Launching Statutory Environmental Reporting

Institute of Chartered Accountants Awards Ceremony
Wellington

Ladies and gentlemen, good evening and thank you for the invitation to help with your awards presentation tonight.

Before announcing the awards I'd like to talk a little about my vision for environmental reporting and the Coalition Government's plans in this regard.

The judges of the Environmental Reporting Awards noted an improvement in the level of environmental reporting - that is encouraging. When it comes to environmental initiatives I fully support and encourage the policy of voluntary agreements between industry and government. However, in the event that such an approach fails to deliver the necessary environmental outcomes, there is a place for government regulation.

The World Bank said recently that it recognised the respective roles that government and industries must play. Their report highlighted five functions that governments, rather than markets and private bodies, must provide. They were: a basic legal framework, an effective macro-economic environment, investment in basic social services and infrastructure, a comprehensive safety net for vulnerable members of society and basic environmental protection.

In essence it was saying that government should ensure that there is a framework which delivers essential services and that environmental protection be ensured. Government can help provide the impetus where necessary.

Business and industry have a responsibility to the environment too, and the new Parliamentary Commissioner for the Environment, Morgan Williams, recognises this. He has said that "most of society's needs and wants are actually delivered by the commercial sector in western economies, leaving aside perhaps education and health.

Therefore, ultimately, the environmental qualities of a nation mostly rest with the business community".

I hope that the accounting profession will take the challenge of improving the levels of environmental reporting. You have to ask, why would you not want to report your impact on the environment?

I believe that environmental reporting is a positive thing, for the environment and business alike.

The Coalition Agreement signalled our intention to amend the Companies Act to require statutory disclosure of environmental impacts by companies. The introduction of such a requirement would create a mechanism for improving corporate governance. Not only would it increase the transparency of individual companies' impacts on the environment, therefore allowing public scrutiny, but it would also encourage competition, with every business wanting to promote it's green credentials, vying to be the cleanest in the business!

The KPMG Environmental Reporting Awards go some way to achieving this, but there are many companies that are either reporting nothing at all or reporting incomplete data.

I envisage companies having to outline their environmental impact in annual reports, and I expect that like accounts, these could be routinely audited to check for accuracy.

Why Organisations Should Report on the Environment

There is increasing pressure on business to demonstrate to stakeholders that it is operating responsibly towards the environment.

The concept of environmental reporting is not just to please the "greenies".

Consumers and the marketplace want to scrutinise environmental performance;
the financial community wants to be aware of long term strategic risks posed by environmental impact;
communities want assurances that an organisation has processes and programmes in place to manage environmental risks and minimise impacts;
employees want to know what is going on because they are the front-line people implementing an organisation's environmental strategy; and
environmental organisations, as one of the most influential users of information want to have accurate data, and likewise Government needs accurate information on which to base future policies.
Some companies are not really aware of their impact on the environment. So statutory disclosure will require companies to know what resources they are using, what discharges result from their activity and how that impacts on the physical environment.

In the eyes of the international community, disclosure of this sort will be seen as responsible. I expect that not only will reporting help us manage our environment in a better way, but trade, tourism and exports will all benefit from people wanting to purchase from environmentally responsible, aware and transparent companies.

The Ministry for the Environment is supporting the KPMG Environmental Unit and Bruce Gilkison in publishing a book on environmental accounting and reporting in New Zealand. I hope that this will provide some guidance to New Zealanders as we all interpret the relationship of the environment with business.

We're increasingly in an age where, if you're not a green company, then you're a bad one. That's good.

Launching the commitment to mandatory environmental reporting

Tonight I'm pleased to announce that the Budget has provided for the implementation of the Coalition's policy on environmental reporting.

Throughout this year the Ministry will be looking at how best to implement the policy.

Our current thinking is that incorporating an environmental reporting requirement into either the Companies Act or the Financial Reporting Act may be the best mechanism to implement mandatory environmental reporting.

This years' work will include looking at what information we would like companies to report and the appropriate legislative vehicle for implementation.

The Ministry will consult extensively during this exercise, and if any of you have any concerns or ideas, please get in touch with either the Ministry or myself.

I expect that work on completing draft legislation will be complete by this time next year, and then we can begin the process of amending legislation.

Awards

I'd now like to move to the part you've been waiting for - the 1997 KPMG Environmental Reporting Awards.

The first award, is the "Best Annual Environmental Report by a Company".

The finalists are:

Electricity Corporation of New Zealand Ltd
The New Zealand Refining Company Ltd
The Tasman Pulp and Paper Company Ltd
Watercare Services Ltd
And, the winner is "Water Care Service Ltd", for the third time in three years.

The next award is the "Local Government Best State of the Environment Report".

There are no finalists for this award, just one clear finalist:

Taranaki Regional Council
Regrettably, I am told, that for the final award, "Local Government Environmental Reporting on Services Delivery", that no reports matched the required standards and that no award is to be made this year.

Congratulations to the winners, and I look forward to hearing from you all during the next year as we work co-operatively towards ensuring that New Zealand maintains its clean green image.

And finally, my thanks to KPMG for their initiative and continued commitment to these awards.

ENDS.