More than 70% of the world's largest firms publicly report on their sustainability performance, but few are considering the financial impacts of environmental risks, reveals KPMG research
Global accountancy giant KPMG has published its eighth report into global corporate responsibility (CR) reporting practices, concluding that big businesses now consider CR reporting a “mainstream business activity”.
The research, which examined stand-alone CR reports and sustainability data in financial reports from 4,100 companies worldwide, confirmed that 71% were publishing data on CR, compared with just 12% in 1993, when KPMG first examined how businesses were disclosing such information.
The most dramatic change in recent years has been seen in Asia Pacific, with the proportion of firms reporting on CR in the region jumping to 77% this year, up from 49% in 2011. Meanwhile, more than half of the businesses examined are now incorporating CR information into their annual reports, compared with 20% two years ago, and just 9% in 2008.
“Companies no longer ask whether they should publish a CR report. We believe that debate is over. The high rates of CR reporting in all regions suggest it is now standard practice worldwide,” states the report.
Yvo de Boer, former UN climate change negotiator and now KPMG’s global chair of climate change and sustainability services, commented: “CR reporting is – or should be – an essential business management tool. It is not – or should not be – something produced simply to mollify potential critics and polish the corporate halo.
“CR reporting is the process by which a company can gather and analyse the data it needs to create long-term value and resilience to environmental and social change. CR reporting is essential to convince investors that your business has a future beyond the next quarter of the next year.”
KMPG’s report also examines the quality of CR reports, revealing that the vast majority of firms (78%) refer to the Global Reporting Initiative’s reporting guidelines, and that the proportion of companies having their data independently verified is also on the increase.
The accountancy firm assessed the CR reports of the world’s 250 largest firms (the G250), scoring each for their level of transparency. This included whether they assessed business strategy against CR risks, provided data on the impacts of their supply chains and disclosed performance against targets.
The analysis revealed that the bulk of firms were reporting on sustainability targets and performance indicators, as well as CR risks and opportunities with the greatest impact on their business. However, few reported on CR across value chains and stakeholder engagement activities.
The research also concluded that while 81% of the G250 identified environmental and social risks to their operations in their reports, just 5% included information of the financial value of such risks.
Damage to a firm’s reputation was most often cited as a CR risk (53% of companies), followed by regulatory compliance (48%) and ability to remain competitive (45%).
A greater proportion of companies identified potential business opportunities offered by CR, including potential new products and services (72%) and ability to strengthen their brand (51%).
Published on the day after the International Integrated Reporting Council published its first international integrated reporting framework, KPMG’s research also reveals that currently just 10% of the 4,100 firms examined consider themselves as publishing an integrated report, despite 51% of the businesses incorporating CR information into their annual reports.
