June 30, 2004



Keywords: Newsletter 

JFS Newsletter No.22 (June 2004)

About 600 Japanese companies are said to have issued environmental reports. The General Press Corporation, a JFS corporate member and web content provider, issued a "Survey of Corporate Environmental Reports 2003" based on a study of 285 Japanese companies. Here we present some of the trends in environmental reporting as revealed in this survey.

As for the titles of such reports, 231 companies (81.1%) use "environmental report," 30 companies (10.5%) use "social/environmental report," 9 (3.2%) use "responsible care report," 8 (2.8%) use "sustainability report," 5 (1.8%) use "environmental management report" and 2 (0.7%) use "CSR (Corporate Social Responsibility) report." No environmental reports were consolidated with the annual report. A shift from "environmental report" to "sustainability report" or "CSR report" seems likely in the near future.

Regarding content, 65.2 percent of the reports discuss environmental topics only, while 27.4 percent deal with non-environmental issues such as legal compliance, social responsibility, and labor safety/hygiene. Only 6.7 percent touch on the so-called the "triple bottom line" (economy, society and environment) set out in the Global Responsibility Initiative (GRI) guidelines, which were drawn up by the Global Reporting Initiative organization with the aim of creating universally applicable guidelines.

About half (50.9%) of the reports "are based on" or otherwise use as reference guidelines drawn up by Japan's Ministry of the Environment, while 30.2 percent use the GRI guidelines as reference.

Environmental accounting results were presented in 82.8 percent of the reports. Measures of progress in environmental management such as eco-efficiency (sales divided by an environmental impact index) and "Factor X" were introduced by 7.7 percent of the companies. In addition, those describing the activities of their overseas offices increased substantially from last year, to 21.8 percent.

Interest has been growing in CSR, and top executives mentioned it in the introductory section of 21.8 percent of the reports, while corporate governance was referred to in 9.8 percent. Following a series of corporate scandals in recent years, society's demand for corporate accountability has risen and an increasing number of companies have created a legal compliance division. Thus, statements about compliance greatly increased compared to last year, and were found in 24.9 percent of the 2003 reports.

Regarding social topics, many companies reported their activities to stakeholders; 20.0% reported to customers, 62.5% to employees and 6.0% to business partners.

Although seven percent described economic performance in terms of the "triple bottom line," in most cases these descriptions were limited to total sales, operating profits and other financial information.

Various attempts were made to improve readability. For example, 38.6 percent of the reports summarized the year's major activities in short paragraphs or as titles in their introductory pages, 47.4 percent had columns and true stories, and 36.8 percent included comments by employees, in order to add a touch of life or a sense of familiarity to the reports.

Third-party reviews were conducted by 30.2 percent of the companies, most frequently by auditing corporations, but also increasingly by environmental non-profit organizations and experts able to provide critical advice.
Negative information, such as accidents and violations, were disclosed by 16.8 percent of the companies.

Some companies considered the environmental impact of the reports themselves; 77.5 percent used soybean oil inks, including 9.1 percent that used inks containing no volatile organic compounds, and 78.2 percent used recycled paper, including 4.9 percent that used non-pulp materials such as kenaf and bamboo. An increasing number of companies (7 percent) used Forest Stewardship Council (FSC)-certified paper.

A majority of companies, 66.3 percent, posted their reports on the company web site, as well as publishing a printed report, and 22.8 percent of these provided additional or new data not in their printed reports to their websites.

These are the major trends as shown through the key data and analyses in the General Press Corporation's Survey of Corporate Environmental Reports 2003.

To sum up general trends, more and more companies are now trying to include not only environmental but also social and economic indices of their activities, especially in accordance with the guidelines of the Ministry of the Environment and the GRI. Many companies now regard the publication of their environmental report not just as an obligation but as a useful communication tool, striving to make the report more readable, more honest about disclosing negative information, and more closely linked to their website.

These trends represent the current state and direction of Japanese corporations' efforts toward sustainability, including increased attention to stakeholders.

(Junko Edahiro)