
Paper P2: Corporate Reporting (International)
64 Go to www.emilewoolfpublishing.com for Q/As, Notes & Study Guides © EWP
The review should also include:
analysis using financial key performance indicators, and
where appropriate, analysis using other key performance indicators, including
information relating to environmental matters and employee matters.
In the UK, for example, the government has issued guidance on key environmental
performance indicators, including 22 quantifiable performance measures relating to
emissions into the air, emissions into the water, emissions into the earth and the use
of non-renewable resources.
Since the business review is a part of the annual directors’ report, the external
auditors are required to give an opinion on whether the information in the report is
consistent with the financial statements.
However, this requirement for a business review applies only in the EU, not
internationally.
1.3 Voluntary CSR reporting
Because of the potential importance of CSR issues for their reputation and public
image, many large companies voluntarily publish an annual CSR report. This is
often called an Environmental Report, or a Social and Environmental Report. The
intended users of social and environmental reports, or environmental, social and
governance (ESG) reports, include stakeholders other than shareholders.
The IASB is happy for companies to present such information, but does not
prescribe the content or the format of reports. As a result, the length and style of
such reports differs significantly between companies, and the content can vary
substantially for companies in different industries.
Some companies include their report on social and environmental issues as part of
their financial statements (normally in the directors’ report), whereas other
companies publish a report as a separate document. Preparing the information as a
separate document helps to distinguish between the readers: the annual report is
designed for the shareholders, whereas the corporate social responsibility report is
prepared for the other stakeholders in addition to the shareholders.
Contents of an environmental report
Typically, an environmental report will include an outline of:
the entity’s policies towards environmental issues
any improvements since previous years
an assessment of the key risks faced and how the company intends to respond
government legislation on environmental matters and how the entity ensures
compliance with the legislation
significant initiatives taken by the company to improve environmental issues
key environmental performance indicators: targets of the industry and the
relative performance of the entity.