These findings are contained in Unlocking the value of social investment, the latest edition of KPMG’s Sustainable Insight research series published on 21 May 2014.
The KPMG study reviewed corporate reports issued between 2012 and 2013 by the 10 largest global companies in each of 10 industry sectors. It found these 100 companies and their associated corporate foundations invested, on average, the equivalent of 2.5 percent of their pre-tax profits in programs to tackle social and environmental challenges such as access to education, healthcare and disaster relief.
However, only 20 percent of these companies reported any quantified metrics for the impact of the programs they fund and only 32 percent of companies reported a detailed investment strategy.
“Companies are investing huge amounts into social programs,” said Neil Morris, Partner, Climate Change and Sustainability of KPMG in South Africa, who led the KPMG study. “The US$12.2 billion invested by these 100 companies alone is equal to the entire annual foreign development aid budget of a country like France.2
“Measuring the impact of these investments on the ground can be challenging, but it is crucial to understand how effective these programs are, how they can be improved and where the money is best spent to deliver the biggest benefits. A clear strategy for social investment is essential to this process. ”
Unlocking the value of social investment is intended to help corporate responsibility managers and others involved in designing and delivering social investments to overcome some of the challenges to measuring and reporting on social programs.
It contains practical advice, case studies and a framework for better measurement and reporting of social investments and programs.
About the Research:
KPMG climate change & sustainability professionals analyzed information published by companies and their associated corporate foundations to assess the effectiveness of reporting on social investment and impacts.
KPMG looked at the 10 largest companies by revenue in each of the 10 sectors studied – a total of 100 companies headquartered in 11 countries. The sectors studied were:
- Chemicals & synthetics
- Finance & insurance
- Food & beverage
- Metals, mining & engineering
- Oil & gas
- Telecommunications, electronics & computers
The research was based on publically available information in corporate and foundation reports, including corporate responsibility (CR)/sustainability reports, annual financial reports (including integrated reports), and foundation annual and progress reports.
Reports were assessed for clarity of reporting on contributions to social programs, social investment strategy, goals and targets, KPIs and approaches to measuring inputs, outputs, outcomes and impacts.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
1Based on 69 of the 100 companies researched that reported their total social investment. These companies report the total value of social investment, such as cash donations, the value of employee volunteering time and donated products and charity sponsorship. This figure should not be taken as absolute as companies use disparate methods to value in-kind contributions.
2According to OECD data development aid from France in 2012 totalled US$ 12 billion.