Corporate responsibility reporting hits all-time high but lacks financial rigour

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 surveys 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.

nSouth Africa’s King Corporate Governance Commission code is attributed for the sharp increase in CR reporting, rising to third place 97 percent reporting, up from 45 percent in 2008;

nThe Americas at 69 percent overall (with the U.S. at 83 percent and Canada 79 percent) and the Middle East and Africa region (61 percent) are quickly gaining ground;

nChina, new to the survey this year, demonstrates rapid uptake with 60 percent of its largest companies reporting on corporate responsibility;

nLowest ranked were New Zealand and Chile (27 percent), India (20 percent) and Israel (18 percent);

nAustralia passed the midpoint on CR reporting, increasing from 45 to 57 percent;

nNordic countries saw a sharp rise in CR reporting with the change attributed to heightened public interest in CR issues as well as government regulation.

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 Bartels.

Further figures with respect to assurance are:

n51 percent of mining and 46 percent of utility companies conduct assurance with numbers dwindling across other sectors;

n46 percent of G250 and 38 percent of N100 companies use assurance as a strategy for verifying CR reporting, which for the G250 is higher than in 2008 but still isn’t a majority; and

nIndia (80 percent) and South Korea (75 percent) lead the way in assurance.

Bartels said that when it comes to CR reporting uptake, size matters.

 “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,” said Bartels.