UK government issues reporting guidelines
London, 26 January: The UK government has published guidelines identifying 'key performance indicators' (KPIs) to help businesses report on their environmental impacts. The guidance comes hot on the heels of finance minister Gordon Brown's surprise scrapping of the Operating Financial Review (OFR), in November, which would have mandated environmental and social reporting.

In announcing the guidance, environment minister Elliot Morley said that it is "simply not the case" that the axing of the OFR meant that UK companies are off the hook when it comes to reporting their environmental impacts.

"All quoted and large private companies preparing the new Business Review will need to report significant environmental issues," he said, referring to reporting requirements under the EU Accounts Modernisation Directive (AMD), which came into force for financial years beginning last April.

It applies to 'large' companies, which the EU defines as those fulfilling two of the three following criteria: annual turnover of above £22.8 million ($40.7 million); a balance sheet larger than £11.4 million; and more than 250 employees.

"The Business Review represents a significant advance in narrative reporting standards, including those for environmental reporting," he said, noting that the new guidelines – prepared by environmental research company Trucost and the Department for Environment, Food and Rural Affairs – should help companies identify the issues on which to report.

The guidance sets out 22 KPIs which businesses can use. It suggests that some 80% of UK companies need only report on four or five indicators. The KPIs cover emissions to air, water and land, and resource use.

"The aim is to provide a means by which all companies can reach the standard of the best in a cost-efficient way," says Simon Thomas, chief executive of Trucost. "Environmental reporting is an important factor in company valuation which is why investors have an increasing interest in it."

Writing in last month's issue of Environmental Finance, Thomas noted that corporate awareness of the new requirements is extremely limited. A survey of quoted UK companies found that fewer than one in 10 had heard of the AMD (see December 2005-January 2006, page 22).