· Just 43 percent of Singapore’s top 100 companies report, and only 7 percent of reporters conduct external assurance.
14 November 2011 - Corporate Responsibility (CR) or Sustainability reporting is now the norm at 95 percent of Global Fortune 250 (G250) companies. According to KPMG’s International Corporate Responsibility Reporting Survey 2011, this represents a 15 percent increase over the 2008 survey.
Possibly the most comprehensive survey of CR reporting ever published, the report reviews trends observed in the G250 and top 100 companies in 34 countries worldwide, across 15 industry sectors. Among the largest 100 companies (N100) studied in each country, the average rate of reporting was 64 percent, up 11 percent from the 2008 analysis.
Developing nations are showing the fastest uptake in CR reporting, but countries leading the 2008 survey continue to dominate. These are:
· United Kingdom at 100 percent and Japan at 99 percent
· US at 83 percent and Canada 79 percent
· Middle East and Africa at 61 percent is quickly gaining ground
· China demonstrates a rapid uptake with 60 percent of N100 reporting on CR
· Australia has increased reporting from 45 to 57 percent.
Singapore, at 43 percent (see page 11) is in the bottom twenty percent of 34 countries studied. Lowest ranked were New Zealand and Chile (27 percent), India (20 percent) and Israel (18 percent).
The industry sectors leading in reporting include the Forestry, Pulp and Paper, Mining (84 percent each) and Automotive (78 percent) sectors. Reporting by pharmaceuticals (64 percent), consumer markets (52 percent) and construction (65 percent) industries have also more than doubled since the 2008 survey.
Independent assurance increases trust
While the use of independent assurance for CR reports among the G250 has improved by 6 percent to 46 percent, it has still not achieved a majority status. For N100 companies, only an average of 38 percent use assurance as a strategy for verifying CR information.
Mr Sharad Somani, Head of KPMG’s Sustainability Advisory in Singapore said, “Unlike financial reporting, reporting on sustainability metrics to the market is largely unregulated. With an average of four times as many restatements, this suggests that CR reporting has some way to go.”
He adds, “As the global economy moves towards CR reporting, the demand for independently verifiable, high quality information will increase. The greater use of independent assurance will enhance standards and stakeholder confidence, and how investors perceive value and trust in CR reporting.”
Singapore has some catching up to do
Singapore is included in the survey for the first time. Current reporting levels are relatively low at 43 percent and overall report quality is questionable. Singapore companies are undoubtedly playing catch up, and from a competitive perspective they need to respond to the increasing global trend towards CR. Looking forward, these combined factors, and the publication by the Singapore Exchange in June 2011 of the Guide to Sustainability Reporting for Listed Companies should encourage more Singapore companies to start reporting their CR performance.
Reports should comprise of material environmental, social and governance issues. In comparison to global peers, Singapore companies were not adequately reporting on issues relating to water, regulation and supply chains or using external assurance. Just 3 percent of N100 companies referred to regulatory risks and opportunities and 6 percent addressed supply chain issues.
Singapore companies were on par with the global average for citing that risk management’ and ‘employee motivation’ as drivers for CR. However, they lagged behind when it came to future focused issues such as access to capital, innovation, strengthening supply chain relationships and management.
Of the 43 companies in Singapore who currently produce a report, 7 percent of these undertake independent assurance (page 29). Leading the way in utilising assurance as a tool for credibility and trust is India (80 percent) and South Korea (75 percent).
Mr Somani adds, “As more Singapore companies operate overseas and supply to leading global organisations, they need to send a message that they hold CR information in high regard. Having an external assurance programme for their CR efforts is the best way to establish the corporate value of their CR information while increasing the focus on internal management and processes.”
CR Governance and Board Responsibility
Governance related factors were also analysed in the survey. These included Supervisory Board involvement in CR, implementation of internal procedures and the use of reporting in the business management and control cycle. Some 25 percent of Singapore companies surveyed did not address any of the pertinent issues.
Just one Singapore company had appointed a board member to take responsibility for CR. This is despite a recent consultation paper, published in June 2011 by the Corporate Governance Council, which outlines proposed changes to the Singapore Code of Corporate Governance 2005, and places increased emphasis on Board responsibility for CR issues.
Lack of global CR standards
In the absence of a regulated, global sustainability reporting standard, the drive for consistency and accessibility to quality data was highlighted in the survey findings. The Global Reporting Initiative (GRI) Sustainability Reporting Guidelines were used by 80 percent of the G250 and an average of 69 percent of N100 companies. It is increasingly adopted as the de facto reporting standard. Despite this global trend, only 9 percent of Singapore companies make use of the guidelines.
“Almost half of the G250 companies report gaining financial value from their CR initiatives. CR is no longer just a moral imperative, but a critical business imperative. The time has come to enhance CR reporting information systems and bring them on-par to financial reporting. This will enable companies to embed comparable quality into governance controls and management,” urged Mr. Somani, “real opportunities exist for smaller companies to leverage the benefits of CR reporting as a financial and reputational differentiator.”
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Note to editors:
About the Survey
In what KPMG believes to be the most comprehensive survey of corporate responsibility (CR) reporting ever published, this year’s survey examined reporting trends among the world’s largest companies.
Seventh in a series conducted by KPMG and various partners since 1993, it is issued every three years. Thirty-four of KPMG’s member firms participated in this study including: 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. Total sample size was 3439 companies, representing the Global Fortune 250 (2010), and the 100 largest companies by revenue from 34 countries.
About KPMG in Singapore
KPMG in Singapore is part of a global network of professional services firms providing Audit, Tax and Advisory services. The independent member firms of the KPMG network operate in 150 countries and have more than 138,000 professionals worldwide. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG’s website is located at kpmg.com.sg
About KPMG’s Climate Change and Sustainability Services (CC&S)
KPMG's CC&S professionals provide sustainability and climate change assurance, tax and advisory services to organisations to help them apply sustainability as a strategic lens to their business operations. We offer a global approach to service delivery, with a response to the complex business challenges faced by multinational organisations by offering services that span industry sectors and national boundaries.