Corporate Environmental Performance
FRANS BERKHOUT
1 Introduction
Environmental performance measurement and reporting are becoming pervasive
features of modern business practice. Just as a century ago modern financial
accounting procedures began to be developed, so today environmental accounting
and management procedures are being created and put in place. There are many
reasons for this development. Among them, the desire of managers for better
control of environmental aspects of their businesses in order to avoid risks and to
capture value, the desire among policymakers and regulators for a richer set of
information about company performance to be made widely available, and a
demand by many customers and other stakeholders of businesses for better
knowledge about how ethically they are behaving. There is a widespread belief
that the availability of information will stimulate greater awareness, self-reflection
and innovation in business, and reduce the likelihood of poor performance and
non-compliance. Information deficits and asymmetries lie at the heart of many
environmental problems.
This article presents an overview of the reasons for the growing emphasis on
environmental and social transparency in business, under the more general
rubric of corporate social responsibility. An assessment is made of current
initiatives and previous research related to environmental performance. Finally,
some results from a study investigating the environmental performance of
European companies are presented. The aim is to provide an introduction to a
growing field of research and practice which seems likely to have profound
impacts on the environmental behaviour of business.
2 Corporate Social Responsibility
The debate about corporate social responsibility has a long history, and turns on
the question of whether firms (or the managers who run them on behalf of
shareholders) have responsibilities to society beyond the making of profits. For
instance, Milton Friedman, taking a contrary position, argued that: ‘. . . there is
one and only one responsibility of business — to use its resources and engage in
P. Arlow and M. J. Gannon, Social responsiveness, corporate structure and economic performance,
Acad. Manage. Rev., 1982, 7, 235—241.
Issues in Environmental Science and Technology, No. 17
Global Environmental Change
© The Royal Society of Chemistry, 2002
161
FRANS BERKHOUT
1 Introduction
Environmental performance measurement and reporting are becoming pervasive
features of modern business practice. Just as a century ago modern financial
accounting procedures began to be developed, so today environmental accounting
and management procedures are being created and put in place. There are many
reasons for this development. Among them, the desire of managers for better
control of environmental aspects of their businesses in order to avoid risks and to
capture value, the desire among policymakers and regulators for a richer set of
information about company performance to be made widely available, and a
demand by many customers and other stakeholders of businesses for better
knowledge about how ethically they are behaving. There is a widespread belief
that the availability of information will stimulate greater awareness, self-reflection
and innovation in business, and reduce the likelihood of poor performance and
non-compliance. Information deficits and asymmetries lie at the heart of many
environmental problems.
This article presents an overview of the reasons for the growing emphasis on
environmental and social transparency in business, under the more general
rubric of corporate social responsibility. An assessment is made of current
initiatives and previous research related to environmental performance. Finally,
some results from a study investigating the environmental performance of
European companies are presented. The aim is to provide an introduction to a
growing field of research and practice which seems likely to have profound
impacts on the environmental behaviour of business.
2 Corporate Social Responsibility
The debate about corporate social responsibility has a long history, and turns on
the question of whether firms (or the managers who run them on behalf of
shareholders) have responsibilities to society beyond the making of profits. For
instance, Milton Friedman, taking a contrary position, argued that: ‘. . . there is
one and only one responsibility of business — to use its resources and engage in
P. Arlow and M. J. Gannon, Social responsiveness, corporate structure and economic performance,
Acad. Manage. Rev., 1982, 7, 235—241.
Issues in Environmental Science and Technology, No. 17
Global Environmental Change
© The Royal Society of Chemistry, 2002
161