Directory UMM :Data Elmu:jurnal:E:Environmental Management and Health:Vol10.Issue5.1999:

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An overview of trends related to environmental

reporting in Singapore

Martin Perry

Senior Lecturer, Department of Geography, National University of Singapore,

Singapore

Teng Tse Sheng

Student, Department of Geography, National University of Singapore, Singapore

Introduction

The absence of ``a right to know'' and little conception of stakeholder interests distin-guish the context for environmental man-agement in newly industrialising from Western business environments. Surveil-lance of business organisations beyond their home region has increased through the activities of Western campaign groups, as-sisted by the use of the Internet for informa-tion diffusion (Lempriereet al., 1996). Such activity has had most impact on the overseas operations of Western multinationals, but even amongst the largest transnational cor-porations there are few which have taken steps to ensure common standards between headquarters and overseas affiliates (Hansen and Gleckman, 1993, p. 763). Cost pressures, customer awareness, supply chain relations and the activities of environmental cam-paigners encourage participation in envir-onmental initiatives (Baylisset al., 1997). These conditions are generally lacking in new and still developing industrial societies, as illustrated in this paper through a case study of corporate environmental reporting in Singapore.

Environmentally and economically newly industrialising economies (NIEs) such as Singapore are of particular interest to Wes-tern governments, business and citizens. Environmentally, NIEs have experienced substantial environmental degradation, lo-cally and affecting the global commons, with their resource demands extending over their surrounding region (Bello and Rosenfeld, 1990; McFarlane, 1998). In the case of Singa-pore, the ecological footprint extends over tropical environments undergoing large-scale destruction (Brookfield and Byron, 1993; Greer, 1998). Economically, living stan-dards match those of many older industrial

economies but typically without comparable environmental regulation and awareness (Lempriereet al., 1996). This stands as an anomaly to the usual expectation that rising living standards are associated with stricter environmental controls. Without such corre-lation, lax environmental regimes can effec-tively act as an export subsidy (Bryant and Bailey, 1997).

The emphasis on top-down hierarchical governmental systems with a mistrust of public involvement in decision making has slowed environmental improvement amongst developing Asia Pacific countries (Howard, 1993; MacAndrews, 1994). This constraint is evident in Singapore where the low level of environmental reporting by companies partly reflects a political environment that constrains citizen demands for information and minimises regulatory pressure on com-panies. The benchmark survey of corporate environmental reporting provided in this paper gives a measure of this activity and identifies priorities for accelerating commit-ment to the new business-environcommit-ment para-digm. Before presenting this assessment, the next sections provide an introduction to the significance of disclosure and the context for disclosure in Singapore.

Environmental disclosure

Amongst Western business, environmental disclosure first emerged in North America in the 1970s as part of a short-term interest in social reporting (Gray, 1994). The practice was revived in the late 1980s with the Norwegian company Norsk Hydro being credited as an influential leader (Collier, 1995; Brophy and Starkey, 1996). New legis-lation in Norway had required environmen-tal reporting. Norsk Hydro responded with quantitative data and significant detail, in-cluding admittance of non-compliance. Man-datory disclosure remains the exception (accounting regulations in the USA require information on the cost of compliance with The current issue and full text archive of this journal is available at

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10/5 [1999] 310±320

#MCB University Press [ISSN 0956-6163] Keywords

Disclosure, Company reports, Singapore, Regulation, Stakeholders

Abstract

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environmental regulations) but the practice has diffused widely. As well as comment in the company annual report, separate corpo-rate environment reports are now provided by many larger Western companies.

In 1993, a survey covering 690 leading companies from ten countries in Europe and North America found that 85 per cent referred to environmental issues in their annual reports (KPMG cited in Collier, 1995, p. 122). A survey of 570 UK annual reports in 1993 found that 26 per cent addressed environmental issues. The practice remains comparatively low amongst smaller and less pollution in-tensive industries but the UK survey found that the proportion of companies disclosing environmental information was growing by over 10 per cent a year (Collier, 1995, p. 124). The growth in disclosure partly reflects how it can be used to assist an organisation's image as well as to inform stakeholders. Thus in the KPMG survey only a fifth of reporting organisations included quantitative data in their disclosure. Bad news (environmental incidents, prosecutions, non-compliance) was reported in slightly less than 10 per cent of disclosures while the results of environmen-tal audits were rarely referred to. The varia-bility and selective nature of information release questions the significance of this activity (ACCA, 1998). Grounds for regarding disclosure as an indicator of business com-mitment to environmental improvement are: 1 The quality of disclosure made by an

individual company generally increases with experience with a large gap evident between best practice organisations and laggards (ACCA, 1998). The gap between early and late adopters reflects the novelty of disclosure and its reliance on indivi-dual experience and investment in infor-mation collection and reporting systems. 2 The expected standard of reporting has

increased with both environmental and business organisations encouraging greater commitment to the publication of logical, honest and quantified data (Collier, 1995, p. 123). Guidelines on good practice have been promoted, including guidance from business director working parties, and while most reporting fails to meet the suggested standards performance is improving. An expectation that some form of corporate environmental report-ing may become mandatory is part of this trend (Grayet al. cited in Brophy and Starkey, 1996, p. 184). By reporting volun-tarily an organisation can build up exper-tise in advance of expected regulation. 3 Disclosure is an additional driver for

organisations to focus on environmental improvement. Environmental reporting is

most widely practised where companies are required to collect relevant data for other purposes, as reporting then makes use of existing investment rather than adding significant additional costs (Brophy and Starkey, 1996, p. 184). On the other hand, disclosure has acquired a status as an environmental initiative in its own right and some organisations may modify environmental investment to gen-erate material for reporting.

4 A key weakness in the ISO 14001 standard for environmental management systems is the absence of a public reporting requirement (Krut and Gleckman, 1998). Environmental regulators concerned with the absence of performance measurement as part of ISO 14001 have included public reporting requirements in their proposals for a modified standard. Public disclosure is already a requirement in the European Union's Eco-Management and Audit Scheme and is likely to become an accepted aspect of environmental man-agement.

5 The commitment to environmental disclo-sure needs to be evaluated against the predominant attitude amongst business organisations, as practised with their fi-nancial reporting, that it is sensible to give the minimum information required so as to minimise the exposure to critical ques-tioning or risk of liabilities. In this context the record with respect to environmental reporting might be viewed as positive and encouraging (Collier, 1995, p. 127).

The Singapore environment

The city state of Singapore covers around 650 sq.km (extensive land reclamation pro-grammes continue to modify the full land area) and has a permanent resident popula-tion of close to 3 million. The populapopula-tion density is high and its living standards the highest in South-east Asia with GNP per capita currently around US$28,000. Average population density in residential areas is over 35,000 persons per sq.km reflecting how the government has given economic activ-ities priority over living space: since political independence in the mid-1960s the proportion of the island given for housing (13 per cent) has remained static while the area for industry, commerce and communications has expanded from around 10 per cent to 25 per cent of the land area (Neville, 1993). Land extensive activities are important to the economy, including sea and air transport services, marine engineering and petro-chemicals.

Martin Perry and Teng Tse Sheng

An overview of trends related to environmental reporting in Singapore

Environmental Management and Health

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A report prepared for the 1972 United Nations Conference on the Human Environ-ment (held in Stockholm) found evidence of widespread pollution from industrial and household waste and alerted the government to the urgent economic need to strengthen environmental regulation (WWICFS, 1972). The subsequent development of environ-mental controls has emphasised the envir-onment as an economic factor in three ways (Bankoff and Elston, 1994). First, as Singa-pore's economic development is highly de-pendent on international capital and

overseas markets, it behoves the government to be aware of changes in, and to attempt to conform to, internationally accepted envir-onmental standards. Thus, Singapore is a signatory of international treaties such as the 1985 Vienna Convention for the Protec-tion of the Ozone Layer and the 1987 Mon-treal Protocol on Substances that Deplete the Ozone Layer, an important treaty for Singa-pore in view of the then widespread use of chlorofluorocarbons in its electronics indus-try. Second, environmental improvement is part of the ``increasingly strong economic imperative'' to meet the environmental as-pirations and recreational demands of skilled and mobile professional and managerial workers in order to stem the small but significant out-migration of these key parti-cipants. Third, with increasing worldwide interest in eco and heritage tourism, the environment is now perceived as a profitable ``commodity in its own right'' This possibility is reflected in the designation of nature reserves and tolerance of the campaigning activities of the Nature Society, one of the few examples of an NGO that has openly challenged government decisions (Perry et al., 1997, pp. 169-70).

These various initiatives have enabled Singapore to promote itself as a ``clean, green city'' (see Ministry of Environment, 1992) but leave four main gaps in its environmental regime. First, the otherwise comprehensive environmental legislation omits a commit-ment to a formal EIA process, in contrast to other South-east Asian countries (Briffett, 1996). Government unwillingness to intro-duce EIA reflects concerns about its potential to delay or inhibit development, increase development costs and introduce ``extra-neous issues'' into the development process. Rather than a transparent and contestable decision-making process, development deci-sions are made through internalised decision making under the control of state develop-ment agencies and senior governdevelop-ment min-isters (Bankoff and Elston, 1994). Advocates of EIA suggest that its absence has stifled public debate about the environment and has

resulted in inadequate attention being given to environmental considerations (Hesp, 1995; Hilton and Manning, 1995). Second, the ``green initiatives'' fostered by the govern-ment's environmental agencies have not incorporated ecological principles. For ex-ample, the Nature Society has criticised the areas selected as nature reserves on the grounds that most are of no ecological significance while areas important to migra-tory wildlife and endemic species have been taken for development (Hesp, 1995, p. 139). Similarly while the parks and roadside planting of trees has given a green appear-ance, the vegetation is typically exotic and unhelpful to native fauna (Corlett, 1992). Third, public environmental consciousness over issues such as product recycling, green consumerism and ecological awareness is low. Recent surveys of environmental beha-viour among Singaporean students and wo-men have shown that Singaporeans are generally ignorant of and resistant to incor-porating environmentally friendly practices in everyday life such as minimising domestic waste, using recycling bins and buying environmentally friendly products (Lau, 1993; Ng, 1994; Savage, 1995). Four, there has been little development of an environmental leadership role by Singapore public or pri-vate agencies in the region despite its eco-nomic wealth and trade dependencies on neighbouring countries. The widespread de-struction of tropical rainforest in Indonesia through deliberate land clearance, which resulted in much of South-east Asia being shrouded in smoke pollution for several months in 1997, may have been an opportu-nity to demonstrate such leadership. Such leadership was not demonstrated although several measures were suggested to the Singapore government (Shepherd, 1997). Si-milarly, although Singapore has a major stake in the shipping and petroleum indus-tries, it has been less important than Japan in promoting marine environment initiatives in the region (Chia, 1995).

The capacity to comply with and evade environmental regulation varies between different types of business. This variability raises particular issues in Singapore where the economy is sharply divided between three main types of business organisation: 1 Foreign multinationals: Singapore has an

unusually high dependence on foreign-owned companies. In the early 1990s, branches and affiliates of foreign multi-nationals accounted for 70 per cent of exports and 40 per cent of employment (Perryet al., 1997, p. 15). This investment has brought to Singapore many of the world's leading multinationals whose Martin Perry and

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home environments in Europe, North America and Japan are associated with stringent environmental regulation. De-spite several decades of high economic growth and full employment, fear of losing foreign companies remains and continues to minimise performance demands or expectations that foreign companies will offer leadership in environmental man-agement.

2 Government-linked companies: most of Singapore's larger locally-owned enter-prises are government controlled. The national airline, shipping line, the three major shipyards and parts of the petro-chemical industry are majority govern-ment-owned. In total, the government has an ownership interest in over 500 compa-nies, comprising over half the 500 largest businesses in Singapore (von Alten, 1995, p. 208). Total assets of the 15 largest statutory boards and the 47 largest GLCs amounted to $167.4 billion in 1993, equivalent to two-thirds of Singapore-owned business assets (Vennewald in von Alten, 1995, p. 212). Wholly government owned companies are exempt from re-quirements to submit reports and ac-counts to the Registrar of Companies, providing a buffer to public and parlia-mentary surveillance. Where the state is a part owner of a public company, govern-ment influence is maintained through a small group of political appointees to company boards (Vennewald quoted in von Alten, 1995, p. 208). GLCs are used to marshal the private sector behind the state's economic planning imperatives and are sheltered from critical surveil-lance. This context might reduce pressure on their environmental performance. 3 Chinese business: local privately-owned

business is predominantly Chinese family enterprise, mostly small scale enterprise but with some emerging and existing multinationals (Yeung, 1994). Opinions differ over the distinctive organisational attributes of Chinese business but it is generally associated with traditional va-lues arising from the deference to family elders and a preference for simple man-agement structures (Redding, 1990). This has often resulted in businesses that are weak in professional management, lack-ing in systematic performance informa-tion and resistant to outside surveillance (PERC, 1997; Suehiro, 1997). The fact of being Chinese owned in a region where they are an ethnic minority accentuates the preference to maintain a low profile (Koike, 1993).

Methodology of the study

The environmental policy context aligned with the particular business population sug-gested that environmental disclosure would be low compared with Western practice. To test this expectation, the first stage of the study comprised an examination of the annual reports of all Singapore registered public companies as listed on the stock exchange in June 1996. For these 264 compa-nies, two consecutive reports were examined (financial years 1995/96 and 1996/97) using the following criterion to identify disclosure:

Any environment-related information re-ported by companies in their annual reports. The information need not be found in a specific environmental section, but the in-tention must be a genuine attempt by the company to communicate their environmen-tal performances affecting issues such as resource use, emission levels, waste minimi-sation and employee and management parti-cipation in environmental programmes.

This criterion was used to exclude incidental references to the environment (such as where one report stated that ``upgrading of plant machinery in conjunction with the reloca-tion of our primary process resulted in higher productivity and reduced waste'') and required evidence of explicit environmental improvement actions amongst companies involved in environmental services (thus a processor of industrial waste citing its aim to commence waste oil recycling was consid-ered an operational issue). Levels of disclo-sure were assessed by sector (distinguishing high, medium and low environmental risk activities) and size of company (measured by financial assets). Guidelines to evaluate the content of disclosure statement were ob-tained from the standards used by the UK Association of Chartered Certified Accoun-tants to adjudicate their environmental re-porting award (Elkington and Spencer-Cooke, 1996).

The second stage of the investigation sought explanation for the level of reporting. It utilised a postal questionnaire sent to 252 of the 264 companies whose reports had been assessed (for the 12 omitted companies Sin-gapore was a secondary reporting location). The survey was sent to the company secre-tary, finance manager, communications manager or other individual suggested by the organisation in a prior telephone call to the company. Separate surveys were designed for disclosing and non-disclosing organisa-tions. For disclosing organisations, the questionnaire obtained information on:

. future reporting intentions;

. scope of reporting considered appropriate;

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. influences on their disclosure;

. awareness of environmental reporting; . comparative priority to environment

ver-sus other business responsibilities.

The survey for non-disclosing organisations collected comparable data with respect to the latter issues as well as the reasons for their non-disclosure and the influences that would cause this to change. In addition, represen-tatives of three Western multinational com-panies operating in Singapore were selected from amongst those known to be active reporters in their home country. These interviews investigated attitudes to informa-tion release in Singapore and how the pressures for disclosure were perceived to differ from those in their home region. In addition representatives of relevant stake-holder organisations with a potential interest in business-environment issues were inter-viewed to identify their assessment of cur-rent disclosure practice and how, if at all, they thought it might be encouraged. These stakeholder groups included business groups (Singapore Confederation of Industries, Sin-gapore Hotels Association, SinSin-gapore Inter-national Chambers of Commerce, Singapore Association for Environmental Companies), the Nature Society and government agencies (Ministry of Environment and the Singapore Environment Council).

Disclosure in annual reports

Less than 10 per cent of reports in either financial year included environmental infor-mation and the proportion reporting in two years was 6.5 per cent. These data indicate low and not significantly increasing levels of reporting. Disclosure was significantly greater amongst the larger organisations: the top 50 companies provide almost half of the disclosers while the top 100 encompasses almost three-quarters. A chi-square test con-firmed a positive relationship existed be-tween financial rank and disclosure (w2= 14.465 significant at 0.001 level). On the other hand, no relationship was found between disclosure and the pollution intensity of the organisation (w2= 0.056). Amongst companies in high environmental risk sectors that did not disclose were shipyard companies (Jur-ong, Keppel, Hitachi Zosen and Sembawang), and cement manufacturers (Jurong Cement, Ssangyong Cement).

Amongst all reporting organisations the extent of disclosure was minimal. Two thirds of the reports with environmental references had no more than two sentences of comment. There were two companies that reported in both years with over ten sentences of

information (a property company, DBS Land, and a car distribution company, Cycle and Carriage) but in both cases the information provided was uninformative. In one of DBS Land's environmental sections, for example, there was an extended description of the opening ceremony for a recently completed hotel while its preceding year's section con-centrated on how the integration of a golf course in a housing scheme demonstrated commitment to environmental preservation. Cycle and Carriage's disclosure focused on the environmental performance of the vehi-cles sold rather than their own organisa-tional performance. Across all cases of disclosure, only one report made reference to the company (ABN AMRO Holdings) having an environmental policy (without disclosing the policy) while there were no references to environmental audits or reviews having been completed. Five companies reported the at-tainment of ISO 14001 certification or the setting up of an environment management system but without providing any informa-tion of the changes either initiative implied. Other criteria of good reporting practice were absent: apart from a few figures reported in percentage terms, there were no quantitative data; no progress against targets was given; information was often incidental to the businesses core activity (for example, a shipping company, CWT Distribution, re-ported only on its paper recycling effort); financial implications or life cycle concepts were absent. Typically claims were uninfor-mative, as in the case of the Broadway Industry Group that emphasised how its moulded-fibre products were completely re-cyclable but without advising on the extent of recycling being achieved. Three reports cited action to comply with environmental laws but only one (Wearnes International) re-ported that it was exceeding the minimum requirement.

Explaining non-disclosure

The company survey obtained a 30 per cent response from non-disclosing companies (66 completed questionnaires out of 221 dis-patched) and a 45 per cent response from disclosing companies (14 completed ques-tionnaires out of 31 despatched). These sam-ples were broadly representative of all types and sizes of organisation. The responses suggest that there are three main reasons for non-disclosure, which equally explain the low commitment amongst disclosing organi-sations:

1 Lack of environmental awareness: the most frequent explanation given for Martin Perry and

Teng Tse Sheng

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non-disclosure was that the company had no environmental impact (Table I). In addition, telephone checks with non-re-sponding organisations found that the main reason for the non-response was a belief that environmental issues were not relevant to their organisation. On the other hand, when questioned specifically on the estimated environmental impact of their organisation, over three quarters of non-disclosing respondents (75.8 per cent) indicated that the environmental impacts of their organisation's activities were unknown. The willingness to provide a judgement on the organisation's environ-mental impact increased amongst disclos-ing organisations, although the high proportion (50 per cent) regarding their activities as ``beneficial'' for the ment equally suggests limited environ-mental awareness.

2 Lack of perceived benefit: significantly more reporting companies associate en-vironmental improvement with market opportunities and cost savings than non-reporting companies (Table II). A large proportion of the non-disclosing organi-sations (over 40 per cent in each case) did not believe that investment in environ-mental improvement offered their orga-nisation either opportunities for cost

saving or improved support from share-holders. An even greater share (75.8 per cent) indicated that growing pressure to tackle environmental problems was per-ceived as ``neither a threat nor an oppor-tunity'' for their company. (Amongst the minority respondents on this issue, most perceived greater customer interest in environmental performance as a competi-tive opportunity.) The lack of perceived benefit was underlined by only half exist-ing reportexist-ing companies indicatexist-ing that environmental disclosure would be a regular practice in their annual report. The awareness that other companies do not report adds to the lack of interest. The second most frequent reason for not reporting was agreement that ``firms in Singapore do not generally include such matters in their annual reports and until this happens, this company will not do so either''. Asked to identify the proportion of Singapore firms practising environ-mental reporting, almost 90 per cent of non-disclosing organisations making an estimate correctly identified the share as less than 10 per cent. When asked to make the same estimate in respect of companies in the UK, fewer than 10 per cent were in the best estimate range (20-29 per cent) but with a even split amongst those under-and over-estimating. Thus a large cluster of firms appear aware that Singapore falls below international participation in en-vironmental reporting.

3 Lack of government pressure: both report-ing and non-reportreport-ing organisations iden-tified the government as the single most direct driver of their reporting coverage (Table III). The expectation of government direction was reinforced by the high proportion (42.9 per cent) of disclosing companies supporting mandatory envir-onmental reporting in annual reports. Government ranked above the influence of business associations and was seen to be more important than resource avail-ability or shareholder and investor pres-sure. Interestingly companies did not admit to concern with the release of information to the public. Two thirds of non-disclosing companies stated that they agreed with the disclosure in Norsk Hydro's environmental report that ``the public has a right to information...if we have a problem it is also in our best interests that it is brought out into full public view''. Of course, this support for openness has to be judged against the current lack of disclosure and the limited conception of corporate environmental responsibilities. More positively, it Table I

Reasons given for not reporting environmental information in the annual report

Reason Percentage

Our company does not have significant environmental impacts 68a

Firms in Singapore do not generally include such matters in their

annual reports and, until this happens, this company will not do so either 53

This company does not have the resources to report on matters that are

not part of legal requirements 41

Our company's activities do have significant environmental impacts, but at this stage we do not believe our shareholders or potential investors are

concerned with these matters 27

Other reasons 17

Note:aTotal exceeds 100 per cent as respondents may give multiple responses

Table II

Perceived impact of environmental improvement on company performance

Per cent of companies agreeing with the statement Disclosers Non-disclosers

Environment improvement can help the company gain a competitive edge and enhance market

opportunities 57.1 45.5

Environment improvement can help the company

save cost substantially 78.6 48.5

Environment improvement can help the company

gain the support of shareholders 85.7 40.9

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suggests that strong governement in-struction could overcome resistance and perceptions that environmental reporting is an unnecessary cost burden.

The absence of information to report would not seem to explain the low disclosure. Over half the non-disclosing respondents indicated that their organisation had recycling, energy conservation or waste minimisation pro-grammes while over a third had resource use efficiency projects (the kinds of issues that reporting companies indicated were appro-priate topics for disclosure). The low envir-onmental awareness revealed from the judgement on the organisation's overall en-vironmental impact (see above) suggests such initiatives may not have an environ-mental motivation but they do provide scope for reporting.

Foreign MNCs and stakeholder

groups

Representatives of the three foreign MNCs interviewed indicated that the environmen-tal commitment in their home region was not reflected in similar priority in Singapore. They suggested that this reflected the low level of interest in environmental issues in Singapore; as one environmental manager commented: ``The level of awareness is very low. Who will care if you report environ-mental initiatives or not? No one will''. An organisation accredited to the European Eco Audit scheme, which requires that it pre-pares a site environmental report for all its locations, advised that without the certifica-tion requirement such reporting would be dropped in Singapore. The Singapore envir-onmental manager cited as evidence of the lack of interest a request to refrain from sending their report to the town council covering their factory site. As the manager said: ``Why create trouble for yourself when

there is no requirement at all in Singapore to report such information to the public?''. Consequently the large contingent of foreign companies with environmental reporting experience are not being encouraged to play a leadership role.

Stakeholder groups tend to be reluctant to campaign for greater business accountabil-ity. In comparison with the role played by the International Chamber of Commerce in pro-moting environmental best practice in Eur-ope and North America (Hansen and Gleckman, 1993; Brophy and Starkey, 1996), the Singapore International Chamber of Commerce has taken no stand on environ-mental matters reflecting the low interest in this issue expressed by its membership. The Singapore Environment Council, a govern-ment appointed education group with a remit to promote environmental awareness in the community and amongst business, similarly indicates that environmental reporting is not considered an issue of significance to Singa-pore. Its president is reported as saying that compliance with legislation provides the public with adequate assurance about com-pany environmental performance (The Straits Times, 21 May 1993). The Council has promoted a revised version of the Interna-tional Chamber of Commerce's Business Charter for Sustainable Development that omits eight clauses in the original version, including that which calls for companies to report annually on their environmental per-formance and progress. Disclosure, it was explained, would be seen as a threat, espe-cially amongst Chinese family businesses who were thought to have a strong prefer-ence for secrecy and person-to-person com-munication rather than written declarations and formal agreements. The Nature Society, Singapore's only independent environmental NGO, has not taken up the issue of business environmental performance. It feels con-strained to focus on issues immediately affecting the survival of Singapore's last remaining pockets of natural habitation. Although it achieved some success in the early 1990s, government influence over its activities has subsequently reduced its in-dependence (Perryet al., 1997).

Discussion

The absence of any cases approaching a serious commitment to disclosure is perhaps a more significant indicator of environmen-tal apathy than the overall low disclosure rate. Singapore's public companies are small compared with the multinationals that have invested most in environmental reporting. Table III

Influences likely to encourage disclosure

Per cent of companies agreeing with the statement Disclosersa Non-disclosers

Government recommendation 71.4 77.3

Interest/request from shareholders and potential

investors 21.4 54.5

Company has resources for reporting ± 45.5

Company obtains ISO 14001 42.9 33.3

Chamber of Commerce or other Industry

Association recommendation 14.3 25.8

Competitors report environmental performance 7.1 22.7

Note:aTotal exceeds 100 per cent as respondents may give multiple responses

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On the other hand, the absence of reporting even amongst activities in pollution inten-sive activities can be seen as a shortfall compared with international practice. At present there is no legislation or official recommendation encouraging companies to disclose and without such requirements there appears little likelihood of disclosure increasing. Two arguments against mandat-ing disclosure are:

1 that disclosure is not important; what matters is actual environmental perfor-mance;

2 that disclosure is a lesser priority than developing environmental management awareness; once management systems are in place, disclosure will follow.

The first of these viewpoints is reflected in the perspective of the Singapore Environ-ment Council that legislative compliance provides adequate assurance of environmen-tal performance. Such a viewpoint contrasts with the expectations in certified environ-mental management systems that companies aim for more than legislative compliance (Welford, 1996). It is also arguably against the best interests of business in the context of generally increasing environmental stan-dards, including the need for conformity with international environmental agreements. Moving beyond compliance minimum means that companies minimise the likelihood of being forced to adopt activity or change investment plans because of regulatory change. Indeed many international compa-nies have incorporated this criterion into their environmental policy (Smart, 1992; Taylor and Welford, 1994). Such leading edge companies recognise that they can gain a competitive advantage by exceeding ance standards and that a focus on compli-ance can be costly and uninspiring to the organisation (Eden, 1996, p. 65). Moreover, within Singapore regulatory non-compliance is significant and has increased during the 1990s. In 1994, 414 prosecutions for environ-mental offences were made mainly involving cases of contaminated waste and illegal release of effluent into water courses (The Straits Times, 14 July 1994). Problems of marine pollution arising from the release of oil and other contaminants into public drains resulted in new legislation to control this activity in 1995. In this context there is scope for disclosure to be another means through which environmental responsibility can be encouraged. This has particular relevance in the context of the government's stated pre-ference to rely increasingly on self-regulation rather than legislative enforcement.

The second perspective argues that disclo-sure will arise once companies start to adopt other environmental initiatives. This per-spective was expressed by a representative of the Ministry of Environment who indicated that encouraging companies to obtain certi-fication to ISO 14001 was a greater priority than disclosure. The two issues tended to be viewed as mutually exclusive in that calls for disclosure were thought likely to deter interest in environmental certification. This was not reflected in the findings of the questionnaire surveys, as suggested by the large agreement with the Norsk Hydro statement. In addition, amongst companies prepared to make a judgement (a third of non-disclosers and slightly over half of dis-closers), the majority correctly identified that ISO 14001 does not require public disclosure of environmental impacts and performance. Moreover, in the context of a low level of participation in ISO 14001 (Tanneret al., 1997), it again might be argued that encouragement to disclosure can be an effective incentive for obtaining certification. Once faced with greater expectations of information release, establishing an inte-grated environmental management system is a necessary response to assist the systematic collection and reporting of environmental performance. Moreover, it would be possible to commence the development of a reporting culture through non-threatening require-ments: for example, through the release of information to industry associations which aggregate data for dissemination. Such an approach might also answer company con-cerns about the cost of reporting.

An increase in disclosure and improve-ment over the existing minimal disclosure statements appears unlikely without con-certed demands on companies. There is a low conception of environmental responsibility and no perceived demand from government or shareholders and investors. The acquisi-tion of ISO 14001 is unlikely to significantly change this. The number of companies ob-taining certification is small and dispropor-tionately foreign owned. Moreover,

expectations of an equivalent growth in certification as achieved by ISO 9000 are misplaced (Krut and Gleckman, 1998). Envir-onmental communication from the latter is addressed to their home country, especially as foreign subsidiaries are typically estab-lished as private companies in Singapore, relieving them of public annual reporting requirements. Amongst Singapore public companies in the survey, two thirds indi-cated that obtaining certification would not encourage disclosure. Government requests for disclosure are seen as the single most Martin Perry and

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important action likely to encourage envir-onmental reporting. Such action is not in prospect, but there are reasons to suggest that government action is not the immediate priority for changing company behaviour.

Environmental reporting will only become significant where stakeholders critically evaluate organisation performance and re-spond to it in their roles as investors, consumers, employees, neighbours or in-formed citizens. Surveys of environmental awareness amongst Singapore citizens sug-gest that understanding of environmental issues is comparable with that in Western countries (Tanet al., 1996). As noted in the introduction, application of that understand-ing into changes in personal behaviour or expectations of organisational performance are less pronounced (Savage and Lau, 1993). Green label products, for example, have had little impact even amongst affluent consu-mers (Wong, 1997) and surveys of Singapore students show little commitment to active or direct participation in environmental pro-tection measures, whether buying recycled products, joining an environmental group, signing a petition or studying environmental subjects (Savage, 1998). Changing this situa-tion requires sustained investment to make people aware and conscious of ecological issues. In Singapore this also requires gov-ernmental acceptance of a broader role for civil society and some relaxation of its tight control of community activism (Tay, 1998). The ``communitarian'' ideology of the Singa-pore government gives little space for local democracy and political action outside of officially controlled channels. As noted above, the Nature Society has been one of few independent NGOs allowed and after a num-ber of high profile campaigns its activity has come under closer surveillance. Government prefers that it is left to set the environmental agenda. This has ensured compliance with international environmental issues neces-sary to sustain the economy's access to world markets, such as conformity to the Montreal protocol, whilst also sheltering companies from environmental demands ahead of com-petitor nations. Thus there has been no development of a ``right to know'' culture with growing affluence and the emergence of a professional middle class (Jones and Brown, 1994; Rodan, 1996).

Conclusion

Environmental disclosure within company annual reports has become an increasing expectation of environmental regulators and campaigners in industrial countries. It is an

indicator of business commitment to envir-onmental improvement to the extent that the disclosures report progress in implementing environmental programmes. Perhaps more important, disclosure is a source of docu-mentary evidence that can be used by external parties to evaluate company perfor-mance. The willingness by company man-agers to open the organisation to external scrutiny is an important step in obtaining business commitment to environmentally sustainable forms of business activity. The low level of environmental disclosure in Singapore is symptomatic of the gap between the developing environmental responsibility accepted in Western countries and that in this newly industrialised economy. Raising interest in environmental reporting will depend on greater environmental conscious-ness amongst shareholders and consumers, which in turn will depend on greater devel-opment of an active citizenry motivated to voice expectations and expose organisations to critical scrutiny. For Western govern-ments, business organisations and campaign groups concerned about inequalities in the diffusion of business environmental respon-sibility, assistance to raise the environmen-tal consciousness of stakeholder groups in Singapore and newly industrialising econo-mies is needed. Business organisations are unlikely to invest in reporting without a perceived need and benefit. The option of encouraging disclosure through mandatory regulations is typically unappealing to busi-ness, although subsequent compliance can be high. Educational initiatives aimed at inves-tors and consumers are necessary to stimu-late demand for disclosure and ensure that the reporting which emerges is significant and ultimately part of a change in business practice.

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(Martin Perry is a senior lecturer in the Department of Geography, National Univer-sity of Singapore where he teaches environ-ment, public policy and urban planning subjects. He is a co-author ofReform at Work: Workplace Change and the New Industrial Order(Longman Paul, 1995) andSingapore: A Developmental City State(John Wiley & Sons, 1997). His latest book,Small Firms and Net-work Economies(Routledge, 1999), assesses the role of small-firm cooperation in eco-nomic development.

Teng Tse Sheng was an honours year student in the Department of Geography, National University of Singapore. He is currently training as a physical education teacher.)