Japan for Sustainability Newsletter #005
ENVIRONMENTAL REPORTING: EXPANDING IN QUALITY, QUANTITY AND APPLICATIONS
In recent years, an increasing number of large and medium-sized
companies in Japan have started to issue environmental reports. Some
local governments and universities have been reporting too.
There is no official definition for what an environmental report is, but
typically one will contain key information for disclosure inside and
outside the organization, including executive comments, policies,
objectives and plans for environmental conservation, the status of
environmental management (environmental management system, legal
compliance, development of environmental technologies, etc.), and
performance of environmental activities (CO2 emission cuts, decrease in
waste generation, etc.). Environmental reports are different from
publicity brochures aiming to enhance a corporate or organizational
image. Most environmental reports are published on paper, but recently
some companies publish only on their websites.
Japanese companies started publishing their environmental reports during
the mid-1990s, when many started to obtain ISO 14001 certification. It
is noteworthy that non-governmental organizations in this country, such
as the Valdez Society and Environmental Auditing Research Group, played
an important role at that early stage by disseminating information and
enhancing people's awareness of environmental reporting.
The purpose of preparing and publishing environmental reports is to
facilitate organizations' voluntary activities for environmental
conservation and to promote "environmental communication" with various
stakeholders. Recently many people in society are starting to recognize
the concept of "accountability," in which organizations are believed to
be responsible for disclosing their environmental information.
According to the "Survey of Companies for Environmentally-Friendly
Activities" for fiscal 2001 by Japan's Ministry of the Environment,
covering 2,644 listed companies and 3,716 unlisted companies with 500 or
more employees, the percentage of companies that had disclosed their
environmental information to the public was 31.1 percent, an increase of
3.2 percent from the previous year. The figure for the listed companies
was 38.9 percent, a 11.4-percent increase over the previous year.
Companies Boost Environmental Activities
The number of companies that issue environmental reports has been on a
rise. Among the companies in the above survey, 579 companies (20.0
percent) issued such reports in 2001 and 347 other companies (12.0
percent) said they would issue their reports in the following year. More
and more companies are expected to publish their environmental reports
in the coming years.
The Ministry of the Environment issued "Environmental Reporting
Guidelines, fiscal 2000 version" in February 2001 as a guide for
companies in creating environmental reports.
The Guidelines cover the rationale and advantages of publishing
environmental reports, potential readers and stakeholders, scope and
media, basic requirements and principles, and mechanisms to secure
reliability, as well as basic items to be included in reports.
Publication of the Guideline has further advanced Japanese companies'
initiatives to create and publish environmental reports.
The Ministry also published the Guidelines for Environmental Performance
Indicators, one of the key elements of environmental reports.
One of the important aspects of environmental reports is "comparability."
Even though many companies publish environmental reports, if their
methodologies and bases for calculation of environmental loads are
different, it is difficult for readers to compare or analyze such
figures. If environmental performance is reported in accordance with
such guidelines, quantitative information can be compared among
companies. In this sense, the Guidelines are very important for further
enhancement of environmental reports. At present the Guidelines are
Also, the Ministry of Economy, Trade and Industry has published their
own guidelines for environmental reporting.
The Ministry of the Environment, in attempt to increase further the
number of companies that issue environmental reports, established
a "Committee to examine ways and initiatives for promotion of
environmental reporting" with plans to report on their discussions
toward the end of fiscal 2002 (i.e., in March 2003).
The Ministry is also trying to raise awareness among readers and users
of environmental reporting by setting up a "Database for Environmental Reports."
Environmental Ministry to Release Database on Corporate Environmental Reports
The Global Environmental Information Center (Tokyo), mainly managed by
the Ministry of the Environment, has a library of environmental reports.
Anyone can drop by and take a look.
In the previous issue, we introduced the Green Purchasing Network, a
unique organization that has promoted and supported Japan's "green
procurement" movement . In the field of environmental reporting, on the
other hand, we have the Network for Environmental Reporting (NER) in Japan.
NER was established in 1998 by companies, organizations, universities
and citizens who were interested in environmental reporting, with an aim
of promoting and developing environmental communications through
environmental reports. In partnership with various stakeholders, NER has
been active in holding study groups and symposiums and exchanging and
disseminating information on environmental reporting.
At present, there are two awards for environmental reports in Japan. One
is the "Environmental Reporting Award" sponsored by the Global
Environmental Forum and supported by the Japanese Ministry of the Environment.
The "Environmental Reporting Award" was started in 1997 with the
objectives of promoting environmental communication through disclosure
of environmental information and promoting proactive initiatives of
companies by awarding excellent environmental reports.
Of 293 entries for the "Environmental Reporting Award" in fiscal 2002,
28 reports received an award. The Grand Prix was awarded to Matsushita
(Panasonic) for its Environmental Sustainability Report 2002.
Two among the 11 reports that received the Award for Excellence were:
Asahi Breweries' Eco Report 2002
SOMPO Japan's Sustainability Report 2002
The other award system is the "Green Reporting Award," co-sponsored by
Green Reporting Forum and publisher Toyo Keizai Inc.
In 2002, the Green Reporting Award Grand Prix was awarded to Seiyu (a
department store chain).
The main audiences for corporate environmental reports are customers,
shareholders, investors, employees and local residents. An increasing
number of companies have started to issue "site reports," published by
factories and business units focusing on their surrounding communities.
Such site reports are prepared to meet a community's concern for the
local environment. Sony, NEC and other companies have been promoting
such initiatives for years.
In addition, there are other unique environmental reporting initiatives
in Japan. For example, the Toshiba Corporate Research and Development
Center issues environmental reports for children.
Waseda University issues environmental reports, one example of
environmental reports published by non-company organizations.
The Tokyo Metropolitan Government's Bureau of Waterworks also issues
As one interesting initiative, the Tokyo Metropolitan Government has
prepared a framework for "Mini Environmental Reports," focusing on
chemical substances, and invites small and medium enterprises (SMEs),
shopping malls and groups of small companies to publish their own "mini"
Increasingly, environmental reports have become important as more people
turn their attention to "eco funds" and socially responsible investment
(SRI). Environmental reports are the main information sources for the
screening of SRI funds, corporate ratings and evaluations.
Many companies use their environmental reports as textbook for their
employees in environmental education classes. In another example, NEC
co-organized a "Meeting to Read the NEC Fuchu Environmental Report" with
the City of Fuchu, in cooperation with the Tokyo Metropolitan Government.
This meeting aimed at promoting dialogue with the community, using the
environmental report as a platform.
Interestingly, some companies in different sectors co-sponsor "Meetings
to Read Environmental Reports" with an aim of promoting candid exchanges
Suntory (beverage company) and Matsushita (Panasonic) held such a joint
meeting in December 2001 for the first time. Employees from both
companies in charge of preparing environmental reports explained their
respective reports and obtained input from various stakeholders. In 2002,
Toyota, Ricoh, Epson and other companies also held such meetings.
Sompo Japan (an insurance company) and Nissan (a automobile manufacturer)
plan to hold a joint workshop in February 2003 to discuss their
environmental reports with various stakeholders. They expect to hear
candid opinions on their reports by comparing sustainability reports
66rom manufacturing and non-manufacturing sectors.
Not only the quantity and use but also the orientation of environmental
reports has been drastically changing. In the past one to two years, in
particular, a trend toward "sustainability reporting" has been clearly
evident. Sustainability Reports define corporate sustainability,
including not only environmental aspects, but also economic and social
aspects, and communicate them to stakeholders.
According to a survey conducted by NER in June 2002, a third of
respondent companies said they already issued sustainability reports and
another quarter of companies surveyed said they were planning or
considering issuing such reports instead of environmental reports.
In the fall of 2002, the GRI Japan Forum was established, aiming to
disseminate Global Reporting Initiative Guidelines in Japan and to send
proposals and inputs from Japan to the international GRI organization.
As you can see, there is now a very active movement in the field of
environmental reports in Japan. Japan for Sustainability will keep you
updated with new developments and initiatives in this field.
The majority of large companies have started to publish English versions
of their environmental reports. JFS is now working to create a page of
links on our website for visitors to obtain English versions of
environmental (sustainability) reports of Japanese companies. We will
let you know when it is ready.