Pilot tested in 1995 and publicly launched in 1996, the Environment Index is a voluntary exercise that benchmarks businesses against their peers, and whole sectors against each other, on the basis of their environmental management and performance in key impact areas. The Index also offers companies a tool to measure progress and drive continuous improvement while providing credible, independent and comparable information to stakeholders.
Companies invited to participate in the Index include: FTSE100 and FTSE250 (excluding Investment Trusts); non-FTSE listed Business in the Community national members; and sector leaders from the Dow Jones Sustainability Index.
Having begun the process in early September 2004, 178 companies participated in this year's Environment Index - 168 publicly and 10 through Business in the Community's private benchmarking service.
There are 20 companies in this year's Premier League (the group of companies scoring 95% or above), compared with 28 in 2003. This is an achievement for Index participants given that this year the Environment Index survey became more detailed and challenging on issues such as climate change, waste, supply chain management and disclosure.
Founding participant Rolls-Royce has followed the evolution of the Index over the past decade, making it all the way into this year's Premier League. Nigel Marsh, Company Head of Environmental Management at Rolls-Royce comments: "The Environment Index has been one of the key external drivers in shaping the development of arrangements for environmental management within Rolls-Royce operations world-wide."
The results show that:
- The overall average score stayed level over the past year at 79%.
- 84% of 2003 respondents participated again in 2004.
- 27 companies entered the Index as new participants this year.
- The average management score was 84%, compared with an average performance score of 74%. This indicates the challenge companies continue to face of moving from implementing environmental management systems to delivering improvements in environmental impact.
- With the highest average score, Electricity is the best performing sector in this year's Index.
- Supply chain remains the most challenging management area, with an average score of 64%, which shows a slight improvement over last year.
- Of the two impact areas on which every company is required to report, participants performed better on climate change, with an average score of 74%, than on waste (69%).
- When managing waste impacts, company focus is largely upon environmentally responsible waste disposal and recycling activities, with only 10% of participants prioritising resource efficiency and use of remanufactured products.
- Companies are beginning to understand and manage their indirect impacts, such as the influence over their customers' environmental burden (i.e. product stewardship) and the environmental implications of their lending and investment decisions.
- In addition to tackling climate change and waste, companies are also addressing, for example, water consumption, resource use and species diversity.
- This year, a fraction of companies' scores was based on their willingness to disclose their feedback and/or full submission to other Index participants, investors and the broader public. Most participants showed a willingness to either fully or partially disclose this information.
Participation in the Environment Index shows a company's commitment to environmental responsibility and transparency. Moreover, as the reporting rules of the Operating and Financial Review come into force, the Index can help companies identify their most material environmental concerns.
According to John Hale, Manager of Investment Affairs at the Association of British Insurers, "The peer group comparison provided by the Environment Index is a key aid to assessing the environmental record of FTSE listed companies and helps lay the groundwork for investor engagement."
Jim Haywood, Director of Business in the Environment (the environment campaign of Business in the Community which delivers the Index), adds:
"The Index has proven an effective benchmark to help companies position themselves in the pack, prompt further action and shine a light on emerging issues. I am so impressed by the number of companies who continue to hold their performance up for public scrutiny via the Index."
An Executive Summary of the Environment Index 2004, including the full ranking, can be found at
Posted on 6th April 2005
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