KPMG has published the results of its survey on the corporate responsibility reporting.
Nearly every Global Fortune 250 (G250) company now reports its corporate responsibility activity, while reporting by pharmaceuticals, consumer markets, and construction industries more than doubled since KPMG International last conducted its global survey in 2008.
In what KPMG believes to be the most comprehensive survey of corporate responsibility (CR) reporting ever published, the KPMG International Survey of Corporate Responsibility Reporting 2011 reviewed trends of each of the G250, as well as 3,400 companies worldwide, representing the national leaders in 34 countries and 15 industry sectors.
The survey found that CR reporting is now undertaken by 95 percent of the G250, while the largest 100 companies (N100) in each country surveyed increased reporting by 11 percent since 2008, to 64 percent overall, with developing nations showing fast uptake.
Almost half of the G250 companies report gaining financial value from their CR initiatives. In the absence of a regulatory global sustainability reporting standard, the drive for consistency and accessibility to quality data was highlighted in the findings. The Global Reporting Initiative (GRI) Sustainability Reporting Guidelines are used by 80 percent of the G250 and 69 percent of N100 companies and is gaining widespread adoption as the de facto reporting standard.
Countries leading reporting in the survey in 2008 continue to dominate today with United Kingdom and Japan at 100 percent and 99 percent, respectively, of companies reporting.
Wim Bartels, Global Head of KPMG’s Sustainability Assurance said the global momentum in corporate responsibility demands both higher quality CR information and greater use of assurance to maintain standards and stakeholder confidence.
“Unlike financial reporting, the disclosure of sustainability metrics to the market is largely unregulated. Restatements are four times higher compared to financial reporting and demonstrate that CR reporting has some way to go.”
Reporters that engaged formal assurance professionals were twice as likely to restate their reports as those without, demonstrating that assurance providers are demanding higher quality data, also signifying the need for increased focus on internal processes.
“This survey shows almost half of the G250 companies report gaining financial value from their CR initiatives. CR has moved from being a moral imperative to a critical business imperative. The time has now come to enhance CR reporting information systems to bring them up to the level that is equal to financial reporting, including a comparable quality of governance controls and management,” urged Mr. Bartels.
Further figures with respect to assurance are:
The findings show that bigger companies are twice as likely to report as those with revenues under U.S. $1 billion. This also presents an opportunity for smaller companies to leverage the benefits of CR reporting as a financial and reputational differentiator.
“At first glance, the results of the research might appear dismal for Russia. At the same time, however, one should note the speed with which Russian business has accepted the rules of the game adopted on global markets. It is not for nothing that the research highlights the fact that if such rates are maintained, Russian practice in this area will soon draw extremely close to the practices of such countries as Great Britain, Japan and South Africa,” notes Igor Korotetskiy, head of the Corporate Governance and Sustainability Group, KPMG in Russia and the CIS.
“However, it is important when embarking on this path to take account of foreign experience of trial and error. For the time being, according to our estimates we are partly repeating the journey taken in the development of corporate responsibility reporting abroad – albeit at a more accelerated pace. A number of companies have started publishing reports on these issues without introducing appropriate changes to the quality and reliability of the systems used to report on information on sustainability issues and without checking the reliability of third party indicators that are disclosed. It is highly likely that all this will in future result in the implications mentioned in the research – a significant number of adjustments to previously published reports”, adds Igor Korotetskiy. He also notes: “Such a situation is understandable, as the regulation of this sector even in other countries is limited. At the same time, however, considering current trends for integrating (combining) financial and corporate responsibility reporting, failure to pay sufficient attention to these issues today could result in undesirable consequences tomorrow – from reputational damage to investor lawsuits.”
Igor Korotetskiy continues: “As well as issues arising from compliance with requirements, I would like to highlight the following. As the research notes, once a company starts reporting on sustainability issues, it begins paying attention to due governance of these aspects. This is precisely what one should strive to attain as part of the process of developing an accounting and reporting system on sustainability issues.”