Consultation on guidance for business on environmental key performance indicators


Comments from ACCA to the Department for Environment, Food and Rural Affairs (Defra) 
24 September 2012


General comments

ACCA welcomes the opportunity to respond to Defra’s consultation on reporting guidance for business on environmental key performance indicators. This response only addresses the particular areas of the consultation that are most relevant to ACCA.


In summary, ACCA believes that:


  • The guidelines needs to be more concise, setting out the tools that companies can use to assess their material environmental impacts, and how this process should drive a company’s environmental strategy and ultimately its disclosure.
  • The way that the guidance is currently presented could result in companies reporting on a wide range of environmental KPIs rather than those that are most material to their organisations.
  • There are a number of passages within the main body of the guidance that could be better presented in appendices.


ACCA recommends that Defra:


  • Refers to the Global Reporting Initiative (GRI) and incorporate a similar approach to assess material impacts within these guidelines.
  • Reconsiders the timing of these guidelines with reference to the GRI G4 Guidance that is currently being developed.

Response to specific questions

Q1. Is the guidance easy to understand and practical to use?



No. The guidance covers a large amount of material, but does so in a manner that is neither easy to navigate through, nor practical to use. Much of the text in the guidance could be summarised into bullets / included in tables / represented in diagrams / moved to an appendix. This would strip out excessive text and only the key points and messages would remain.

It is important to consider the audience of the guidelines, namely company directors and business leaders, who will not likely have the time or will to read through pages of text to pull out the key points of the guidelines. It is therefore important to tailor the content to the audience in order to success in engaging them.

Whilst we appreciate this is guidance, not regulation, the language used in the guidance is not strong enough, referring a lot to what a company ‘could’ or ‘might’ be doing. The guidance should aim to demonstrate best practice, which at present, it does not do. This is an opportunity for Defra to take the lead globally in setting robust guidance for companies to follow


Q2. Was section 1 clear on why and where you should report on environmental impacts? Do you have any comments to improve this section? What more would you find helpful in developing your environmental strategy?

Section 1 could be clearer on why and where companies should report on environmental impacts. Again, the information is presented in a way that is text heavy. Certain parts of the section could easily be summarised in a table or diagram, for example the paragraph listing the benefits of reporting on environmental impacts. With the specific audience in mind, it is crucial that the information is presented in a format that will be engaging and implemented.

The structure of the section does not flow well. The guidance structure should be included at the end of the section rather.

Some elements of the section could be moved to an appendix, for example. If it is necessary to define a KPI, do so in an appendix.

The information presented in section 1 does not provide guidance on how to develop an environmental strategy, but rather makes an argument for disclosure of environmental KPIs, describes where disclosure could be made and the characteristics of a good KPI.


Q3. Is it clear in section 2 how an organisation should go about identifying the environmental issues and KPIs most material to its operations? How could it be improved?

It is not clear how an organisation should identify its environmental issues and KPIs. Again, a lot of the text could be reduced through the use of diagrams, or non-essential text moved to an appendix.

The reference to the polluter pays principle is useful, highlighting the difference between a company’s direct vs. indirect impacts.

A lot of information on climate change is included here, which detracts from the main point of the section. The section should provide the user with the tools to assess their organisation’s material impacts, which might not necessarily include climate change. The reference to the UK Climate Change Risk Assessment would be better placed in an appendix.

The inclusion of 6 key areas where an organisation’s environmental impacts may lie is useful, but included at the wrong point of the guidance. It could also be beneficial to illustrate this point with a flow diagram. The guidance needs to stress that a thorough assessment needs to be done to determine material environmental impacts. Reading the guidance as it stands, a company director may decide that if they produce KPIs addressing the 6 areas that are suggested, their disclosures are complete. This would result in reports that are cluttered with immaterial performance indicators rather than reports that are tailored to address key impacts and issues.

The reference to the boundaries of the organisation is clear, stating that reporting boundaries for environmental reporting should be the same for financial reporting, but not necessarily correct. The fact that an organisation may have supply chain impacts to consider is made very weakly, whilst recent examples like the Puma Environmental P&L have demonstrated that many companies will have supply chain impacts far greater than their direct impacts. 

A better approach is provided by the GRI. The GRI 4.0 Exposure Draft advises companies to review their value chain as the starting point to determine their environmental impacts, which is a better means to do so that looking at financial reporting lines. We encourage consistency with the GRI model.


Q4. Did you find the references to legislation in the different subject chapters helpful?

The references to legislation are helpful, especially with regards to the 2006 Companies Act and how that requires large companies to report on environmental issues in the business review section of their annual report and accounts. The inclusion of references to EU legislation on pollutants etc. is useful, as it will show organisations where they may already be collecting data on environmental impacts, although detailed descriptions could be included in notes or appendices.


Q5. Does table 1 at Annex C (Environmental Impacts and ICB and ISIC classifications) help you identify which are the main environmental impacts of your organisation? How to use table 1 is set out in the guidance in section two on page 13 under “Your Key Performance Indicators”.

The table is useful in identifying environmental impacts, but it should serve as an initial guide rather than a substitute for an organisation specific environmental impact assessment.