however, some signs that the situation is improving. Over the past 3 or 4 years, it has become normal for the largest U.K. companies to include information on environmental issues in or in conjunction with their annual reports. Some of these companies provide an extensive review. Within Europe, the amount of disclosure of environmental information appears higher in Germany than in any other country (Roberts, 1991). Much of the information currently provided in the United Kingdom remains nonspecific. Emphasis is on statements of policy with relatively little quantification of technical or financial factors; quantified achievements against targets are provided by a few companies such as ICI, British Telecom (BT), and IBM-UK.

Even when quantification is provided, only a few financial implications are mentioned. For example, ICI's environmental report presents its annual environmental expenditure and gives the costs of some individual new plants. The report also refers to some of the financial savings achieved through reductions in waste, energy, and water usage. British Petroleum (BP) devoted nearly a full page of the financial review section of its 1993 annual report and accounts to environmental investment. BP estimated its 1993 operating expenditure on pollution prevention, control, abatement, or elimination to be £200 million, although its chief financial officer noted that environmental expenditure is difficult to identify because it is embedded within other day-to-day operating costs. In addition, BP charged about £160 million against profits for environmental remediation programs at service stations and other sites. Capital investment was about £250 million. In its accounting policies, BP has a section on environmental liabilities; provisions for environmental restoration stood at£345 million at the end of 1993, whereas provisions for dismantling costs stood at £1,530 million. Potential contingent liabilities also were discussed (Accountancy, 1994).

Information on environmental costs in financial statements (or notes thereto) is more common in the United States where there are Securities and Exchange Commission (SEC) and Financial Accounting Standards Board requirements relating to disclosure of such information (Macve and Carey, 1992). Over 25 percent of the U.S. companies surveyed by KPMG (1993) gave some information on environmental expenditures. There is increasing debate worldwide as to what extent more explicit guidance should be given by regulators and accounting bodies to companies on their reporting of and accounting for environmental costs.

Most of the concern regarding financial accounting has focused on issues such as the reporting contingent liabilities for environmental restitution costs and penalties and of impairment to land and other asset values. Issues that need to be dealt with under ordinary accounting and reporting requirements differ in their environmental aspects, mainly because their potential financial impacts may prove much larger than those that companies have already faced. As such, they are of enormous potential concern to investors and lenders (and hence to regulators such as the SEC).

The fear of litigation and of raising further the level of stakeholders' expectations

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