A Model for Information Support of Environmental Management
Systems
Bill Davey
Department of Business Computing
ph61396605979
fx 613 9660 5850
email billd@rmit.edu.au
Clive Mathews
Department of Accountancy
ph 613 9660 5719
fx 613 9660 5741
email cmathews @rmit .edu.au
Abstract
A review of the literature of Environmental
Management Systems has shown a steady
development of theory supporting the
production of well supported environmental
management systems integrated to enterprise
infomation systems. Research into the
differences between Australian Chief Financial
Oficers and Information Systems Managers has
shown that there is a gap between company
policy on environmental management systems
and existing information support for them. This
paper reports on the research covering
Australias top 150 companies and preliminary
results of interviews of responsible officers. A
model is presented which draws on the
literature and research findings. This model
brings a systems focus to the problem of
integrating information systems with
environmental management systems so as to
achieve organisational goals.
1 Introduction
The area of environmental management
produces an interesting range of problems. The
natural complexity of the area and a set of
pressures to perform, usually from outside the
organisation, make the information systems
support of environmental management systems
an almost unique information systems problem.
27
$05.00 0 1996 IEEE
0-8186-7710-1/96
In Australia there are no statutory or
professional requirements for companies to
collect, analyse and disclose complete
environmental information. There are limited
requirements, some of which come from various
accounting standards.
The Australian Accounting Standards Board
(AASB), the Corporations Legislation
(including Schedule 5 ) and the Australian Stock
Exchange (ASX) requirements relating to
environmental disclosure, are concentrated on
certain sections of the annual report for each
company. Significant accounting policies or
calculation methods used in the preparation of
the financial statements are required to be
disclosed by AASB 1001 Accounting Policies -
Disclosure and AASB 1022 Accounting for
Extractive industries requires the accounting for
restoration activities. There is also some
requirements in relation to contingent liabilities.
The literature shows trends by forecasters that
indicate an emergent importance for this area.
Kestigan (1991) speculated that the emergence
of the green debate in boardrooms would be one
of the most pressing issues for the Australian
corporate sector in the 1990s. The professional
accounting bodies have started to commit
resources to environmental issues. In 1994 the
ASCPA Management Accounting Centre for
Excellence released a booklet entitled
“Environmental Issues: A Challenge for
Management Accountants”. That group
concluded “. .. very little management
accounting was being done for environmental
issues “ (Ashton 1994). Miller (1994) also
stated that “ ... much of corporate Australia has
failed to address the issue and how it will affect
the future of their business.”
This trend has seen some increase in
environmental reporting but the ASCPA Public
Sector Accounting Centre of Excellence
publication “A Review of Environmental
Accounting (1995) concluded
Numerous Australian firms have been
identified as providing environmental
information in their annual reports,
usually in the chairmans report,
managing directors report or
equivalent. However, a preliminary
survey of Australian accountants
environmental views indicated mixed
support for disclosure in annual
reports.
2. The Survey
In 1995 Burrows (1995) attempted to provide a
detailed analysis of the environmental content
of the annual reports of Australian companies
with a view to ascertaining the amount and type
of environmental disclosure. This work built on
previous studies by Gibson and O’Donovan
(1994) which concluded that 70% of companies
included information about environmental
performance in their annual reports. Burrows
found that 66% of the companies in her sample
(of 75) provided some form of environmental
disclosure. A significant proportion do not
provide monetary or non-monetary disclosure in
relation to environmental issues.
At this stage of the survey analysis a speculation
arose. The previous studies of actual company
disclosure in annual reports had always shown
that a far greater proportion of companies
disclose than our survey showed. Yet we had
asked officers (financial and IS) who ought to
have been concerned with preparing
information for the disclosure documents. The
28
The authors were interested in this work from
the point of view of information systems support
for disclosure and surveyed the top 150
companies in Australia by market capitalisation.
Survey forms were addressed to both the chief
financial officer and the Information Systems
manager. This was designed to show up any
discrepancies between the two arms of
management in this area. After discounting
foreign companies, 33.3% of financial officers
and 22.2% of Information Systems Officers
replied to the survey. Both categories of
respondents were asked questions relating to the
amount of information gathered and the form of
its processing that supported environmental
disclosure. From the valid responses received
only 13 Chief Financial Officers (27% of
respondents) indicated that their organisation
disclosed environmental accounting
information. Of those that indicated that their
organisation disclosed this information the
majority felt that it was done to provide better
information to shareholders. Studies by Guthrie
and Parker (1990) and Deegan and Gordon
(1993) have indicated that companies generally
had only ‘positive’ news to report. Deegan and
Rankin (1995) also considered a small sample
of companies that had been successfully
prosecuted by the EPA in NSW and concluded
that companies will only provide information
that is favourable to their corporate image.
Most of the respondents indicated that the
information disclosed was a mixture of
qualitative and quantitative information (see
table below). Previous Australian studies
including Guthrie (1982) and Burrows (1995)
have found similar situations.
very small number of these officers reporting
disclosure did not agree with the proportion of
the same companies that have disclosure in
their annual reports. This caused us to speculate
as to the origin of the annual report
information.
Responses from those companies whose officers
claimed to have disclosure then looked at the
systems for preparation. The Chief Information
Officer responses showed that 29% collect
information, but that 67% thought the
information was important. The numbers of
those who reported disclosure, and then
collected information, became so small that
further questions of how information systems
were structured or developed became impossible
to generalise.
3. The Interviews
Respondents were asked to indicate if they
would consent to interviews. A large proportion
of respondents did consent and a number of
interviews have been carried out. These
interviews show that companies have formalised
information systems where a pressing legislative
or operational need exists. Examples are mostly
confined to the extractive industries. The results
of the study would indicate that there is a
commonality of perceptions regarding
environmental information amongst CFOs and
the Information Systems Officers. The
responses from both groups acknowledge that
the majority of organisations are not disclosing
environmental accounting information, many
are not yet collecting it and most perceive that
there will be no significant change to this
situation in the near future.
An important aspect of this study were the
views of the Information Systems Officers. In
Australia there had previously been little done
to survey the views of information providers.
These people could be regarded as the
controllers of information catchment. The
system can only provide to CFOs, and others
responsible for environmental management
systems, what is collected and analysed.
Increased awareness amongst Information
Systems Officers could be seen as a first step to
overcoming the problem of poor provision of
environmental information into the
environmental management system.
4. Factors affecting environmental
information systems
Hutchison (1995) has shown the example of an
Integrated Catchment Management system to be
classifiable as a complex system using the Flood
and Jackson (1991) criteria for complexity.
29
Appleyard and Haselgrove (1995) point to this
same problem with the domain by identifying
”The degradation of ecosystems is often caused
by the complex interaction of a number of
variables which are hard to isolate and quantify,
and management decisions are often made on
the basis of limited data.”
This complexity helps to provide an explanation
for our findings of inadequate information
systems in the companies studied. An approach
to solving information requirements of
environmental management systems must
include strategies for dealing with complexity.
One approach by Finegan (1993) combines the
elements of soft systems methodology, the “Rich
Picture” and CATWOE to define a method of
attack for complex problems. This allows us to
‘... show the elements of slow-to-change
structure and elements of constantly changing
process.’
Argent, Ladson and Grayson (1995) report
successful application of the Adaptive
Environmental Assessment and Management
(AEAM) approach in water catchment
problems. They recognise that “Natural
resources management often involves the
manipulation of complex system components
and the assessment and comparison of
alternative management actions on these
components. The AEAM approach involves the
steps
identi9 stakeholders within the system
under consideration and identify a key
person close to the issue who will be a
champion.
Use an initial workshop to identify possible
management actions and indicators of
system response. From this identify key
components of the system to be modelled.
Use a series of workshops and specialist sub-
group meetings to develop algorithms for the
representation of key system components
and combine algorithms into an interactive
model.
Use a gaming workshop to test the model
and obtain feedback from stakeholders on
the ability of the model to simulate observed
system responses.
Finalise the model development and use a
final workshop to represent the model to
managers and stakeholders
The AEAM approach was succesfully applied to
the problem of nutrient management in the
Goulburn-Broken River Catchment. The success The following model incorporates ideas from
of the approach was attributed to “ stakeholder quality management of continuous improvement
involvement, identification of possible cycles. It also includes the components
management actions, identification of the addressed by Burke.
indicators to be represented and used in the
model, and the development of algorithms that 6. Conclusion
represent system components and their links at
an appropriate scale and level of
Our research has shown a gap between company
understanding.”
objectives, as measured by annual reports, and
Thus it can be seen that a diversity of
the implementation of information systems to
techniques have been successfully tried in
support environmental management systems.
specific environmental developments. It is our
This gap may have a cause in the complexity of
impression from preliminary studies of
the problems and these would require an
companies that there is a need for integration
approach such as soft systems methodology. In
between development of environmental
this problem domain it is clear that there must
information systems and the other aspects of the
exist an integration of systems thinking with
company mission.
development of the enterprise database and the
strategic planning function. System
5. EIS development model development models exist dating back to 1984.
The fact that these models have been
Our research has indicated the need for a successfully implemented in sample problems,
mechanism that enables the complex field of but have not become widespread points to the
environmental information systems to be need to integrate environmental management
addressed in practical ways. Burke (1984 has systems development into the mainstream
identified four primary functions of a social development efforts of organisations.
accounting system:
0 To systematically survey developments in
7. References:
the social environment, a general
surveillance system
0 To furnish information with respect to 1. Appleyard S J and Haselgrove K D
“Groundwater Discharge of Nutrients to a
choice of social goals and the selection of
Sheltered Marine System: Data Uncertainty
specific programs which include explicitly
and Constraints on Management” from
stated social objectives
e to provide inputs to specific decisions
Hutchison W, Metcalf S, Standing C and
Williams M (eds) Systems For the Future
e to evaluate the systems overall effectiveness
Faculty of Business Edith Cowan
An environmental information system would
University 1995
need to provide these dimensions, the most
2. Argent R M, Ladson A R and Grayson R B
difficult being the general surveillance system.
“Modelling, Managing and Massaging
Burke (1984) identifies four phases of the
Environmental Systems” with AEAM from
development of such a system:
from Hutchison W, Metcalf S , Standing C
0 identification of information items
and Williams M (eds) Systems For the
e integration and data reduction
Future Faculty of Business Edith Cowan
0 development of information profiles
University 1995
e provision of social inputs to strategic
3. Ashton B quoted in Miller T “How Green is
planning Your Company” from Financial Forum
This view of the information system presumes a
Australian Society of Certified Practicing
level of support from the organisation that our
Accountants December 1994
research does not show as being widespread in
4. Australian Society of CPAs (1995) A
the corporate community. There seems to be a
Review of Environmental Accounting,
need for a model incorporating the core
Public Centre of Excellence
operations of an organisation with the efforts to
5. Burke R C (1984) Decision Making in
build an environmental information system.
Complex Times: The Contribution of a

30
 Social Accounting Information System
Society of Management Accountants of
Canada, Ontario
6. Burrows S (1995) An Evaluation of
Environmental Disclosure Made in
Australian Corporate Annual Reports
unpublished Masters Thesis, RMIT
7. Deegan C and Gordon B (1993) Towards a
Positive Theory of Environmental
Disclosures British Accounting Association
Annual Conference, Glascow April 1993
8. Deegan C and Rankin M (1995) Do
Australian
9. Finegan A “Soft Systems Methodology: AN
Alternative Approach to Knowledge
31
Elicitation in Complex and Poorly Defined
Systems” from Green D and Bossomaier T
(ed) Complex Systems: From Biology to
Computation 10s Press 1993
10. Hutchison W. E. (1995) “The Use of
Qualitative Systems Methodologies in
Environmental Management” from
Hutchison W E, Metcalf S, Standing C and
Williams M (eds) Systems For the Future
Faculty of Business Edith Cowan
University 1995