Rapport om evaluering af de grønne regnskaber

English Summary

1. Fulfilment of the requirements of the law and of the statutory order
2. The target groups’ utilisation of the accounts
3. The firms’ internal utilisation of the green accounts
4. Financial and administrative consequences
5. Connection with other environmental policy initiatives and demands ono the firms

Objective of the evaluation

The objective of the evaluation is specified in the Danish Environmental Protection Agency’s terms of reference for the evaluation. The evaluation has had the following main objectives:

• to elucidate the extent to which the green accounts meet the requirements of the legislation;
• to investigate whether the accounts have been utilised by the target group and to investigate knowledge of the accounts;
• to investigate whether the firms have benefited from the green accounts, including whether the accounts have contributed to reducing environmental and resource burdens and to investigate the marketing related effect of the account;
• to investigate the administrative and economic aspects of the legislation.

The evaluation also elucidates the extent to which the green accounts, as an environmental regulatory instrument, interact with other initiatives and regulatory instruments in the environmental sector.

The green account and its objective

The law on green accounts was enacted in June 1995. The general political objective of the green accounts was to stimulate interest in and encourage an active environmental protection effort among private firms and citizens.

The law on green accounts has some inherent preconditions:

• that there is an increasing interest among the public in the environmental situation of especially the polluting firms;
• that the accounts, with their recurring statement of environmental performances, will stimulate firms to make an extra effort to enact ongoing improvements;
• that publication of the green accounts in itself entails a quality assurance and an inspiration for self-management in the domain of environmental protection.

The obligation to elaborate green accounts involves a number of especially polluting firms among the "Chapter Five firms" so denoted because of the law on environmental protection. Today, approximately 1200 firms are required to submit green account declarations, while approximately 200 firms have utilised the option of submitting a voluntary account. In 1998, 1032 green accounts were made public, of which 173 were voluntary.

The administration of the green account was set up so that it utilises the existing system of public access to the financial accounts. Hence, the Commerce and Companies Agency has been responsible for the administrative task linked to the collection and publication of the accounts. The Environmental Protection Agency has administered the rules connected to the other questions, including the quality criteria requirements connected to the actual content of the account. The Environmental Protection Agency is also responsible for granting deferment of the green account with reference to the introduction of the environmental management systems. The environmental supervising authority for the individual firm has the possibility to comment on the obligatory account, but is not required to do so.

The evaluation’s implementation, validity of data and conclusions

The survey was conducted during the period January 1-May 31, 1999. The evaluation has had a point of departure in the Environmental Protection Agency’s terms of reference.

The evaluation has included a large number of separate investigations having the general goal of forming both an overview over and detailed knowledge about the accounts themselves, both in their form and as concerns their agreement with the actual conditions, as well as obtaining insight into all the key stakeholders’ knowledge about, attitudes toward and concrete use of the accounts.

The conclusions of the survey thus build upon:

• A review of 550 accounts, of which 500 were submitted in 1998 and 50 were selected "first generation" accounts submitted in 1997. The 500 accounts constitute nearly 50% of all accounts submitted in 1998.
• Interviews with responsible managers in over 500 enterprises, corresponding to over 60% of the managers responsible for the submitted green accounts.
• Interviews with 320 selected individuals with special background for or presumed special interest in the green accounts.
• Responses to questionnaires from all counties and from a large portion of municipalities having supervisory responsibility for more than one green enterprise.
• Interviews with staff members of the Environmental Protection Agency, and Commerce and Companies Agency and the Labour Inspectorate.
• Group interviews and individualised, more deep-going interviews involving selected firms and specialists.
• Interviews with 500 neighbours in areas with polluting enterprises and with 1900 consumers (as part of a random survey).

This very comprehensive data collection has given the evaluation both breadth and depth. The collection of viewpoints from many sides—firms, account users and authorities—has made it possible to verify the information and elucidate the problems from several perspectives.

The evaluation was conducted by a consortium consisting of the Center for Alternative Social Analysis (CASA), Gallup A/S and the Hanne Eriksen Consulting Company.

Results of the evaluation

The results of the evaluation are summarised in the evaluation’s five main themes:

5. Interaction with other environmental policy initiatives

The conclusions are summarised in the section on "Principal Conclusions".

Assessment of the green accounts

This section provides a systematic assessment of the results of the review of the 550 the green accounts. The review examines the extent to which the accounts contain the required basic information and whether they fulfill the demands of the statutory order on significance and good communication.

The review of the accounts is supplemented by a further examination of 50 randomly selected accounts and comparison with the supervising authorities’ views of the account statements regarding the environmental protection situation.

The accounts’ total quality is compared with the firm’s behaviour in the area of environmental protection, the firm’s size and type of production with several parameters. In parts of these surveys, the results of the review of the accounts are combined with data from the interviews conducted with the firms.

Analysis of the firms

In the analysis, the firms’ attitudes towards the green accounts are analysed as is their experiences with the account work. The interviews are also a source of knowledge about both the environmental and financial effects of the work with the green accounts. The analysis has a response rate of 62% and represents a very large proportion of all those firms submitting accounts. It therefore gives a good overall picture of the firms’ views and experiences.

Analysis of the data has been combined with an assessment of the accounts submitted by the firms, which has given the possibility for analysis of the significance of the firm’s behaviour on the quality of the account.

Stakeholders in the green account

The stakeholder analysis contains interviews with eight different stakeholder groups which are identified as key groups. This concerns the general public, in the form of neighbours to environmentally burdened enterprises and to consumers, local environmental groups represented by selected members of the Danish Association for Nature Conservation, Greenpeace and Friends of the Earth (NOAH), the press (represented by business and environmental journalists), public sector purchasers, consumer groups, environmental organisations, employer organisations, other enterprises as well as well as advisors and investors. Finally, this section includes some written responses from supervising authorities in county and municipal administrations.

The analysis includes knowledge, use and application as well as confidence and credibility. Also included are the results of a small media analysis.

The central level authorities and the green accounts

This section consists of an analysis of interviews with staff from the Commerce and Companies Agency, the Danish Environmental Protection Agency and the Labour Inspectorate. The interviews give an impression of the development of the green account system within the Danish public administration, experiences and the current activities and situation as well as planned initiatives.

Local authorities and the green accounts

The counties and municipalities have contributed to the completion of a comprehensive questionnaire and a supplementary qualitative evaluation of the accounts. This section describes the counties’ and municipalities’ practice and activities in connection with the green accounts as well as in the administration and use value seen from their perspective. The experience of interest in the green accounts is also described.

Round table conversations and green accounts

This section describes the views of selected specialists and central stakeholders regarding the law and the green accounts. Its effect and relevance is discussed. The developmental tendencies in the area are also a theme. Advisors and accountants discuss their experiences regarding the quality and development of the account concept.

Interaction with other environmental policy initiatives

This section summarises some crosscutting points of view, and the developing of the environmental policy area is seen in connection with the legislation on the green accounts. Stakeholders’ viewpoints on double work and administrative burdens are further elaborated, as well as possibilities for synergy with other environmental initiatives.

Case studies

As part of the project, four case studies were carried out taking a point of departure in four concrete firms’ environmental work. In-depth interviews with various parties within and outside the firms were carried out, in the form of authorities and NGOs. The interviews attempt to get behind the quantitative responses in the evaluation. The four enterprises are Novo Nordisk (chemicals), Grenaa Dampvæveri (textiles), Rockwool (insulation) and Tarco Vej (asphalt). The four firms were selected because they represent various control authorities (county and municipality administrations), various branches and a geographic distribution, and because they represent companies with experiences in environmental work, in the green accounts and in experiences with the public’s interest for their environmental conditions.

The evaluation’s response to the terms of reference.

As part of the evaluation, the Environmental Protection Agency sought to have elucidated a larger number of concrete questions. This section gives a systematic though brief response to the questions raised. Elements of the response can often be found in several of the report’s investigations and various sections.

Principal Conclusion

The evaluation of the green accounts has had the objective of elucidating and answering the following questions:

1. Do the green accounts fulfil the requirements of the law?

2. Do the target groups utilise the accounts?

3. Have the firms had internal benefits in their work with the green accounts?

4. What administrative and financial consequences has the legislation had for the firms and the authorities?

5. Is there a connection between the green accounts and related environmental initiatives and the demands on the firms?

1. Fulfilment of the requirements of the law and of the statutory order

The general conclusion is that the majority of the accounts meet the requirements of the law to a reasonable degree. This conclusion must be seen in light of the fact that the law has only been in force for three years, and that many of the accounts examined represented the firms’ very first attempt at elaborating a green account. In several areas the law is very untraditional, with a significant flexibility for the firms.

The conclusion is supported by the following data and assessments:

• The law’s self-reporting principle has entailed that about 90% of all duty-bound firms and production places have registered within the first two years. The inherent automatic character and the administrative measures meant to ensure submission of accounts by all firms obligated to do so is assessed as gradually reducing the number of non-registered firms.
• Five out of six green accounts generally contain the basic information required by the law.
• Every sixth account has a high quality measured on the basis of the premises, i.e., the mandatory content, essential environmental information and good presentation.
• About half the accounts have an adequate quality measured on the basis of the three premises.
• Every third account has critical quality shortcomings in the mandatory content, or concerning environmental information, or because the account cannot be understood.
• A significant improvement can be assessed in the quality of the account from the first year a firm submits to the second year. Nearly 50% of the analysed accounts were the firm’s first account.
• The accounts often give a good picture of the firm’s resource utilisation, while discussion of polluting materials is frequently somewhat lacking.
• The main portion of the accounts show good or very good agreement with the environmental certification conditions and refer to major environmental burdens, even though some shortcomings can be pointed out.
• Analysis of the accounts combined with control among the authorities shows that a good 10% of all accounts give a decidedly defective picture of the environmental burdens, or they are veiled because of the exaggerated use of index numbers. There is frequently an authority focus on improvement of these accounts.

2. The target groups’ utilisation of the accounts

If the stakeholders are to utilise the accounts, they must be familiar and be available, and if the firms are to be inspired in doing the accounts, the accounts must be in demand. The use of the accounts thus depends on the content being viewed as useful and reliable.

The evaluation’s main conclusion is:

• That the professional stakeholders are familiar with the accounts, they have considerable confidence in them, they utilise them to a certain degree, and they often find the expected information.
• The general public, in the form of neighbours to the polluting firms and general consumers, are familiar with the concept of the green accounts, many know the relevant places from where to obtain an account; however, concrete knowledge is quite low, and confidence in the accounts and the process which generates them is significantly lower than among other stakeholders.
• The stakeholders are in considerable disagreement as to the extent to which the firms’ themselves elaborate the account decisively contributes to the accounts' reliability. Between one-third and two-thirds of the organisations, investors and supervising authorities agree that the firms' own work with the accounts contributes to the reliability of the accounts. Only some 5% of neighbours and consumers believe that the firm’s work with the account has significance for the reliability of the account.
• The firms have experienced a very small interest in the green accounts. Half of all firms have themselves sent out fewer than ten green accounts; three out of four have obtained no reaction to their accounts. Also among firms who have used many resources on their accounts, a disturbingly low level of demand is recorded. The general impression among the firms, however, is one of an increasing interest.

The conclusion concerning the general public is supported by the following survey data:

• Half of the groups "neighbours to polluting firms and general consumers" know of the green accounts and they know how one can obtain an account.
• Ten per cent of the neighbours and consumer groups have seen a green account.
• Half of the neighbour and consumer groups express either a lack of confidence in the account’s content (approx. 30%) or are unsure over the content (approx. 20%).

3. The firms’ internal utilisation of the green accounts

It was expected that the systematic environmental work would give internal results for the firms. The evaluation shows that this is confirmed. Those firms who have engaged themselves in elaborating a green account have also tended to achieve positive results of an environmental, organisational or economic character or in several of these areas.

The conclusion of the evaluation can be quantified and supported as follows:

• Forty percent of all enterprises have achieved environmental improvements. This applies especially within the sector of energy and water consumption, other resources and materials as well as waste. Many have initiated work with cleaner technology and every fifth with less environmentally hazardous products.
• Fifty percent of the firms have involved employees in the elaboration of the accounts. Sixty percent of these enterprises have experienced a positive effect of employee involvement, and most of them expect increased involvement. The positive effects include higher involvement, better communication and more efficient work routines.
• For several firms, work with the green accounts has also contributed to the establishment of new environmental policies, elaboration of environmental action plans or to a decision to introduce environmental management.

The analysis points to several associations between the firms’ internal conditions and the ability to achieve internal use and the good quality of the green account. Those firms who achieve benefits and who elaborate good accounts often have the following characteristics: they are large or middle-sized, they use primarily internal resources in the account work, have established environmental management, have formalised staff involvement, apply the account in their marketing activities and use external environmental specialists as sparring partners. Those firms having green accounts which were not so good and had little or no benefit from them tended to have the opposite characteristics. These enterprises are also often negatively disposed toward the green accounts.

4. Financial and administrative consequences

The law on the green accounts has not led to the establishment of new administrative organs, in that the administrative system in the Commerce and Companies Agency, which gives the public access to the economic accounts, is utilised. As work is being done on self-reporting and systematic, obligatory monitoring by authorities of the content of the accounts does not take place, the public sector costs of administration and control costs remain low.

The administrative system:

• The administrative system has in practice functioned according to plan, but both the firms and especially the supervising authorities complain that it is difficult to understand the role of the Commerce and Companies Agency.
• The supervising authorities point to the unsuitable aspect that the Environmental Protection Agency is the first competent authority with respect to the green account, while it is the supervising authorities who have knowledge of the firms’ environmental conditions.
• The firms have born the most important administrative burden in the implementation of the law. About half the firms, however, have achieved financial benefits linked to the work with the accounts.

Resource consumption and profits can be summarised in the following main figures:

• For submission of their second green account, the firms used an average of about 95 hours. The total costs of the 1200 mandatory green account statements lies at about 75 person-years of labour or DKK 20-25 mill. To this must be added the costs of outside assistance, about DKK 5 mill. About 30% of the firms have utilised outside assistance.
• About half of all the firms are of the opinion that the benefit of elaborating the green account measures up to the costs. About 15% of the firms have indicated concrete financial benefits on average of DKK 75.000. Fifteen of the 512 firms asked stated that the financial benefits exceeded DKK 250.000.
• The Environmental Protection Agency and the Commerce and Companies’ Agency have each had a resource utilisation of about 1.5 person-years of labour for the new tasks linked to the law. On the basis of the information from the supervising authorities’ regarding the average time used per account, it can be calculated that the counties and municipalities have used about three person-years on the voluntary commentary, prior to the accounts being accepted for public distribution.
• The counties believe that to a certain degree the legislation has increased the work burden without giving greater benefits, while a part of the municipalities see a certain rationalisation and only very few can identify an increase in labour burden.
• The primary effect of the law seen from the perspective of the supervising authorities has been as creator of dialogue, just as the firm’s interest for the local environmental measures and advising does not seem to be increased.

5. Connection with other environmental policy initiatives and demands ono the firms

The regulations for public access to insight into and knowledge of the firm’s behaviour in the environmental sector enters into an increasing number of contexts. Correspondingly, an increasing number of firms are voluntarily engaging themselves in activities and arrangements, which make available this knowledge. Environmental conditions have in many contexts become an important competitive parameter.

The evaluation points to a certain degree of duplicated effort between the green accounts and such activities as the self-monitoring reports which the firms submit directly to the supervising authorities. There is a potential hazard for further double reporting, and duplicate effort in areas such as employee involvement and work environmental conditions as well as reporting of environmental data, environmental reports and publication according international regulations and agreements.

If the green account is to be applied more extensively and for newer objectives, it will be difficult to maintain the existing primary goal of the account, namely to ensure the public easily understandable, regularly appearing environmental reports, and to maintain the existing concept where it is the enterprises themselves which to a very high degree define the content and the extent of the account.

Via the evaluation, detailed knowledge has been collected regarding the existing accounting concept and more general experiences regarding the effect of the firms’ environmental work and the stakeholders’ attitudes which cannot only be utilised in the further development of the green accounts but can also find application in other environmental policy initiatives.