The management of Clean Corporation is concerned about the growing demand on the

Question

The management of Clean Corporation is concerned about the growing demand on the part of investors and the public in general for environmental disclosures in annual reports. In reviewing a number of foreign competitors’ annual reports you observe a number of environmental disclosures including; actual and contingent liabilities for the cost of environmental clean-up, corporate programs and policies to protect the environment, and self-assessment reports of internal goals reached with respect to its environmental protection measures. You also notices that some companies include environmental disclosures in their annual reports while others prepare a separate report. The management of Clean is agonizing over the extent and type of environmental disclosures to provide in the company’s next annual report. They have hired a consultant to work along with you to help them establish environmental reporting policies. a. In your opinion are environmental disclosures in company annual reports necessary? Explain. b. What specific environmental disclosures should companies provide? Why?

Explanation / Answer

a. Environmental Disclosure (ED) in comapny's annual report is necessary as public are very much interested to get Environtal Informaton (EI) from companies. It is the corporate responsibility to disclose the steps taken to promote environmental protection and steps taken to prevent environmental degradation. All corporates are running with tbe publc licence, so they have to inform to the public through their annual report regarding stepts taken by them to promote environmental protection and how much contribution they made towards this. The companies performance in this regard is also to be audited by an external auditors and reprot them to the publc. It also should be made mandatory to report in the annual report in addition to financial reporting. So it is the right of the publc to get Environtal Information from the corporate annual report.

b. The following specific Environtal disclosure should be made in annual report by corporates

    i What are company programmes and polices regarding environtal protecion

   ii. What contributions it made in the previosus year to protect environgment

iii. How much amount it spent on the environmental protection

iv. What technoloty being used in this regard

v. Whethe it has complied the environmental laws and company law in this regard

vi. Whether it has conducted environtal audit by an external qualified person

vii.Mentioning of progress year by year

viii. Environmental training to their employees

ix. Future environmental investment & expenditure

x. Creation of environmental awareness amoung company employees.

By doing all this regarding Environmental Disclosre, a companies look greener and do a lot for the protection of human and wild life through protection of Environment.

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