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 uptake of Corporate Responsibility Reporting in South Africa is evident in this latest KPMG survey. When comparing these national leaders in 34 countries in terms of the percentage of companies reporting on their sustainability initiatives between 2008 and 2011, the most exciting entry into the leader board is South Africa, which rose to third place this year. South Africa, a participant in the survey from as early as 1999, jumped from 18 percent of respondents in 2005 to 45 percent in 2008. Currently, 97 percent of South Africa’s JSE Top 100 companies report on sustainability activities. This is interesting for a country where there is no mandatory reporting requirement for corporate responsibility or sustainability reporting. This is in marked contrast to countries such as Denmark (where it is required for all listed organisations) and Sweden (required for all state-owned companies).
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. They are gaining widespread adoption as the de facto reporting standard.
The countries leading reporting in the survey in 2008 continue to dominate, with the United Kingdom and Japan at 100 percent and 99 percent, respectively, of companies reporting.
- South Africa’s King Corporate Governance Commission code is credited for the sharp increase in CR reporting, rising to third-placed 97 percent reporting, up from 45 percent in 2008.
- The Americas at 69 percent overall (with the US at 83 percent and Canada 79 percent) and the Middle East and Africa region (61 percent) are quickly gaining ground.
- China, new to the survey this year, demonstrates rapid uptake with 60 percent of its largest companies reporting on corporate responsibility.
- Lowest-ranked were New Zealand and Chile (27 percent), India (20 percent) and Israel (18 percent).
- Australia passed the midpoint on CR reporting, increasing from 45 to 57 percent.
- Nordic countries saw a sharp rise in CR reporting with the change attributed to heightened public interest in CR issues as well as government regulation.
Shireen Naidoo, Director in KPMG in South Africa’s Climate Change and Sustainability Unit, said that this astounding jump is almost fully attributable to the King Code of Governance Principles for South Africa 2009 (King 3). These are a JSE listing requirement for entities with effect from years commencing on or after 1 March 2010.
King 3 recommends that companies adopt Integrated Reporting, albeit on the Code’s ‘apply or explain’ basis. Other disclosure initiatives, explained Naidoo, which have contributed to the increase in Sustainability Reporting in South Africa, have been the JSE SRI Index and the Carbon Disclosure Project (CDP).
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. This demonstrates that assurance providers are demanding higher-quality data, and signifies the need for increased focus on internal processes.
“This survey shows almost half of the G250 organisations report gaining financial value from 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.
The survey contains these interesting figures regarding assurance:
- 51 percent of mining and 46 percent of utility companies conduct assurance, with numbers dwindling across other sectors.
- 46 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 is not a majority.
- India (80 percent) and South Korea (75 percent) lead the way in assurance.
- In South Africa, 31 percent of the Top 100 companies conduct 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 US$1 billion. This also presents an opportunity for smaller companies to leverage the benefits of CR reporting as a financial and reputational differentiator.”
The KPMG International Survey of Corporate Responsibility Reporting 2011 was designed to examine reporting trends among the world’s largest companies. Conducted by KPMG and various partners since 1993, it is the seventh in a series and is issued every three years.
Thirty-four of KPMG’s member firms participated in this study, including those in Australia, Brazil, Bulgaria, Canada, Chile, China, Denmark, Finland, France, Germany, Greece, Hungary, India, Israel, Italy, Japan, Mexico, New Zealand, Nigeria, Portugal, Romania, Russia, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Ukraine, The Netherlands, United Kingdom and the United States.
Analysts searched only publicly available information such as websites, corporate responsibility reports and financial reports, and collected information on over 34 data points from each company associated with corporate responsibility reporting, standards, process, drivers and issues. The sample included the Global Fortune 250 (2010), and the 100 largest companies by revenue from 34 countries.