzalez, C.C. Ruiz, and J.M.P.Sandubete. larinaga@emp.uc3m.esCorporate Attitudes to Sustainability:Exploring the Possibility of AccountingChange.

J. Raar: Deakin University, Burwood.raar@deakin.edu.auEcological Values vs Economic Values:Preliminary Case Study: Evidence onFactors Motivating Financial Outlays.

BAA papers

Andrea B. Coulson, Durham UniversityBusiness School, A.B.Coulson@durham.ac.ukEnvironmental Considerations WithinBank Lending Processes.

Glen Lehman, University of SouthAustralia, Glen.Lehman@unisa.edu.auCorporate Social and EnvironmentalAccounting in Liberal-Democracies.

M.R. Mathews, Massey University,M.R.Mathews@massey.ac.nzAccounting to the Wider Society:Towards a Mega-Accounting Theory.(also presented at EAA)

Jeffrey Unerman, Thames ValleyUniversity,jeffrey.unerman@tvu.ac.ukA Critique of Content Analysis as aResearch Method for Corporate Social

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Reporting.

Thanks to Reg Mathews from MasseyUniversity for providing this information.

Accounting Association of Australiaand New Zealand (AAANZ) 1998Annual ConferenceIt is encouraging to see thatenvironmental accounting continues tohave a regular, if not growing, presencein this important academic conference.This years conference is in Adelaidebetween 5 and 8 July. Papers beingpresented which may be of interest toreaders are:

D. Keene, The EnvironmentalConsciousness of AccountantsEnvironmental Worldviews, Beliefs andPro-Environmental Behaviours.

G. Tower, S. Kusumo & M. Williams,An Evaluation of the Determinants of theQuantity and Quality of VoluntaryDisclosures in Indonesian ListedCompanies

M. Milne & R. Adler, Exploring theReliability of Social Disclosure’s ContentAnalysis

G. Frost & M. Harding, Accounting forRestoration Obligations: An Analysis ofthe Implications From the Introduction ofUIG Abstract 4

R. Mathews & J. Lockhart,Environmental Accounting Education:Some Thoughts

For more details on these and otherpapers refer to either of the twofollowing web sites:http://www.sapmea.asn.au/aaanz.htmorhttp://www.ecom.unimelb.edu.au/accwww/aaanz/

Centre for Social and EnvironmentalAccounting Research (CSEAR)NewsletterThe first edition of Volume 18 of thelatest newsletter is now available. Asusual it contains an abundance of usefulinformation. Highlights of this editioninclude a thought provoking articleentitled “Corporate EnvironmentalReporting: Some Critical Thoughts” byGlen Lehman. The regular article andbook reviews make this newsletter anessential read for any person interestedin keeping abreast of the latest social andenvironmental accounting initiatives.

ENVIRONMENT EXTRA!The Cost of Human DevelopmentSource: http://www.enn.comTuesday, June 16, 1998

Over the past 100 years, humans haveachieved a longer life expectancy, higher

per capita incomes and better education.Yet, at the same time, human impact onthe natural world has risen dramaticallyas the scope and intensity of humanactivities have increased, according to amulti-agency report.

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