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KPMG InternatIonal
The KPMG Survey of Corporate
Responsibility Reporting 2013
kpmg.com/sustainability
Contents
aboutthissurvey 3
Methodology 5
Corporateresponsibilityreporting:isitreallyworthit? 9
Keyfindings 10
Part1:GlobaltrendsinCRreporting:aviewacross41countries 18Crreportingrates:asiaPacificseesstrongestgrowth 21
regulationdrivesgrowthinCrreporting 23
anarrowinggapbetweenleadingandlaggingsectors 26
MorecompaniesreportonCrintheannualreportbut‘integratedreports’areinaminority 27
GrIremainstheleadingreportingframework 30
assurancereachesatippingpointamongtheworld’slargestcompanies 32
Dataqualitystabilizesamongtheworld’slargestcompanies 33
Part2:Thequalityofreportingamongtheworld’slargestcompanies 34Introduction 36
lessonsfromtheleaders 39
1:Strategy,riskandopportunity 47
2:Materiality 53
3:targetsandindicators 57
4:Suppliersandthevaluechain 61
5:Stakeholderengagement 67
6:GovernanceofCr 71
7:transparencyandbalance 75
aboutKPMG’sClimateChange&SustainabilityServices 79
acknowledgements 80
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 2
3 theKPMGSurveyofCorporateresponsibilityreporting2013©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Aboutthissurvey
WelcometotheKPMGSurveyofCorporateresponsibilityreporting2013.
KPMG’ssurveyispublishedprimarilyforbusinessleaders,companyboardsandcorporateresponsibility(Cr)andsustainabilityprofessionals.ItprovidesasnapshotofcurrentglobaltrendsinCrreportingwithbenchmarks,guidanceandinsightstohelpcompaniesworldwidedeterminetheirownapproachestoCrreportingandtoassessandimprovethequalityoftheirreports.
thesurveyisalsointendedtoprovideausefulreflectionofthecurrentstateofCrreportingforotheraudienceswhotakeaninterestinthesubject.theseincludeinvestors,assetmanagersandratingsagencies,manyofwhomareincreasinglyfactoringenvironmental,socialandgovernanceinformationintotheirassessmentsofcorporateperformance.
Corporatestakeholders,includingnGos,customers,academicsandstudents,andpolicymakersshouldalsofindusefulinformationandfoodforthoughtinthesepages.
thisistheeightheditionoftheKPMGSurveyofCorporateresponsibilityreportingandmarks20yearssincethefirstsurveywaspublishedin1993.thisyeartheresearchismorebroad-rangingthanever,covering4,100companiesacross41 countries(thelastsurveyin2011lookedat3,400companiesin34countries).
thegrowthinthenumberofcountriesandcompaniescoveredinthissurveyisjustoneindicationofhowCrreportinghasevolvedintoamainstreambusinesspracticeoverthelasttwodecades.
theformatofthissurveyhaschangedtoreflectthatevolution.theresultsarenowpresentedintwoparts:
Part1:GlobaltrendsinCRreporting:aviewacross41countries(page18)thissectionlooksatthe100largestcompaniesbyrevenuein41countriestoexplorehowmanycompaniesareproducingCrreportsandotherissues,suchasthedriversforreporting,sectorvariances,andtheuseofstandardsandassuranceforCrreports.
Part2:Thequalityofreportingamongtheworld’slargestcompanies(page34)thissectionlooksspecificallyattheworld’slargest250companies.ItassessesthequalityoftheirCrreports,identifiesleadersandusestheseexamplestoofferguidanceandinsights.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 4
5©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Methodology
ScopeofthisreportthesurveyisbasedonadetailedstudyofcompanyreportingonCrperformance,carriedoutbyKPMGmemberfirms’professionalsandbasedonpubliclyavailableinformationinannualfinancialreports,stand-aloneCrreportsandoncompanywebsites.ItincludesinformationprovidedinbothPDFandprintedreportsaswellasinweb-onlycontent.reportspublishedbetweenmid-2012andmid-2013weresoughtinthefirstinstance.Ifacompanydidnotreportduringthisperiod,informationfrom2011wasused.Informationrelatingtoperiodspriorto2011wasnotincludedinthissurvey.the findingsarebasedonanalysisofpubliclyavailableinformationonly,andnotoninformationsubmittedbycompaniestoKPMGmemberfirms.
Figure1:ReportingterminologyusedbyN100
43
25
14
6
6
2 2 1 1
Sustainability
Corporate social responsibility (CSR)
Corporate responsibility (CR)
Sustainable development
Other
Corporate citizenship
Environmental and social report
Anoteonterminology:‘corporateresponsibility’versus‘sustainability’terminologyusedforreportingvariesbetweencompanies.researchconductedforthissurveyshowsthemostcommonlyusedtermsgloballyare‘corporateresponsibility’(14percent)or‘corporatesocialresponsibility’(25 percent)and‘sustainability’report(43percent).reportingundertheseandothertermswasincludedinthissurvey.theuseoftheterm‘corporateresponsibility/Cr’inthisdocumentshouldthereforebetakentoalsocovertheterm‘sustainability’andothersimilarterms.
N100researchthefirstpartofthisreportassessesCrreportingamongthe100largestcompaniesin41countries:4,100companiesintotal.thesearereferredto asthe“n100”companies.KPMGmemberfirmsidentifiedthen100intheircountrybyrevenuebasedonarecognizednationalsourceor,wherearankingwasnotavailableorwasincomplete,bymarketcapitalizationor othersector-appropriatemeasures.
n100companiesincludebothpublicly-listed companiesandthosewithdifferentownershipstructuressuchasprivately-ownedandstate-ownedbusinesses.ninenewcountriesjoinedthesurveythisyear(seechartbelow),whiletwocountriesincludedin2011arenotpartofthe2013survey(BulgariaandUkraine).
KPMGanalystscollecteddataonthefollowingcriteriaforthen100:
• numberofcompaniespublishingCrinformationinstand-alonereportsandannualreportsbycountryandsector
• formatandintegrationofCR reporting
• useofreportingguidelinesandstandards
• rateandtypeofverificationofCrinformation,assuranceprovideranddatarestatements.
thecountriesincludedinthe2013researchwere:
Americas AsiaPacific Europe MiddleEast& Africa
Brazil australia Belgium Poland angola
Canada China(incl.HongKong) Denmark Portugal Israel
Chile India Finland romania nigeria
Colombia Indonesia France russia Southafrica
Mexico Japan Germany Slovakia Uae
US Kazakhstan Greece Spain
Malaysia Hungary Sweden
newZealand Italy Switzerland
Singapore netherlands UK
SouthKorea norway
taiwanPeople, planet, profit
Corporate responsibility & sustainability New countries added to the survey in 2013
Source: KPMG International, The KPMG Survey of Source:KPMGInternational,TheKPMGSurveyof
Corporate Responsibility Reporting 2013, December 2013 CorporateResponsibilityReporting2013,December2013
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 6
Figure2: Figure3:G250companiesbylocationof G250companiesbyindustrysector(%)headquarters(%)
13
27
6
8
128
5
3
3
3
2
2 2
2 2
211 1 11
13
25
7 117
6
6
5
4
4 3
3 2 2 2
USA Other: Finance,insurance Construction&building
Japan Malaysia &securities materials
China Austria Oil&gas Food&beverage
France Thailand Trade&retail Pharmaceuticals
Germany Finland Automotive Otherservices
UK Norway Electronics&computers Mining
Switzerland SaudiArabia Communications&media Transport
Italy Taiwan Utilities Chemicals&synthetics
Spain Singapore Metals,engineering&
Turkey manufacturing
SouthKorea
Netherlands
Canada
Australia
Denmark Companiesincludedunder‘otherservices’include
Brazil
Luxembourg entertainment,healthcare,resorts,mail,packageandfreight
delivery.ThenumberofcompaniesineachofthesesectorsIndia Sweden
representlessthan1percentoftheG250.Russia Venezuela
Mexico
Source:KPMGInternational,TheKPMGSurveyof
CorporateResponsibilityReporting2013,December2013Source: KPMG International, The KPMG Survey of
Corporate Responsibility Reporting 2013, December 2013
7©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
G250researchthesecondpartofthissurveyassessesthequalityofreportingamongtheworld’slargest250globalcompanies.
thesewereidentifiedasthetop250 companieslistedintheFortuneGlobal500rankingfor2012.Inthissurveytheyarereferredtoas“the G250”companies.theyoperatein 14 industrysectorsandarehead-quarteredin30differentcountries.
KPMGanalystssoughttoassessthequalityofCrreportingbytheG250againstsevenkeycriteria,whicharebasedoncurrentreportingguidelinesandKPMGprofessionals’viewofleadingreportingpractices.
• Strategy,riskandopportunity–reportingshouldincludeaclearassessmentoftheCrrisksandopportunitiesabusinessfacesandshouldexplaintheactionsitistakinginresponse.
•Materiality–CrreportsshoulddemonstratethatacompanyhasidentifiedtheCrissueswiththegreatestpotentialimpactsbothonthebusinessitselfanditsstakeholders.Companiesshouldmakecleartheprocesstheyhaveusedtoassessmateriality,howtheyhaveinvolvedstakeholdersinthisprocess,andhowtheyhaveusedthematerialityassessmenttoinform
theirreportingandmanagementofCrrisksandopportunities.
• Targetsandindicators–companiesshouldusemeaningful(e.g.timeboundandmeasurable)targetsandkeyperformanceindicatorstomeasureprogress,andclearlyreporttheirprogressandperformanceonsettargetsandobjectives.
• Suppliersandthevaluechain–Crreportsshouldexplainthesocialandenvironmentalimpactsofthecompany’ssupplychain,aswellasthedownstreamimpactofproductsandservices,andshowhowthecompanyismanagingthoseimpacts.
• Stakeholderengagement– companiesshouldidentifystakeholdersintheirCrreports,explaintheprocessusedtoengagewithstakeholders,andtheactionstakeninresponsetotheirfeedback.
• GovernanceofCR–reportsshouldmakeclearhowCrisgovernedwithinacompany,whohasresponsibilityforthecompany’sCrperformanceandhowthecompanylinksCrperformancetoremuneration.
• Transparencyandbalance– Crreportsshouldbebalancedandincludeinformationonchallengesandsetbacksaswellasachievements.
onthebasisofKPMG’sanalysis,scoreswereattributedtoeachoftheG250companiestoreflecthowwelltheirCrreportssatisfiedthecriterialistedabove.answersforthecriteriawereweightedtoproduceanoverallscoreoutof100,withgreatestweightgiventostrategy,riskandopportunity,materiality,targetsandindicatorsandstakeholderengagement,toreflecttherelativeimportanceofthesecriteriainachievinghigh-qualityreports.
asaresult,aclusterof10leadingcompanieswasidentified(eachofwhichscored90outof100,ormore)aswellasthehighestscoringcompanyineachofthe14industrysectorsrepresentedintheG250.
Seniorexecutivesfrom14ofthesetop-scoringcompanieswereinterviewedtodiscovermoreabouthowtheyapproachCrreporting.thelessonslearnedareoutlinedonpage39ofthissurvey.
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theKPMGSurveyofCorporateresponsibilityreporting20139 theKPMGSurveyofCorporateresponsibilityreporting20139©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Corporateresponsibilityreporting:isitreallyworthit?
letusbehonest,corporateresponsibility(Cr)reportingisnotwithoutitscritics.
Somepeoplesaythesereportsareawasteoftimeandmoney,believingthemtobesodenseandsodullthatnoonecouldpossiblybothertoreadthem.othersseethemasvehiclesforcorporategreenwash,anopportunityforcompaniestoexaggeratetheirsocialandenvironmentalcredentialswithoutanygenuineintentiontochange.
Someinthecorporateworldseetheproductionofthesereportsastoocomplexandtoocostlyandwithdubiousreturn-on-investment.
WhileIunderstandtheconcernsbehindaccusationslikethese,Ithinksuchviewsarefortunatelyfastbecomingoutdated.
Yes,Crreportsareoftennotaneasyreadandcompaniesshouldseektocommunicatetheinformationinmoredigestibleandengagingways.However,thatisnotanargumentfornotreportingatall.
Yes,greenwashcanbeariskbutastimegoeson,stakeholders-fromnGosandpressuregroupstocustomersandinvestors-areallbecomingmoreadeptatknowingthedifferencebetweenPrspinandCrperformance.Itisnotsoeasytopulltheproverbialwooloverpeople’seyesanymore.
Yes,Crreportingdoneproperlydoesrequirefinancialandhumanresources,butsodoallformsofcorporatereporting.
thepointthatisbeingmissedbymanypeoplewhomakethesecriticismsisthat,inthe21stcentury,Crreportingis–orshouldbe-anessentialbusinessmanagementtool.Itisnot–orshouldnotbe-somethingproducedsimplytomollifypotentialcriticsandpolishthecorporatehalo.
Weareallliving,andsomeofusarerunningbusinesses,inaworldundergoingunprecedentedenvironmentalandsocialchanges.rampantpopulationgrowthisfuellingever-increasingdemandsforlimitedresources.Unpredictableextremeweatherisaffectingsuppliesofkeycommodities.Changingsocialconditionsandexpectationsaredrivingbothincreasedspendingpowerandsocialunrest.
Crreportingisthemeansbywhichabusinesscanunderstandbothitsexposuretotherisksofthesechangesanditspotentialtoprofitfromthenewcommercialopportunities.Crreportingistheprocessbywhichacompanycangatherandanalyzethedataitneedstocreatelongtermvalueandresiliencetoenvironmentalandsocialchange.Crreportingisessentialtoconvinceinvestorsthatyourbusinesshasafuturebeyondthenextquarterorthenextyear.
Whatencouragesmemostaboutthefindingsofthisyear’sKPMGSurveyofCorporateresponsibilityreportingarethesignsthatmanyoftheworld’slargestcompaniesareusingtheprocessofCrreportingtobringCrandsustainabilityrighttotheheartoftheirbusinessstrategy,whereitbelongs.
almostalltheworld’slargest250companiesreportonCr.ofthosethatdo,ninein10usetheirreportstoidentifyenvironmentalandsocialchangesthatimpactthebusinessanditsstakeholders.eightin10reportthattheyhaveastrategytomanagetherisksandopportunities.Sevenin10reportthatthesechangesbringopportunitiesfortheinnovationofnewproductsandservices.anenlightened,butIsuspectgrowing,minorityofaroundonethirdalsoreportopportunitiestogrowtheirmarketshareandcutcosts.
Wherethesecompanieslead,otherswillfollow.thedirectionoftravelisclear.
IbelievethatthedebateonwhethercompaniesshouldreportonCrornotisdeadandburied.asthissurveyfinds,Crreportingappearstobestandardbusinesspracticetheworldover-eveninthosegeographicregionsandindustrysectorsthatonlytwoyearsagolaggedbehind.
thequestionscompaniesshouldaskthemselvesnow,andwhichwehaveendeavoredtoanswerinthispublication,are“whatshouldwereporton?”and“howshouldwereportit?”.and,mostimportantly,“howcanwebestusetheprocessofreportingtogeneratemaximumvaluebothforourshareholdersandforourotherstakeholders?”.
YvodeBoerKPMG’sGlobalChairman,ClimateChange&SustainabilityServices
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 10
Keyfindings
GlobaltrendsinCr reportingCRreportingseesexceptionalgrowthinemergingeconomies• Therehasbeenadramaticincreasein
CrreportingratesinasiaPacificoverthelasttwoyears.almostthreequarters(71percent)ofcompaniesbasedinasiaPacificnowpublishCrreports–anincreaseof22percentagepointssince2011whenlessthanhalf(49percent)didso.
• TheAmericashasnow overtakeneuropeastheleadingCrreportingregion,largelyduetoanincreaseinCrreportinginlatinamerica.Seventysix percentofcompaniesintheamericasnowreportonCr,73 percentineuropeand71percent inasiaPacific.
KPMGvIeW
• ThehighestgrowthinCRreportingsince2011hasbeenseenin:India(+53percentagepoints),Chile(+46),Singapore(+37),australia(+25),taiwan(+19)andChina(+16).
• CRreportingisnow undeniablyamainstreambusinesspracticeworldwide,undertakenbyalmostthreequarters(71percent)ofthe4,100companiessurveyedin2013.thisglobalCrreportingrateisanincreaseof7percentagepointssince2011whenlessthantwothirds(64 percent)ofthecompaniessurveyedissuedCrreports.
• Amongtheworld’slargest250companies,theCrreportingrateismoreorlessstableat93percent.
Toreportornottoreport?ThedebateisoverCompaniesshouldnolongeraskwhetherornottheyshouldpublishaCrreport.Webelievethatdebateisover.thehighratesofCrreportinginallregionssuggestitisnowstandardbusinesspracticeworldwide.theleadersofn100orG250companiesthatstilldonotpublishCrreportsshouldaskthemselveswhetheritbenefitsthemtocontinueswimmingagainstthetideorwhetheritputsthematrisk.
theimportantquestionsnoware“what?”and“how?”–or,inotherwords,it isnowaboutthequalityofCrreportingandthebestmeanstoreachrelevantaudiences.thisincludesassessingwhatismaterialforthebusiness,properengagementwithstakeholders,havinganhonestcommunicationstrategyincludingopennessaboutchallengesandputtinginplacetheunderlyingprocessestogatherandcheckdata.
Anarrowinggapbetweenleadingandlaggingindustrysectors
• InallsectorsmorethanhalfofcompaniesreportonCr,meaningreportingcanbeconsideredstandardglobalpracticeirrespectiveofindustry.twoyearsagolessthanhalfofthesectorshadreportingratesabove50percent.atthesametime,thegapbetweenthehighestscoringandlowestscoringsectorhasnownarrowedto22percentagepoints.
• Somesectorshave takenbigstepsoverthepastyears.theautomotiveandtelecommunications&mediasectorsnowhavesomeofthehighestlevelsofCrreporting(77 percentand75percent,respectively),whereasfiveyearsago,in2008,theirCrreportingrateswereamongthelowest(49percentand47 percent).
CRinformationintheannualreport:nowstandardpractice• Overhalfofreportingcompanies
worldwide(51percent)nowincludeCrinformationintheirannualfinancialreports.thisisastrikingrisesince2011(whenonly20percentdidso)and2008(only9percent).thedirectionoftravelisclearandwithmorethanhalfofcompaniesresearchednowincludingCrdataintheirfinancialreports,thiscanarguablybeconsideredasstandardglobalpractice.
11©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
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• However, includingCRinformationintheannualreportdoesnotimplythatcompanieshaveembracedthetrendofintegratedreporting(Ir):onlyonein10companiesthatreportonCrclaimstopublishanintegratedreport.
UseofGlobalReportingInitiative(GRI)guidelinesisalmostuniversal• Seventyeight percentofreporting
companiesworldwiderefertotheGrIreportingguidelinesintheirCrreports,ariseof9percentagepointssincethe2011survey(over90percentdosoinSouthKorea,Southafrica,Portugal,Chile,BrazilandSweden).
• Amongtheworld’s250largestcompaniestherateisevenhigherthanthen100:82percentofG250companiesthatreportonCrrefertotheGrIguidelinesasopposedto78percentin2011.
Assuranceamongthelargestcompanieshasreachedatippingpoint• Overhalf(59percent)oftheG250
companiesthatreportCrdatanowinvestinexternalassurance.thisisupfrom46percentin2011.
• Two thirdsofthosecompaniesthatinvestinassurancechoosetoengageamajoraccountancyfirm.
KPMGvIeW
Boardsshouldgetbehindintegratedreporting(IR)Basedonmemberfirms’experiencesandresearchthereseemstobeacceptanceofIrasthenextdestinationforcorporatereporting,butfewcompaniesaredoingityet.thereisalsosomenervousnessaroundwhetherIrcouldlimitratherthanenhancecommunicationaroundCrandsustainability,specificallyfornon-financialstakeholdergroups.
Ircanbethecatalystforintegratedmanagement.KPMG’sexperienceinSouthafrica,whereIrisnowmandatory,showsthatthecloseinvolvementofCeosandotherboardmembersisessentialtoreach‘oneview’ofthebusiness,consensusononesetofmaterialissuesandonecombinedbusinessstrategy.Withanintegratedapproachtovaluecreationastheendobjective,boardsupportforIrneedstoscaleup.
KPMGvIeW
AssuranceisnolongerjustanoptionJustasCrreportingitselfisnowastandardbusinesspractice;itisalsobecomingstandardpracticetohaveCrandsustainabilitydataexternallyassured.thetippingpointhasbeencrossed,withoverhalftheworld’slargestcompanies(G250)nowinvestinginassurance.ascanbeseenwithothertrendsinCrreporting,thelargestcompaniestendtosetthedirectionthatothercorporationsfollow.
Manycompaniesnowfacesignificantpressuretogivestakeholdersconfidenceinwhattheysayandassurancecanhelpprovidethiscredibility.thequestionforleadersisthereforenolonger“shouldweassureourCrdata?”rather“whywouldwenot?”and“howdowechoosetheappropriateassuranceoptionthatmeetsstakeholders’needsandputsusaheadofourpeers?”.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 12
thequalityofreportingamongtheworld’slargestcompanies
Attentionmustbepaidtoreporting Table1:10G250companiesscoremorethan90outof100forCRreportingquality:onthevaluechain
• InKPMG’sanalysis,theaveragequalityscoreachievedbyG250companiesfortheirCrreportsis59outofapossible100.thisindicates
Company
a.P.MøllerMærsk
Country
Denmark
Sector
transport
significantroomforimprovement BMW Germany automotiveoverall.
CiscoSystems US telecommunications&media
• Reportingontargetsandindicatorsis FordMotorCompany US automotivemostwell-developedtodate,withanaveragescoreof68outof100.
Hewlett-Packard US electronics&computers
large companiesalsoappeartobe InG netherlands Finance,insurance&securities
reportingonmaterialityandstrategy, nestlé Switzerland Food&beverageatanaveragescoreof66and62.
repsol Spain oil&gas
• Akey areafor improvementisreportingonsuppliersandthevaluechain,whereaverageG250reportingqualitywasassessedat46outof100,followedcloselybystakeholderengagementandgovernance,bothat anaveragescoreof53outof100.
Europeancompaniesserveasanexampleforotherregions• AroundonequarteroftheG250
(63 companies)scorehigherthan80 outof100acrossthequalitycriteria,and10companiesscorehigherthan90.thesecompaniesarelocatedineuropeandtheUS.
• EuropeanG250companiesachievethehighestaveragequalityscorefortheirCrreportsat71outof100.this compareswithaveragescoresof54forcompaniesintheamericasand50inasiaPacific.
• WithinEurope,companiesinItaly(85),Spain(79)andtheUK(76)scoremosthighly.
Siemens Germany electronics&computers
total France oil&gas
Source:KPMGInternational,TheKPMGSurveyofCorporateResponsibilityReporting2013,December2013
IndustrieswithhighCRimpactsshowtrailingscores• Largecompaniesintheelectronics
& computers,miningandpharmaceuticalssectorsproducethehighestqualityCrreports.theiraveragescoresare75,70and70 respectively.
• However somesectorsthatfacesignificantCrrisksandopportunities,andhavesignificantpotentialsocialandenvironmentalimpacts,arepublishingreportswithscoresbelowtheglobalaverage.theoil&gas,trade&retail,metals,engineering&manufacturingandconstruction&buildingmaterialssectorshaveaveragescoresof55,55,48and46outof100,respectively.
Opportunitiesovertakerisks• MostG250CRreports(87percent)
identifyatleastsomesocialandenvironmentalchanges(or‘megaforces’)thataffectthebusiness.Climatechange,materialresourcescarcityandenergyandfuelarethemostcommonlymentioned.
• Morecompaniesseeopportunitiesthanrisks:81percentofreportingcompaniesidentifybusinessrisksfromsocialandenvironmentalfactors,whereasslightlymore(87 percent)identifycommercialopportunities.
• Themostcommonlycitedopportunityofsocialandenviron-mentalchangeisinnovationofnew
13©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
productsandservices,mentionedby72percentofreportingG250companies.theopportunitytostrengthenbrandsandcorporatereputationisthenextmostcommonlycited(mentionedby51percentofreportingcompanies),followedbyimprovingmarketposition/growingmarketshare(36percent)andcuttingcosts(30percent).
• Onlyonein10 reportingcompanies(12percent)identifiesimprovedaccesstocapitalorimprovedshareholdervalueasanopportunityofsocialandenvironmentalchange.
• Reputationalriskisthemostcommonlycitedtypeofbusinessrisk,mentionedby53percentofreportingG250companies.
• OnlyasmallnumberofG250Crreports(5percent)includeinformationonthefinancialvalueatstakethroughenvironmentalandsocialrisk.
• Asignificantnumberofreportingcompaniesalsomentionothertypesofriskthataffectcompanyoperationsandnotjustcorporatereputations:
KPMGvIeW
RiskandopportunityneedstobelinkedtovalueManycompaniesnolongerseecorporateresponsibilityasamoralissue,butascorebusinessrisksandopportunities.Moreandmoreinvestorsacceptthatenvironmentalandsocialfactorsputcompanyvalueatstake.thisleadstothequestionofwhatthepotentialfinancialimpactsofthoserisksandopportunitiescouldbeandwhatthecompanyisdoingtomitigateormaximizethem.
veryfewcompaniesareyetdeclaringanyquantifiedriskstothebottomlineintheirCrreporting.Companiesneedtobepreparedforthistochangeandshouldstarttointegratethetopandbottom-lineimplicationsintheirbusinessscenarioplanningandriskmanagement.
regulatoryrisk(48percent), • Mostreportingcompaniesinthecompetitiverisk(45percent),physical G250(83percent)stateintheirrisk(38percent),socialrisks(36 reportsthattheyhaveaCrstrategy.percent)andlegalrisks(21percent).1 Companiesintheamericasaremost
likelynottorefertostrategy:threein• TheAmericasistheonlyregion 10donot.
wherecompetitiveandregulatoryrisksarementionedmoreofteninG250Crreportsthanreputationalrisks.
1Seepage48foradefinitionofdifferenttypesofrisks
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thequalityofreportingamongtheworld’slargestcompanies
Figure4:AveragequalityofG250reportsbysector(Scoreoutofapossible100)
• Largecompaniesintheelectronics&computers,miningandpharmaceuticalssectorsproducethehighestqualityCr reports.
Electronics & computers Mining
Pharmaceuticals Utilities
Communications & media Transport
Automotive Food & beverage
Finance, insurance & securities Chemicals & synthetics
Oil & gas Trade & retail
Metals, engineering & manufacturing Construction & building materials
75 70 70 65 65 64 64 59 58 58 55 55 48 46
Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
15©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Figure5:AveragequalityofG250reportsbycountry2
(Scoreoutofapossible100)
•LargecompaniesinItaly,SpainandtheUKleadtheworldforthequalityofCr reports.•EuropeanG250companiesachievethehighestaverage
qualityscorefortheirCrreportsat68outof100.thiscompareswithaveragescoresof51forcompaniesintheamericasand48inasiaPacific.
85 79 76 70 70 69 68 63 60 55 54 39
Italy Spain
UK France
Australia Netherlands
Germany Switzerland
South Korea Japan
USA China/Hong Kong
Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
Figure6:AveragequalityofG250reportsbycriterion(Scoreoutofapossible100)
•G250companiesasawholescoremosthighlyfor targetsandindicators.thegreatestimprovementneedstobemadeinreportingonsuppliersandthevaluechain.
Source:KPMGInternational,TheKPMGSurveyof
CorporateResponsibilityReporting2013,December2013
Targets and indicators Materiality
Strategy, risk and opportunity Transparency and balance
Governance Stakeholder engagement
Suppliers and the value chain
68 66 62 58 53 53 46
2averagescorespercountryareonlygivenforthosecountriesthathavefiveormorecompaniesreportingonCrintheG250.
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Moretransparencyneededonmaterialityprocess• Overthreequarters(79percent)of
G250companiesthatissueCrreports,discusstheidentificationofCrissuesthatarematerialtotheirbusinessandstakeholders.
• Thereisroomfor improvementintermsoftransparencyontheprocessusedforidentifyingmaterialissues.41percentofthereportingcompaniesdonotexplaintheprocesstheyuseandonlyasmallminority(5percent)assessmaterialissuesonanongoingbasis.
Targetsandindicatorsarenotyetfullydefined• OneineightreportingG250
companies(13percent)reportsnoCrtargetsatallandaquarter(26percent)donotrelatetheirCrtargetstomaterialissues.
Reportingonsuppliersandthevaluechainislackinginsectorsatrisk• Companiesinthechemicals&
syntheticssectoraretheleastlikelytoreportonsupplychainissues.Sixty percentofG250companiesinthissectorthatreportonCrdonotreportonthesupplychain.Companiesintheelectronics&computerssectorarethemostlikelytodoso.
• G250companiesinEuropearethemostlikelytodiscussindetailtheenvironmentalandsocialimpactsoftheirproductsandservices.almostthreequarters(73percent)ofreportingcompaniesineuropedosowithafurther23percentprovidinglimitedinformation.Intheamericas,lessthanhalf(49percent)providedetailedinformationondownstreamimpactsandthefiguredropstolessthanonethird(32percent)inasiaPacific.
CompaniesintheAmericasandAsiaPacificstruggletoexplainstakeholderengagementprocess• G250companiesinAsiaPacificand
theamericaslagbehindthoseineuropeforexplainingtheprocessusedtoengagestakeholders.Fourin10companiesintheseregionsoffernoexplanationatall.
• Theminingandmetals,engineering&manufacturingsectorsscorehighestforidentifyingkeystakeholdersintheirreports.
• OnlyonethirdofG250companies(31 percent)includestakeholdercommentsintheirCrreports.
17©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
KPMGvIeW
Supplychainreportingneedsmorefocusthissurveyshowsthatsomesectorswithcomplexsupplychains,carryingpotentiallycatastrophicenvironmentalandsocialrisks,havelowlevelsofreportingonsupplychainissues.
recentincidentsincludingoilspillsandfactorydisastersshouldremindbusinessleadershowimportantitistomanagetheenvironmentalandsocialimpactsofthesupplychain.
Putsimply,ifcompaniesdon’tstartmanagingtheseissuestheywon’thavealicensetooperateintheglobalized21stcenturyworld.Companiesurgentlyneedtobuildconfidenceamongcustomers,communities,investorsandotherstakeholdersthattheirsupplychainsarebeingproperlymanaged.transparentcorporateresponsibilityreportingisaneffectivewaytobuildsuchconfidence.
FewlargecompaniesyetlinkCR Transparencyandbalanceislimitedperformancetoremuneration formostcompanies• Aroundonequarterofcompanies • Onlyoneinfive G250companies
(24 percent)reportthatthecompany (23 percent)publishesawell-Boardhasultimateresponsibility balancedreportthatdiscussesforCr. Crchallengesandsetbacksaswell
assuccesses.Companiesinthefood• Inmost G250 companies (61 percent) &beverage,pharmaceuticals,and
Crismanagedonaday-to-daybasisby electronics&computerssectorsareadedicatedCrorsustainabilityunit. mostlikelytodoso.
• Onlyonein10 G250companies(10percent)reportsaclearlinkbetweenCrperformanceandexecutiveoremployeeremuneration.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 18
Global trends in CR reporting: a viewacross 41 countries
© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client the KPMG Survey of Corporate responsibility reporting 2013 services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 19
Part 1 © 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. the KPMG Survey of Corporate responsibility reporting 2013 20
SincethelastKPMGSurveyofCorporateresponsibilityreportingin2011,therehavebeentwoyearsofdebateinthebusinessworldontheform,scopeandcontentofCr reporting.
Muchofthisdiscussionhasbeeninfluencedbythreeimportantdevelopmentsinthefield.Firstly,the publicationinMay2013oftheGrIG4 Guidelines3forreporting.Secondly,thespreadofmandatoryCrreportingrequirementsincountriesfromIndiatotheUK.4andthirdly,momentumtowardsintegratingnon-financialandfinancialinformationinreportingandtheworkoftheInternationalIntegratedreportingCouncil(IIrC).researchforthissurveyexploredtheimpactofthesechangessince2011,assessingreportingamongthen100–the100largestcompaniesin41countries.
theresearchpresentsapictureofCrreportingasatrulymainstreamglobalbusinesspractice,theimportanceofwhichisrecognizedbycompaniesandregulatorsalike.reportingratesare
nowhighacrossallregionsandindustrysectors.Countriesthatpreviouslylaggedbehindarecatchinguporevenovertakingtheearlypioneersintermsofthequantityofcompaniesreporting.
thistrendisreplicatedattheregionallevel,wheretheamericashasover-takeneuropeastheregionwiththehighestreportingrate.
regulationisanincreasinglyimportantdriverofgrowthinCrreporting,butframeworkssuchastheGrIandvoluntaryguidancefromregulatorsandstockexchangesarealsodrivingupreportingrates.alongsidetheoverallgrowthinreporting,integrationoffinancialandnon-financialinformationisincreasing.
• TheN100 globalaveragereportingratehasincreasedfrom64percentin2011to71percentin2013.
• TheAmericasovertookEuropeastheleadingreportingregion.AsiaPacificsawthemostsignificantincreaseduetoajumpinCrreportingratesincountriessuchasIndia,Singaporeandaustralia,andnewcountrieswithhighreportingratesjoiningthesurvey.
• RatesremainedstaticinEuropeanddroppedintheMiddleEast&Africa,largelyduetoanumberofcountrieswithlowreportingratesjoiningthesurveyforthefirsttime.
Keyfindings:
3 theGlobalreportingInitiative’sG4GuidelineswerepublishedinMay2013,availableat:globalreporting.org/reporting/g4/4 KPMG,UnitednationsenvironmentProgramme,GlobalreportingInitiativeandUnitforCorporateGovernanceinafrica,CarrotsandSticks,
Sustainabilityreportingpoliciesworldwide,2013.
21©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Crreportingrates:asiaPacificseesstrongestgrowth
Crreportingisnowundeniablyamainstreamglobalbusinesspractice–withalmostthreequarters(71percent)ofthen100companiessurveyedpublishingareport,comparedwith64 percentofcompaniesresearchedin2011.thereportingratefortheG250remainedrelativelystablein2013comparedwith2011,withaminimaldecreasefrom95percentto93percentduetothechangingcompositionofthe250eligiblecompanies.
then100growthtrendismostevidentintwooftheregionsstudied,withtheamericasovertakingeuropeastheleadingreportingregionandasiaPacificalmostcatchingupwitheurope.
asiaPacificsawthebiggestoverallincreasefrom49percentin2011to71 percentin2013.thisispartlyduetonewcountriesbeingincludedinthesurvey,suchasIndonesiaandMalaysia,whichbothdemonstratehighreportingrates.However,themajorityoftheincreaseisduetoexceptionallyhighgrowthratesinseveralcountries.
Figure7:Growthinreportingsince1993PercentageofcompanieswithCrreports
%
For example,inIndiatheCrreportingrateincreasedto73percentin2013from20percentin2011,inSingaporetherateincreasedto80percentfrom43 percent,andinaustraliatherateincreasedto82percentfrom57 percent.InthecaseofIndiaandSingaporeitislikelythatmuchofthisgrowthisduetotheintroductionofnewmandatoryandvoluntaryreportingrequirements(seepage23).InaustraliatheincreaseisduetoanumberofcompaniesreportingonCrforthefirsttimein2013,primarilyinthecompanyannualreport.
Intheamericas,theCrreportingrateincreasedfrom69percentin2011to76 percentin2013,largelyduetothechangesinthenumberofcompaniesreportingonCrinlatinamerica.DespitetherateofCrreportingremainingrelativelystableintheUSandCanadaandthenumberofreportingcompaniesinBrazilandMexicodropping,theoverallrateintheregionincreased.
Figure8:
“therehasbeenasurgeinCrreportinginMalaysiawhichIseeasatippingpointinmakingCrstandardbusinesspracticehere,encouragedbytheMalaysianStockexchange’srequirementthatlistedcompaniesreportonCractivities.atthesametime,IthinkmanyMalaysiancompaniesarelessexperiencedinCrthancompaniesineuropeandtheamericas.Forthisreason,manyCrreportsarestilllimitedinscopewithafocusonphilanthropicandcommunityinvestments.However, justasthequantityofreportsisincreasingrapidly,soIexpecttoseerapidprogressinthequalityandsophisticationofreportingprocessesandcontent.”
DatukHewLeeLamSang,Partner,KPMGinMalaysia
CRreportingbyregionPercentageofcompanieswithCrreports
% 100 100
1993 1996 1999 2002 2005 2008 2011 2013
93
71
95
64
83
53
64
4145
2835
2418
12
8080
6060
4040
2020
00Americas Asia Pacific Europe Middle East
& Africa
7671 7173
6154
69
49
Base: 4,100 N100 companies Base N100/G250 companies 2011 N100 Source: KPMG International, The KPMG Survey of Source: KPMG International, The KPMG Survey of 2013 Corporate Responsibility Reporting 2013, December 2013 G250 Corporate Responsibility Reporting 2013, December 2013
From1993to2002thesurveyincludedonlystandaloneCRreports.
From2005onwardsthesurveyincludesCRinformationinannualreportsaswell
asseparateCRreportshardcopyorweb-based,duetothetrendofmore theKPMGSurveyofCorporateresponsibilityreporting2013companiesreportingonCRincompanyannualreports.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
22
80
100%
Figure 9: Reporting rates by country
Keyfindings:
•Regulatoryrequirementshave drivenreportingtoitshighestlevelsinFrance,DenmarkandSouthafrica.
•Thehighestgrowthratessince2011 wereseeninIndia,Chile,Singapore,australia,taiwan,romania,China(incl.HongKong)andnigeria.
•ReportingratesalsofellnoticeablyinMexico,Brazil,Spain,Slovakia,FinlandandtheUK.
60
40
20
0
Fran
ce
Den
mar
k
Sou
th A
fric
a
Mal
aysi
a
Japa
n
Indo
nesi
a
UK
USA
Can
ada
Nig
eria
Net
herla
nds
Aus
tral
ia
Spa
in
Finl
and
Sin
gapo
re
Swed
en
Hun
gary
Bra
zil
Ital
y
Col
ombi
a
Chi
na (i
ncl.
Hon
g Ko
ng)
Nor
way
Indi
a
Chi
le
Port
ugal
Rom
ania
Bel
gium
Switz
erla
nd
Ger
man
y
Slo
vaki
a
Rus
sia
Taiw
an
Pola
nd
Mex
ico
Ang
ola
Sou
th K
orea
New
Zea
land
*
Gre
ece
Kaz
akhs
tan
UA
E
Isra
el
2011
2013 * 2011 reporting rate restated for New Zealand.
reportinginChileincreasedsubstantiallyfrom27percentin2011to73percentin2013,duepartlytomanycompaniesreportingonCrforthefirsttimeandanumberofnewcompaniescomingintotheChileann100list.theadditionofColombiatothesurvey,withareportingrateof77percent,addedtotheoverallincreaseintheamericas.
thereportingrateineuropeincreasedonlyslightly,partlyduetolowerthanaveragereportingratesinsomeofthecountriesthatwereincludedinthesurveyforthefirsttimethisyear(e.g.Poland).theMiddleeast&africa(Mea)wastheonlyregiontoseeadropinCrreportingrates:from61percentin2011to54percentin2013.thiswasdespiteahighrateofreportinginSouthafrica(98 percent)whichisconsistentwith2011,andanincreaseinthereportingrateinnigeriato82percentfrom68percent,largelyduetonewregulations(seeoppositepage).theoveralldeclineintheMeareportingrateisduetoanumberofcountrieswithlowerthanaveragereportingrates,suchasUaeandangola,joiningthesurveyforthefirsttimethisyear.
“reportinginChinahascontinuedtogrowwiththreequartersofcompaniesresearchedthisyearproducingCrreports,comparedwith59percentin2011.reportingrequirementsfromtheShanghaiStockexchangeandCrguidelinesforstate-ownedenterpriseshavebeeninplacesince2008.It’slikelyrecentgrowthreflectsthegreaterexpectationsinthemarketplaceregardingCr.reportingisapracticalwaytoshowresponsiveness,andcompaniesalsowanttoavoidbeingleftbehindthosewhohavealreadyissuedreports.”
SeanGilbert,Director,KPMGinChina
Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
“CrisgaininggreaterprominenceamonglargecompaniesinChileastheyincreasinglyunderstandthebenefitsofincorporatingCrintothebusinessandreportingonthis.High-profileprojectsintheminingandenergysectorshavebeendelayedinrecentyearsduetosocialpressureandconcernsabouttheimpactoncommunitiesandtheenvironment,demonstratingthatcompaniesmustaddressCrissuestocontinuetooperate.ChileancompaniesarealsoimplementingCrpoliciesandreportingontheiractivitiestoensuretheyremaincompetitivewithforeignmultinationalsandareinagoodpositiontomeetgovernmentregulations.”
LuisFelipeEncina,Partner,KPMGinChile
2323©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
regulationdrivesgrowthinCrreporting
Crreportinghastraditionallybeenvoluntary,however,governmentsandstockexchangesaroundtheworldareincreasinglyimposingmandatoryreportingrequirements.Crreportingregulationsareseeninseveralcountriesthathavealmost100percentreportingrates,includingFrance,DenmarkandSouthafrica.regulationisalsobehindasignificantincreaseinreportingratesintaiwan.
alongsidegovernmentregulation,newguidelinesandstandardsfromstockexchangesandotherorganizationsarealsohavinganimpact.Forexample,inSingapore,theintroductionoftheSingaporeStockexchange(SGX)SustainabilityreportingGuideforlistedcompaniesandarevisedCodeofCorporateGovernance(whichmakesconsiderationofsustainabilityissuespartoftheboard’sremit)hasinfluencedthe37percentagepointriseinreportingrates.
SimilarfactorsareinfluencingCrreportinginnigeria,whichhasoneofthehighestCrreportingrates(82percent)notonlyinafrica,butalsoglobally.the CentralBankofnigeria
issuedguidelinesin2012mandatingthatfinancialservicescompaniesestablishsustainabilityprocessesandreportonthem.Inaddition,theSecuritiesandexchangeCommissionof nigeriaupdatedtheCorporateGovernanceCodein2011torecommenddisclosureofsustainabilitypractices.
InIndia,wheremuchCrreportingisfocusedoncommunityinvestmentanddevelopment,thereportingrateisincreasingduetorecentregulatoryrequirements.thetop100listedcompaniesinIndiaarerequiredbytheSecuritiesexchangeBoardtoreportontheiradoptionofIndia’s‘nationalvoluntaryGuidelinesforSocial,environmentalandeconomicresponsibilitiesofBusiness’intheirannualreportingfromfinancialyear2012/13.thenewCompaniesact,whichwillimpactreportsfromfinancialyear2014/15,requiresallregisteredcompaniestoestablishaBoardCommitteeonCorporateSocialresponsibility,investatleast2percentofnetprofitsonsociallyresponsibleprojects,andexplaintheiractivitiesintheirannualreport.
Trendsinmandatoryandvoluntaryreportingpoliciesresearchreleasedin2013bytheGrIincollaborationwithKPMG,theUnitednationsenvironmentProgramme(UneP)andtheCentreforCorporateGovernanceinafrica,examinesmandatoryandvoluntaryreportingpoliciesin45countries.theresearchfoundthat:
• thereare134 separatemandatorypoliciescoveringdifferentaspectsofCrreportingandafurther53voluntarypolicies
•manypoliciesarebasedona‘reportorexplain’approach
•sustainabilityreportinghasbecomealistingrequirementonseveralstockexchangesinnon-oeCDcountries,includingBrazil,China(incl.HongKong),MalaysiaandSouthafrica.5
CRreportingdropsinsomecountriesCrreportingratesdroppedinsomecountriescomparedwith2011,despitetheoverallupwardtrend.thebiggestdropswereseeninMexicoandBrazil(10fewercompaniesreportinginboth)andtheUK(9fewercompaniesreporting).thesedecreasescanbeexplained,atleastinpart,bythechangingcompositionofthen100inthesecountriesfollowingtheglobalfinancialcrisis.InSpain,forexample,mergersandacquisitionsamongbigfirmsinthebankingsectorhaveresultedinsomesmallercompanies,whicharelesslikelytoissueCrreports,beingincludedintheSpanishn100.
“InDenmarkthebiggestcompaniesare requiredeithertoreportontheirCractivities,or,iftheydonot,toexplainintheirannualreportswhytheydonotdoso.From2014this‘reportorexplain’approachwillbeextendedwithrequirementsforcompaniestoreportonhumanrights,climatechangeandemployeediversity.WhilethereportingrateinDenmarkisveryhigh,manycompaniesstrugglewithreportingonCrastheyremainfocusedondisconnectedenvironmental,health,humanresourcesorphilanthropicinitiatives.thelegislationhasencouragedcompaniestodevelopamorestructuredapproachtoCrasitisincreasinglydifficulttoreportwithoutanunderlyingCrstrategyandclearmanagementapproach.”
ChristianHonoré,Partner,KPMGinDenmark
5 KPMG,UnitednationsenvironmentProgramme,GlobalreportingInitiativeandUnitforCorporateGovernanceinafrica,CarrotsandSticks,Sustainabilityreportingpoliciesworldwide,2013.
theKPMGSurveyofCorporateresponsibilityreporting2013 24©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Figure 10:
Rateofcorporateresponsibilityreporting
across41countries-2011and2013 (%ofcompaniesreportingonCR)
Canada 79 83
Mexico 66 56
USA 83 86
Brazil 88 78
Chile 27 73
Colombia – 77 Angola – 50
Americas Israel 18 19 Nigeria 68 82 SouthAfrica 97 98 UAE – 22
2011 2013 MiddleEast
&AfricaReporting rates in percentages
Spotlightonreportingrequirements
ThefollowingcountrieshavehighCRreportingratesorsignificantrecentgrowthinCRreporting,relatedtoreportingrequirements:
Denmark France India Indonesia Japan Malaysia Nigeria FinancialStatements GrenelleIIActrequires Thetop100listed LawNo.40/2007 Mandatoryand MalaysiaStock CentralBankofNigeria
Actrequireslarge largecompaniesto companiesinIndiaare requiresLimited voluntaryguidelines Exchangelisting requiresfinancial
companiestoreport reportannuallyonCR requiredbythe LiabilityCompaniesto forcertaintypesof requirementthat servicescompaniesto
onCRactivities,or,if activitiesandadvises SecuritiesExchange reportonCRinthe companiestoreport companiesdescribe reportonCRandthe
theydonot,toexplain reportsaresubjectto Boardtoreporton annualreport.Publicly- onenvironmental CRactivitiesandlaw SecuritiesandExchange
intheirannualreports independent CRintheirannual listedcompaniesare impacts,including thatallpubliclylisted CommissionofNigeria
whynot. verification. reportingfromfinancial alsorequiredtoreport GHGemissions. companiespublish CorporateGovernance
year2012/13. onCRintheannual CRinformationinthe Coderecommends
report. annualreport. companiesdisclose
CRpractices.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclienttheKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.25
Belgium – 68 Poland – 56 Denmark 91 99 Portugal 69 71 Finland 85 81 Romania 54 69 France 94 99 Russia 58 57 Germany 62 67 Slovakia 63 57 Greece 33 43 Spain 88 81 Hungary 70 78 Sweden 72 79 Italy 74 77 Switzerland 64 67 Netherlands 82 82 UK 100 91 Norway – 73
Europe
Australia 57 82 China(incl.HongKong) 59 75 India 20 73 Indonesia – 95 Japan 99 98 Kazakhstan – 25 Malaysia – 98 NewZealand 43 47 Singapore 43 80 SouthKorea 48 49 Taiwan 37 56
AsiaPacific
Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
Norway Singapore South Africa UK USA NorwegianAccounting SingaporeStockExchange KingCodeof Companieslistedonthe Disclosurerequirements
Act(andamendment (SGX)Sustainability GovernancePrinciples LondonStockExchange oftheU.S.Securities&
in2013)requireslarge ReportingGuideforlisted andKingReporton mustreportonGHG ExchangeCommission
companiestoreport companiesandCodeof Governance(KingIII), emissionsfrom2013. (SEC),Dodd-FrankAct
onsocial,environ- CorporateGovernance andJohannesburg CompaniesActrequires requiresdisclosureon
mentalananti- encourageCRreporting,
StockExchange(JSE) largeandmediumsized conflictmineralsand
corruptionactivities. andEnergyConservation
Act2012requireslarge
companiestoreporton
requirecompaniesto
publishanintegrated
reportincludingCR
companiestodisclose
CRinformationrelevant
tocompanyperformance
PresidentialExecutive
Order13514requires
federalagenciestoreport
Source: KPMG, United Nations Environment Programme, Global Reporting Initiative and Unit for Corporate Governance in Africa, Carrots and Sticks, Sustainability reporting
energyuse. performance. intheannualreport. onCRperformance. policies worldwide, 2013.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 26
Trade
& re
tail
Chem
icals
&
synt
hetic
s
Cons
tructi
on &
build
ing m
ateria
ls
Trans
port
Pharm
aceu
ticals
Met
als, e
ngine
ering
&
man
ufac
turin
g
Finan
ce, in
suran
ce
& se
curit
ies
Food
& be
verag
e
Oil &
gas
Com
mun
icatio
ns
& m
edia
Electr
onics
&
com
pute
rs
Fore
stry,
pulp
& pa
per
Auto
mot
ive
Utilit
ies
Mini
ng
anarrowinggapbetweenleadingandlaggingsectors
Keyfindings:
•ThegapbetweenthesectorswiththehighestandlowestCrreportingrateshasnarrowedtojust22 percentagepoints,from32in2011and42in2008.
•Reportingrateshave changedonlyincrementallyinmostsectorssince2011,reflectingthematurityofreporting.
•Ninesectorsmoved fromhavingaminorityofcompaniesreportingin2008toamajorityin2013.
•Theautomotiveandtelecommunications&mediasectorsnowhavesomeofthehighestlevelsofCrreporting(77percentand75 percent).Fiveyearsago,theirCrreportingrateswereamongthelowest(49percentand47 percent).
Companiesoperatingin15differentsectorsareincludedinthissurvey.
reportingisnowthenormacrossallthesesectors,withatleast62percentofcompaniesineverysectorproducingareport.thereislittlechangesince2011inthetypesofindustriesthataremostorleastlikelytoreport.Heavyindustryandresource-basedsectorsstillleadthewaywiththehighestreportingrates,andservicesandtrade&retailstilllagbehind.However,thegapbetweenreportingratesamongtheleadersandlaggardsisnarrowing.
lookingbacktothe2008survey,ninesectorshavemovedfromhavingaminorityofcompaniesreportingfiveyearsagotoamajorityin2013:automotive,communications&media,construction&buildingmaterials,finance&insurance,food&beverage,metals,engineering&manufacturing,pharmaceuticals,trade&retailandtransport.ofthese,themostsignificantincreaseswereintheconstruction,pharmaceuticalsandtrade&retailsectors.
Figure11:
Sectorreportingtrends
% 100
66
84 8484
67
62
58 65
47 47
59 62
79
71
78
69
7778 77 7574 7269 7267 70
61 61
69 69
64
69
57
66 6568
62
5249 49
41
25
39
32
26
80
60
50
40
20
0
2008
2011
2013
27 theKPMGSurveyofCorporateresponsibilityreporting2013
Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
MorecompaniesreportonCrintheannualreport,but‘integratedreports’areinaminorityIrhasgainedsignificantmomentumsincethelastsurveyin2011,drivenbytheworkoftheIIrCtodefineaframework,bytheKingCodeofGovernancePrinciplesandtheKingreportonGovernance(KingIII)inSouthafrica,andworldwidebycompanies’owneffortstopresentinvestor-relevantnon-financialinformationinreports.
ManycompaniesaretakingtentativestepstowardsIrbypresentingCrdataalongwithfinancialdataintheirannualcompanyreports.Companiescontinuetotakedifferentapproachestointegration,andnotallcompaniestaketheIIrCconceptanddefinitionasthestartingpoint.researchforthissurveyshowsthatmorecompaniesarecombiningtheirnon-financialwithfinancialdata,butthatfewcompaniesfeelconfidentinstatingthattheyproduceanintegratedreport.
“SincetheKingCodeofGovernancePrinciplesandtheKingreportonGovernance(KingIII)cameintoeffecton1March2010,agrowingnumberofSouthafricanorganizationshavebeenproducinganintegratedreport.Itisespeciallyencouragingthatthisgrowthisnotonlydrivenbycompliance,butratherbytherealizationthatintegratedreportingisabetterwayofprovidinginsightsintotheorganization’sstrategyanditsabilitytocreatevalueintheshort,mediumandlongterm.”
NeilMorris,Partner,KPMGinSouthAfrica
Forthefirsttimeinthissurvey,themajorityofcompanies(51percent)includeinformationonCrintheirannualfinancialreport.thisfigurehasrisendramaticallysince2008,whenitwasjust9percent,andsince2011whenitwas20percent,showingagrowingacceptancethatCrissuesarematerialforbusiness.
ofthosecompaniesthatincludeCrinformationintheirannualreports,themajority(58percent)dosoinaseparatechapter,ratherthanintegratingCrdataintothewidernarrativeonbusinessperformanceandvalue.anincreasingnumberbutstillaminority(42percent),arestartingtomakethelinkbetweenCrandbusinessstrategybyincludingCrinformationintheDirectors’report.
ofcompaniesthatincludeCrintheDirectors’report,mostalsocontinuetopresentCrinformationinaseparatechapteroutsidetheDirectors’report.thissuggeststhatmanycompaniescontinuetoseeavalueinprovidingaseparatenarrativearoundCrperformance,andenablinginterestedreaderstolookintothisaspectofcompanyperformanceingreaterdetail.ItcouldalsomeanthatcompaniesarenotyetsurehowtofullyintegratetheirCrinformationwiththewidernarrativeonbusinessperformance.
theresearchalsoshowsthatonlyaminorityofcompaniesclaimthattheypublishanintegratedreport.Justonein10companiesthatreportonCr(10 percent)dosoandevenfewer(3 percent)referencetheworkoftheIIrC.ItremainstobeseenhowthiswillchangewiththelaunchofthefinalIIrCframework,andasmorecompaniesusetheframeworkandshareexperienceswiththeirpeers.
HowwillIRchangecompanyreporting?Inthebroadestsense,Irisaboutaligningbusinessreportingwithbusinessstrategy,explaininghowenvironmental,social,governanceandothernon-financialfactorsimpactonabusiness’sabilitytooperate,createandsustainvalueovertheshort,mediumandlongterm.
Formanybusinesses,Crinfor-mationhasanimportantroletoplayinthisbroadervisionofreporting,butitisimportanttorecognizethattheCrinformationrequiredinanintegratedannualreportmaybedifferenttothattraditionallyprovidedinCrreports.thisisbecauseanannualreportfocusesonlyonthemattersthataremostrelevanttothebusinessstrategy,andwillnormallyprovideinformationthatisspecificallyaimedatmeetinginvestorneeds.ManycompaniesmaychoosetoreportinmoredetailonCrinaseparatereportinordertomeettheneedsofotherstakeholdersinterestedinCrpoliciesandperformance.
themajorityofcompaniesthatstatetheyproduceanintegratedreportarebasedinSouthafrica,drivenbyKingIII.ninetythreepercentofn100companiesthatreportonCrinSouthafricastatethattheirreportisintegrated.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 28
Figure 12: Figure13:
Corporate responsibility in annual reporting FormatofCRinformationinannualreports
In a specific section/chapter on CR only
In a specific section/chapter on CR and in the Directors’ report
In the Directors’ report only
24
18
58
•Morethanhalf(51percent)ofn100companiesnowreportonCrintheirannualfinancialreport.thisproportionhasincreaseddramaticallyinthelastfiveyearsfromjust4percentin2008and20 percentin2011.
•Ofthecompaniesthatincludeinformationintheirannualreport,42 percentnowincludeinformationonCrintheirDirectors’report,comparedwithjustoveraquarterin2011.
Keyfindings:
5149
7
3
1
89
• 10 percentofcompaniesclaimtohaveintegratedtheirannualreporting,andofthese,mostdonotyetrefertotheIIrCconceptordefinition.
• ThenumberofreportsthatstatetheyareintegratedarebyfarthehighestinSouthafricaat93percentduetotherequirementsofKingIIIandtheJohannesburgStockexchange.
Keyfindings:
CRinformationinannualreport
NoCRinformationinannualreport
Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013 Base: 2,080 N100 companies that include CR information
in annual reports Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
Figure14:
Doesthereportstateitisanintegratedreport?
No
Yes, the report states it is integrated, but does not refer to the IIRC
Yes, the report states it is integrated and it refers to the IIRC
The report does not state it is integrated, but there is reference to the IR trend/IIRC
Base: 2,897 N100 companies that report on CR Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
29©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
“Companiesneedtofindanapproachtointegratedreportingthatenablesthemtoreportonvaluecreationinitsbroadestsense–financial,social,environmentalandeconomic.WhiletheworkoftheIIrCisinvaluableinaddressingtheneedsofthelongterminvestor,businessesmustalsothinkabouthowCrinformationispresentedinawaythatmeetstheneedsoftheirotherstakeholders.Wearelikelytoseemanydifferentapproachesascompaniesembracetheconceptofintegration.CompaniesmaychoosetocontinuetogivereadersmoredetailonCrinitiativesinastand-alonereport,inaseparatechapteroftheannualreportorthroughtheirwebsite.Iwouldrecommendthatcompaniesdevelopacommunicationsstrategybasedontheneedsofdifferentstakeholders.”
WimBartels,KPMG’sGlobalHeadofSustainabilityReporting&Assurance
“thereleaseofthefirstInternationalFrameworkcreatesthecatalystforashiftfromthoseinnovatorsincorporatereportingmovingtowardsintegratedreporting,toasignificantnumberofearlyadopters.Itisremarkablehowmuchawarenesshasbeencreated,withthisreporthighlightingthemomentumtowardsincorporatingcorporateresponsibilityintoannualreports.themomentumisnotedandIthankKPMGfortheinsights,itonlyencouragestheIIrCtohelpmakethisbreakthroughnowthatthereisaFrameworkforcompaniestouse.IcanonlyreiteratethewordsofWimBartelswhenhestatesthat‘Wewouldrecommendthatcompaniesdevelopacommunicationstrategybasedontheneedsofdifferentstakeholders’.”
PaulDruckman,ChiefExecutive,InternationalIntegratedReportingCouncil
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 30
GrIremainstheleadingreportingframework
Intheabsenceofregulatoryrequirements,voluntaryreportingguidelinessuchastheGrIplayanimportantroleinimprovingconsistencyinCrreportingandthequalityofdisclosure.
researchconductedforthissurveyshowsthattheGrIremainsthemostwidelyusedvoluntaryreportingframework,farexceedingtheuseofnationalstandardsandotherguidelines.overthreequarters(78percent)ofglobaln100companiesnowrefertotheGrIintheirCrreport,anincreaseof9percentagepointssince2011.amongtheworld’slargest250companiestherateincreasedto82 percentin2013from78percentin2011.thosewhodonotrefertotheGrIframeworkeitherstatethattheyusetheirownframeworksdevelopedin-house,nationalreportingguidelinesornoneatall.
Inseveralcountrieswheremorethan75 percentofreportingcompaniesrefertoGrI,itislikelythisislinkedtolocalregulatoryreportingrequirements.Forexample,inBrazil,Finland,Southafrica,Spain,andSwedenreportingrequirementsreferencetheGrIorexplicitlyrequireorrecommendthatcompaniesreportusingtheGrIguidelines.
“thereisastrongbeliefamonglargecompaniesinSouthKoreathattheapplicationofglobalstandardsandguidelinessignificantlyenhancesthecredibilityoftheirreporting.atthesametime,Koreancompanieshaveahistoryoffocusingresourcesonimprovingdisclosure.theGrIguidelinesareperceivedtobemorecrediblethanacompany’sownstandardsorthosefromlocalorganizations.”
SungwooKim,Partner,KPMGinSouthKorea
“Inthiseraofprofessionalreporting,companiesneedtobeabletoexplaintostakeholdersthebasisonwhichtheirreporthasbeenprepared.UseofanexternalframeworksuchastheGrIwillincreasinglybeseentobeessentialtodemonstratecredibility.thereiscurrentlyalackofconsistencyinhowtheGrIisusedandthisisreflectedinreportingquality.alignmentbetweencompaniesonhowtheyapplytheGrIframework,andhowtheyfocusreportingonmaterialissuesinlinewiththelatestG4Guidelines,isthenextstep.”
WimBartels,KPMG’sGlobalHeadofSustainabilityReporting&Assurance
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
“theGlobalreportingInitiativeundertakesanarrayofoutreachactivities,engagingwitheveryonefrommultinationalcorporations,labororganizationsandcivilsociety,togovernment,academiaandmarketregulators.thesustainabilitychallengeisaglobalone,andGrIisinauniquepositiontoinformdebatesthroughitsglobalnetworkofthousandsofexpertsandsustainabilityleaders,GrI‘FocalPoints’,whichareregionalofficesinBeijing,Delhi,Johannesburg,newYork,Melbourne,Mumbai,SaoPauloandsoon,Bogota–andover70certifiedtrainingpartnersineveryregionintheworld.SinceKPMG’s2011surveywaspublished,thetrendtoregulatesustainabilityreportinghasincreasedmarkedly,anditisnosurprisethatthefiguresinKPMG’ssurveyarehighestinthosecountriesthathaveintroducedregulationinoneformoranother.”
ErnstLigteringen,ChiefExecutive,GlobalReportingInitiative
Figure15:
UseoftheGRIGuidelines
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N100 Base: N100/G250 companies with standalone report or GRI-based section in the annual report
G250 Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
31 theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Figure 16: Where are the GRI Guidelines used most?
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Keyfindings
• Morecompaniesthanever nowrefertotheGrIguidelinesintheirCrreporting.
• In37ofthe41countriessurveyed,morethanhalfofn100companiesrefertotheGrIguidelinesintheirCrreporting.
• Morethan90percentdosoinSouthKorea,Southafrica,Portugal,Chile,BrazilandSweden.
• Lessthan50percentdosoinKazakhstan,romania,Denmarkandnigeria.
Base: N100 companies with standalone report or GRI-based section in the annual report Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
32theKPMGSurveyofCorporateresponsibilityreporting2013©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
assurancereachesatippingpointamongtheworld’slargestcompaniesexternalassuranceofCrreportsisstillvoluntaryinmostcountries,withjustFranceandSouthafricapioneeringamandatoryapproachamongthe41 countriessurveyed.Despitethis,manycompaniesdoseekoutassurance,motivatedbyaneedtodemonstratecredibilitywithexternalstakeholders,tomeettherequirementsofsustainabilityindicesandbythevalueassurancecancreateinternallythroughmorereliabledataandaclearerunderstandingofCrissues.
theoverallrateofCrreportassuranceamongn100companiesin2013,includingthenewcountriesaddedtothesurveythisyear,isequalto2011at38percent.amongcountriescoveredinboththe2011and2013surveys,therateofassuranceamongcompaniesthatreportonCrincreasedto41percentin2013.thelowestratesofassuranceareseenincountrieswhereCrreportingisstillinitsinfancy,includingIndonesia,Israel,Kazakhstan,Malaysia,nigeria,SingaporeandtheUae.
Figure17:
RatesofassuranceforCRreporting
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ofthen100companiesthatchoosetoassuretheirCrreports,72percentoptforalimitedratherthanreasonablelevelofassurance,10percentforareasonablelevelofassuranceandafurther8percentoptforacombinationofthetwolevels.overhalf(52percent)choosetoverifytheirwholereportratherthanselectedindicatorsorchaptersandthemajority(67percent)continuetooptforamajoraccountancyfirmtoprovideassuranceservices.
Incontrasttothen100,assuranceratesamongtheworld’s250largestcompanieshavereachedatippingpointwithoverhalf(59percent)ofcompaniesthatreportonCrnowoptingforassurance,upfrom46percentin2011.
astheG250grouphasledreportingtrendsoverthelast20years,itislikelythistrendwillbereflectedamongthen100infutureyears.
2002 2005 2008 2011 2013
2927 3033
4039
46
3838
59
Base: N100/G250 companies that report on CR Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
theKPMGSurveyofCorporateresponsibilityreporting2013
“WithmorecompaniesmovingtowardsdeeperintegrationofCrintotheirbusinessstrategyandmanagementprocesses,webelievethatexternalstakeholderswillseekinformationfromauditorsprovidingindependentassuranceofCrinformationanddemonstratingthatthecompanyisasseriousaboutCrdataasitisaboutitsfinancialinformation.atKPMGwebelievememberfirmshavearoletoplaytoassistorganizationsandstakeholdersinthatjourney.”
LarryBradley,KPMG’sGlobalHeadofAudit
67
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Figure 18: Assurance providers
Keyfindings
• ThenumberofcompaniesthatchoosetohavetheirCrreportsassuredbymajoraccountancyfirmsincreasedslightlyto67 percentin2013,comparedwith 64percentin2011.
Major accountancy organizations
Other providers
Base: 1,099 N100 companies that report on CR and use external assurance Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
33
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
Dataqualitystabilizesamongtheworld’slargestcompanies
33
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Keyfindings
• OnequarterofN100 reportingcompaniesrestatedCrdatafrompreviousyears.ofthosethatrestateddata,33percentstatethereasonforrestatementswasupdatedorimprovedmethodologies.
• ThenumberofG250companiesrestatingdatadroppedfromathirdin2011toonequarterin2013.ofthosethatrestateddata,49percentcitedupdatedorimprovedmethodologies.
ascompaniesseektointegratereportingandpresentrelevantCrdatatoinvestorsalongsideestablishedmetricsforfinancialdisclosure,itismoreimportantthaneverthatCrdataisrobust.Highlevelsofrestateddatayearuponyearriskserodingconfidenceincompanydata,reportingsystemsandprocesses.
thenumberofn100companiesthatmadeanyCrdatarestatementsincreasedslightlyto25percentin2013from21percentin2011.thenumberofcompaniesthatrestatedanyCrdatadroppedamongtheG250fromonethirdtojustoveronequarter(26percent)suggestingthatthequalityofdataisimprovingamongthebiggestcompaniesasCrreportingsystemsandprocessesmature.
themostcommontypeofrestatementfoundinbothn100andG250Crreportsrelatetoanupdatedorimprovedmethodologybeingappliedbycompanies,suggestingthatcompaniesarestrengtheningtheirinternalreportingsystemsandprocessesandimprovingthequalityofdatafordecisionmaking.
thepercentageofrestatementsduetoerrororomissionamongthen100decreasedto21percentin2013,comparedwith29percentin2011.amongtheG250,thenumberofrestatementsduetodataerrorsoromissionsalsodecreasedto22percentin2013from35percentin2011.
Figure19:
ReasonsforrestatementsofCRdata
Restatements due to updated (improved) estimation/calculation methodology
Update of definitions applied
Restatements due to error or omission
Update of scope (not relating to change in acquisition/divestments)
Base: 587 N100 companies that report on CR and restated CR data Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 34
the KPMG Survey of Corporate responsibility reporting 2013 35
The quality of reporting among the world’s largest companies
© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
the KPMG Survey of Corporate responsibility reporting 2013 36
Part 2 © 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Introduction
asoutlinedintheprevioussection,Crreportingisabusinessnormtoday,butweneedtolookbehindthequantitativedatatounderstandwhethertheincreaseinthevolumeofreportsismatchedbyanimprovementinthequalityofreporting.
thisyear,forthefirsttime,theKPMG tosupplementtheresearch,seniorSurveyofCorporateresponsibility representativeshavebeeninterviewedreportingincludesanin-depth fromseveralofthecompaniesthatassessmentoftheCrreportspublished scoredmosthighlyintheKPMGbytheG250companies(theworld’s250 assessment.theysharedinsightslargestcompaniesbasedontheFortune intohowtheyhaveachievedbestranking).thequalityofG250reportshas practicesinreporting,theirmotivationbeenassessedusingsevencriteria: fordoingsoandthebusinessbenefits• strategy,riskandopportunity theyhavegainedasaresult.• materiality• targetsettingandindicators• suppliersandthevaluechain• stakeholderengagement• governanceofCR• transparencyandbalance.
Figure 20: KPMG’s CR reporting quality assessment, 7 key criteria
STAKEHOLDER ENGAGEMENT Report explains how stakeholders are engaged and how their views inform CR strategy, materiality process, targets, etc.
RISK, OPPORTUNITY & STRATEGY Report identifies social and environmental risks /opportunities and explains the company’s strategic response.
MATERIALITY Report demonstrates clear, on-going process to identify most significant issues.
TARGETS & INDICATORS Report declares timebound and measurable targets.
TRANSPARENCY & BALANCE Report is open about challenges as well as achievements. Communicates effectively.
SUPPLIERS & VALUE CHAIN Report shows how CR strategy and targets address material impacts of suppliers, products and services.
GOVERNANCE OF CR Report shows how CR is governed within the company, who has responsibility, and how CR performance is linked to remuneration.
Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013
37©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
AlmostallG250companiesissueCRreportsbutthequalityofreportingisinconsistenteachG250company’sreportwasassessedagainstthequalitycriteriaandawardedanoverallscore.thisproducedanaveragequalityscoreof59outof100amongthe93percentofG250companiesthatpublishaCrreport.
thehighestaveragescoreswereseenforreportingontargetsandindicators(68)andmateriality(66).Companiesscoredlowestforthequalityoftheirreportingonsuppliersandthevaluechain(46),governance(53)andstakeholderengagement(53).theresultssuggestthereisroomforimprovementinthequalityofcompanyreportingonCr.
thehistoricaltrendhasbeentoreportondataandnumbersratherthanthedetailsaroundprocesses.also,issuessuchassupplychainmanagementandgovernancehaveonlybecomesubjecttopublicscrutinyfairlyrecentlyandsocompanyprocessesforthesemaynotyetbeasrobustastheycouldbeinmanycompanies.thequalityofreportingmattersbecauseitistakenasindicativeofthequalityofmanagement/whatisactuallyhappeninginsidethecompany.
Poorqualityreportstendtobeassociatedwithpoorperformanceinthemindofthereader.Fewcompaniespractice‘totalgreenwash’thesedaysbutreaderscertainlygivemorecredencetoahigherqualityreport.
Aclusterof10companiesofthosesurveyedsetthepaceonequarterofG250companies(63)achievedanoverallqualityscoreof80orabove.thesecompaniesdemonstratedasuperiorunderstandingoftheimpactofsocialandenvironmentalissuesontheirbusinessandreportedontheirstrategy,performanceandinteractionwithstakeholdersmorethanothers.
tencompaniesscored90ormore.theyare:• A.P.MøllerMærsk
Transport-Denmark
• BMW
Automotive–Germany
• CiscoSystems
Telecommunications&media–US
• FordMotorCompany
Automotive–US
• HewlettPackard
Electronics&computers–US
• ING
Finance,insurance&securities–
TheNetherlands
• NestléFood&beverage–Switzerland
• RepsolOil&gas–Spain
• SiemensElectronics&computers–Germany
• TotalOil&gas–France
“thequalityofCrreportinginChinavariesquitedramaticallyfromthoughtfuldocumentstoonesthatonlyspeakofbroadambitionsandvalueswithlittledetailaboutactualactionsoroutcomes.reportingshouldoutlineastrategicfocus,targetsandfollow-upactions,ratherthananexhaustivelistofunconnectedsocialorenvironmentalactivities.WhenthedepartmentthatdrivesCrreportingdoesnothaveamandatetosetstrategyforthecompanyorinfluenceotherdepartments’goals,programsandpriorities,itisoftenreflectedinthequalityofthereporting.thatsaid,itisaprocessandChinamustberecognizedforgoingfromverylimiteddisclosuretothemuchhighernumbersofcompaniesreportingtodayinjustafewshortyears.”
SeanGilbert,Director,KPMGinChina
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 38
Table2: Table3: Table4:AveragequalityofG250reportsbysector AveragequalityofG250reportsbycountry AveragequalityofG250reportsbycriterion
Sector Averagescore Country Averagescore Qualitycriteria Averagescore(outofapossible100) (outofapossible100) (outofapossible100)
electronics&computers 75 Italy 85 targets&indicators 68
Mining 70 Spain 79 Materiality 66
Pharmaceuticals 70 UK 76 Strategy,risk&opportunity 62
Utilities 65 France 70 transparency&balance 58
telecommunications&media 65 australia 70 Governance 53
transport 64 netherlands 69 Stakeholderengagement 53
automotive 64 Germany 68 Suppliers&thevaluechain 46
Food&beverage 59 Switzerland 63 Source:KPMGInternational,TheKPMGSurveyof
Finance,insurance&securities 58 SouthKorea 60CorporateResponsibilityReporting2013,December2013
Chemicals&synthetics 58 Japan 55
oil&gas 55 US 54
trade&retail 55 China(incl.HongKong) 39
Metals,engineering&manufacturing 48
Construction&buildingmaterials 46
Source:KPMGInternational,TheKPMGSurveyof
CorporateResponsibilityReporting2013,December2013
Electronics&computercompaniesleadthepackCompaniesintheelectronics&computerssectorleadtheG250intermsofthequalityofCrreporting,withanaveragescoreof75,followedbymining(70)andpharmaceuticals(70).thelowestscoringsectorsareoil&gas,trade&retail,metals,engineering&manufacturing,andconstruction&buildingmaterials.
Note:Tableincludesonlythosecountrieswithfiveormore
companiesintheG250thatreportonCR.
Source:KPMGInternational,TheKPMGSurveyof
CorporateResponsibilityReporting2013,December2013
Europeinfrontonreportingqualityeuropeancompanieshaveasignificantleadoverotherregionsinreportingqualitywithanaveragescoreof71,comparedwithaveragescoresof54intheamericasand50inasiaPacific.
therearealsopronouncedregionaldifferencesinscoresforcertaincriteria.Forexample,companiesintheasiaPacificregionscore45onaveragefortransparencyandbalance,comparedwith53intheamericasandanaverage
europeanscoreof73.Forreportingonsuppliersandthevaluechain,averagequalityscoresare31inasiaPacific,comparedwith48intheamericasand58ineurope.
Italy,SpainandtheUKhavethehighestaveragescores,reflectingtherelativematurityofreportinginthesemarketscomparedwithcountriessuchasChina(incl.HongKong)wherewidespreadreportingisanewerphenomenon.
39©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient
theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.
LessonsfromtheleadersKPMG’sanalysishasidentifiedaclusterof10exemplarG250companieswhoseCrreportingscoredparticularlyhighlyagainstourqualitycriteria,andafurthereightwhosereportsscoredmosthighlywithintheirspecificsector.
anumberofthesecompaniesagreedtosharetheirexperienceswithreadersofthissurvey.organizationswiththeirownexperienceinCrreportingmayrecognizemuchofwhatthesecompaniessay,whilethosethatarelesspracticedmayfindsomeusefullessons.
Table5:Companiesthatparticipatedininterviews:
Weaskedtheexemplarcompaniesthefollowingquestions.
•WhatarethefundamentalsforpublishinghighqualityCrreports?
•WhatbenefitshaveyougainedfromCrreporting?
•HowdoyouthinkCrreportingislikelytoevolve?
•Whatchallengesdoyoufaceinfurtherimprovingthequalityofyourreports?
Company Country Sector
a.P.MøllerMærsk Denmark transport
Bayer Germany Pharmaceuticals
BMW Germany automotive
CiscoSystems US telecommunications&media
enel Italy Utilities
FordMotorCompany US automotive
Hewlett-Packard US electronics&computers
InG netherlands Finance&insurance
nestlé Switzerland Food&beverage
repsol Spain oil&gas
Siemens Germany electronics&computers
tesco UK trade&retail
total France oil&gas
vale Brazil Mining
Source:KPMGInternational,TheKPMGSurveyofCorporateResponsibilityReporting2013,December2013
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 40
Gettingthefundamentalsright
EstablishrobustprocessesallthecompanieswespoketoagreedthatthefoundationsofqualityCrreportingarerobustsystemsandprocessesforcollectingdataandidentifyingmaterialissues.
“Gettingthebasicsright,suchasagoodmaterialityprocess,enablesustocreateareportthatbothsatisfiestheneedsofexternalstakeholdersandisrelevanttoourbusiness,”saidannetteStube,DirectorofGroupSustainabilityata.P.MøllerMærskGroup.“themoresolidourprocessesthebetterthereport.”
“themoresolidourprocessesthebetterthereport.”
AnnetteStube,DirectorofGroupSustainability,A.P.MøllerMærskGroup
thereis,however,no“onesize-fits-all”solutionforcollectingdata.Manyofthesecompanieshavedevelopedtheirownsystemsratherthanbuyingoff-the-shelfproducts.Inevitablyittakestime,andsometrial-and-error,togetthesesystemsrightbutthemoreintegratedtheyareintothebusiness,themoreeffectivetheyare.
attesco,forexample,Crisacorepartofthebalancedscorecardusedacrosstheentirecompanytomonitorperformanceagainstthebusinessstrategy.
LeadfromthefrontGettingtherightprocessesinplaceisimportant,butgoodprocessesarenouseiftheyarenotimplemented.
thatimplementationneedstobedrivenfromtheverytopoftheorganization,accordingtothecompanieswespoketo.
“leadershipsupportisamusttosecurethebuy-inandengagementofthefunctionswhicharecrucialtodevelopmentofthereport,”saidUrsulaMathar,HeadofGroupSustainabilityandenvironmentalProtectionatBMW.
asKersten-KarlBarth,DirectorofCorporateSustainabilityatSiemenssaid,“theSiemensSustainabilityBoard,whichischairedbytheChiefSustainabilityofficer,isthecentralsteeringcommitteeforsustainabilityatSiemens.Initsregularmeetingsitdirectsoursustainabilityprogramaspartofoursustainablestrategy,adoptsappropriatemeasuresandinitiativesandmonitorsprogress.”
ItisperhapsnosurprisethatthesecompaniesallhaveleaderswhoarepersonallyengagedwithandcommittedtoCr.
©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientttheKPMGSurheKPMGSurvveeyofCorporateryofCorporateresponsibilitesponsibilityryreporting20eporting201133 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.4141
atvale,forexample,seniorleadersplayhands-onrolesinCrreporting,helpingtoestablishprioritiesandidentifyissuesanddilemmastobecovered.
notonlydoesthishelptosecurethenecessarytimeandresourcesforqualityreporting,butitalsogivesCrteamsthelicensetobetransparentandbalancedintheirdisclosure,reportingchallengesandsetbacksaswellassuccesses.
asJohnviera,GlobalDirectorofSustainabilityofFordMotorCompanysaid,“Wehavesupportfromthetopdownandthathasenabledustoreportinamorecredibleway.”
However,evenincompanieswherereportingiswell-established,seniormanagersdocomeandgoandprioritiescanchange.Crteamsmustcontinuallydemonstratethebusinessvalueofreportingtoensurecontinuedsupport.
“Crreportingcostsmoneyandtime,soitisimportantthatinternalstakeholdersunderstandtheaddedvaluewegetfromthereport,”saidUteMenke,HeadofSustainabilityandexternalreportingatBayer.
“Byreachingoutbeyondourownfourwalls,wecancreateabetterreport.”
JohnViera,GlobalDirectorofSustainability,FordMotorCompany
Stakeholderengagement:gettherightbalancethecompaniesagreedontheimportanceofgoodstakeholderengagementindeliveringqualityCrreporting.
“Byreachingoutbeyondourownfourwalls,wecancreateabetterreportthatmeetstheneedsofourstakeholders.Italsogivesconfidencetoourseniorleadersthatwearefocusedontherightissues,”saidJohnvieraofFord.
However,thesecompaniesrecognizeitisunrealistictosatisfyalltheinformationexpectationsofallstakeholders.
eduardoGarcíaMoreno,DirectorofCorporateresponsibilityandInstitutionalServicesatrepsolnoted,“Weneedtorespondtomanystakeholders;somedemandmoreconciseinformationwhileothersrequiremoredetaileddata.”
abalancingactisrequiredandthisiswherearobustmaterialityprocessisessential.
“Wegetahugevolumeofenquiriesfromstakeholders.Wecanneverrespondtoeverything,soweusematerialitytoidentifyourprioritiesanddrivethoseforward,”saidKathyMulvany,SeniorDirectorofCorporateaffairsatCiscoSystems.
CompaniesthatpublishstakeholderviewsandcommentsintheirCrreportssaytheybenefitsignificantlyfromtheaddedcredibilitytheseindependentvoicesbring.However,someareconcernedthatthemovetowardsintegratedreportingcouldleadtoconstraintsonformatandcontentandmakeitmoredifficulttoincludestakeholdervoicesinthefuture.
“Weusematerialitytoidentifyourprioritiesanddrivethoseforward.”
KathyMulvany,SeniorDirectorofCorporateAffairs,CiscoSystems
BetransparentontargetstheexemplarcompaniesbelievetheirCrperformanceishelpedbypubliclydeclaringtheirCrtargets,andbeingopenabouttheirperformanceagainstthosetargets.
asJoshHardie,CorporateresponsibilityDirectorattescoPlCsaid,“Publishingareportdoesincentivizeustopushourselvesfurther.Ifyoumissatargetyouhavetobeopenaboutit,andyoudon’twanttomissitagain.”
atBayer,UteMenkebelievesthattargetshavebenefitsaboveandbeyondshowingexternalstakeholderstheprogresstheco