The University of Southampton
Engineering and the Environment

Research project: Promoting corporate environmental improvement and sustainable investment

Currently Active: 
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The CLEAR Info project, part-funded by the European Union’s (EC) Life+ Environment Policy and Governance 2010 fund, is investigating how transparent information on the environmental performance of parent companies can promote effective implementation of EC environmental legislation. The project is trialling a system for integrating and analysing the data Great Britain’s Environment Agencies collect as environmental regulators.

Project Overview

Fawley Oil Refinery
Fawley Oil Refinery

Our global economy has evolved with little consideration towards the residuals of production and consumption and their impacts on the environment. However, in recent times, the environment has become an intensely regulated area of business, with over 80,000 pages of European legislation and over 500 relevant EU Directives. A perpetual challenge for implementing environmental legislation is targeting limited resources to best protect the environment and people. As a consequence of Europe’s enduring post-recession austerity measures, protecting the environment needs to be done with fewer resources. Integrated data and information can provide the evidence to maximise the impact of strategic, policy and legal interventions. Having a clear view of which businesses are complying with legislation and paying attention to their environmental impacts is essential to focusing efforts where they will have the greatest impact.

Regulatory bodies gather data in ways that support enactment of specific environmental laws. They subsequently face the problem of aligning the data with the multifaceted and constantly shifting structures of regulated businesses or the geographical areas where improvements to the environment are needed. For example, the Environment Agency (EA) in England and Wales (prior to separation in April 2013) collected data on more than 500,000 business sites. Many of these are owned by global parent companies based in over 30 different countries. However, information on environmental impact is stored at a site level. Combining disconnected site level data to examine how a parent company is performing across all the businesses it owns is extremely challenging.

CLEAR info project overview
CLEAR info project overview

The CLEAR Info project aims to assist European regulators sharing data across regulatory boundaries and building an understanding of corporate performance. Without a clear view of company-level environmental compliance/impacts, it is difficult to produce a comprehensive overview of a given company’s environmental performance. Thus, an individual company may find it hard to have an overview of its own overall environmental compliance and environmental performance level, especially if it operates on multiple sites or if it owns several subsidiary companies. This project will demonstrate how regulatory site data can be integrated to deliver information on parent company environmental performance.

The Clear INFO team, which includes GB’s Environment Agencies, environmental data experts Trucost and a University of Southampton team led by Professor Ian Williams, combined expertise to assess the feasibility of generating reports from integrated data.Since 2007, the EA has regularly analysed compliance data for sites owned by 12 large waste companies. This was used to produce reports on the performance of approximately 1200 businesses and sites. The analysis of these datasets produced some interesting findings:

  •  During 2007-2008, the EA recorded 3,663 breaches, 1,619 of which (44%) were at sites with a parent company. Four of the parent companies responsible for the top 10 cumulative permit condition breaches were based outside of the UK.
  • A number of companies operate through a wide pattern of subsidiary companies in the UK and the link to the parent company is not always clear.
  • From 2007–2008, of the parent companies with the top 10 cumulative fines, half are stock market listed, and just over 30% are based outside of the UK.
  • Between 2007 and 2008, the average fine paid by both large parent companies and small- and medium-sized enterprises (SMEs) that were prosecuted was almost exactly the same, around £9.5k on average. Whilst levels of fines remain relatively low compared to the true cost to society of the environmental damage caused, it may still be cost effective for some companies to pay the fines rather than improve their environmental performance. However, this ignores the potential reputational risks associated with poor environmental performance, which may be considerable.

The results of this study have already proved highly effective in helping build constructive relationships with the biggest waste companies in the UK. They have also enabled more targeted regulatory interventions and empowered the businesses to take action. Since account management was introduced by the EA in 2007, waste companies have shown an improvement in their compliance rating.

These results and the emerging impacts underlined the challenges faced by regulators and the potential wider benefits. The investment community can make use of this type of environmental performance information as part of engagement programmes and to inform decision making. Aggregating data to the parent company level and combining it across datasets would provide a far more compelling dataset. The CLEAR Info project will be publishing an environmental dataset on companies the EA regulates that would have the potential for dissemination to a much wider audience. This would include investors, analysts, commercial data providers, NGOs and other stakeholders. It would also have the added benefit of delivering environmental improvements through investor and stakeholder engagement, making more efficient use of the information the EA holds.

The main focus of the work is on company performance as regulated industry has a significant impact on the environment. This impact is illustrated in the correlation between economic growth and environmental damage. Linking company environmental performance and financial performance can highlight to the investment community the relationship between environmental and financial risks, helping to decouple economic growth from environmental damage. The integrated data can also be utilised by the companies themselves to understand their businesses better, to compare themselves with other similar businesses and identify best practice. Better benchmarking of environmental performance across companies, subsidiaries and sites would encourage more competition and a ‘race to the top’. Better, standardised reporting on environmental performance enables companies, investors and the public to see where it is not only possible but beneficial for companies to protect and improve the environment. It is anticipated that CLEAR Info will make improving environmental performance central to a company’s strategy for growth. It will ensure that reporting on environmental performance becomes a key element of a companies reporting cycle.

The innovation in this project is in applying a linkage integration system to environmental data. This solution to integrating environmental data works at an appropriate scale to deliver tangible benefits in a relatively short timescale. The approach is sometimes termed evolutionary delivery as it will involve iterative actions and outputs. The approach will be replicable and will provide intelligence on how the integrity of source data can be improved over time. It is not intended to be a high cost IT solution that improves data quality in one action but a cost effective solution to dealing with poor quality data legacies to deliver stepwise improvements in environmental data and information. The result will be a unique view on the environmental data agencies collect through their regulatory and enforcement activities.

Award for CLEARing wasted data news story

Associated research themes

Water and Environment

Energy and Climate Change

Related research groups

Centre for Environmental Sciences
Waste Management

Staff

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