INCREASE IN CSR REPORTING

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KPMG SURVEY SHOWS DRAMATIC INCREASE IN
CORPORATE SOCIAL RESPONSIBILITY REPORTING
Shireen NAIDOO
KPMG Sustainability Services
27 June 2005

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KPMG Survey shows dramatic increase in Corporate Social Responsibility Reporting

This year, 52% of the 250 biggest companies in the world issued separate reports on corporate social responsibility, according to KPMG’s International Survey of Corporate Responsibility Reporting 2005, released today.

KPMG International Chairman Mike Rake said that the survey reflected the growing importance within the business community of corporate responsibility as the key indicator of non-financial performance, as well as a driver of financial performance.

This survey, the most comprehensive of its kind since its initiation in 1993, is carried out every three years. It’s aim is to analyse trends in Corporate Responsibility reporting of the world’s largest corporations, including the top 250 companies of the Fortune 500 (Global 250) and the top 100 companies in 16 countries, including South Africa (National 100).

This survey which provides a truly global picture of reporting trends over the past 10 years, indicates that in 2005, 52% of the Global 250 and 33% of the National 100 companies issued separate CR reports - compared to 45% and 23% respectively in 2002. If annual financial reports are included with CR information, these percentages are even higher.

“Companies should not just talk about responsible practice, but be seen to be acting responsibly,” said KPMG CEO Tom Grieve. “This can only happen if there is active communication with stakeholders and transparent reporting.”

Shireen Naidoo, Director of KPMG Sustainability Services, said that she found the findings of the survey “both striking and exciting - especially for South Africa, which has been noted as one of the countries with the highest increase in reporting.”

“Corporate responsibility reporting is easier said than done, and we need to acknowledge those companies that have made a sincere effort with regards to balanced public disclosure. The challenge for these companies, however, is in the integration of corporate responsibility into their business strategy.”

Naidoo noted that there has also been increasing professionalism in the form of new global reporting standards. “Corporate responsibility performance has definitely caught the eye of the financial sector as is reflected in developments such as the Equator Principles, the Dow Jones Sustainability Index (DJS) and the FTSE4 Good Index on the stock markets and the emergence of Social Responsible Investment funds.

“Increased corporate governance requirements, including the adoption of the King Code of Corporate Governance (King II) for all listed companies, and the advent of the first Socially Responsible Investment (SRI) Index in an emerging market, the JSE SRI Index, have all increased the level of transparency and accountability required from companies operating in South Africa.”

The KPMG International Survey of Corporate Responsibility Reporting 2005 shows that:
• There has been a dramatic change in the type of CR reporting, which has changed from purely environmental reporting up until 1999, to sustainability (social, environmental and economic reporting), which has now become mainstream among G250 companies (70%) and is fast becoming so among N100 companies (50%).
• Although the majority (80%) in most countries still issue separate CR reports, there has been an increase in the number of companies publishing CR information as part of their annual reports.
• At a national level, the two top countries in terms of separate CR reporting are Japan (80%) and the United Kingdom (71%). The highest increases in the 16 countries in the survey are seen in Italy, Spain, Canada, France and South Africa. There have been significant decreases in Norway and Sweden.
• The typical industrial sectors with relatively high environmental impact continue to lead in reporting. At global level (G250), more than 80% of the companies are reporting in the electronics & computers, utilities and automotive & gas sectors. At national level (N100), over 50% are reporting in the utilities, mining, chemicals & synthetics, oil & gas, forestry and paper & pulp sectors. But the most remarkable is the financial sector, which shows more than a two-fold increase in reporting since 2002.
• The survey which includes a detailed analysis of the reports of the Global 250 companies, focused on the reasons behind their commitment to corporate responsibility and what influenced the content of the reports. The conclusion that may be drawn is that business drivers are diverse, both economic (75%) and ethical (50%). The top three reported economic drivers are innovation & learning, employee motivation and risk management & reduction, with about 50% of companies reporting these as motivating factors.
• Independent assurance remains a valuable part of reporting. In 2005, the number of reports with an assurance statement increased to 30% (G250) and 33% (N100) from 29% and 27% respectively in 2002. Major accountancy firms continue to dominate the Corporate Responsibility assurance market with close to 60% of the statements.

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