As the UK prepares to countdown to COP26 in 2021, new research from KPMG has revealed the country’s top 100 companies have slipped behind a number of European countries for sustainability reporting.
KPMG International’s Survey of Sustainability Reporting 2020 reveals 94 of the UK’s top 100 businesses report on sustainability – down from 99 in 2017. While Britain remains one of only 14 nations around the world with reporting rates above 90%, the country has slipped behind Sweden (98%), Spain (98%) and France (97%). However, despite the drop, Britain’s sustainability reporting rate remains significantly higher than the European average of 77%.
Meanwhile, 87 of the UK’s top 100 companies now provide some sustainability information in their annual reports – the highest figure in Europe and the second highest in the G10, behind Japan (96%).
KPMG’s global survey reviewed corporate reporting from 5,200 companies ─ the top 100 companies by revenue in each of 52 different countries and jurisdictions. This year’s findings reveal many positive developments in sustainability reporting and assurance. In recent years, momentum has grown behind increased coalescence of the major non-financial reporting standards, with investors increasingly pushing for more harmonized standards.
George Richards, Associate Partner of ESG Assurance at KPMG UK said:
“Awareness, sentiment and regulatory action around climate-related risks have accelerated exponentially since 2017 in the UK. Press coverage, questions at AGMs and letters to companies asking for transparency on how they assess climate risks have all become commonplace. Against this backdrop, UK companies are increasingly seeing climate risk as a board-level strategic risk issue, with failure to take the appropriate steps potentially exposing them to material financial, legal, strategic and regulatory risk.
“For many companies, the existing directors’ duties and governance and strategic reporting requirements, along with emerging recommendations for a business resilience statement from the Brydon review, are creating an impetus to stretch their planning horizon and give emerging risks, such as climate change, their due attention. To date, climate-related risk considerations have been mostly narrative, with 34 percent of companies reporting in line with the TCFD. So, although we should take a moment to praise those results, we also expect progress to accelerate following confirmation in November 2020 that TCFD reporting will be mandatory in the UK for premium listed companies and certain financial institutions from 2021. It will be expanded to other companies thereafter.
“This trend is further supported by the UK regulator stating that it expects public interest entities to report under both TCFD and sector-specific disclosures aligned with the Sustainability Accounting Standards Board (SASB). The momentum needs to continue to accelerate and expand to include quantified risks, in line with the 2020 recommendations of the TCFD Status Update.”
With COP26 taking place in Glasgow next November, the findings highlight a growing recognition of climate risk in the UK, with 69% of businesses specifically acknowledging climate change as a financial risk – the third highest figure in the world, behind France and Taiwan.
While much of the findings highlight positive progress around the world, there is some evidence that companies are struggling to match strategy with action. Despite a high number of international reporting companies linking their targets to the UN’s Sustainable Development Goals, only 14% actually disclose how they contribute to the global problems the UN’s goals seek to solve.
Sue Bonney, Head of ESG at KPMG UK, commented:
“It’s reassuring to see that more than two-thirds of reporting companies now connect their business activities with the UN Sustainable Development Goals in their corporate reporting. Around the world, corporate leaders and board rooms are slowly getting to grips with the clear connection between financial success and corporate responsibility. This goes far further than a CSR box-ticking exercise. Businesses can have a significant positive or negative impact on society’s biggest issues, including climate risk. What we need to see now is clearer collaboration across jurisdictions and an acceleration of efforts to tackle the environment, sustainability and governance challenges that are slowing the possibility of real, immediate progress.”
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Notes to Editors:
The Time has Come: The KPMG Survey of Sustainability Reporting 2020 can be downloaded from www.home.kpmg/sustainabilityreporting
Sue Bonney, Head of ESG, KPMG UK
About the survey
This research was conducted in 2020 by climate change and sustainability professionals at KPMG firms. They reviewed corporate reporting from the 5,200 largest companies by revenue across 52 different countries and jurisdictions including the world’s 250 largest companies as defined by the Fortune Global 500 ranking for 2019. Reporting reviewed included annual financial or integrated reports, sustainability reports, stand-alone reports and company websites published between 1 July 2019 and 30 June 2020. This is the 11th edition of the KPMG Survey of Sustainability Reporting which was first published in 1993. This research has been conducted by KPMG IMPACT, a newly established initiative of KPMG firms. KPMG IMPACT brings together professionals and subject matter experts from across KPMG’s global organization to support the delivery of the United Nations Sustainable Development Goals (SDGs).
About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 17,600 partners and staff. The UK firm recorded a revenue of £2.40 billion in the year ended 30 September 2019.
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
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