St. Petersburg University
Graduate School of Management
Master in Management
Non-financial Reporting as a Form of Environmental Disclosure:
The Case of International Construction Industry
Master Thesis by a 2nd year student
General track, CEMS
Anastasiia Malysheva
Research advisor:
Yury E. Blagov, Associate Professor
St. Petersburg
2017
ЗАЯВЛЕНИЕ О САМОСТОЯТЕЛЬНОМ ХАРАКТЕРЕ ВЫПОЛНЕНИЯ
ВЫПУСКНОЙ КВАЛИФИКАЦИОННОЙ РАБОТЫ
Я, Малышева Анастасия Евгеньевна, студент второго курса магистратуры
направления «Менеджмент», заявляю, что в моей магистерской диссертации на тему
«Нефинансовая отчетность как форма раскрытия экологической информации на примере
международной строительной отрасли», представленной в службу обеспечения программ
магистратуры для последующей передачи в государственную аттестационную комиссию
для публичной защиты, не содержится элементов плагиата.
Все прямые заимствования из печатных и электронных источников, а также из
защищенных ранее выпускных квалификационных работ, кандидатских и докторских
диссертаций имеют соответствующие ссылки.
Мне известно содержание п. 9.7.1 Правил обучения по основным образовательным
программам высшего и среднего профессионального образования в СПбГУ о том, что
«ВКР выполняется индивидуально каждым студентом под руководством назначенного
ему научного руководителя», и п. 51 Устава федерального государственного бюджетного
образовательного
учреждения
высшего
образования
«Санкт-Петербургский
государственный университет» о том, что «студент подлежит отчислению из СанктПетербургского
университета
за
представление
курсовой
или
выпускной
квалификационной работы, выполненной другим лицом (лицами)».
______ _________________________________________ (Подпись студента)
________________________________________________ (Дата)
STATEMENT ABOUT THE INDEPENDENT CHARACTER OF
THE MASTER THESIS
I, Anastasiia Malysheva, (second) year master student, program «Management», state
that my master thesis on the topic «Non-financial Reporting as a Form of Environmental
Disclosure: The Case of International Construction Industry», which is presented to the Master
Office to be submitted to the Official Defense Committee for the public defense, does not
contain any elements of plagiarism.
All direct borrowings from printed and electronic sources, as well as from master theses,
PhD and doctorate theses which were defended earlier, have appropriate references.
I am aware that according to paragraph 9.7.1. of Guidelines for instruction in major
curriculum programs of higher and secondary professional education at St.Petersburg University
«A master thesis must be completed by each of the degree candidates individually under the
supervision of his or her advisor», and according to paragraph 51 of Charter of the Federal State
Institution of Higher Education Saint-Petersburg State University «a student can be expelled
from St.Petersburg University for submitting of the course or graduation qualification work
developed by other person (persons)».
________________________________________________(Student‟s signature)
________________________________________________ (Date)
2
АННОТАЦИЯ
Автор
Анастасия Евгеньевна Малышева
Название ВКР
Нефинансовая отчетность как форма раскрытия экологической
информации на примере международной строительной отрасли
Направление
Менеджмент (общий профиль)
подготовки
Год
2017
Научный
Юрий Евгеньевич Благов
руководитель
Описание
задач
и
цели, Целью работы является выявить основные тенденции в раскрытии
основных экологической
результатов
информации
международными
строительными
компаниями путем публикации нефинансовой отчетности.
Проведен анализ современной научной литературы о методах
оценки экологической ответственности и основных стандартах
нефинансовой
индикаторов,
отчетности.
согласно
Собран
которому
был
набор
экологических
проведен
контентно-
сравнительный анализ нефинансовых отчетов 30-ти компаний. Для
исследования связи между степенью раскрытия экологической
информации и инвестиционной привлекательностью компаний был
проведен регрессионный анализ.
В
заключении
представлены
выводы
касательно
роли
нефинансовой отчетности в отрасли и факторах, влияющих на
степень раскрытия экологической информации.
Ключевые слова
Нефинансовая отчетность, устойчивое развитие, экологическая
ответственность, экологические показатели, строительная отрасль,
степень раскрытия информации
3
ABSTRACT
Master
Student's Anastasiia Malysheva
Name
Master Thesis Title
Non-financial Reporting as a Form of Environmental Disclosure: The
Case of International Construction Industry
Main field of study
Management (General Track)
Year
2017
Academic Advisor's Yury E. Blagov
Name
Description of the The paper aims to find out the main tendencies of environmental
goal, tasks and main disclosure by international construction companies via non-financial
results
reporting. It starts with an overview of contemporary academic research
on the environmental performance assessment, as well as the main
standards of environmental disclosure.
A set of environmental indicators was aggregated and used to analyse
reports of 30 companies. Regression analysis was run to probe the
relationship between the degree of environmental disclosure and the
companies‟ investor attractiveness.
The final section concludes about the role of non-financial reporting in
the construction industry and the factors influencing the degree of
environmental disclosure.
Keywords
Non-financial disclosure, sustainability, environmental responsibility,
environmental indicators, construction industry, degree of disclosure
4
Content
Introduction ..................................................................................................................................... 6
Chapter I. Literature review ............................................................................................................ 8
1.1. Environmental impact of construction industry.................................................................... 8
1.2. Environmental responsibility and its assessment tools ....................................................... 10
1.3. Role of non-financial reporting........................................................................................... 14
1.4. Rating method: pros and cons and limitations .................................................................... 18
1.5. Summary of findings from Chapter I .................................................................................. 21
Research gap .............................................................................................................................. 21
Chapter II. Data collection and methodology................................................................................ 22
2.1. Choice of methodology ....................................................................................................... 22
2.2. Data collection and sample description .............................................................................. 23
2.3. Methodology ....................................................................................................................... 24
2.4. Obstacles and limitations .................................................................................................... 25
Chapter III. Analysis results discussion ........................................................................................ 26
3.1. Creation of the indicator list ............................................................................................... 26
3.2. Degree of disclosure by the companies .............................................................................. 28
3.3. Degree of disclosure per indicator ...................................................................................... 30
3.4. Construction industry-specific environmental indicators ................................................... 33
3.5. Degree of disclosure and ROI ............................................................................................. 34
3.6. Summary of findings from Chapter III ............................................................................... 38
Conclusions ................................................................................................................................... 39
List of references ........................................................................................................................... 42
Appendix 1. List of studied companies ......................................................................................... 46
Appendix 2. Pool of environmental indicators .............................................................................. 47
Appendix 3. Degree of disclosure grid .......................................................................................... 51
Appendix 4. Ranking by the degree of environmental disclosure ................................................. 53
Appendix 5. Degree of disclosure by indicators............................................................................ 54
5
Introduction
The topic of environmental responsibility is gaining popularity both in research and in
industry. Along with the social and the economical responsibility, the environmental
responsibility is an essential part of companies‟ sustainability policy.
Construction industry is one of the most environmentally-damaging, and thus, the issue
of environmental responsibility is particularly acute there. Richard and Ramli (2011) point out
the main ecological consequences of construction work: land and water pollution, CO2
emissions, high proportion of waste, energy and water consumption, deforestation, among
others. This explains the actuality of the chosen research topic.
Analysis of literature has shown that construction is rarely a subject of research, and little
academic discussion can be found about the specificity of sustainability measures that should be
taken in construction. There are many national environmental standards for construction but no
universal (international) framework that would exhaustively explain how to measure and
estimate companies‟ environmental performance. The novelty of this research paper lies in the
methodology of assessment of environmental performance and in the final result – the
environmental responsibility rating of international construction companies.
The main purpose of this paper is to discover the main tendencies in the environmental
disclosure by the international construction companies. To reach this purpose, the research
targets the following goals:
-
Reveal the limitations of existing environmental methodologies through the analysis
of contemporary academic literature;
-
Collect a pool of relevant indicators to estimate construction industry‟s impact on the
environment;
-
Find out the degree of disclosure for each indicator;
-
Discuss whether it is possible to rank the companies using secondary data (nonfinancial reports);
-
Make conclusions about the main factors that influence the content of environmental
reports by the construction companies.
This research paper is framed by the following research questions:
(1)
What is the degree of environmental disclosure by the international construction
companies? Is it possible to rank the companies by their environmental performance based on
the information they disclose in their non-financial reports?
(2)
Are there any construction industry-specific environmental issues that are not
covered by major corporate sustainability assessment frameworks?
6
(3)
Is higher degree of disclosure associated with higher investor attractiveness?
The research paper contains an introduction, three chapters followed by summaries of
findings, a conclusion, annexes and a list of references. The first chapter gives an overview of
literature on environmental responsibility and reporting, the impact of the construction industry
on the environment, and the main challenges of rating methodologies. The second chapter
describes the data collection process and the methodology of the current study. The third chapter
presents the results – a proposed list of environmental performance indicators for the
construction industry, and discusses how the new methodology tackles the challenges of
environmental performance assessment and of the rating methodology. The conclusions section
summarises the learnings and presents them as answers to the research questions. Theoretical
and managerial implications as well as directions for further research are also discussed in the
conclusions.
It should be noted at this point that in this paper the terms „environmental performance‟
and „environmental responsibility‟ are used interchangeably. Sometimes the term „sustainability‟
may be used as a hyperonym for environmental responsibility since the latter is one of the three
aspects of sustainability.
7
Chapter I. Literature review
Sustainability and, more narrowly, environmental responsibility, are gaining popularity in
both the academic research and the industry. Nowadays it is equally important to be both
economically profitable and responsible socially and environmentally. The problem, however, is
in deciding how to measure environmental performance, especially when it comes to comparing
companies from different countries. There are a few studies that suggest their own framework for
sustainability assessment, but a universal extensive list of sustainability indicators has not been
elaborated so far.
This paper is dedicated to creating a framework of environmental responsibility
evaluation for the construction industry on the international level. For this, indicators and the
measurement system need to be agreed on.
The study requires thorough theoretical background on environmental responsibility as a
subset of contemporary sustainability theory, as well as on sustainability reporting and
sustainability ratings. Literature review is aimed at revealing the current trends in understanding
of sustainability and approaches to estimate sustainability performance as well as formulating the
potential alterations to be made and tested in chapters two and three of this paper.
The chapter starts with a discussion on the impact of the construction industry on the
environment. This will explain the existing tension and the choice of topic for research. Then
follows an overview of the existing environmental assessment tools (or standards). After that we
give a brief summary of non-financial reporting systems such as the Global Reporting Initiative,
and reason the purpose of reporting. The last section is dedicated to the pros and cons of the
rating methods in assessing companies‟ sustainability. The chapter ends with the summary of
findings from the four sections and the research gap for the study presented in this paper.
1.1. Environmental impact of construction industry
Recent years have seen an increased concern over environmental problems. It has reached
the global level: in 2015 the United Nations signed the New Sustainable Development agenda
for 2030 signed by almost 200 countries who agreed to strengthen their performance on the 17
Sustainable Development Goals (SDGs) (UN, 2017).
Each industry affects the ecology in its own way. Richard and Ramli draw plenty of facts
illustrating how unsustainable construction affects the environment (Richard, Ramli, 2011):
-
It produces 5% of the world total carbon dioxide emitted through cement
production. Some companies have started using foam concrete that can be called a sustainable
material;
8
-
Extensive mining of raw materials for the cement production often results in rapid
deforestation and loss of the top soil;
-
The building and construction sector take up 40% of the world‟s energy
consumption and 12% of water consumption;
-
40% of construction waste is sent to landfill.
It is needed that companies build sustainable policies and set long-term goals to decrease
their ecological footprint. However, it is challenging to find motivation for a company to restrain
the use of resources and enforce eco-friendly production unless it is regulated by local or
international authorities to do so.
With the rise of environmental concerns in the construction industry the concept of
sustainable construction was born. Sustainable construction is tautologically defined as „the
result of the application of sustainable development in the construction industry‟ (Shi, 2008).
Sustainable development is “the development that meets the needs of the present without
compromising the ability of future generations to meet their own needs” (Brundtland, 1987). In
order to promote it in the construction industry, different assessment tools have been introduced.
They are often referred to as the green building assessment tools. Some of them are presented
below in Fig. 1:
CBIP
C-2000
GSB
GBTool
BREEAM
LEED
Green
Globes
GBRS
ASHRAE
CASBEE
GreenCalc
ESGB
GBI 2009
BCA
Fig. 1. Green building assessment tools
LEED (United States Green Building Council)
GreenCalc from Netherlands
Green Globes from the United States
CASBEE from Japan
BREEAM from the United Kingdom
GBRS from Korea
GBTool (SBTool), C-2000 IDP and CBIP from Canada
ESGB from China
ASHRAE from the US
BCA- GM from Singapore
Guideline for sustainable building from Germany
GBI 2009 from Malaysia
9
These tools are guidelines and standards that help regulate the environmental impact of
construction in the given region. Such variety of standards makes it challenging to compare
sustainability performance of companies from different countries. These standards have very
similar indicators - only BREEAM, CASBEE, LEED, GBTool and Green Globes are the original
ones (Fowler & Rauch, 2006). The rest of them use one of these five tools as a base for their
framework.
These green building tools should not be confused with the ones that we will use in this
paper to collect a pool of environmental indicators for construction companies. The goal of this
paper is to analyse environmental disclosure of construction companies at the corporate level,
and not to analyse environmental impact of the building structures.
We have come to the notion of green building, a narrower concept within sustainable
construction. Green building focuses specifically on the environmental impact of construction
process and the structures themselves (Kibert, 2004).
In this section we have discussed the facts that bring in the actuality of the topic: the
negative impact of construction on the ecology is undoubted. The section acquaints the reader
with the concept of green building and green building assessment tools.
1.2. Environmental responsibility and its assessment tools
In the 21st century sustainability has become a buzzword. Governments, organisations
and individuals put the interests of the society and the environment on the discussion table
together with profitability. The link between being responsible and profitable has been discussed
in academic research and witnessed in practice. Dyllick and Hockerts (2002) explain the
interrelation of the environmental, social and business aspects of sustainability. As is shown in
Fig.2, sufficiency and eco-effectiveness aim at sustainable development and bring about society
and businesses as the two producers of environmental good:
10
Fig. 2. The natural, societal and business cases. Extracted from Dyllick & Hockerts,
2002.
In other words, society and business have a common goal to take care of the environment,
and being an environmentally responsible business is part of being socially responsible. Now,
how does this translate into profitability? Environmental standard are set by the governments,
and are directly linked to financial consequences in case of non-compliance. Besides, being
sustainable makes for a good reputation among sustainability-conscious customers and investors.
A phenomenon called socially responsible investing is in place now that investors have seen that
companies‟ sustainability practices produce direct material impact on their valuations
(Chouinard et al, 2011). Today firms can only prove they are viable in the long run by providing
evidence of their sustainability practices. It is usually done through sustainability reporting –
disclosing such type of information alongside the financials.
Environmental performance can be defined as the set of initiatives that companies take to
control their impact on the environment (Walls et al, 2011). Environmental performance is
another term for environmental responsibility of a company in a more practical meaning tied to
certain metrics. Environmental performance is about carrying out the firm‟s environmental
strategy. Environmental strategy involves products, processes, and policies that help decrease
waste and energy consumption, the strategy implies usage of sustainable resources, and
implementation of environmental management systems (Bansal, Roth, 2000).
Judith Walls and her colleagues suggest classifying environmental strategies into reactive
and proactive. Reactive environmental strategies deal with „environmental issues when they arise
as a result of the firm‟s activities‟. Proactive environmental strategies are those that attempt to
prevent environmental consequences of firm‟s operations and aim at combining resources for the
firm to develop environmental capabilities (Walls et al., 2011). Notably, regardless of what kind
11
of environmental strategy a company claims to have, it seems hardly possible to estimate
whether it actually is proactive or not. But the researchers propose a tool that sets the direction
for evaluating the environmental responsibility of businesses (Walls et al., 2011):
1)
Historical orientation. The authors believe that firms with a history in
environmental strategy are more likely to integrate environmental concerns in their operations.
They are more likely to have already formed environmental capabilities.
2)
Network embeddedness of supply chain and other stakeholders. This construct is
especially valuable, because „networks are socially complex and difficult to imitate‟.
3)
Endowments
–
ISO
certification,
environmental
management
system,
environmental R&D. Endowments help firms become proactive. Walls et al use the term to mean
the volume of firm investments in environmental R&D combined with supporting structures that
maximize the endowment (for example, ISO-14001 certified environmental process).
4)
Managerial vision – long-term commitment to environment. The authors suggest
measuring managerial vision in time (short- or long-term goals are set) and depth (global or not).
5)
Top management team skills – senior environmental executive, reporting
structure. It is important to take into account whether there is an environmental manager in the
executive team and whether they report at a local or facility level.
6)
HR – environmental training programs, acquaintance of staff with GRI or other
reporting systems. Formal environmental training programs and formal environmental
performance reporting systems define the skills of company employees for environmental
strategy.
The authors highlight that all capabilities are highly correlated with one another. This
correlation will be reflected in the rating, since the companies who have managed to integrate
these capabilities, will accumulate higher score for each criterion.
One of the most prominent theories of environmental responsibility is the natural
resource–based view, introduced in the 1990s. The conceptual framework of the NRBV is built
upon the three major strategic capabilities: pollution prevention, product stewardship and
sustainable development, which, if taken advantage of, allow for cost reduction through
continuous improvement and stakeholder integration (Hart, 1995). A company that boasts such
capabilities is able to be always ahead of its competitors and be proactive. Stuart L. Hart
explained the specifics of the three capabilities.
Pollution prevention implies elimination or minimization of emissions, effluents and
waste. Pollution comes from inefficient use of materials and human resources. Pollutionprevention measures together with pollution control equipment are forms of pollution abatement,
which means eco-friendly manufacturing process and minimal ecological footprint of a
12
company. Pollution control increases productivity and efficiency and thus leads to cost
reduction. Unique ways of cost reduction are the most desirable competitive advantages of any
firm.
Product stewardship refers to such product design and development processes that are
environmentally responsible. In order for a product to bring low environmental costs, it should
consist of renewable and non-toxic materials. Producing green products affects the company‟s
reputation in a favourable way.
Sustainable development highlights the idea of long-term profits. Firm‟s ability to
envision sustainable technologies and products and be the first to create them is the highest-end
competitive advantage it can get. The hidden rock here is the necessity to have enough financial
and infrastructural resources in order to sacrifice short-term profits for the implementation of
these potentially economic and environmentally responsible technologies. It takes special
commitment and vision to successfully enter the path of sustainable development.
Pollution
prevention,
product
stewardship
and
sustainable
development
are
interconnected strategies, which means they need to be implemented together, and work best
with the synergy effect.
Sharma and Aragón-Correa are contemporary authors on NRBV. In their 2005 book they
argue that three strategic capabilities can allow firms to identify and prepare for major
environmental events (Sharma, Aragón-Correa, 2005). A firm that has all three capabilities is
likely to drive environmental innovation and effectively address sustainability problems.
Nowadays the tools for assessing environmental performance are numerous and differ by
the scope (industry-specific or non-industry-specific) and geography (national or international),
as is shown at Fig. 3 below:
Environmental responsibility assessment tools
Industry-specific
(usually national)
LEED
GBTool
CASBE
E
Non-industry-specific
(usually international)
GSB,
and
others
Green
Globes
Fig. 3. Environmental performance assessment tools
13
CBA,
MCA
EIA,
SEA,
HIA
LCA
A few of the notorious international tools are not industry-specific and include EIA
(Environmental Impact Assessment), SEA (Strategic Environmental Assessment), LCA (Life
Cycle Assessment), HIA (Health Impact Assessment), CBA (Cost Benefit Analysis), MCA
(Multiple Criteria Assessment). Some of the mentioned assessment tools are used in the
development process of legislation, policies and projects (EIA, SEA, and HIA). They do not
suggest a list of environmental indicators, but recommend a certain procedure of decisionmaking regarding the environment. Two of the mentioned tools – CBA and MCA - are designed
to help compare alternatives, for example a few projects. They do not compare companies‟
performances on the corporate level though. Life Cycle Analysis helps to find out the impact of a
product, process or service on the environment and human health. The scope of these tools does
not fit the goal of this study, so we cannot find a discrete set of environmental indicators from
them.
Industry-specific tools (such as LEED, Green Globes, JSBC, GBTool, and CASBEE in
the case of construction industry) are usually applied in certain regions and are rarely used
outside of the country of origin. For the purpose of this research we will compare a few of these
tools to aggregate the most exhaustive set of environmental impact indicators for the
construction industry. A more detailed examination of these tools is provided in Chapter II where
we choose which tools to use as sources of performance indicators for the new aggregated list.
1.3. Role of non-financial reporting
The most common way for a company to boast its sustainability is to publish nonfinancial reports. They can be called differently: CSR reports, sustainability reports,
environmental responsibility reports, or by the name of the standards: GRI reports, SA8000
reports, and so on. Non-financial report is “the company‟s portrait” (RSPP, 2017) in the sense
that it reflects the company‟s social role. Non-financial reports allow the reader to see the
company‟s strategy and what it does to achieve its goals. The very fact of publishing a nonfinancial report and especially leaving it in the open access is evidence that the firm aims at
building transparent and trustworthy relationships with its stakeholders (RUIE, 2017). In this
respect the high quality (namely, degree of disclosure) is an important factor for strengthening
trust and reputation.
In chapter 3 of this paper we will analyse the content of the international construction
companies‟ non-financial reports, so it is considered important at this point to discuss the role of
non-financial reporting.
14
Environmental responsibility and disclosure is encouraged at many levels:
-
Global: initiatives such as the Paris agreement on the Climate Change;
-
National: some governments have made it mandatory to report on certain ESG
aspects (such as those of the UK and the Netherlands);
-
Institutional: external independent institutions (for example, Greenpeace and WWF)
and consulting/research organizations (such as KLD Analytics and RobecoSAM)
publish articles, ratings and guidelines for environmental disclosure.
-
Stakeholder: the stakeholder expectations often include efficiency and ecofriendliness of business.
Unlike financial reporting, the trend of non-financial reporting is quite new, and
companies need assistance on how better to implement sustainability policies and report their
performance. For the sake of unification and facilitation of non-financial reporting, standardized
systems have been elaborated.
Companies are free to design their non-financial reports using any (or no) standard.
Among the non-financial standardized reporting systems are GRI (the Global Reporting
Initiative), AccountAbility (AA1000), Social Accountability International (SA8000), and ESG
guidelines provided by stock exchanges. SA8000 only deals with the human right issues in the
company management1. The guidelines for AA1000 are not published in the open access, so we
are unable to use them as sources of environmental performance indicators for our research. In
this paper we will analyse in more detail the GRI and ESG frameworks.
GRI is the oldest sustainability reporting standard, which explains its wide use as a
benchmark and the amount of research conducted about the content of GRI reports. The GRI
explains its purpose as to help organizations measure, understand and share their economic,
environmental, social and government performance (GRI, 2016). Thus it aims at empowering
them to take actions towards more sustainable economy.
GRI offers such definition of sustainability reporting: “A sustainability report is a report
published by a company or organization about the economic, environmental and social impacts
caused by its everyday activities” (GRI, 2017). Yet in the early 2000s John Elkington, the guru
of sustainability and the author of the Triple Bottom Line theory, noticed the increasing demand
for the non-financial information by businesses‟ stakeholders “to compare, benchmark and rank
the performance of competing companies” (Elkington, 2004).
Among the reasons why non-financial reporting is important are the following:
-
The perceived environmental visibility of the firm (Skouloudis et al, 2009). This is
however, linked with greenwashing that we will discuss later in this section.
1
From URL: http://sa-intl.org/_data/n_0001/resources/live/SA8000%20Standard%202014.pdf
15
-
Facilitation of the dialogue with stakeholders and providing data to help establish
the industry benchmarks and point out the best practices (Chouinard et al, 2011). Companies can
drive industry innovation by learning from each other‟s best practices or fails. For the
stakeholders published open information is the first point of reference when they get acquainted
with the company.
-
The support of investor decision-making (Slater & Gilbert, 2004).
The latter is a popular topic in scientific research. Most academics argue that investors
are increasingly more concerned about the sustainability performance of the firms (Busch et al
2015; Cadman, 2011), while some sources provide statistical evidence that in very few cases
sustainability information is included in investors‟ decisions. For example, Eurosif study says
that ESG-based rating results are systematically included within investment decisions in only 8%
of cases (Eurosif, 2010).
The solid evidence of the increasing emphasis on sustainability is the phenomenon of
Sustainable Stock Exchanges (SSEs). The SSE initiative was launched by the UN in 2009 as “a
peer-to-peer learning platform for exploring how exchanges, in collaboration with policymakers,
regulators, investors and companies, can promote responsible investment for sustainable
development” (SSE Initiative, 2016). 58 stock exchanges joined the initiative. While it might
seem that the initiative itself is an indicator of the investor interest in non-financial reporting, the
Initiative representatives found out that only 10% of CEOs confirmed investor pressure to higher
sustainability (SSE Initiative, 2016).
Having discussed the potential benefits from non-financial reporting, let us now look at
the major points of criticism. These will be useful to take into account while conducting
comparative content analysis of the reports.
Some researchers emphasize the lack of context in the reports, i.e. absence of
comparisons with regional averages and industry averages, as well as with previous years‟
performance by some companies (Fonseca, 2010; Isaksson, Steimle, 2009).
Another ground for criticism is the confusing system of assigning grades to companies
for their GRI reports. Companies can get B, B+, A, A+, which are not the grades for
sustainability performance, but for the quality of the report (Bernard et al, 2015). This means
that a company might not have an outstanding sustainability policy, but by issuing an impeccably
written GRI report can get an A or A+. Such grading system is misleading to some readers who
perceive the score as attributed to the company‟s actual sustainability score.
One more important notice is the ‘greenwashing’ effect of sustainability reports and their
misuse by companies in attempt to create an image of an ecologically-conscious and sustainable
16
business while in reality this is not the case (Bradford, 2007). Interpretative nature of
sustainability reports requires more attention to the tactics of CSR communication (and
sustainability reports are a method of it) and establishment of a tool that helps estimate
companies‟ environmental performance.
There were also attempts to estimate whether GRI reports help achieve the stated goals of
the initiative. Sneha Bernard et al in their 2015 study of GRI reports issued by 64 companies
from 5 industries have reached to the conclusion that „GRI does not appear to drive corporate
sustainability so much as recount pre-existing trends‟ (Bernard et al, 2015). Another negative
inference was made by A. Fonseca about the fact that sustainability reports may enable
companies to „conceal unsustainable behaviour‟ (Fonseca 2010). This happens because
companies are free to report their best sustainability practices and not report their operations that
yield to unfavourable results.
A summary of the positive and negative critique on the sustainability reports is presented
at Fig. 4.
Empowering for actions
Perceived environmental visibility
Positive
effects
Support of investor decision-making
Sustainability
reports
Lack of historical context
No comparison with industry average
Greenwash
Misleading grading system
Reporting is not a real driver of performance
Fig.4. Pros and cons of sustainability reporting
This section helps us locate the challenges when analysing non-financial reports. These
reports may also create a false image of a responsible company and cover for unsustainable
practices, which is called the „greenwashing‟ effect. While it is easier to find criticism of nonfinancial reporting, it should be praised for encouraging firms to work further in the direction of
their sustainable development.
17
1.4. Rating method: pros and cons and limitations
In the previous section it is mentioned that sustainability information may be needed for
investors or other stakeholders to benchmark and compare performances. The most popular form
of comparative analysis is a rating. In order to discuss the possibility of ranking the companies
based only on the information provided in their sustainability reports, it makes sense to look as
the current criticism of the rating method.
So far the major challenge for researchers who compile the ratings is to agree on the
measures when estimating environmental strategy. Once the measurement scale is established,
data collection can start and the rating method can be used efficiently to enable comparison of
multiple firms on multiple criteria.
Goldman Sachs has targeted the issue of measurability and has tried to convert ESG
(environmental, social and governance) criteria into quantitative scores (Goldman Sachs, 2011).
Goldman Sachs appeals to the need to calculate social and environmental risks. In their report
the main emphasis is made on clean energy, carbon emissions, volume of investment in
environmental issues, growth of LEED-certified office space (energy efficient offices), and
financing of preservation of nature. The reporting format is adjusted to the specifics of the
financial industry. Goldman Sachs presents a table of their environmental indicators and their
values in 2005, 2010 and 2011. Such historical comparison makes the analysis more transparent,
as well as helps the company track its progress and evaluate the improvement of its sustainability
performance. Busch argues that despite the advancement of such quantitative approach, it
cannot avoid arbitrariness (Busch et al, 2015). When speaking about ratings, Busch points out
two spheres of improvement for sustainability ratings: data collection process and transparency.
An example when a rating methodology was praised in the academic literature is the
KLD rating approach. KLD Analytics is a consulting company that specializes in environmental,
social and governance (ESG) research. They have launched the Global Sustainability Index
(GSI) and are running its own ESG database and working on elaboration of an ESG
benchmarking system. ESG ratings by KLD Analytics were compared against actual results, and
were found to be an adequate measure of companies‟ environmental performance (Chatterji et al,
2009). We would like to argue on whether KLD methodology is the most advanced since it
remains unclear how KLD measures each of the indicators since the description of each indicator
gives much room for interpretation. For example, the description to the indicator (ENV-str-C),
about recycling, reads “the company is a substantial user of recycled materials” (Risk Metrics
Group, 2010). It is not clarified how to measure “substantial use”, and different companies might
have different thresholds to define „substantial‟.
18
Dow Jones Sustainability Index (DJSI) is another prominent tool to assess and rank
companies on their sustainability performance. RobecoSAM, the company that manages the
index, emphasizes that the index is oriented at long-term company policies as much as at current
performance (RobecoSAM, 2017). The main challenge of using Dow Jones‟ set of indicators is
the intangible nature of what the index measures. For example, such criteria as Climate strategy
or Operational Eco-Efficiency could be measured in various ways and, thus, the score might be
different. The company does not provide information on how it measures every indicator, but in
this paper we will try to incorporate DJSI into our framework.
One more drawback of the rating method relates to the criteria of choosing sustainability
measures for assessment. A rating is built upon some criteria of sustainable performance
(sustainability measures), however it is difficult to say which measures are meaningful (i.e.
relevant) and which are not (Orlitzky, 2013). Meaningful measures are those that can trace
improvements in the company‟s ecological, social and ethical performance. It can thus be
inferred that each measure should be tested before deciding to use it as a criteria for comparison.
Another critique discards one of the arguments from the previous section on how
disclosure of environmental information can attract investments. Eurosif study claims that ESGbased rating results are systematically included within investment decisions in only 8% of cases
(Eurosif, 2010).
Chatterji et al (2009) bring to attention a limitation to the sustainability ratings: they show
no predictive power and are hardly helpful in foreseeing performance and compliance violations
by companies. We would like to argue that this point is not always relevant to the end-users of
ratings for they use ratings for a snapshot of current state of the industry, not in order to make
prognosis.
Despite the mentioned limitations, ratings can help fight with „greenwashing‟ and
encourage continuous improvement of sustainability performance (Parguel et al, 2011). It was
shown in the empirical research by Parguel et al that sustainability ratings are a significant help
for consumers to evaluate a company‟s CSR more precisely and responsibly. This means that the
ratings allow them to draw conclusions and make decisions based on firm-to-firm comparison
and not on their personal interpretations of released CSR information. By analogy, sustainability
ratings might be of use for all other stakeholders, including investors and potential partners of
the companies. It was also proved in academic research that ratings influence behavior of the
market: even unrated firms start working on improving their sustainability performance with the
growing number of the rated companies (Sharkey et al, 2015). This means that ratings could
potentially be a driving force for a greener industry together with legal regulations.
19
This section has shown that sustainability ratings, though being an attempt to present an
objective comparison of multiple companies, require a more rigid choice of indicators (or
criteria) and a thoroughly elaborated measurement system. KLD Analytics and RobecoSAM
introduced their own tools to facilitate sustainability ratings, but both of them use indicators that
can be interpreted in many ways, which makes them not specific enough for a comparative
analysis.
In this chapter we discussed a lot of environmental evaluation tools and standards. The
table 1 below presents in a structured fashion the rationale of choosing among these sources for
environmental performance indicator list collection:
Source (in order of appearance)
Used or not Reason
Green building assessment tools
(LEED, BREEAM, CASBEE and
Unsuitable scope (building level instead of
the corporate level).
Not used
others)
Academic paper by Walls et al.,
2011
Propose a performance evaluation tool
based on the companies‟ capabilities
analysis
Unsuitable scope (national/policy level
instead of the corporate level).
Unsuitable scope (project level instead of
the corporate level).
Unsuitable scope (product/service level
instead of the corporate level).
Used
EIA, SEA, HIA
Not used
CBA, MCA
Not used
LCA
Not used
AA1000
Not used
Guidelines unavailable in open access
SA8000
Not used
Unsuitable scope (social responsibility
instead of environmental
GRI
Used
International non-financial reporting
standard suggesting a set of 30
environmental performance indicators
ESG guidelines
Not used
Differ by issuers, no set of indicators is
published
KLD Analytics
Used
Evaluate corporate environmental
performance by specific criteria
Used
Evaluate corporate environmental
performance by specific criteria
Dow Jones Sustainability Index
(RobecoSAM)
Table 1. Choosing the sources for environmental indicator list compilation
20
1.5. Summary of findings from Chapter I
1) Construction industry can have a significant negative impact on the environment, which
brings the need for responsible management. Environmental ratings might help motivate
construction companies to be more sustainable.
2) Companies report their sustainability performance in their non-financial reports and can
choose any of the existing standards of non-financial reporting.
3) Non-financial reports are praised for encouraging the companies to improve their
sustainability performance and attracting investment from „responsible‟ investors. They are
criticized for giving the companies the opportunity to cover their unsustainable behaviour
and still look responsible – the so-called „greenwashing‟ effect.
4) No universal methodology to measure sustainability has been developed yet. Sustainability
ratings are blamed for arbitrariness and bias. They need to bring more context (against
industry and historical comparison). Revealed limitations of the rating methodology are to
be overcome in the methodology developed in this research work.
5) The most successful examples of measuring sustainability performance are the systems such
as KLD Analytics and RobecoSAM. These will be useful in the development of an
environmental assessment framework for this paper, taken together with the international
and industry-specific tools for measuring environmental impact.
Research gap
Analysis of contemporary academic literature revealed the lack of agreement on how to
report, measure and evaluate corporate environmental performance.
Despite the ecological impact of the industry, the environmental performance of
construction companies is discussed only at the project and not the corporate level.
Non-financial reporting is agreeably an important medium of communicating about
sustainability to stakeholders, however, the opinions on the role of non-financial reporting in
investor decision-making are polarised.
This paper is an attempt to fill the research gap by aggregating a most comprehensive set
of environmental performance indicators, applying it for analysing the construction companies‟
reports and discussing the relationship between the degree of environmental disclosure in nonfinancial reports and investor attractiveness.
21
Chapter II. Data collection and methodology
This chapter gives reasoning for the methodological choice of this research paper. We use
qualitative study I order to answer the research question 1 and 2 and quantitative study to answer
the third research question.
2.1. Choice of methodology
In order to describe research methodology it is necessary to define: a) its type by data and
analytical method, b) the purpose of research, c) the research strategy. By the data type and
analysis research methods are divided into three categories - qualitative, quantitative and mixed.
According to the purpose of research it can be exploratory, explanatory, evaluative, descriptive
and combined studies. The classification of research methodologies is illustrated in Fig. 5:
Methodological
choice
Multiple
method
Mono method
Qualitative
study
Multi-method
qualitative
study
Quantitative
study
Multi-method
Mixed methods
Mixed method
research
Multi-method
quantitative
study
Mixed model
research
Fig.5. Research choices available. Source: Saunders et al. (2016)
This paper is a multiple method study. Such studies use a few different methods to collect
and analyse data. If they use both quantitative and qualitative methods, such studies can be called
either mixed method or mixed model studies. In our case, this is a mixed model study, because
we don‟t only deal with different nature of data, but transform qualitative data into quantitative
scores.
22
We begin with a comparative content analysis of the companies non-financial reports.
This research method is a perfect fit according to the nature of the first two research questions,
which is to find out the tendencies of disclosure by the international construction companies.
Thus, the first (qualitative) part of our research can be classified as an exploratory study with
elements of descriptive study (Saunders et al, 2016). It aims at gaining insights in the research
topic, to clarify some aspect of a matter. Its outcome is relatively unpredictable. Exploration
starts with acquaintance with broader topics, and then narrows down to a certain issue.
The third research question requires a quantitative method. We will conduct regression
analysis to find association of the return on investment with the degree of environmental
disclosure. The degree of disclosure will be a numerical score resulted in the quantification of
qualitative data studied in the first part of the research.
Research can follow different strategies, i.e. have different action plans or structures.
Research strategy refers primarily to data collection: ether primary or secondary data can be
used. Primary data are the data collected by a researcher for a particular research. The main
research strategies when collecting primary data are: experiment, survey, ethnography, action
research, grounded theory, narrative inquiry. Secondary data are data collected by a second party
(for instance, market reports), or published by a company that is the subject of research.
Strategies involving secondary data are archival and documentary research, case studies. Data
needed for this research are sourced from the companies‟ sustainability reports. Thus, this
research is based on secondary data analysis, and its strategy is defined as an
archival/documentary research.
2.2. Data collection and sample description
In order to achieve the research purpose and answer the research questions we need to
collect two types of data: environmental performance indicators from different methodologies
and the environmental performance reports of the international construction companies.
When sourcing for the environmental indicators we followed two criteria: they have to
deal with the corporate level of performance and be applicable in the construction industry (not
be designed specially for a different industry).
The companies for the sample of environmental disclosure information were selected
according to three criteria:
1) having international operations;
2) providing 2016 data in the open access; and
23
3) being the largest contractors worldwide.
The list of the companies includes 30 international construction contractors from the top50 on the Engineering News Record website. Some of them have diversified businesses (such as
oil drilling and construction services), but all of them have international construction operations,
therefore they need to adjust to different stakeholder expectations and legal regulations regarding
environmental management depending on the country they are entering. ENR ranked the
companies “according to construction revenue generated outside of each company’s home
country in 2016 in U.S. $ millions” (ENR, 2017).
Most companies have their headquarters in Europe (13) and Asia (13). The United States,
Canada, Brazil and Australia are represented by one company each.
The full list of 30 companies with their headquarters can be found in Annex 1.
2.3. Methodology
The flow of research consists generally of four parts:
1)
Aggregating the indicators from existing environmental standards/assessment
tools into one pool. We will be doing this in parallel with comparing the lists of indicators and
merging the repeating indicators. The goal of this stage is to avoid creating a duplicate for
existing methodologies, but to enrich them so that they show a full picture about environmental
management in the construction industry. In order to achieve maximum objectivity, we will
compare the indicators from 4 different sources and eliminate repetition.
2)
After the pool is collected, we will test it by using the indicators to analyse the
environmental reports. At this stage we find out both the degree of disclosure by the companies
and also the correctness of the indicator. When it comes to the degree of disclosure we will rank
the companies answers per indicator by full disclosure, partial disclosure and information not
provided. We will also see whether the reports covered some additional aspects of environmental
performance than the ones we will have selected from the pool. The assumption is that in case
there are such additional aspects, they are industry-specific.
This stage is the most challenging part of research because it has two goals – to qualify
the indicators and assess the degree of disclosure. Such cross-qualification means that there are a
few iterations of the list revision. This process can be called the cycle of continuous
improvement, or called plan-do-check-act (PDCA) cycle (Searcy et al, 2009).
3)
The next step is making conclusions about the specificity of environmental
reporting in the chosen industry using the induction method. We will also correct the list of
24
indicators if necessary in order to provide a final set of indicators that could be used to assess the
environmental performance of the companies.
4)
Running a regression analysis in order to find out the relationship between the
degree of environmental disclosure and ROI. The results will allow us to make conclusions about
the industry trends in disclosing the environmental information as well as validate or disprove
the arguments about the role of non-financial reporting in attracting investment.
2.4. Obstacles and limitations
The main limitation of current study lies in the fact that qualitative research design is
mainly associated with interpretative nature of study. However, we refer to multiple sources of
information when it comes to the indicator list compilation to compensate for the possible
personal biases. The main obstacle in this research is the lack of data provided in the
sustainability reports in order for us to actually rank the companies‟ performance and make
further interesting conclusions such as the correspondence of performance with the degree of
disclosure. The lack of data can be explained by two factors that are interrelated:
-
The sensitivity of the subject, and
-
The freedom to choose the disclosure format.
Since the companies‟ reputation is at stake, they might choose not to disclose on certain
aspects where their performance is low. Not having a mandatory non-financial reporting standard
allows them to do so. Besides, the auditors who verify the reports do not have to point out the
missing data since their responsibility is “checking the consistency of information in the
accounts” (ICAEW, 2008).
25
Chapter III. Analysis results discussion
In this chapter we will aggregate a list of environmental indicators from the major
environmental assessment standards. Then we will analyse 30 top international construction
companies‟ non-financial reports using these indicators as points of difference.
The degree to which the companies chose to disclose on each indicator will help us make
inferences about the industry priorities in the environmental reporting. The scores on degree of
disclosure are used for regression analysis to test whether higher degree of environmental
disclosure would lead to higher investor attractiveness.
3.1. Creation of the indicator list
This section covers stages 1 and 2 of the process flow shown at Fig. 6.
In chapter I we have briefly reviewed all the standards/tools that we will use to collect a
pool of relevant environmental indicators:
-
a framework by the non-industry specific reporting initiative GRI (GRI, 2017);
-
frameworks by KLD (Risk Metrics Group,2010) and RobecoSAM (2015);
-
academic study suggesting their own approach to environmental assessment: Walls et al
2011.
As we mentioned before, there are many industry-specific standards evaluating green
building. These are not included in this research because they deal with buildings themselves,
not the overall operations of construction companies. We do however take them into
consideration in one indicator – “Certifications and awards”. If a company has constructed a
certain percentage of LEED, BREEAM, etc.-certified buildings, it is indicative of its
environmental performance – namely, product design.
We start by listing the indicators from the GRI G4 guidelines. Then we list the
indicators by KLD in the next column, matching them with the ones from GRI if they have the
same subject matter. In the same way we add indicators from DJSI, Walls et al 2011 and Hart
1995. Analysis of the tools has shown that GRI has the most extensive list of environmental
criteria, whereas all the others have very vague formulations of each indicator and do not provide
recommendations on how to measure each of them. Lists of corresponding indicators from each
tool can be found in the table in the annex 2.
The list of indicators has 40 items, only 9 of which are not listed in the GRI guidelines.
Interestingly, only one indicator (number 7 in the annex 2) is mentioned in all frameworks:
environmental impact of the product. KLD and DJSI do not formulate it in this way, but we are
26
making an assumption that Transmission & Distribution (GJSI) and Pollution Prevention (KLD)
are included the environmental impact of the product.
Each framework has contributed at least one unique environmental criterion that was
not suggested by the others. Indicators that are only mentioned in one source are the following:
1)
Total environmental protection expenditures and investments by type (GRI).
This could be implied in the generic formulation of the “Environmental
Policy/Management system” in other sources, but since GRI distinguishes between the policy
and the money allocated on the environment, we consider it a separate indicator. By the way,
Engineering News Record used environmental expenses as one of the very few indicators in its
environmental rating of construction contractors, which adds value to our argument in favour of
separating this criterion.
2)
Business risks and opportunities (DJSI).
It is debatable whether this should be a separate indicator, because the wording implies
multilateral analysis of the internal and external circumstances for the company and all the other
indicators of environmental performance lead to the discussion about the risks and opportunities
anyway.
3)
Employee trainings (Walls et al 2011).
Employee trainings, and in general, engagement of employees, encouragement to be
more environmentally responsible, not only enforces the culture within the company, but also
pays off in the form of lower scope 2 of the CO2 emissions if the employees use less electricity
and car-share, for example. In the case of electricity it will also pay off directly by lower bills for
office and on-site electricity use.
4)
Historical orientation (Walls et al 2011).
What we will mean by this indicator is whether the company compares its performance
with previous years on most of its numbers. This information refers mainly to the report quality,
but it is also indicative of how transparent the company is and how it tracks the progress.
5)
Certifications and awards (endowments) (Walls et al 2011).
In this area we will look at awards such as Energy star, inclusion in the CDP Climate A
list and whether a few company‟s projects received a LEED, BREEAM or any other green
building certification. We do not use a threshold for how many projects have to be certified,
because even if the number is low, the very fact of certification means that the company has
already gained advanced competences in environmental management, and has a potential to scale
them to the corporate level.
27
6)
Network embeddedness (Walls et al 2011).
What Judith Walls means by that is engagement of stakeholders. We have already
separated employees in a specific indicator, so in this case we are looking at two aspects: a)
whether the company audits its suppliers; and b) engages communities in the environmental
initiatives that it runs.
7)
Property, plant, and equipment (KLD).
The explanation of this indicator provided by KLD is “The company maintains its
property, plant, and equipment with above average environmental performance for its industry”.
This indicator is generic since the environmental performance is not defined. We assume that
this indicator would be relevant to an industrial setting, manufacturing, rather than to
construction.
The indicator “Agricultural chemicals” (KLD) is irrelevant to the construction industry
and is not included in the final list of indicators.
When comparing the indicators suggested by GRI and by the other sources it becomes
evident how generic (immeasurable and subject to interpretation) the indicators are in all sources
besides GRI. Let‟s look at the two outstanding examples by KLD:
-
“Operational eco-efficiency” is not an indicator but rather a topic worth covering on
many pages and in many aspects. We allocated this indicator as a duplicate for all GRI‟s
indicators assessing intensity and some indicators measuring consumption of resources.
-
“Climate strategy” is also a multi-faceted notion. We pair it with all indicators related to
air emissions.
The final names of the indicators can be found in the right column of the table in the
Annex 2.
3.2. Degree of disclosure by the companies
The analysis of 30 companies from the top 50 international construction companies
showed that they use different reporting standards:
- 23 companies used GRI guidelines to structure their reports. Only 7 of them filed their
reports into the GRI database, the others only referred to GRI guidelines unofficially - for
structure.
- 3 companies that disclosed according to the ESG (environmental, social and
governance) reporting guide are China Communications Construction Group Ltd (CCCG),
28
China Metallurgical Group Corp. (CMG) and China State Construction Engineering Corp. Ltd
(CSCI). All companies are listed in the Hong Kong Exchanges and Clearing (HKEX), which has
its own ESG guideline for reporting. CSCI and CMG use ESG guidelines together with GRI
guidelines, which are easily compatible with each other. The main difference between the GRI
and ESG approaches is that the latter uses “a ‟comply or explain‟ policy approach that requires
companies to either report on their sustainability impacts or explain why they choose not to”
(GRI, 2016). In other words, ESG is more flexible than GRI, and we expect that companies
using GRI guidelines disclose more than those who opt for ESG.
- One company – Ferrovial - uses AA1000 principles, but does it together with the GRI
guidelines.
- 6 companies do not mention any reporting standard that they use. As we will show
further, they provide the least amount of information compared to the other examined
companies.
The degree to which the companies disclosed on each indicator can be seen in Annex 3.
The table looks like a grid, where black cells stand for full (detailed) disclosure on the matter,
grey ones mean that the information was generic or not all required information was provided;
white cells mean the information was not provided at all.
We ranked the companies by the degree of environmental disclosure. For each fully
disclosed indicator (coloured black in the grid in Annex 3) they scored 1, for a partially disclosed
(grey) indicator we assigned 0,5 points. The ranking position of the companies can be found in
the Annex 4.
It can be seen that all the companies that do not use a certain standard as a reference to
structure their report, are positioned at the bottom of the table.
Strabag, CCCG, CMG and SNC score surprisingly low despite using a reporting
standard. In fact, CCCG and CMG rely on the ESG guidelines, so they exercise the right to
“explain why they choose not to disclose” on a certain issue (GRI, 2016). These two companies
are listed in the HKEX which issued its own ESG guidelines. HKEX ESG requirements are more
flexible due to the permission not to disclose information as long as the reason for non-disclosure
is explained. Strabag and SNC use the GRI format but they were not registered in the GRI
database for the year 2016, so they might have only used GRI to facilitate the report production
process.
Overall, the degree of disclosure by the 30 examined companies is quite low, especially
given the number of companies that refer to GRI. Why is this the case? The main reason is in the
29
recommendative nature of the reporting standards. Companies can use reporting guidelines in
order to help structure the report and even set a proper environmental KPI system to track
performance during the year. They are not obliged to disclose on every single indicator. For
instance, SK E&C and Samsung Engineering base their reports on the GRI guidelines and they
provide a GRI index at the end of their reports, but they only list those GRI indicators in the
index that they actually reported, so the reader‟s first impression is that they reported on all
indicators.
3.3. Degree of disclosure per indicator
In Annex 5 we provide a summary of the degree of disclosure by indicator – how many
companies out of 30 disclosed on it (regardless of whether fully or partly) in absolute number
and in percentage.
Two indicators were not disclosed on by any of the companies: (40) Property, plant, and
equipment and (7) Reductions in energy requirements of products and services. Interestingly,
Ferrovial included the indicator 7 in its GRI index, but the only reported information on the
indicator was that they consider energy efficiency in the purchasing and subcontracting
processes.
Indicator (27) % of products sold and their packaging materials that are reclaimed was
disclosed by only one company – Larsen and Toubro. We assigned half a point for the degree of
disclosure because the company explained why the data could not be provided (product does not
require packaging). Such disclosure is not enough for a full point because the company did not
report on the reclaimed products (buildings to be demolished or cancelled building projects).
Even if there were no cases of product environmental violations, reporting on it is important.
Seven more indicators were disclosed by 10 or less percent of the companies. Let us look
at them in more detail using the Keeble‟s approach:
It is suggested that an ideal performance indicator should be (Keeble et al, 2002):
-
Measurable and verifiable (MV);
-
Potentially benchmarkable (BM);
-
Able to measure progress over time (PR);
-
Meaningful at group level (it should be clear whether a higher value is good or bad for
the environment) (ME).
In the Table 2 we marked with a “+” the indicators that fit the verification criteria, with
“- ” those that do not fit. “±” means that it depends on the situation or it is difficult to measure,
30
benchmark and track the indicator. For example, it is possible to measure direct impacts on
biodiversity; however it is difficult to measure the indirect ones. Environmental impacts of
products and services can be measured by multiplying the firm‟s total impacts by the proportion
attributed to a product. This means, the indicator repeats what other indicators measure. That is
why we put all ± to this indicator.
Indicator
№ Indicator
Disclosed
by
Direct and indirect impacts on
12 biodiversity
10%
Number of endangered species affected by
14 operations
Weight of hazardous waste transported
24 and treated
Water bodies/habitats affected by the
25 discharges of water and runoff
33
19
MV BM PR
± ±
ME
±
±
±
10%
+ +
+
±
10%
+ +
+
+
10%
+ ±
+
10%
- -
-
7%
+ +
+
-
Business risks and opportunities
+
Emissions of ODS by weight
Environmental impacts of products and
26 services
% of products sold and their packaging
27 materials that are reclaimed
Reductions in energy requirements of
7 products and services
40 Property, plant, and equipment
±
7%
± ±
±
+
3%
± ±
±
+
0%
± ±
±
0%
- -
-
-
Table 2. Verification of the least disclosed indicators
Using Keeble‟s system we can discard the indicators № 33 and 40. As we had assumed
before, such formulations are too generic for an indicator. Three companies did disclose on the
indicator 33, but it was rather a section of the report than a specific performance value. The rest
of the indicators, except number 19 may be difficult for the companies to measure or collect the
information about. Although the measurement system for them can be potentially established, it
is difficult in practice to calculate the number of species, or keep track of the hazardous waste
transported and treated.
As for the ODS emissions, CIMIC included them in the GRI index at the end of their
report, but referred to the section on the GHG emissions despite the fact that it is a different type
31
of emissions. A few companies left a note that they consider these emissions immaterial (BAM,
Salini, OHL). According to the GRI guidelines (GRI, 2017), material issues are those that are
crucial for the organisation‟s goals and “substantively influence the assessments and decisions of
stakeholders”. Such materiality focus of GRI aims at increasing the relevance of the report
content and making them easier to read. But at the same time, it gives the companies an excuse
not to report on a few issues.
Now let us discuss the most covered environmental indicators by the examined
companies. The highest degree of disclosure per indicator is 80%. Eleven indicators were
covered in 53-80% of reports. We have analysed the possible reasons for such relatively wide
disclosure and found three possible explanations:
1) The issue is legally regulated (indicators 15, 3 and 4).
The careful disclosure of GHG emissions and energy consumption can be explained by the fact
that in most countries these are highly regulated by the government, especially in Europe.
Besides, the GHG emissions and energy consumption are linked in one generic problem of
climate change. In November 2016 55 countries signed the Paris agreement on climate change,
with the purpose to maintain the average temperature rise below 2 degrees Celsius (UNFCCC,
2017). The agreement requires all parties to establish their nationally determined contributions
(NDCs) and report on their emissions levels and efforts to reduce them.
We would like to note that most companies reported total energy consumption without
clarification about direct/indirect sources. In the grid, such companies are marked with grey for
both the direct and indirect energy consumption.
2) Positive image creation.
Indicators 37, 39, 13, 31, 36 and 32 do not address the environmental damage of the company. In
fact, none of them, except the indicator 13 on the habitat protection, are about the environmental
impact per se. Besides, some of them are intangible, so there is more freedom on how to disclose
on these issues.
If we were to compare the companies‟ environmental performance, we would have to exclude
indicators 39, 31 and 32 because they are non-discrete (qualitative). For the other two indicators
a measurement system would have to be introduced. Indicator 37 could be measured in the
number of awards and percentage of green building- certified project. Indicator (36) Network
embeddedness could be expressed in the percentage of suppliers audited for compliance;
however, it would be challenging to measure the relationship with other stakeholders.
3) Easy to collect data.
Indicators 13, 22 and 8 are relatively easy to measure. For example, water consumption and
weight of waste are usually tracked because they are being paid for. In the case of indicator (13)
32
Habitats affected, protected or restored, many companies wrote about the replanted areas and
land restoration projects.
3.4. Construction industry-specific environmental indicators
Let us look at what other information was disclosed besides the 40 indicators that we
have suggested.
Water intensity – was reported on by CIMIC and ACS. This measure is defined by the
amount of water used per million of revenue. Together with energy intensity, emissions intensity
and, for example, waste intensity, they would make a nice set of environmental criteria for
ratings and comparative studies. The companies do not need to disclose intensity because they
can easily be calculated is the total consumption number is reported. What is challenging though
is that companies report revenue in their national currencies, so in order to standardize the values
we would need to translate all currencies into one and adjust by purchasing power. Another
consideration is whether revenues are a sufficient indicator of the company size. For more
objectivity we could use two values of intensity – per revenue and per workforce.
Energy efficiency – disclosed only by Tecnicas Reunidas. This value indicates how much
energy was delivered out of the whole volume of energy produced. This is a difficult measure
and it has to be calculated in-house. Such indicator would be a nice criterion for a rating,
however as long as the companies are not required to report this value, it might be rarely
reported.
Waste intensity – reported only by BAM Group. Another intensity value that can be
evaluated per revenue or workforce and would be useful in the rating methodologies or
comparative analyses.
Soil removed, reused soil – reported by Ferrovial.
Construction-generated soil emissions – reported by SK E&C.
Construction industry has the heaviest effect on soil through the amount of soil removed,
deforestated and polluted. Reporting on the soil damage is relevant to the industry, and is not
prescribed by GRI, KLD and other methodologies.
Waste water – disclosed only by Hyundai. This value can be helpful in evaluating water
efficiency. The actuality of water use in the current environmental discourse is out of doubt, so it
can be expected that water use and wastage will soon be regulated as much as GHG and energy
use.
33
Although the above mentioned indicators are relevant not only to the construction
industry, they give a fuller picture of the impact on the environment and present measurable and
benchmarkable value that can be used for rankings and comparisons.
The construction-specific environmental indicators can be found in the green building
standards (LEED, BREEAM, GRTool and others), but those evaluate building projects from the
design stage until the demolition. Because green building tools assess environmental
performance on the project and not the corporate level, they are not relevant for our research.
The only way we can take them into account is when finding the proportion of a company‟s
projects that are green building-certified (indicator 37).
3.5. Degree of disclosure and ROI
In the first chapter we discussed the role of non-financial reporting for investor decisionmaking and communication with other stakeholders. Having analysed the environmental
disclosure by the international construction companies and evaluated their degrees of disclosure,
we can now test whether there are financial implications of environmental reporting.
Specifically, whether higher degree of disclosure is associated with higher investment
attractiveness (higher return on investment). We used Excel 2007 Data Analytics extension to
run the regression analysis testing the hypothesis:
(H1) The higher is the degree of environmental disclosure, the higher is the company’s ROI.
The null hypothesis then is:
(Ho) ROI value does not get higher with the growth of the degree of disclosure.
We will use the degree of disclosure scores that we assigned to the companies as the
predictor variable and ROI as the outcome variable. The values can be found in Annex 4. ROI
values were calculated using the 2016 financial data provided in the companies‟ reports, Yahoo
finance portal or stock exchanges. Data for each separate company were taken from the same
source to ensure consistency of the values. There are variations on how to calculate ROI, but all
of them express the relation of profits to the resources invested (Farris et al, 2010). In our case,
given the data availability, ROI was calculated using revenue and revenue expenses (COGS)
values:
𝑅𝑂𝐼 =
(𝑅𝑒𝑣𝑒𝑛𝑢𝑒 −𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 )
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
34
,
where (Revenue – Revenue Expenses) express the gains from investment and Revenue
Expenses (the denominator) express the investment cost.
The sample size for our regression test is 29, because the privately held company
Odebrecht does not provide open access financial data.
The results of the regression analysis can be found at Table 3 below. The value of the R
square tells us how much of the ROI variance is explained by the values of degree of disclosure
– only 1,9%. Meanwhile, the p value is too high (p=0,4659) indicating that there is a 47% chance
that the result was obtained randomly. Our hypothesis was not confirmed; there is no significant
relationship between the degree of disclosure and ROI.
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
St Error
0,140913945
0,01985674
-0,016444862
0,117685585
Observations
29
ANOVA
df
Regression
SS
MS
F
1
0,007575803
0,007575803
Residual
27
0,373947219
0,013849897
Total
28
0,381523022
Coeffic-s
Y-intercept
Degree of
disclosure
Stand Error
t-stats
P-value
Significance F
0,546993482
Lower 95%
0,465931005
Upper 95%
0,0646
0,0456
1,4149
0,1685
-0,0291
0,1582
0,0027
0,0036
0,7396
0,4659
-0,0048
0,0101
Table 3. Summary output of the regression analysis
The scatter plot at Fig. 6 illustrates the distribution of the ROI and degree of disclosure
values:
35
0,5
0,4
0,3
ROI
0,2
0,1
0
0
5
10
15
20
25
-0,1
-0,2
Degree of environmental disclosure
Fig.6. Scatter plot: ROI and degree of disclosure
The scatter plot helps to see both the „big picture‟ and the individual cases. One can
easily spot that the majority of the ROI values are gathered close regardless whether the degree
of environmental disclosure is the highest or the lowest in the sample. Extremely high ROI
values appear for the lowest, the medium and the highest values of disclosure. There are two
companies that have negative ROI (Saipem and Orascom), who are in the bottom half of the
degree of disclosure rating in the Annex 5. The vast majority of the companies have ROI that is
lower than 20%.
How can we interpret such statistical results?
Firstly, this might be caused by the small sample size. It is recommended that regression
is run using 60 or more entries in the sample in order to track at least a medium effect of the
predictor on the outcome (Field, 2009: 223). Due to the nature of data collection for our research
we limited our research to 30 companies.
Another conclusion is that the degree of environmental disclosure alone is not enough to
influence ROI. This has opened perspective for further research to find out whether the degree of
disclosure on all 3 sustainability aspects – economical, environmental and social - influences the
36
investor attractiveness of a company, or whether it is the environmental (or sustainability)
performance and not degree of disclosure that actually interests investors.
So far, we cannot confirm that there is investor pressure for the construction companies to
increase their degree of environmental disclosure. This might be the reason why the construction
companies follow the reporting guidelines flexibly.
37
3.6. Summary of findings from Chapter III
1) In the sections above we discussed the degree of environmental disclosure by 30
international construction companies. It may or may not reflect the environmental
performance by the companies; however it could be useful for investors, NGOs and other
stakeholders if the companies reported according to the same system. Following the same
reporting and measurement system would facilitate ratings and comparative performance
analyses.
2) We have aggregated indicators from different environmental assessment tools into one pool
containing 41 indicators. After qualifying the reports against these indicators a conclusion
was made that 3 indicators are irrelevant to the industry or are formulated incorrectly.
Besides, we found 6 issues that the construction companies disclosed on that were not
mentioned in our original indicator list. Out of these 6 indicators only 2 are construction
industry-specific.
3) The indicators that were covered in all or majority of the reports deal with legally regulated
environmental issues, create a positive image of the company and are relatively easy to
collect the information about. The indicators that were poorly covered in the reports are
difficult to measure and benchmark or obtain information about.
4) Even though the majority of construction companies follow GRI guidelines to structure their
non-financial reports, they have the freedom to choose what topics they disclose on and to
what extent. They also interpret differently what each indicator means. Unless the
companies are encouraged to use more of quantitative data and provide lists and examples of
practices, innovations, affected species, etc. it is difficult to compare their performance
without collecting primary data via surveys and/or audits.
5) We ran regression analysis with the aim to find out whether higher degree of disclosure
associates with higher return on investment. The result was not significant enough to
confirm the hypothesis, which is why additional influence factors can be looked for in
further research.
38
Conclusions
The main purpose of this paper was to reveal the main tendencies in the environmental
disclosure in the international construction industry.
In order to do so, we started the paper by analysing the limitations of environmental
assessment methodologies discussed in scientific research. We have looked at the most popular
sustainability disclosure and performance assessment tools. They can be divided into nonindustry specific (such as GRI, ESG) and industry-specific tools (such as LEED, BREEAM).
The latter are focused on the green product and do not help assess the performance at a corporate
level.
Then we collected a pool of environmental performance indicators from four different
sources: GRI, KLD Analytics, RobecoSAM and Walls et al. (2011). We matched the indicators
that have the same subject matter and shortlisted them to eliminate repetition and establish
maximum coverage of the issues. After that, we screened 30 environmental reports published by
the international construction companies according to the indicator list. We assigned scores for
full and partial disclosure and ranked the companies by the sum of the scores. This allowed us to
run a regression analysis later to find whether there is a relationship between the degree of
environmental disclosure and ROI.
From the academic literature we have found out that non-financial reporting might be a
powerful medium of communication with the stakeholders, it creates an image about the
company and could help attract new, sustainability-conscious, investors. However, as is shown
in chapter 3 of this paper, reports are of little use when it comes to comparing companies‟
environmental performances.
Answering the research question 1, we can say that unless the companies are obliged to
report by the same system and have similar degree of disclosure, there is too much missing data
that hinders comparative analysis.
All companies, except Samsung Engineering, disclosed on less than 50% of indicators.
Companies that do not use any reporting standard as a reference showed the least degree of
environmental disclosure, as did the companies that use a very liberal ESG approach to
reporting. The majority of the companies used the GRI format of reports, however not all of
them were registered in the GRI database, which means not all those reports were graded by
quality.
It was also found that almost all companies disclosed on the issues that are regulated by
the governments (for example, GHG emissions and energy use), easy to collect information
about and produce a positive image. The least disclosed indicators turned to be difficult to
39
measure and benchmark. In this case, the companies preferred to call them immaterial, or
insignificant to the companies‟ goals and overall performance.
The second research question addressed industry-specific indicators that might be found
in the non-financial reports beyond the original set of indicators. We found that the companies
sometimes disclosed in more detail about environmental issues that it was prescribed in the
standards, but only two industry-specific indicators were found among them: soil removed,
reused soil and construction-generated soil emissions.
Finally, the results of the regression analysis showed that higher ROI is not associated
with higher degree of environmental disclosure (answer to the research question 3). This means
that the environmental disclosure degree alone is not enough to facilitate investor decisionmaking. Besides, the lack of investor pressure to report the environmental performance might
explain such low degree of disclosure in the industry.
Therefore, the main influential factors for the environmental disclosure in non-financial
reports remain to be only the measurability of the issues (and, thus, the easiness to collect
information) and the established environmental regulations.
Managerial implications
One of the products of this paper is a set of environmental indicators which can be used
by companies, consulting and rating agencies as a comprehensive tool to evaluate environmental
performance. Besides, it can be used by companies looking for ways to enrich their sustainability
reports.
A clarification was made about the role of non-financial reporting for investor decisionmaking, which is a message for the industry that environmental disclosure alone is not enough
for investor attractiveness.
The implication for the reporting standards comes from the analysis of the least covered
environmental issues. Formulation or even subject matter of a few indicators could be changed
so that the reports provide measurable and benchmarkable data that is easier to collect for the
companies and is more usable by external parties assessing the actual performance.
Theoretical implications and further research perspectives
This paper presents a holistic tool for corporate environmental assessment in the
construction industry. The framework includes perspectives of different stakeholders by
40
aggregating the environmental indicators from a reporting standard, rating methodologies and an
academic paper.
The hypothesis about the influence of the degree of environmental disclosure on investor
attractiveness was not confirmed which opens new issues for future research. It can be further
explored whether degree of disclosure on all three aspects of sustainability together (social,
economical and environmental) actually influences investor attractiveness of a construction
company. Surveys and interviews with investors and other stakeholders can be used for more
insights about the role of non-financial reporting for investor decision-making in the construction
industry.
41
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Appendix 1. List of studied companies
ENR
2016
position* Name of the company
1 ACS, Actividades de Construcción y Servicios
CCCG (China Communications Construction
3 Group Ltd.)
4 VINCI
8 Skanska AB
9 Strabag SE
CSCI (China State Construction Engineering
11 Corp. Ltd.)
12 Saipem
13 Ferrovial
14 Hyundai Engineering & Co. Ltd.
15 Petrofac Ltd.
16 Fluor Corp.
17 CIMIC Group Ltd.
18 Salini ImpreglioSPA
20 Samsung C&T Corp.
21 China Railway Group Ltd.
22 Technicas Reunidas
24 Royal BAM Group NV
29 Odebrecht Engenharia e Construçao SA
30 Obayashi Corp.
32 Orascom Construction Ltd.
33 Larsen & Toubro Ltd
34 Samsung Engineering Co Ltd
35 SK E&C
37 OHL SA (Obrascon Huarte Lain SA)
39 Toyo Engineering Corp.
40 Kajima Corp.
43 SNC-Lavalin Inc.
44 Jan De Nul Group (Sofidra SA)
45 NCC AB
48 China Metallurgical Group Corp. (CMG)
Headquarters
Madrid, Spain
Beijing, China
Rueil-Malmaison Cedex,
France
Stockholm, Sweden
Vienna, Austria
Beijing, China
San Donato Milanese, Italy
Madrid, Spain
Seoul, S. Korea
Jersey, U.K.
Irving, Texas, U.S.A.
St. Leonards, Australia
Milan, Italy
Gueonggi-do, S. Korea
Beijing, China
Madrid, Spain
Bunnik, The Netherlands
São Paulo, SP, Brazil
Tokyo, Japan
Dubai, U.A.E.
Mumbai, Maharashtra, India
Seoul, S. Korea
Seoul, S. Korea
Madrid, Spain
Chiba, Japan
Tokyo, Japan
Montreal, Quebec, Canada
Capellen, Luxemburg
Solna, Sweden
Beijing, China
*the companies that did not fit the selection criteria are not included in this table
46
Appendix 2. Pool of environmental indicators (grouped by source and subject matter)
1
GRI
(G4-EN1) Materials used by weight
or volume.
2
3
4
(G4-EN2) Recycled input materials
(in %)
(G4-EN3) Direct energy consumption
by primary energy source
(G4-EN4) Indirect energy
consumption by primary source
5
KLD
Pollution Prevention
(ENV-str-B), Recycling
(ENV-str-C)
Clean Energy (ENV-strD)
Clean Energy (ENV-strD)
-
8
9
(G4-EN7) Reductions in energy
requirements of products and services
(G4-EN8 ) Total water withdrawal by
source
Final indicator name
Materials consumption
-
Proportion of materials
recycled
-
-
Direct energy
consumption
Indirect energy
consumption
Energy intensity
-
Energy saved / reduced
Reductions in energy
requirements of products
and services
Water sources
significantly affected by
withdrawal of water
Percentage of water
recycled/reused
Operations in or adjacent
to protected areas
Direct and indirect
impacts on biodiversity
Electricity Generation
-
Pollution Prevention
(ENV-str-B)
-
Water-Related Risks
Environmental R&D,
product design and
development processes,
innovation
-
Water-Related Risks
-
Water-Related Risks
-
(G4-EN6) Energy saved / reduced
7
Walls et al 2011
-
Electricity Generation
Operational EcoEfficiency
Operational EcoEfficiency
Transmission &
Distribution
(G4-EN5) Energy intensity
6
DJSI
Operational EcoEfficiency
Operational EcoEfficiency
(G4-EN9) Water sources significantly
affected by withdrawal of water
(G4-EN10) Percentage and total
Recycling (ENV-str-C)
10 volume of water recycled and reused
(G4-EN11) Operations in or adjacent 11 to protected areas
(G4-EN12) Direct and indirect
12 impacts on biodiversity
Biodiversity
Biodiversity
47
Total water consumption
Appendix 2 (Continued). Pool of environmental indicators
(G4-EN13) Habitats affected,
13 protected or restored
(G4-EN14) Total number of IUCN
Red List species and national
conservation list species with habitats
in areas affected by operations, by
14 level of extinction risk
(G4-EN15, 16) Total direct and
indirect greenhouse gas emissions by
15 weight (scope 1,2)
(G4-EN17) Other relevant indirect
greenhouse gas emissions by weight
16 (scope 3)
17 (G4-EN18) GHG emissions intensity
(G4-EN19) Initiatives to reduce
greenhouse gas emissions and
18 reductions achieved
(G4-EN20) Emissions of ozone19 depleting substances by weight
(G4-EN21) NO, SO, and other
significant air emissions by type and
20 weight
(G4-EN22) Total water discharge by
21 quality and destination
(G4-EN23) Total weight of waste by
22 type and disposal method
-
Biodiversity
-
-
Habitats affected,
protected or restored
Number of endangered
species affected by
operations
Biodiversity
Substantial Emissions
(ENV-con-D), Climate
Change (ENV-con-F)
Substantial Emissions
(ENV-con-D), Climate
Change (ENV-con-F)
Substantial Emissions
(ENV-con-D), Climate
Change (ENV-con-F)
Pollution Prevention
(ENV-str-B), Climate
Change (ENV-con-F)
Ozone Depleting
Chemicals (ENV-con-C)
Substantial Emissions
(ENV-con-D)
-
Total direct GHG
emissions (scope 1 and 2)
-
Indirect GHG (scope 3)
Climate Strategy
Operational EcoEfficiency
-
GHG emissions intensity
Climate Strategy
-
Reductions in GHG
Climate Strategy
-
Climate Strategy
-
-
Water-Related Risks
-
Emissions of ODS by
weight
NO, SO, and other
significant air emissions
by type and weight
Total water discharge
Recycling (ENV-str-C)
Operational EcoEfficiency
-
Climate Strategy
48
Total weight of waste by
type and disposal method
Appendix 2 (Continued). Pool of environmental indicators
(G4-EN24) Total number and volume
23 of significant spills
(G4-EN25) Weight of transported,
imported, exported, or treated waste
deemed hazardous, and percentage of
transported waste shipped
24 internationally
-
-
-
Hazardous Waste (ENVcon-A)
Transmission &
Distribution
-
-
Water-Related Risks
-
Beneficial Products and
Services (ENV-str-A)
-
Beneficial Products and
Services (ENV-str-A)
-
Environmental R&D,
product design and
development processes,
innovation
-
Regulatory Problems
(ENV-con-B), Other
Concern (ENV-con-X)
(controversies)
-
-
-
Transmission &
Distribution
-
Impacts of transportation
of resources and people
-
-
-
Total environmental
protection expenditures
and investments by type
(G4-EN26) Water bodies and related
habitats significantly affected by the
25 discharges of water and runoff
(G4-EN27) Environmental impacts of
products and services, and extent of
26 impact mitigation
27
28
29
30
(G4-EN28) Percentage of products
sold and their packaging materials
that are reclaimed
(G4-EN29) Monetary value of
significant fines; number of nonmonetary sanctions for
noncompliance
(G4-EN30) Significant environmental
impacts of transporting products as
well as transporting members of the
workforce
(G4-EN31) Total environmental
protection expenditures and
investments by type
49
Total number and volume
of significant spills
Weight of hazardous
waste transported and
treated
Water bodies and related
habitats significantly
affected by the discharges
of water and runoff
Environmental impacts of
products and services
Percentage of products
sold and their packaging
materials that are
reclaimed
Value of non-compliance
fines
Appendix 2 (Continued). Pool of environmental indicators
-
Communications (ENVstr-E)
Management Systems
(ENV-str-G)
Environmental Reporting
Reporting system
Environmental Policy &
Management Systems
Environmental
management system in
place
-
-
-
34
35 -
-
Business Risks and
Opportunities
-
-
-
-
-
-
-
-
-
-
Other Strength (ENVstr-X)
Property, Plant, and
Equipment (ENV-str-F)
Agricultural Chemicals
(ENV-con-E)
-
Historical orientation
Network embeddedness
(inclusion of supply chain
and other stakeholders)
Certifications and awards
(endowments)
Environmental R&D,
product design and
development processes,
innovation
Managerial vision
-
-
-
-
31
(G4-DMA) Management approach
32
33
36
37
38
39
40
41
50
Employee trainings
Reporting system by a
standard, audits
Environmental
management system in
place (CSR department,
executives)
Business Risks and
Opportunities
Employee engagement
and trainings
Historical orientation
Network embeddedness
Certifications and awards
Environmental R&D and
innovation examples
Managerial vision
Property, Plant, and
Equipment
-
Appendix 3. Degree of disclosure grid
- not disclosed
- partly disclosed
- fully disclosed
51
Appendix 3 (Continued). Degree of disclosure grid
- not disclosed
- partly disclosed
- fully disclosed
52
Appendix 4. Ranking by the degree of environmental disclosure
Company name
Samsung
Egineering
L&T
OHL
Ferrovial
Salini
BAM Group
CIMIC
SKEC
Hyundai
Odebrecht
CSCI
ACS
Samsung CT
Vinci
Petrofac
NCC
Tecnicas Reunidas
Saipem
Kajima
Fluor
Skanska
Strabag
Obayashi
CCCG
Toyo
China Metal
CRG
SNC
Jan De Nul
Orascom
Reporting standard used
GRI
GRI
GRI
AA1000 + GRI
GRI
GRI
GRI
GRI
GRI
GRI
ESG + GRI
GRI
GRI
GRI
GRI
GRI
GRI
GRI
GRI
GRI
none
GRI
none
ESG
none
ESG + GRI
none
GRI
none
none
Number of
indicators disclosed
22
19,5
19
18,5
17,5
16,5
16,5
16,5
16
15,5
15
14,5
13,5
13
12
11
10,5
9,5
9
8,5
7
6,5
5,5
4,5
4,5
4,5
4
2,5
1,5
0,5
53
ROI
0,069
0,458
0,289
0,059
0,051
0,003
0,061
0,081
0,066
N/A
0,118
0,043
0,006
0,121
0,067
0,278
0,030
-0,130
0,157
0,033
0,036
0,035
0,077
0,067
0,038
0,125
0,028
0,142
0,336
-0,013
Appendix 5. Degree of disclosure by indicators
Indicator
№*
Impact indicator
15
3
4
37
39
13
22
31
36
8
32
17
28
35
1
16
34
5
6
30
18
10
2
38
11
21
23
9
20
29
12
14
24
Total direct GHG emissions (scope 1 and 2)
Direct energy consumption
Indirect energy consumption
Certifications and awards
Managerial vision
Habitats affected, protected or restored
Total weight of waste by type and disposal method
Reporting system by a standard, audits
Network embeddedness
Total water consumption
Environmental management system in place
GHG emissions intensity
Value of non-compliance fines
Historical orientation
Materials consumption
Indirect GHG (scope 3)
Employee engagement and trainings
Energy intensity
Energy saved / reduced
Total environmental protection expenditures
Reductions in GHG
Percentage of water recycled/reused
Proportion of materials recycled
Environmental R&D and innovation examples
Operations in or adjacent to protected areas
Total water discharge
Total number and volume of significant spills
Water sources signif. affected by withdrawal of water
NO, SO, and other signif. air emissions by type and weight
Impacts of transportation of resources and people
Direct and indirect impacts on biodiversity
Number of endangered species affected by operations
Weight of hazardous waste transported and treated
Water bodies/habitats affected by the discharges of water
25 and runoff
33 Business risks and opportunities
19 Emissions of ODS by weight
26 Environmental impacts of products and services
7 Reductions in energy requirements of products and services
% of products sold and their packaging materials that are
27 reclaimed
40 Property, plant, and equipment
*as they appeared in Annex 2
54
Disclosed
times, out
of 30
24
21
21
20
20
19
18
18
17
16
16
12
12
12
11
11
11
10
10
10
9
8
7
6
5
5
5
4
4
4
3
3
3
Disclosed
in %
80%
70%
70%
67%
67%
63%
60%
60%
57%
53%
53%
40%
40%
40%
37%
37%
37%
33%
33%
33%
30%
27%
23%
20%
17%
17%
17%
13%
13%
13%
10%
10%
10%
3
3
2
2
1
10%
10%
7%
7%
3%
1
0
3%
0%
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