NEWS JOURNAL OF THE ASIA PACIFIC CENTRE FOR ENVIRONMENTAL ACCOUNTABILITY Volume 4, No. 3, September 1998 Contents Page No. Editorial 2 Feature Articles The Buck's Gotta Stop Somewhere: Social and Environmental 3 Accountability in the Financing of Mining Sarah Wright, The Minerals Policy Institute The Natural Heritage Trust – Improved Accountability? 6 Roger Burritt Discussion Paper: Towards a National Environment Protection 10 Measure for the Assessment of Contaminated Sites Kathy Gibson A Review of interim report by House of Representatives Standing 12 Committee on Environment, Recreation and the Arts - "Regulatory Arrangements for Trading in Greenhouse Gas Emissions", (Aug 1998) Roger Martin Regular Features APCEA Branch Reports 13 Watching the Web 14 News and Issues 15 Environment Extra! 17 Published with the assistance of the Department of Accounting and Finance, Victoria University of Technology, Melbourne, Australia Sponsored by the Tasmanian Division of the Australian Society of Certified Practising Accountants
Transcript
NEWS JOURNAL OF THE ASIA PACIFIC CENTRE FOR
ENVIRONMENTAL ACCOUNTABILITY
Volume 4, No. 3, September 1998
Contents Page No.
Editorial 2
Feature Articles The Buck's Gotta Stop Somewhere: Social and Environmental 3Accountability in the Financing of MiningSarah Wright, The Minerals Policy Institute
The Natural Heritage Trust – Improved Accountability? 6Roger Burritt
Discussion Paper: Towards a National Environment Protection 10Measure for the Assessment of Contaminated SitesKathy Gibson
A Review of interim report by House of Representatives Standing 12Committee on Environment, Recreation and the Arts - "Regulatory Arrangements for Trading in Greenhouse Gas Emissions", (Aug 1998)Roger MartinRegular FeaturesAPCEA Branch Reports 13
Watching the Web 14
News and Issues 15
Environment Extra! 17
Published with the assistance of the Department of Accounting and Finance, Victoria University ofTechnology, Melbourne, Australia
Sponsored by the Tasmanian Division of the Australian Society of Certified PractisingAccountants
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EDITORIALWelcome to the third edition of the APCEAnews journal for 1998.
We are fortunate to be able to include in thisedition an article on the social andenvironmental accountability of financialinstitutions. The article, submitted by theMineral Policy Institute, is particularly thoughtprovoking in these times of heightenedawareness in relation to corporate social andenvironmental issues.
No business or corporation can operatewithout finance and this study covers an oftenneglected area of research in regard to thepower financial institutions have overbusinesses. Society is quick to criticise largecorporations for being environmentallyirresponsible, yet, as this article highlights,without the financial support of banks and otherfinancial institutions, these corporations wouldnot exist. If financial institutions began toimpose certain social and environmentalcovenants on business, we may see animprovement in the area of corporate socialand environmental performance.
Kathy Gibson and Roger Burritt have alsoprovided interesting pieces on contaminatedsites and accountability and the nationalheritage trust. Roger Martin has written a briefreview on the federal government’s “RegulatoryArrangements for Trading in Greenhouse GasEmissions", (Aug 1998).
Our regular contributor from Deloitte’s inDenmark, Dan Atkins, is having an edition off,but his contributions will continue in the nextedition.
Back copies of editions from Volumes 1, 2 and3 of this news journal and its predecessor, theStrategic Centre for EnvironmentalAccountability (SRCEA) Newsletter are
available on the World Wide Web. They canbe accessed from a link at APCEA’s homepage (address at the bottom of this page) ordirectly from the SRCEA’s site at:
http://www.comlaw.utas.edu.au/SRCEA/Index.html
You will need to use Adobe Acrobat to accessthe back issues.
If our readers wish to contribute articles ofinterest at any time for consideration for thejournal they can send any articles forconsideration, to Gary O’Donovan, Editor -APCEA News Journal, Department ofAccounting and Finance, Victoria University ofTechnology, F005 Footscray Campus, Box14428 MCMC, Melbourne, Victoria, 8001,Australia. If possible could articles be sent viaemail.Gary O’Donovan EditorPhone: 61-3-9688-4331Fax: 61-3-9688-4901email: [email protected]
EDITORIAL BOARD
Gary 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, September 1998
APCEA home page web site:http://www.efs.mq.edu.au/accg/apcea/index.html
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to Caterpillar, Rotec Industries and VoithHydro who were bidding for contracts for the$75 billion Three Gorges hydro-electric dam inChina .
The project:This project evaluated existing social andenvironmental policies and practises of thefinance sector. It provides a base from whichto inform and guide the development ofstrategies aimed at changing the way financialinstitutions loan money, assess risks, and makeinvestments in large-scaleprojects.
The project looked at best ethical practice,investigating standards that could beincorporated into banking policy. It alsolooked at ways that ethical factors are currentlybeing assessed, or could be assessed, chieflythrough environmental risk assessmentprocesses.
In particular, the research aimed to address thefollowing questions; • What are the social and environmentalpolicies of Australian and Australian-basedfinancial institutions?
• How thoroughly do these policies coverthe areas of environmental and socialassessment, monitoring and corrective actionand public accountability?
• To what extent do these policies lead toclear and measurable results?
Major findings:
SOCIAL AND ENVIRONMENTAL POLICY
• 45% of respondents (banks, insurersand export-import credit agencies)reported thatthey have some kind of policy or policiesregarding environment, human rights and socialissues in giving out loans, insurance or investing
in mining companies.
• Less encouraging, however, wereindicators that dealt more specifically withconcrete issues (ie screening, monitoring anddue diligence).
• The Australian commercial banksperformed favourably with respect toenvironmental or social policies but did notmeasure up in some other indicators. Forexample, only one respondent reported that itmonitored the effects of its projects and norespondent indicated that it expected toincrease attention to environmental or socialfactors in the next three years. This is againstthe trend of international respondents who sawenvironmental and social factors becomingincreasingly important in the future.
• Australian banks play a very importantrole in the region. In a survey of projectfinance, Australian banks were ranked secondand sixth in the list of major arrangers in theAsia Pacific region. ANZ was ranked thesecond largest arranger with over $2 billiondollars invested in the region. ANZ alsoranked third in the list of arrangers in SouthAsia. Australian banks are also very active ininvestments in mining companies, particularlythrough fund management companies. ANZhas no formal environment policy.
ENVIRONMENTAL AND SOCIAL ASSESSMENT
• Due diligence, in the majority of caseswas performed on, at best, a case-by-casebasis. This result called into question the rigourof environmental and social policies. Duediligence was not applied as a matter of policyto mining projects.
• It was unclear what framework wasused to decide whether projects were subjectto due diligence, and only one respondentindicated that it possessed any systematicmethod of determining "high impact" proposals.
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If projects are monitored and assessed on anad-hoc basis and remedial action is not applied,the thoroughness of environmental and socialpolicies is highly questionable.
• One trend that emerged relates to theemergence of environmentally targetedportfolios. Whilst the existence of theseportfolios represents a positive step, it is notideal to isolate thorough environmental andsocial due diligence to one-off specialised"eco-portfolios". Best practise would see suchstandards apply industry-wide.
PUBLIC ACCOUNTABILITY
• The financial services industry fell wellshort of ethical practice in public participationand transparency. Disappointingly, even theresponse of government export credit agencies(eg Australia's Export Finance and InsuranceCorporation) was poor, although was not aspoor as the commercial banks. The exportcredit agencies aim to support trade byextending finance and insurance to theircountry's exporters. Details of theenvironmental policies of the majority of thepublic respondents were not publicly available.Not a single private respondent had a publiclyavailable environmental policy. Hiding behinda screen of confidentiality seems a convenientway to avoid scrutiny over specific details ofethically based policies.
• Industry willingness to collaborate withNGOs or engage in a collaborativeindustry-based process to exploreenvironmental and social issues wasencouraging. Industry-wide, over 90 banksfrom twenty-seven countries have signed theUNEP Declaration of the Banks on theEnvironment and Sustainable Development.Such signs of collaboration bode well for thefuture.
The future:As institutions and organisations combine their
skills to develop better ways of integratingenvironmental risks and opportunities into thecore financial service investment and creditevaluation processes, the chances for industrybest ethical practise will also be increased.
The picture is not all bleak. The finance sectoris beginning to pay attention to social andenvironmental issues, and many players in theindustry expect this attention, whether forethical or purely finance reasons, to increase incoming years. A response rate of 50% wasalso encouraging and financial institutions whoresponded are commended for theirtransparency. Such improvements bode wellfor the future.
However, there is significant room forimprovement. Many financial institutions makemajor decisions that effect the lives ofcommunities around the globe without even abasic environmental or social policy to helpinform their decisions. Other institutions lackthe clear and measurable policies needed tomake real change.
Finally, the sector on the whole, performedvery poorly in terms of public participation andaccountability. Whilst competitiveness andcustomer confidentiality are of highest priorityin lending, investment and insuring activities,publication of policies and projects need notautomatically breach confidentialityrequirements. Indeed, a commitment to ethicalinvestment and transparency can lead to aboveaverage returns, less risk and greatercompetitiveness.
Pressure from NGOs and government(including legislative change and regulation) isneeded. This study shows there is a need for furtherresearch and advocacy to:
• gain more detail on policies andpractices;
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• identify appropriate ethical standardsand bench marks;• measure performance againststandards, including where practices contradictpolicies;• identify the role for changes tocompany law and regulation;• lobby governments and companies toimprove human rights and environmentalaccountability mechanisms;• identify levers for change.
If the finance sector was to take responsibilityfor the performance and impacts of its loansand investments, the contribution of the sectorto an ecologically sustainable future could besignificant. It is anticipated that environmentaland social due diligence will one day becomestandard industry practise and that such aprocess will not just be ethically, but alsofinancially justified.
References:Chris Harris, Regulating the grave diggers, TheEcologist Sanctuary Asia, Vol 6 No 2March/April 1998.
Philip Carter, The environment strikes back,Project and Trade finance, November 1997
Mary Watkins, Leaders in the field, ProjectFinance, April 1988 p30
The Mineral Policy Institute - An
OverviewThe Mineral Policy Institute is an Australianbased, non-profit environmental advocacy andresearch organisation dedicated to monitoringthe activities of companies in the mineralsindustry. The organisation advocates for theprotection of human rights, for improvements inenvironmental standards, for better economicreturns to communities effected by miningdevelopments.
Sarah Wright is the research coordinator forthe Mineral Policy Institute.
Rona Feyerbrand is a researcher with theInstitute
For further information and a copy of thereport, please contact The Mineral PolicyInstitute, PO Box 22, Bondi Junction, NSW2022; (02) 9387 [email protected]__________________________________Mineral Policy InstituteMonitoring the Mining IndustryCampaigning for better social and environmental practiceWorking with local communities
IntroductionPerformance and financial accountability ofprograms in Environment Australia (EA) andthe Department of Primary Industries andEnergy (DPIE) were criticised by the Australian
National Audit Office (ANAO) in theirpublication entitled “Commonwealth NaturalResource management and EnvironmentPrograms. Australia’s Land, Water andVegetation Resources” (see the review by
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Burritt, in News Journal of APCEA, Vol.3,No.2, August 1997). This brief articleconsiders whether recommended changes inaccountability procedures have been adoptedin the administration of the Natural HeritageTrust by EA and DPIE.
The Trust was established in 1997 with anallocation of A$1.25 billion over five years.Funds were derived from government sale of25% of the shares in Telstra, previously awholly government-owned telecommunicationsorganisation. The Trust was approved to“…stimulate significant investment inconservation, sustainable use, and repair of
Problems identified with accountability at EAand DPIE and suggestions for overcomingthem.
The ANAO identified a range of problems infinancial and performance accountability withinprograms administered by EnvironmentAustralia and DPIE.
Typical problems are noted in the Table below:
Performance Accountability Financial AccountabilityObjectives too broad and not used as abenchmark for reporting purposes
Double dipping into funds of EA andDPIE
Duplication of roles and responsibilities ofStates and the Commonwealth
Poor controls when there is non-compliance with contract conditions inpurchaser/provider arrangements
Narrow and inconsistent performanceinformation
Poor cash management practices
Program administration is focussed oninputs rather thanresults andoutcomes
Lack of competitive tendering forpurchased services
Project reports arenot timely, and areinadequate formanagement ofpotential risks
Late or non-acquittal of grantexpenditures
F o u r t e e nrecommendations weremade about how theseshortcomings in programadministration might beovercome. Several ofthese recommendations(see below), relating to financial accountability,were put under the spotlight in 1998 when theLeader of the Opposition [Labour Party] andsome Members of Parliament raised questionsabout the allocation patterns of financialassistance approved under the NHT. An audit
of the NHT had beenplanned for 1999.However, because ofthe questions raised,earlier inquiries by theA N A O w e r ec o n s i d e r e d
appropriate. In particular, concerns wereexpressed about the lack of an even-handedtreatment in that some 90 per cent of the valueof approved NHT projects and 87 per cent ofthe number of approved projects went toconstituencies held by the government of the
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day – the Liberal-National Party Coalition.Also, the ANAO was asked to examine thedegree to which the NHT was repeating the
mistakes of the past.
Financial Accountability Selected ANAO Recommendations to EA and DPIEDouble dipping into funds of EA and DPIE Recommendation # 6.
1. Evaluate whether the One-Stop-Shop conceptshould be expanded, to facilitate the jointproduction and administration of relatedCommonwealth and State/Territory programsand reduce client confusion
Recommendation # 42. Ensure that there is…a transparent, consistent
and objective determination and treatment ofpublic and private benefits in projectassessments under the NHT
Poor controls when there is non-compliancewith contract conditions in purchaser/providerarrangements
Recommendation # 9.1. Link payments to the achievement of program
milestones/ targets;2. Withhold further NHT funding until current or
previous grant acquittal and/or projectperformance reporting requirements are met;
3. Allow a carry forward of funds to the followingyear, or accelerated implementation of futureactivities as appropriate
Poor cash management practices Recommendation # 101. Maintain appropriate records to allow unspent
grant funds at year end to be monitored;2. Consider moving towards quarterly payment of
grant funds to service delivery agenciesLack of competitive tendering for purchasedservices
Recommendation # 13.1. Open, competitive tendering arrangements be
used, where appropriate, for the delivery of theNHT programs so that value-for-money optionscan be fully market tested.
Late or non- acquittal of grant expenditures Recommendation # 8.1. Maintain appropriate records to monitor the
receipt of grant acquittals; 2. Ensure that all grant acquittals …meet
legislative and contractual requirements andappropriate accountability and probityprovisions;
3. Institute a more rigorous approach to follow upoverdue grant acquittals;
4. Ensure that the statements of funds spentunder all programs are independently audited.
Readers may need to be reminded over thepolitical sensitivity of accountability for programfunds. This was at a height in the early 1990s.Ms Ros Kelly, Minister for the Territories,Environment, and Sports, was called toaccount for funds she approved for differentsports programs. She could only appeal to thefact that a record of approvals had been kept
on a white board in her office and the records,unfortunately, had been erased. With the NHT,most of the funds provided are to be spent oncommunity grants, regional projects andinitiatives, and State and Territory agencyprojects. Preliminary inquiries of the ANAOsuggest that accountability processes havecome a long way since the ‘Sports rort’.
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Findings of the ANAO.From some 6000 NHT applications in 1997-98, 3170 projects valuedat $192 million were recommended to theCommonwealth as part of formal State andTerritory recommendations. 2428 projectsvalued at $132.9 million were approved by theMinisters as at March 1998 when the ANAOconducted its inquiry. Programs funded in1997-8 for A$163 million were examined bythe ANAO. Seven programs were considered.Largest of these is the National LandcareProgram (A$87.4 million); smallest is theNational Wetlands Program (A1.8 million).Each program has its own specific goals andfunding. Each program examined had beendesigned as a One-Stop-Shop involvingRegional and State Assessment Panels andhelping to avoid unnecessary overlap betweenthe role of the Commonwealth and States.
In its inquiries, the ANAO found that thenumber and value of project applications fromCoalition-held electorates were significantlyhigher than from Labour-held electorates.However, by successfully tracking availableinformation the ANAO discovered a number ofreasons to justify such an outcome:
• major program components of the NHT(ie. National Landcare Program, Murray-Darling 2001 and Farm Forestry Program)are substantially about sustainable naturalresource management which is clearlyfocussed on rural electorates; and
• the design of the NHT application processfor all program components closelyfollowed that developed under the NationalLandcare Program for primarily ruralregions. These regions had pre-existing
administrative and support structures whichgreatly assisted in the number and qualityof applications being made.
Information contained in the NHT projectapplications did not necessarily permit projectsto be linked with electorates. Some projectswere State-wide and could not be allocated toelectorates, and some projects crossedelectoral boundaries and were classed as‘regional’. In all, only about 55.8% of projectscould be allocated to electorates. As theCoalition was strongly represented in ruralelectorates, it was not a surprise that 90% ofthe value and 87% of the number ofState/Territory recommended projects wereawarded to Coalition-held electorates.
Concluding comments.The ANAO was sufficiently satisfied with theaccountability processes of the NHT to drawseveral conclusions. First, the NHT decision-making process is fundamentally sound inproviding transparency and rigour. Second,there was sufficient financial accountabilityinformation to conclude that there is nosystemic bias in the allocation of funds toprojects. Finally, the ANAO was convincedthat the accountability processes were workingto such an extent that no full audit is needed atthe present time. Such an audit will take placein a little over a year when there will be abroader range of experiences to judge whethereach of the ANAO’s recommendations madein 1997 have been heeded.
Roger Burritt can be contacted on:Telephone: 02 6249 3670Fax: 02 6249 5005Email: [email protected]
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DISCUSSION PAPER: TOWARDS A NATIONAL
ENVIRONMENT PROTECTION MEASURE FOR THE
ASSESSMENT OF CONTAMINATED SITESKathy Gibson, University of Tasmania
This Discussion Paper 1(DP) was released inJuly as a basis for discussion on what theformal draft National Environment ProtectionMeasure (NEPM)2 and Impact Statement onassessment of contaminated sites might include.It raises many issues of environmentalaccountability, and allour readers areencouraged to read ita n d s u b m i tresponses.
In addition to being amajor environmentalissue, contaminatedsites, and the liabilityfor them, is becomingan important issue foraccountants. The DPpoints out that withchanging community standards, and theredevelopment of former industrial andagricultural land, such sites, in addition toposing a possible threat to public health and theenvironment, have significant economic, legaland planning implications.
Acknowledging that the complexity of thevarious costs and benefits is unlikely to be fullycaptured by a single assessment methodology,the DP outlines a range of possible assessmenttechniques that may help explain and make
transparent the known key costs and benefits ofa proposed NEPM. These techniques includeproviding monetary estimates whereappropriate.
The focus of the DP is firmly on impactassessment, notcleanup, and theauthors emphasiset h a t t h e“economics of ac o n s i s t e n tapproach to theassessment ofcontaminated sitesneeds to bedistinguished fromthe economics ofcontaminated siteremediation”.
Contaminated site is defined as “a site atwhich the concentrations of hazardoussubstances in soil and associated surface wateror groundwater are above backgroundconcentrations, and a site assessment (in whichsite use is considered) indicates that thesubstances pose, or are likely to pose, animmediate or long term risk to human healthand/or the environment”.
It is pointed out that the NEPC Act deliberatelyleaves the implementation of the NEPM toeach individual jurisdiction. This may result indifficulties for proposed regional ecologically-based investigation levels, and groundwaterprotection policies. It would seem that theremight be potential here to achieve uniformitythrough a cooperative system, similar to the one
1 National Environment Protection CouncilCommittee, 13 July.
2 NEPMs are broad, framework-setting statutoryinstruments that outline agreed national objectivesfor protecting particular aspects of theenvironment.
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achieved with Corporations Law.
Ten draft guidelines are provided, of which theninth relates to “Competencies and Acceptanceof Environmental Auditors and RelatedProfessionals”. This may be of particularinterest to environmental accountants, althoughthe other guidelines also contain issues withwhich we could be concerned. Guideline 1, forexample, raises the issue of whether regulators,landowners, auditors and other stakeholderswould be assisted by standardised reportformats, and how prescriptive these wouldneed to be?
Guideline 3 suggests that whilst “it is unlikelythat one person will have the breadth of skill toundertake all components of thehealth risk assessment, theremust be a single personcoordinating and takingresponsibi l i ty for theassessment”. The issue is raisedof what skills should bepossessed by people undertakingthe risk characterisationcomponent? Accounting,auditing and actuarial skills maywell be very useful here.
An important recommendation of Guideline 6 isthat “where land is used predominantly for onepurpose, but contains within it a more“sensitive” use, then the exposure settingrelevant to that more sensitive use must beadopted for that particular parcel of land. Forexample, if an industrial site is also used forresidential purposes such as a caretaker’sresidence, or there is an on-site creche within acommercial facility, then the appropriateresidential setting … should be used for areasof the site that may give rise to soil exposure”.Accountants may need to be aware of theeconomic implications of site uses whichappear peripheral to the organisation’sactivities, but which may lead to a higher level
of contamination assessment. The potential forincreased costs would need to form part of anyproject evaluation.
Draft Guideline 9, previously mentioned,recommends that the “establishment ofcompetencies should facilitate arrangements forthe transportability of appointments orprofessional acceptance across jurisdictions”.It raises the question of how transportabilitycould be facilitated, and accountants may wellbe able to contribute their experience ofnational professional standards andqualifications. The question is also raised ofwhether auditing systems should be a matter foreach jurisdiction to consider, and thee x p e r i e n c e d a u d i t o r s a m o n g s t
u s m a y w e l l b eable to contribute suggestionsin that area.
Lastly, in Guideline 10,respondents are asked tocomment on maintenance andmonitoring conditions that mayaffect property marketability.This would also be an externalreporting issue in terms ofbalance sheet values. Further,feedback is sought on the issue
o f l e g a l r e s p o n s i b i l i t y o flandowners for monitoring andm a i n t e n a n c e , a n d h o w t h i sinformation should be made available to thepublic and intending land purchasers. Dare wesuggest disclosure in Annual Reports?
Interested readers are strongly recommendedto participate in this exposure process, and canobtain a copy of the Discussion Paper from theNEPC website at www.nepc.gov.au
Kathy Gibson, SRCEA, University of Tasmania, email:[email protected]
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A REVIEW OF INTERIM REPORT BY HOUSE OF
REPRESENTATIVES STANDING COMMITTEE ON
ENVIRONMENT, RECREATION AND THE ARTS -"REGULATORY ARRANGEMENTS FOR TRADING IN
GREENHOUSE GAS EMISSIONS", (AUG 1998)Roger Martin
This interim report is part of an ongoing inquiryinto trading greenhouse gas emissions. Itincludes a reasonably succinct summary of thesubmissions and the issues affecting Australia,the possible mechanisms and some of theproblems in establishing greenhouse gasemission trading.
There are two main recommendations: 1. Emission permits should be licenses to emit
rather than conferring property rights; and2. An early trialing of greenhouse gas
emissions trading.
The basic idea is to issue permits capped to acertain initial level (based on the Kyotoprotocol) and reducing total emissions overtime with a single national market for tradingthese permits. The US sulfur dioxide tradingscheme is considered a successful model tofollow.
Issues of permit type, size, duration and initialallocation, and measurement of emissions andparticularly carbon sequestration in sinks haveto be resolved. The report identifies a need forresearch as accuracy of measurement must be"vastly improved" to allow maximum coverageofgases, sources and sinks.
Permits can either be a type that confersproperty rights (ie legal ownership) or a licenceto emit. The former approach is much preferredby greenhouse emitting industry but posessignificant risk to the government for
compensation claims if the scheme is altered.The point in production chain where permitsare allocated is affected by the number ofparticipants, the cost of monitoring and cost oftrading as well as economic ideals. Thescheme, at least initially, would be restricted tovery large 'traders' as it is too expensive toaccount for individual cars and cows, etc.
Initial allocation would be largely based ongrand fathering with a proportion auctioned,establishing a price. Adjustments are likely forthose emitters that have recently reduced theiremissions and an allocation to 'green' electricityproducers (eg. Hydro) is mentioned (thoughomitted from the "key conclusions"). Theexemption of certain industries for reasons ofinternational competition is considered "not anequitable arrangement" and the possibility of a"climate compliance charge" (ie carbon taxequivalent) on imports is suggested as apossible alternative. Some permits could alsobe retained by government to add flexibility tothe system - to help overcome any marketfailures and to allow for new market entrants.
Measurement requires standard measurementand estimation methodologies for all emissionsand sinks included in the scheme. Directmeasurement is reasonably possible for someemitters such as fossil fuel burners but not soeasy for some others (eg methane emissionsfrom coal mining or grazing animals) andparticularly carbon credits for sinks (ie forests,tree plantations) due to the difficulty andexpense of monitoring and the lack of
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understanding of greenhouse gas cycles. Forexample tree farmers appear to be majorproponents of carbon trading yet theEcologically Sustainable Forest Managementreport from the Tasmanian Regional ForestryAgreement suggests that tree farming is likely tobe a net emitter. Soil carbon releases frominitial clearing can continue at excess rates fordecades though soil carbon accretion andreleases are fairly poorly understood,particularly in Australia (which is the onlyOECD country with significant net greenhouse
gas emissions from land use)!
Monitoring and regulation "should be minimal"(especially according to the industrysubmissions!) with a single government bodymanaging the scheme, overseeing monitoringand verification by accrediting auditors forrandom audits.
APCEA BRANCH REPORTSNot a lot of news from the branches to reportin this edition. This no doubt means thatmembers are busy researching and teaching inenvironmental accountability. Oneexpects that the results of theseactivities will once more fill theAPCEA branch reports sectionin subsequent editions of thejournal.
Victoria University ofTechnologyResearch into environmentalaccounting and reporting continues to take afocus at the Victoria University of Technologybranch.
Jeff Faux, Trevor Wilmshurst and GaryO’Donovan continue to work on PhD theses invarious areas of environmental reporting andaccounting. Jeff looking at users perspectiveson environmental reporting; Trevor investigatingstakeholder theory and environmental reportingand Gary researching legitimacy theory as anexplanation for corporate environmentaldisclosure.
For any further information regardingAPCEA’s activities through Victoria Universityof Technology, contact Gary O’Donovan onPh: (03) 9688 4331 or email:
Australian NationalUniversityRoger Burritt reports thatunfortunately the conferenceplanned for February 1999
on 'Acting locally throughenvironmental accounting'
has had to be cancel ledb e c a u s e o f l a c k o fe x p r e s s i o n s o f i n t e r e s t f r o maccountants.
Dr Alfred Tran of APCEA(ANU) visitedAPCEA (Peking) for three weeks from 8September 1998. While in China Dr Tranexamined harmonisation and taxation issues.
Roger Burritt can be contacted at ANU on:Telephone: 02 6249 3670Fax: 02 6249 5005Email: [email protected]
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WATCHING THE WEB
http://www.envirobiz.com/
Envirobiz is an international environmentalinformation network based in Minneapolis inthe US. The site is split into 12 sections.
1. Envirobiz newswire, a daily publicationof (mainly) US business environmental issues.2. Envirobiz forum, which allows anexchange of ideas.3. Professional services.4. Market research.5. Equipment and technology.6. Databases7. Publications8. Government agency information 9. Conferences10. Public interest links.11. Business opportunities12. Audit and compliance.
The ULS (Use Less Stuff) ReportThe ULS Report is a USA based bi-monthlynewsletter created to help people Use LessStuff by conserving resources and reducingwaste. It takes a common-sense approach towaste prevention, relying on facts and figuresrather than simply rising and falling with thetides of public opinion.
The Report is written in a concise,easy-to-read style that mixes a dollop ofentertainment with its informational content.Recent articles included 'How to be aneco-friendly couch potato,' and 'Puttingpackaging on a diet.' Regular features includeshopping tips, a reader Q&A, ReductionRoundup, and a column by garbologist Dr.William Rathje, co-author of the bestsellingbook Rubbish!
If you would like to automatically receive theelectronic edition of The ULS Report viae-mail, send a blank message to:[email protected] . For more information, send e-mail [email protected].
http://www.memegroup.co.uk/
The fusi@n business magazinecontains many useful links as well asarticles on economic, social and
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Charl de Villiers (University of SouthAfrica, South Africa) “South AfricanEnvironmental Reporting: What It Is,What It Should Be”
Rob Gray & JanB e b b i n g t o n(University ofD u n d e e , U K )“Accounting and theS o u l o fSustainability”
Jong-Seo Cho i(Pusan NationalUniversity, Korea)An Investigation of the InitialVoluntary Environmental DisclosuresMade in Korean Semi-AnnualFinancial Reports”
Hai Yap Teoh, Foo Wan Pin, TanTheng Joo & Yap Yen Ling (NanyangBusiness School,S ingapore ) “Env i ronmenta lDisclosures - Financial PerformanceLink: Further Evidence from IndustrialEconomy Perspectives”
Olwen Duncan (University ofEdinburgh, & Ian Thomson(University of Strathclyde, UK)“Waste Accounting and CleanerTechnology: A Complex Evaluation”
Gordon Boyce (Macquarie University,Australia) “Public Disclosure andDecision-making: An Exploration ofPossibilities for Financial, Social andEnvironmental Accounting”
A. J. Stagliano (Saint Joseph's
University, USA) and W. DarrellWalden (University ofRichmond, USA) “Assessing theQuality of Environmental Disclosure
Themes”
These and other papers areavailable for downloadingfrom the APIRA home pageat:
http://www3.bus.osaka-cu.ac.jp/apira98/
Accounting Association ofAustralia and New Zealand(AAANZ) 1998 Annual ConferenceSince the publication of our last issue,the AAANZ has held its annualconference. Although details ofpapers presented in the area of socialand environmental accountability wereincluded in the previous issue, it wasdecided that details of these paperswere worthy of a repeat. This yearsconference was held in Adelaidebetween 5 and 8 July. Paperspresented which may be of interest toreaders were:
D. Keene, The EnvironmentalConsciousness of AccountantsEnvironmental Worldviews, Beliefsand Pro-Environmental Behaviours.
G. Tower, S. Kusumo & M. Williams,An Evaluation of the Determinants ofthe Quantity and Quality of VoluntaryDisclosures in Indonesian ListedCompanies
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M. Milne & R. Adler, Exploring theReliability of Social Disclosure’sContent Analysis
G. Frost & M. Harding, Accountingfor Restoration Obligations: AnAnalysis of the Implications From theIntroduction of UIG Abstract 4
R. Mathews & J. Lockhart,Environmental Accounting Education:Some Thoughts
For more details on these and otherpapers refer to either of the followingtwo web sites:http://www.sapmea.asn.au/aaanz.htmorhttp://www.ecom.unimelb.edu.au/accwww/aaanz/
Forthcoming Conference - call forpapers
F i f t h I n t e r n a t i o n a lInterdisciplinary EnvironmentalAssociation (IEA) Conference-Baltimore, Maryland, USAThe Interdisciplinary EnvironmentalAssociation, in conjunction withAssumption College, Worcester,Massachusetts, invites interestedparties to participate in the 5thInternational InterdisciplinaryConference on the Environment to beheld between 23-26 June, 1999.
The Conference is motivated by theneed to combine ideas and researchfindings from different disciplines toenhance understanding of theinteractions between the naturalenvironment and human institutions.
Conference presentations will beaimed at the educated layperson andfocus on:
(i) What all disciplines have tooffer with respect tounderstanding environmentaland resource problems;
(ii) What solutions are available;(iii) What are the implications of the
globalization of environmentalconcerns.
Watch for a feature article on the IEAin the next edition of the APCEAnews journal. Details of theconference can be accessed at website:
Dr Chris Fay, Chairman and ChiefExecutive of Shell UK Ltd, gave apresentation on Friday at the ICAEWexplaining Shell's motivation for therecent release of their 'Report toSociety' - the non-financial version ofShell's latest annual reports andaccounts. Is this the way forward forcompanies wishing to reportnon-financial data about theirperformance?
Shell, he suggests, have been involvedin non-financial reporting of the formof this report for many years and theinformation the report contains isinformation they have had internally asa socially and environmentallyconscious company for a long while.They now, however, feel that thisinformation should be broadcast morewidely and their first report will befollowed by others against which thepromises of social responsibility theymake can be judged.
The Report to Society contains detailssuch as :
- listening and learning fromstakeholders- people giving their best - a review of Shell staff- building a sustainable future
- Shell's contributions to the UKeconomy and environment- HSE data - verified Health, Safetyand Environment data- environmental challenges - information and education ontechnological improvements
Dr Fay requests comments on theReport if you so wish at Shell UK,Ltd. Shell-Mex House, Strand,London WC2R 0DX.
You can view Shell’s Society Reportat:http://www.shell.co.uk/ukcorp/environment/report_to_society/rep_mainpage.htm
Environmental reporting and themarket for environmental expertiseand technologyby Roger Burritt
The Federal Minister for theEnvironment, Senator Hill, hasannounced new support forAustralia's environment industry whichwill be of interest to environmentalaccountants. The federal governmenthas made the following commitments:
$270,000 to develop model guidelineson environmental reporting. Thegovernment will sponsor threeenvironmental facilitators in three keyindustry organisations;
$125,000 towards developing data todetermine environmental impacts ofbuilding materials, in order to reduceadverse impacts and improve efficient
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use of resources;
$100,000 for sponsoring aneco-efficiency workshop with theOECD and the private sector early in1999;
$100,000 for an upgrading ofEnviroNet internet services, to makeenvironment data more accessible tobusiness; and
$170,000 for the EnvironmentManagement Industry Association ofAustralia to establish a major BusinessLeader's Forum on sustainabledevelopment - the first meeting to beheld early in 1999. This will be asummit of CEO's from large and smallAustralian companies who have madeoutstanding contributions to cleanerproduction, eco-efficiency andsustainable development.
These announcements were made atthe opening of the AustralianEnvironment Industries NationalSecretariat in Canberra on 4September 1998. The Secretariat isbeing used by the AustralianEnvironmental Management ExportCorporation; the EnvironmentManagement Industry Association ofAustralia; the Environment IndustryDevelopment Network; and theSustainable Energy Industries Councilof Australia.
A move to Canberra may help theindustry in its lobbying processes.The prize seems to be a slice of thegrowing Asian market for
environmental expertise andtechnology. Senator Hill indicated thatthe OECD has estimated this marketto be worth $60 billion by the year2000. Indeed, the market in Chinaalone is predicted to be $5 billion by2005 and $20 billion the followingdecade.
References:Hill, R, 1998, 'Hill announces majorfunding boost to Australia'senvironment industries' Media release,Minister for the Environment,C o a l i t i o n G o v e r n m e n t ,Commonwealth of Australia.
Schroder, P, 1998, Major industrygroup moves, The Canberra Times, 7September, p.14.
Telephone: 02 6249 3670Fax: 02 6249 5005E m a i l : [email protected]
New mandatory environmentalreporting regulat ions forAustralian companiesBy Gary O’Donovan
It appears as though in the wee hoursof an August 1998 morning, theAustralian senate passed anamendment to the Corporations Lawwhich requires Australian corporationsto report on environmentalperformance.
With the announcement of the 3October federal election, thisamendment, along with other
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legislation, has not received muchmedia attention. It is the editor’sunderstanding that if the legislation isnot amended by the ParliamentaryJoint Committee on Corporations andSecurities, then all incorporatedentities, as defined under theCorporations Law, will be required toreport on their environmentalperformance. The legislation willapply to the 1998/99 financial year.
It looks like companies will berequired to report on theirenvironmental performance in relationto both Commonwealth and Stateenvironmental legislation. Exactlywhat they will have to report is notclear at the time of writing. Thewording of the amendment indicatesthat if an entity’s operations aresubject to “any particular andsignificant” State or Commonwealthenvironmental regulation, thedirectors’ report for a financial year
must detail the entity’s performance inrelation to environmental legislation.
What is specifically meant by“particular and significant” and howcorporat ions should detai l“performance in relation toenvironmental legislation” is a matterof conjecture at the moment.
This amendment (if passed) appearscertain to, at the least, exercise theminds of corporate personnel withregard to environmental reporting and,at the most, result in a significantincrease in the level of environmentaldisclosure. The quality of suchdisclosures may still be problematic.
For further information contact: Gary O’Donovanemail: [email protected]: 03 9688 4331Fax: 03 9688 4901
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You can spend yourYou can spend your
life being justlife being just
anotheranother
accountant.accountant.
Or you can become aOr you can become a
CPA.CPA.
For further details contact the
Australian Society of CPAs
in your area or visit
CPA Online on the Internet at:
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This issue is sponsored by the Tasmanian Division of the
Australian Society of Certified Practising Accountants
