(iv) Verification. As mentioned earlier, there is concern that company reports do not
fairly reflect their activities and impacts and that they may be used as a public rela-
tions and legitimating exercise. A recent trend with the issue of the separate report
on social or environmental issues is the inclusion of some form of verification state-
ment. A recent survey by KPMG of global mining companies found that 38% of
companies surveyed produced a separate report, and that of the Canadian and Aus-
tralian companies 40% included some form of external verification (or audit). An ex-
ternal audit is no guarantee that reports will not be used as a legitimating exercise.
For external audits to add value from a stakeholder perspective, they must be con-
ducted by appropriately qualified people who both understand the audit process and
accept the ethical, social and environmental responsibilities of companies.^23 They
must also be carried out using generally accepted auditing guidelines and, crucially,
the criteria for qualification of the audit report must be clear. At present there are no
guidelines that adequately cover the ethical, social and environmental audit process.
There is an urgent need for their development and enforcement for companies oper-
ating globally. AccountAbility published a consultation document on the issue in
June 2002 and plans to develop a full assurance standard following the consultation
period.
At present, many companies do not provide an assurance statement and where
they do the scope of the work is often limited. For example, the scope of the work,
which is determined by the company itself, carried out by KPMG on ICI’s 1999 re-
port was limited to one part of the reporting process. The Ernst & Young audit report
of BP dated March 12, 2001, provides an example of an audit much broader in scope.
The terms of reference included, for example, reviewing “a selection of external
media sources for reports relating to BP’s adherence to its policies, as a check on the
appropriateness of the information reported and statements made in the report”
(http://www.bp.com).^24
The increase in reporting on the Internet, whereby companies can change their dis-
closures frequently, further emphasises the need to define the scope of such audits.
There is concern that much of the data on the Internet is not audited. The Ernst &
Young report of BP specifically includes publication on the Internet and, unusually,
provides some comfort:
BP periodically updates the report to provide information on company activities and to
reflect progress in performance. As and when new assertions, statements and perform-
ance data are published by BP, they are reviewed by Ernst & Young. The date appear-
ing on the Ernst & Young statement shows the last date at which information has been
reviewed and attested to by Ernst & Young in accordance with our terms of reference.
(http://www.bp.com)The assurance statements of the Cooperative Bank and Novo Nordisk in Exhibits
23.9 and 23.10 currently represent examples of best practice.
23.4 SUSTAINABILITY/TRIPLE BOTTOM LINE REPORTING. An emerging trend in
corporate reporting is the integration of accounting and reporting of social, environ-
23 • 16 CORPORATE ENVIRONMENTAL AND SOCIAL REPORTING(^23) See Ball et al., 2000; Kamp-Roelands, 1999; and Owen et al., 2000.
(^24) Adams, 2002b.