South Africa: Corporate Responsibility Reporting Is Now A Standard Business Practice Worldwide, Says KPMG

Last Updated: 19 February 2014
Article by Shireen Naidoo and Neil Morris

Johannesburg, 12 February 2014 - Reporting on corporate responsibility (CR) is now a standard business practice worldwide, undertaken by almost three quarters (71 percent) of companies, according to the 8th KPMG Survey of Corporate Responsibility Reporting published in December 2013.

The 2013 edition of the KPMG Survey of Corporate Responsibility Reporting marks 20 years since the first survey was published in 1993. This year the research is more extensive than ever, covering the top 100 companies by revenue across 41 countries, a total of 4100 companies. The 1993 survey looked at companies in just 10 countries.

Based on KPMG's survey, the number of companies reporting on CR has increased by 7 percentage points since 2011. Amongst the world's largest 250 companies (the G250), the CR reporting rate is 93 percent. In South Africa, 98 percent of the top 100 companies by revenue report on CR. In 88 percent of the companies, the ultimate responsibility for CR/sustainability lies with the company board.

"Companies should no longer ask whether or not they should publish a CR report. That debate is over," said Yvo de Boer, Global Chairman Climate Change & Sustainability Services.

"The important questions now are 'what should we report?' and 'how should we report it?'. The challenge for companies is to use the CR reporting process to identify the most important environmental and social issues for their business and stakeholders. They can then bring those issues into the heart of corporate strategy to manage risks, unlock opportunities and build long-term value."

Over half (51 percent) the companies worldwide that report on CR now include CR information in their annual financial reports. This is a striking rise since 2011 (when only 20 percent did so) and 2008 (only 9 percent).

Integrated reporting has gained significant momentum since the last survey in 2011, driven by the work of the IIRC to define the framework, by the King Code of Governance Principles and the King Report on Governance (King III) in South Africa. Many companies are taking steps towards Integrated Reporting by presenting CR data along with financial data in their annual company reports, but few companies feel confident in stating that they produce an integrated report. 93 percent of the top 100 companies that report on CR in South Africa, state that their report is integrated.

"As a result of the focus on integrated reporting in South Africa, we are starting to see sustainability embedded into the business, linked to the business strategy and no longer being treated as a 'nice to have add-on', says Shireen Naidoo, Director, Climate Change & Sustainability at KPMG in South Africa.

The KPMG Survey of Corporate Responsibility Reporting 2013 also explored the quality of CR reporting among the G250 and found:

  • A cluster of 10 companies stood out for the quality of their CR reporting; they were: A.P. Møller Mærsk (Transport - Denmark), BMW (Automotive – Germany), Cisco Systems (Communications & media – USA), Ford Motor Company (Automotive – USA), Hewlett-Packard (Electronics & computers – USA), ING Group (Finance, insurance, & securities – Netherlands), Nestlé (Food & beverage – Switzerland), Repsol (Oil & gas – Spain), Siemens (Electronics & computers – Germany), and Total (Oil & gas – France).
  • Only one in five G250 companies (22 percent) reports a clear link between CR performance and executive or employee remuneration.
  • Only one in five G250 companies (23 percent) publishes a well-balanced report that discusses CR challenges and setbacks as well as successes.
  • More transparency is needed on the materiality process – 79 percent of companies discuss the identification of material issues but only 59 percent of companies explain the process they use and only 5 percent assess material issues on an on-going basis.
  • Most G250 CR reports (87 percent) identify at least some social and environmental changes (or "megaforces") that affect the business. Climate change, material resource scarcity, and energy and fuel are the most commonly mentioned
  • More companies see opportunities than see risks: 81 percent of reporting companies identify business risks from social and environmental factors, whereas slightly more (87 percent) identify commercial opportunities.
  • Reporting on suppliers and the value chain is lacking in sectors at risk – companies in the chemicals and synthetics sector are the least likely to report on supply chain issues. In this sector, 60 percent of companies that report on CR do not report on the supply chain. Companies in the electronics and computers sector are most likely to report on the supply chain.
  • Targets and indicators are not yet fully defined – 13 percent of reporting companies report no CR targets and 26 percent of companies do not relate their CR targets to material issues.

The survey also revealed that sustainability assurance has reached a tipping point among many  of  the world's largest companies. Well over half (59 percent) of the 250 largest companies (defined by the Fortune 2012 listing) now invest in external assurance for sustainability reporting – an increase of 13 percentage points since KPMG's last survey in 2011 when less than half (46 percent) did so.

KPMG's credibility in the field of sustainability assurance has been confirmed by the latest Green Quadrant report from sustainability analyst firm Verdantix. The research indicates that the firm is perceived as having  the strongest capabilities of any providers in the global sustainability assurance marketplace. The research reflects the views of decision makers from businesses in 7 countries with combined revenues in excess of USD 350 billion.

Over two thirds (67 percent) of those interviewed by Verdantix said that KPMG member firms have "strong capabilities" in sustainability assurance and that they have either already engaged or are likely to engage a KPMG member firm to carry out sustainability assurance services. 

"We see sustainability assurance as much more than simply ticking boxes. It is about bringing clients genuine insight and guidance," said Wim Bartels, KPMG's Global Head of Sustainability Reporting and Assurance.

"KPMG has invested in developing this approach across our global network, we believe we offer clients a consistent quality of service wherever they operate. It is encouraging to see these positive perceptions reflected in customer views," he concluded."

About the Survey

This KPMG Survey of Corporate Responsibility Reporting 2013 is published primarily for business leaders, company boards and CR and sustainability professionals. It provides a snapshot of current global trends in CR reporting with benchmarks, guidance and insights to help companies worldwide determine their own approaches to CR reporting and to assess and improve the quality of their reports. This year the survey, which has been regularly published since 1993, covers a record 41 countries and 4100 companies across 15 industry sectors.

The growth in the number of countries and companies covered in this survey is just one indication of how CR reporting has evolved into a mainstream business practice over the last two decades.

This format of this survey has changed to reflect that evolution. This year the survey is divided into two parts:

Part 1: Global trends in CR reporting: a view across 41 countries

This section looks at the 100 largest companies by revenue in 41 countries to explore how many companies are producing CR reports and other issues such as the drivers for reporting, sectoral variances, and the use of standards and assurance for CR reports.

Part 2: The quality of reporting among the world's largest companies

This section looks specifically at the world's largest 250 companies. It assesses the quality of their CR reports, identifies leaders and uses these examples to offer guidance and insights.

Download a copy of the KPMG Survey of Corporate Responsibility Reporting 2013 here:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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