he directors of Glowball, a public limited company, had discussed the study by the Institute of Environmental Management which indicated that over 35% of the world's largest 250 corporations are voluntarily releasing green reports to the public to promote corporate environmental performance and to attract customers and investors. They have heard that their main competitors are applying the 'Global Reporting Initiative' (GRI) in an effort to develop a worldwide format for corporate environmental reporting. However, the directors are unsure as to what this initiative actually means. Additionally, they require advice as to the nature of any legislation or standards relating to environmental reporting, as they are worried that any environmental report produced by the company may not be of sufficient quality and may detract and not enhance their image if the report does not comply with recognized standards. Glowball has a reputation for ensuring the preservation of the environment in its business activities. Further the directors have collected information in respect of a series of events which they consider to be important and worthy of note in the environmental report but are not sure as to how they would be incorporated in the environmental report or whether they should be included in the financial statements. The events are as follows: (a) Glowball is a company that pipes gas from offshore gas installations to major consumers. The company purchased its main competitor during the year and found that there were environmental liabilities arising out of the restoration of many miles of farmland that had been affected by the laying of a pipeline. There was no legal obligation to carry out the work but the company felt that there would be a cost of around $150 million if the farmland was to be restored. (b) Most of the offshore gas installations are governed by operating licenses which specify limits to the substances which can be discharged to the air and water. These limits vary according to local legislation and tests are carried out by the regulatory authorities. During the year the company was prosecuted for infringements of an environmental law in the USA when toxic gas escaped into the atmosphere. In 20X2 the company was prosecuted five times and in 20X1 eleven times for infringement of the law. The final amount of the fine/costs to be imposed by the courts has not been determined but is expected to be around $5 million. The escape occurred over the seas and it was considered that there was little threat to human life. (c) The company produced statistics that measure their improvement in the handling of emissions of gases which may have an impact on the environment. The statistics deal with: (i) Measurement of the release of gases with the potential to form acid rain. The emissions have been reduced by 84% over five years due to the closure of old plants. (ii) Measurement of emissions of substances potentially hazardous to human health. The emissions are down by 51% on 20W8 levels. (iii) Measurement of emissions to water that removes dissolved oxygen and substances that may have an adverse effect on aquatic life. Accurate measurement of these emissions is not possible but the company is planning to spend $70 million on research in this area. (d) The company tries to reduce the environmental impacts associated with the siting and construction of its gas installations. This is done in the way that minimises the impact on wild life and human beings. Additionally, when the installations are at the end of their life, they are dismantled and are not sunk into the sea. The current provision for the decommissioning of these installations is $215 million and there are still decommissioning costs of $407 million to be provided as the company's policy is to build up the required provision over the life of the installation. Required Discuss the following elements: (a) Current reporting requirements and guidelines relating to environmental reporting. (b) The nature of any disclosure which would be required in an environmental report and/or the financial statements for the events (a)–(d) above.