Evolution of Regulatory Frameworks for Environmental Reporting A Comprehensive Analysis with Special Reference to India and Bangladesh

Environmental Reporting

Dr. Mohammed Fazlur Rahman Khan
The Author is a
BCS (General Education)
Assistant Professor (Accounting)
Mymensingh Government College

Corporate environmental reporting is a significant way in providing the actual scenario of the organizations’ environmental performance with the purpose of acknowledging their impact on natural system. It is also necessary for taking any controlling measure or developing corporate and national policy for reducing or avoiding environmental cost and hazards in achieving sustainable development. The paper aims at exploring the present status of regulatory frameworks for environmental reporting that are evolving at national and international level with special reference to India and Bangladesh. Present study is mainly qualitative in nature, and so content analysis method is used for of scrutiny the documentary evidence that were issued by respective countries and various internationally recognized organizations like Global Reporting Initiatives (GRI), International Organization for Standardization (ISO), United Nations Environment Program (UNEP), International Accounting Standards Board (IASB), KPMG Sustainability, etc. The study reveals that most of the environmental reporting standards developed at the global level are purely voluntary in nature. The level of environmental reporting in India and Bangladesh is at embryonic stage and still evolving. But adequacy level of the reporting regulations of Bangladesh lags behind that of India. The study concluded that current status of regulatory framework of environmental reporting is not at satisfactory level but it is developing rapidly worldwide. The professionals and respective regulatory authorities and standard setting bodies should be more active in order to develop a possible common regulatory framework regarding environmental reporting.

Key Words

Environmental Reporting, Sustainability Reporting, Regulatory Framework.


Company’s environmental performance affects its financial health along with the overall environment. The traditional corporate reporting system does not consider external environmental cost and activities having undesirable impact on the environment, thus, the system cannot provide the real picture of the organizations’ environmental performance, which is necessary for taking any controlling measure or developing corporate and national policy to achieve sustainable development (Belal, 2011). Consequently, there has been increasing demand from various stakeholder groups for companies to publicly report information regarding their environmental performance in a global scale (UNCTAD, 1998). In this regard, corporate environmental reporting is a significant way for organization to acknowledge their impact on natural system. Environmental reporting is a process through which companies disclose their environmental performance related information to the stakeholders (Gray, et al, 1995). Environmental reporting is also specified in target 12.6 of the SDG 12 (Responsible consumption and production) which specifically advises to encourage companies, especially large and transnational companies, to integrate sustainability information into their reporting cycle (Khan, 2016). Many national and international organizations have been working for the development of specific regulatory framework of environmental reporting, such as United Nations Environment Program (UNEP), United Nations Conference on Trade and Development (UNCTAD), United States Environmental Protection Agency (US EPA), KPMG Sustainability, Global Reporting Initiatives (GRI), International Organization for Standardization (ISO).

Besides, in 2006, two global leading accounting and reporting standard-setting organizations such as International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) announced that they would work jointly on all major issues including environmental accounting and reporting. But any commonly accepted regulatory framework for environmental reporting has not yet been developed. There is great variety in corporate environmental reporting; companies within the same industry often report their environmental performance by using dierent standards (UNEP and KPMG Sustainability B.V., the Netherlands, 2006). Owing to this variety, there has been a vigorous debate on how and what to report. In reviewing previous literature, up-to-date research work has been not found that covered this area by focusing on the evolution of regulatory framework of environmental reporting at national and international level. Therefore, to bridge this gap in existing literature, the paper aims at exploring the present status of regulatory framework of environmental reporting developed at national and international level with special reference to India and Bangladesh.

Objectives of the Study

The general objective of the study is to explore the regulatory framework of environmental reporting developed at global level with special reference to India and Bangladesh. The specific objectives of the study are:

  • To explore the present status of regulatory frameworks of environmental reporting that are evolving at National and International level with special reference to India and Bangladesh.
  • To identify the limitations of current regulatory framework of environmental reporting and make recommendations for possible future development.

Literature Review

Beets and Souther (1999) identify the necessity of environmental reporting standards which would especially benefit investors and other stakeholders by making the reports more consistent and comparable. Cerin (2002) calls for stricter reporting rules and underlines that there is great variety in the content of what is reported. Cunningham and Gadenne (2003) concluded that environmental regulation acts as an impetus for companies to include information on certain environmental issues in the annual report. Paul and Pal (2001) also concluded that within the study period reporting is gaining advancement even in the absence of any complete standards or guidelines. Hossain et al., (2006) concluded that a very few companies in Bangladesh are making eorts to provide environmental information on a voluntary basis, which are mostly qualitative in nature. Pramanik (2007) concluded that there is no complete-recognized environmental reporting standard in India. Consequently, the level of sustainability reporting in India is at an infancy stage and still evolving. The consultancy KPMG performed a survey of corporate sustainability reporting in 2002 among almost 2000 companies. The results show that environmental reporting and the verification of these reports is becoming mainstream business. In 2006 and 2012 UNEP, KPMG Sustainability and GRI issued the publications called “Carrots and Sticks for Starters, Current Trends and Approaches in Voluntary and Mandatory Standards for Sustainability Reporting” and revealed that the regulatory framework is still evolving across the globe. In 2016 UNEP, KPMG International and GRI further issued the “Carrots and Sticks ” and revealed that up to 2015 there were 383 sustainability reporting standards and related legislation have also been evolved among 71 countries around the world, 65% of which are mandatory.


This study is predominantly qualitative in nature in which analytical and descriptive approach are followed. Mainly content analysis is applied in conducting the study. Both primary and secondary data are used in this study

Data Collection Techniques

  • Primary data were collected from various sources like enacted Acts, Regulation, Ordinance, Notifications of various national governments and international conventions, regulation, standards, codes and guidelines relating to environmental reporting.
  • Secondary data were collected through document analysis of relevant books, journals, reports of relevant national or international organizations, published or unpublished dissertations, reports of various conferences of national and international agencies through intensive library work and by using internet facilities

Data Analysis and Interpretation

The collected data and information were carefully reviewed, edited and scrutinized on the basis of the study objectives. Qualitative data were analyzed through logical interpretation. The researchers had taken precaution against any sort of prejudice to come into a fair conclusion.

Analysis and Findings

Environmental Reporting: Regulatory Framework The concept of environmental reporting has firmly become a desirable and mainstream practice in the key sectors and there is still much to be learned. Consequently, an increasing number of countries have initiated mandatory environmental disclosure in their reporting requirements. Denmark was the first country to adopt mandatory legislation on public environmental reporting (Zaho, 2011). As well 383 laws regarding environmental reporting have been enacted in 71 countries around the world by 2016, 65% of which are mandatory in nature (UNEP and KPMG, 2016) International Standards, Codes and Guidelines for Environmental Reporting The number of international standards, codes and guidelines regarding environmental reporting has been increasing gradually. Among all the International Standards identified at the global level, the GRI Guidelines and ISO 14031 requirements are generally accepted as the most comprehensive on sustainability as a tool for measurement and communication (UNEP and KPMG, 2016). The Global Reporting Initiative (GRI) GRI was established in Boston, USA in 1997 by the joint collaboration of the United Nations Environment Program (UNEP) and Coalition for Environmentally Responsible Economies in order to develop and disseminate globally applicable guidelines for reporting on the triple bottom line; economic, environmental and social performance. (GRI, 2006).

The GRI Guidelines The reporting material of GRI is titled as “Sustainability Reporting Framework”. Revised guidelines of GRI were first issued in June, 2000. These include instructions on defining the relevant content and a form in which the report should be structured (GRI, 2002). The third generation of GRI guidelines known as G3 was first published in 2006 and updated version G3.1 in 2011. The G3.1 guidelines includes three types of standard disclosures, which should be included in sustainability reports, such as strategy and profile, management approach and performance indicators. The fourth generation of GRI guidelines is known as G4 launched in May 2013 but came into effective in 2018 (GRI, 2016).

The International Organization for Standardization (ISO)

ISO is an independent non-governmental membership organization. It is a network of national standard setting bodies. It has a membership of 163 national standards institutes from countries in all regions of the world (ISO, 2013).

ISO 14000 Series and Environmental Management

ISO 14000 family of standards were introduced with the aim of creating a framework for systematic standardized environmental management and reporting practices among organizations (ISO, 2009).

ISO 14031 (Environmental Management–Environmental Performance Evaluation– Guidelines)

In 1999, ISO launched its Environmental managementEnvironmental performance evaluation- Guidelines (ISO 14031). This standard was last reviewed in 2013 (http://www.iso.org). ISO 14031:2013 provides guidance on the design and use of environmental performance evaluation (EPE) within an organization. It is applicable to all kinds of organizations (ISO, 2013). The standard ISO 14031 addresses the selection of suitable performance indicators, so that environmental performance can be assessed against criteria set by management. Hence ISO 14031 can be used as a basis for internal and external environmental reporting of the organizations (ISO, 2006).

3 Other Important International Standards, Codes and Guidelines for Environmental Report

The UN Global Compact, UN Principles for Responsible Investment: (UNPRI), The Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, The Coalition for Environmentally Responsible Economics (CERES) Principles (previously “Valdez”) and AA1000 Accountability Principles Standard (AA1000APS), 2008 are also used by organizations to develop an accountable and strategic response to sustainability, including reporting (UNEP and KPMG, 2006).

Regulatory Framework of Environmental Reporting in India

The Environment (Protection) Act of 1986 is considered as the “Umbrella Act” in India, The national environmental policy framework is the responsibility of the Ministry of Environment and Forests. Implementation is undertaken by the Central Pollution Control Board (CPCB) and the State Pollution Control Board (SPCB) at the federal and state levels respectively. The Department of Environment at the federal level supports the SPCB ((UNEP and KPMG, 2012). The tradition of non-financial reporting launched in India through the public announcement of the Central Government in 1991. According to the announcement, the Ministry of Environment and Forest (MoEF) has proposed that “every company shall include the particulars of compliance with the environmental laws, steps taken or proposed to be taken towards adoption of clean technologies for prevention of pollution, waste minimization, waste re-cycling and utilization, pollution control measures, investment on environmental protection and impact of these measures on waste reduction, water and other resources conservation in the “Board of Directors’ Report”. A notification issued by the (MoEF) on ‘Environmental Audit Report’ in 1992 (The term ‘Audit report’ was replaced by ‘statement’ as a result of another notification issued by the Ministry of environment in 1993). The notification requires submission of an Environmental Statement to the SPCB, which is applicable to any industry, operation or process requiring consent to operate within the water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 or both or authorization under the Hazardous Wastes (Management and Handling) Rules, 1989 issued under the Environment (protection) Act 1986. In the environment statement, the concerned entity is required to provide information on: Water and Raw Material Consumption, Pollution Generated, nature of hazardous waste and disposal practice and Impact of pollution control measures on conservation of natural resources (Pramanic, 2007).

Reporting under the Companies Act 2013 (Revised);

India has become one of the first countries to prescribe expenditure for (qualifying) companies towards Corporate Social Responsibility (CSR) by incorporating the new and revised Companies Act 2013. Section 135 of the Companies Act 2013 requires that companies adopt a CSR policy, constitute a board -level CSR committee for oversight and implementation, and disclose their social and environmental activities. According to the Act, CSR spending would be computed as 2% of the average net profits made by the company during every block of three preceding financial years (Kumar and Devi, 2013) According to Indian Factories Act, 1948 (Amended in 1987) every factory is required to submit report to their relevant state governments in a prescribed format which covers information relating to labor and employment, working hours, accidents, health and safety (Pramanik, 2007). In 2009, the Ministry of Corporate Affairs issued the voluntary corporate Social Responsibility Guidelines for dissemination of information to stakeholders and the public regarding care for stakeholders, respect for workers’ rights and welfare, environment. (UNEP and KPMG, 2012). Reporting Pattern; According to the Companies Act 2013, CSR Report should contain details of CSR activities undertaken during the year: a.) Total amount to be spent for the year; b.) amount carried forward from earlier years; c.) amount spent during the year; d.) amount carried forward for the year. To be signed by CEO/ MD/ Director or Chairman CSR Committee. Pramanik (2007) revealed that there is no complete reporting standard on environmental reporting which is recognized by the regulatory bodies in India. However, over the past few years Indian companies are becoming increasingly oriented towards global standards on sustainability reporting. An increasing number of companies in India use the GRI guidelines. (UNEP and KPMG, 2016).

Environmental Regulations and Environmental Reporting in Bangladesh

The promulgation of Environment Pollution Control Ordinance, 1977 and creation of the Department of Environment Pollution Control (DEPC) were significant steps in environmental protection in Bangladesh (Nath, 2012). Accordingly, The Fourth Five Year Plan (FFYP) introduced a chapter for the first time on “Environment and Sustainable Development” (Hossan, 2014). In order to promote environmental consciousness and arrest degradation, A National Environment Policy was finalized in 1992 as a guide to long term sustainable development. Another important strategic response of GoB to environmental protection is the National Environmental Management Action Plan, 1995 (Ahmad, 2012). Moreover, GoB has enacted very important laws regarding environment, such as the Bangladesh Environment Conservation Act, 1995 (hereafter the Act), the Environment Conservation Rules, 1997”. The Ministry of Environment, Forest and Climate Change and the Department of Environment play significant role to ensure a green environment and pollution free society. Because, Section 12 of the Act states that no industrial unit or project can be established without obtaining an Environmental Clearance Certificate (ECC) from the Ministry of Environment, Forest and Climate Change. Besides the Act has provision for Environmental Impact Assessment (EIA) for Industrial or infrastructure projects. Moreover according to the Act, companies maybe asked to submit their environmental information to the Department of Environment as and when required. In addition, according to the Article 18 A of the Constitution of People’s Republic of Bangladesh “the State shall endeavor to protect and improve the environment and to preserve and safeguard the natural resources, bio-diversity, wetlands, forests and wild life for the present and future citizens” which ensured the commitment of the State towards sustainable development.

Regulatory and Institutional Frameworks for Corporate Disclosures in Bangladesh

The current regulatory and institutional frameworks, which influence the corporate disclosure practices, comprised a set of rules, regulations and some institutions. These include the Companies Act, 1994, the Insurance Act, 1938, the Bank Company (amendment) Act 2013, the Income Tax Ordinance, 1984, the Securities and Exchange Ordinance, 1969, the Securities and Exchange Commission Act 1993, the listing rules of stock exchanges and the various statutes creating the public enterprises (Hossan, 2014). With a view to integrate sustainability, Bangladesh Bank (the central bank of Bangladesh) issued guidelines on ‘Environmental Risk Management’ (ERM) in 2011 which is updated on February 2017 titled as ‘Environmental & Social Risk Management (ESRM) for Banks and Financial Institutions in Bangladesh’.

All the above mentioned environmental and corporate related laws, and prevailing Accounting and Reporting Standards do not prescribe any periodical mandatory environmental disclosure by the companies. Therefore corporate environmental reporting in Bangladesh is voluntary in nature. A major reform has been undertaken to rationalize and update the laws (Ahmed, 2012).

Financial Reporting Council (FRC)

The Government of Bangladesh had formed the Financial Reporting Council (FRC) and appointed a chairman along with three directors for the Council in accordance with The Financial Reporting Act, 2015, for controlling and overseeing the accounting and financial reporting activities of the organizations. Under the Act, the FRC will also be responsible for developing necessary accounting and auditing standards along with their proper implementation (The Daily Star, 2 April, 2018).

National Best Presented Annual Reports Award ICAB introduced National Best Presented Annual Reports Award

among the Public Limited Companies covering criteria on Environmental Reporting. In this regard, ICAB allocated 13 and 11 marks (out of 140 marks) for the reporting sections of Sustainability Reporting and Risk Management & Control Environment respectively. Accordingly some companies try to comply with the sections and want to be recognized as responsible corporate citizens.

Dhaka Stock Exchange (DSE) and Sustainability Reporting Guideline

There is increasing demand for companies to be transparent and accountable to their stakeholders regarding sustainability issues. From regulatory point of view, DSE provided a guideline titled “Guidance on Sustainability Reporting for Listed Companies in Bangladesh” to ensure sustainable development. The guide is designed to complement the reporting requirements of prevailing rules and regulations. It is also corresponded with the basic notion of the Article 18A of the Constitution of Bangladesh. The publication will be helpful for the companies regardless listed or unlisted that want to start the reporting process on their social, economic and environmental performance (https://www.researchgate.net/ publication/320313279_Sustain ability_Reporting_Practices_Evi dence_from_Bangladesh)

Limitations of Environmental Reporting Regulatory Framework

The study reveals that there is no complete standardized regulatory framework for environmental reporting which can be applicable globally in general. Organizations within the same industry often introduce environmental information by using dierent performance indicators. Because, standardized generic and industry specific indicators have not yet been developed for environmental reporting.

Absence of credible external verification and lack of consistency of measurement in existing environmental reporting system are also great constraints in producing ideal environmental report.


The role of national regulators in the field of environmental reporting should be more effective, they should raise bar of minimum disclosure but leave enough space for voluntary reporting. The mandatory regulatory initiatives should be simplified that can play an effective role by evaluation of standards at the country level and through alignment with the global standards. Regulators should consider the value of mandatory reporting standards in the context of globalized economy which can improve comparability, avoid duplication and ensure that goals from international agreement are met. Relevant regulatory bodies should try to develop standardized environmental key performance indicators which have general industry significance and can be computed on a consistent basis over time. Moreover, it is essential to develop necessary guidelines for external verification of corporate environmental information (corporate environmental audit) in order to enhance transparency of their environmental performance and disclosures and improve the credibility of environmental reporting activities by formalizing the external attestation process. In case of Bangladesh, it is essential to take proper initiatives to impose mandatory legal requirements on organizations with enough space for voluntary reporting to provide their real environmental performance in the annual reports. Besides, ICAB and/or FRC should develop industry wise guidelines for environmental reporting of the organizations on the basis of corporate and national culture. Legislators should consider the issues that are related to the potential costs and benefits of mandatory environmental reporting to companies, as well as to the community in general. It is expected that such initiatives can create a culture of environmental reporting practices among the corporate organizations.


The study reveals that over the last few years both national and International standards, codes and guidelines as well as legislation for environmental reporting have been evolving around the world. But most of the standards developed at the global level are purely voluntary in nature. However, the overall status of regulatory framework of environmental reporting is not satisfactory, but it is evolving worldwide. It is also revealed that the level of environmental reporting in India and Bangladesh is at embryonic stage and still evolving. But adequacy level of the reporting regulations of Bangladesh lags behind that of India.

Limitations of the Study

The study reviews the regulatory framework of environmental reporting based on library work and internet facilities. It focuses only on the environmental disclosures related standards, codes and guidelines developed at Global level and in two purposively selected developing countries. Besides, the study is conducted on the basis of limited literature review.


Ahmad, A (2012), “Environmental Accounting & Reporting Practices, Significance and Issues: A Case from Bangladeshi Companies”, Global Journal of Management and Business Research, Volume 12 (14). Belal, A (2000), “Environmental Reporting in Developing Countries: Empirical Evidence for Bangladesh”, Eco-Management and Auditing, Vol. 7(3). Gray, R. Owen, D and Maunders, K (1998), “Corporate Social Reporting: Emerging Trends in Accountability and Social Contract”, Accounting, Auditing and Accountability Journal, Vol. 1(1). GRI (2006). Sustainability reporting guidelines. Global Reporting Initiative (GRI). http//www.globalreporting.org/rep orting framework. GoB (1994). The Companies Act-1994. Ministry of Commerce, Government of the People’s Republic of Bangladesh. GoB (1995). The Environment Conservation Act-1995. Ministry of Environment and Forest, Government of the People’s Republic of Bangladesh. Gray, R., Owen, D., & Maunders, K. (1998). Corporate social reporting: Emerging trends in accountability and social contract. Accounting, Auditing and Accountability, 1(1), 6-20. Hossan, M. M. (2014). Evaluation of environmental policies in Bangladesh (1972-2010). Journal of the Asiatic Society of Bangladesh (Hum), 59(1), 2014, 39-63.

Hossain, M. (2002). Corporate environmental disclosure in developing countries: Evidence from Bangladesh. Bangladesh Environment, 1 (12), 1077-1089. ISO (2002). ISO ISO 14031: Environmental performance evaluation. International Organization for Standardization, Geneva. retrieved on 18th July, 2007 f r o m http://www.altech-group.com/ftp/E PEarticle.pdf ISO (2013). The ISO survey of management system standard certifications – 2013. Organization for Standardization, Geneva. Retrieved on 2 january, 2014 from http://www.iso.org/iso/iso_survey_ executive-summary.pdf? v2013. Khan, F. R. (2016, December 29). Incorporating Environmental Responsiveness, The Daily New Age, p-8. Kolk, A (2004), “A Decade of Sustainability Reporting: Developments and Significant”, International Journal of Environment Sustainable Development, Vol. 3(1). KPMG Sustainability B.V., the Netherlands (2008). KPMG International Survey of Corporate Responsibility Reporting 2008. Nath, C. N. (2012, July). Manufacturing sector of Bangladesh-growth, structure and strategies for future development. Paper presented at the conference on global economy and vision 2021, Bangladesh Institute of Development Studies, Dhaka. Pramanik, A. Shil, Chand. Das, B (2007), Environmental accounting and reporting with special reference to India, Global Journal of Management and Business Research, Vol. 13 (4). Ullah, H. Yakub, M. and Hossain, M (2013), “Environmental Reporting Practices in Annual Report of Selected Listed Companies in Bangladesh”,

Research Journal of Finance and Accounting, Vol. 4, No. 7. UNEP and KPMG Sustainability B.V.(2006). Carrots and sticks for starters, current trends and approaches in voluntary and mandatory standards for sustainability reporting. Amsterdam, Netherlands. UNEP and KPMG Sustainability B.V.(2012). Carrots and sticks for starters, current trends and approaches in voluntary and mandatory standards for sustainability reporting. Amsterdam, Netherlands. UNEP and KPMG Sustainability B.V.(2016). Carrots and sticks for starters, current trends and approaches in voluntary and mandatory standards for sustainability reporting. Amsterdam, Netherlands.

This article was first published by Chartered Accountants Ireland at the following URL: https://www.icab.org.bd/publication/news/17/131/details