Telling the truth

Aila victims yet to be rehabilitated.

OF late, the issue of climate change has come to the forefront of discussion and attention amongst government, business and non-government quarters. Interest in this issue was heightened even further by the Copenhagen Conference on Climate Change held in December 2009.
In addition to the state responses around the world, the business sector is also responding to it. As the engines of economic growth, it is argued that business activities result in significant environmental and climate changes. Therefore, with increasing carbon emission, it is expected that firms will address this issue in a comprehensive, transparent and accountable manner.
One of the corporate responses could be the systematic measurement and reporting of their environmental and climate change impacts. Hence, examining the extent and nature of corporate environmental and climate change disclosures in Bangladesh is of utmost importance and relevance. This article is based on a content analysis of annual reports related to the year 2008 and of the websites of the 100 largest companies (according to market capitalisation) listed on the Dhaka Stock Exchange.
Bangladesh is considered as one of the worst victims of climate change, although its contribution to climate change is minimal. Given the growing importance of environmental and climate change issues, a question arises as to how firms are responding to these issues.
There has been increasing focus on environmental and climate change issues within the sustainability reporting literature. Previous studies of corporate environmental reporting (CER) in Bangladesh indicated an increase in disclosures, albeit from a very low base. Although, it is compulsory for Bangladeshi corporations to disclose expenditures on energy in their annual reports, there are no other requirements for environmental disclosures.
It is apparent from a careful scrutiny of the policy context of climate change in Bangladesh that there is little emphasis on the role of business in the adaptation and mitigation plan. A recent report on the emerging issues in Asian CSR revealed that climate change is going to be the number one stakeholder concern, which is expected to be addressed by the companies in Asia.
Therefore, in order to achieve long term success Bangladeshi companies will need to respond to the challenges of climate change with appropriate strategies. It appears that this is yet to be articulated in the policy arena of Bangladesh.
The study found that none of the companies disclosed their Greenhouse Gas (GHG) emission data, which is a key climate change related disclosure, while 88% (website 3%) of the companies disclosed their energy usage data in monetary terms. Only 4% (website 1%) of the companies made brief policy statements related to climate change, whereas 10% (website 0%) identified climate change as an important factor.
Only 5% (website 6%) of the companies disclosed that they had an effluent treatment plant (ETP), although establishment of ETPs has been made mandatory in Bangladesh. While a number of companies (45%) made brief policy statements (website 18%) on environment, the length of disclosures barely exceeded an average of three sentences.
Thus, the level of environmental and climate change disclosures is very low.
Although 91% made disclosures in at least one category most of them made disclosures in the energy usage category only, which is a mandatory disclosure. Even fewer companies made disclosures in the specific areas of climate change. This indicates that although there is some corporate awareness of climate change issues disclosures were made in some selected categories only. No disclosure was made in the significant categories like GHG emissions.
Closer examination of the nature of disclosures suggests that most of them are positive and descriptive in nature. There is hardly any bad/negative news. This finding raises question about the credibility of disclosures as we are aware that the department of environment had served notice on a number of non-compliant companies on the issue of ETP and other environmental matters. Lack of independent information further undermines the credibility of the disclosures made.
It is clear that there are significant differences in the extent of environmental and climate change disclosures in the annual reports and websites. Annual reports still appear to be the most popular mediium, at least in the context of Bangladesh. The disclosure exercise, as the study findings suggest, remains essentially superficial; substance is often superseded by rhetoric.
There has been little practical action towards translating the high-flying statements into reality -- for example, only a meagre 5% of the sampled companies bothered to disclose information on the installation of ETPs, which is a mandatory requirement in Bangladesh.
On the basis of the above discussion and analysis, we would like to make the following recommendations for consideration by the relevant policy makers:
The current policy framework -- especially such key national documents as the Bangladesh Climate Change Strategy and Action Plan, National Adaptation Plan of Action, and National Environment Policy -- does not adequately provide for specific role of corporate institutions in terms of environmental and climate change affairs. It is imperative to provide for a better articulation of the corporate sector's role in these policy documents, and for bringing synergy amongst the policies.
The mandatory legal requirements need to be effectively monitored by the relevant government agencies. This in turn will call for capacity building of these oversight agencies to enable them to perform their role.
There need to be policy-level incentives for the few relatively better performing companies in this regard. In the absence of an effective "reward and punishment'' mechanism, compliant companies may eventually lose their zeal in the face of unhealthy competition from their non-complaint peers and free-riders.

Dr. Ataur Belal is at Aston University, UK and Professor Taiabur Rahman at Dhaka University.