At least 80% of the Global Fortune 250 now release environmental, social and governance (ESG) data in stand alone reports or integrated into annual financial reports, up from 50% in the three years since KPMG last conducted its survey in 2005.
Lord Michael Hastings of Scarisbrick CBE, global head of citizenship & diversity at KPMG remarks: "With these results it is clear that there has been an important shift in direction with ESG reporting becoming the norm instead of the exception within the world's largest companies."
The KPMG International Survey on Corporate Responsibility Reporting is the most comprehensive conducted on this subject to date. In addition to the Global Fortune 250, the sample also included the 100 largest companies by revenue in 22 countries. National level companies trail the Global 250 with 45% issuing reports, but numbers vary widely per country. For example, fewer than 20% in Mexico and Czech Republic issue reports, but well over 90% in Japan and the UK do so.
"For South Africa, we undertook research on the top 100 companies on the JSC and the results show that sustainability reporting locally is influenced by three major factors: the extent of a company's environmental impact, its size, and its exposure to international markets and investors," says Shireen Naidoo, director of sustainability development at KPMG.
"While 86% of companies in South Africa include some level of sustainability reporting in their annual reports or issue a stand-alone report, it is still concerning to see that very few companies (15%) seek assurance of their sustainability reports."
The KPMG International survey also reveals that innovation and ethical considerations are the most important drivers for reporting, whereas risk management fell in the ranking from 2005 levels. About half of the Global 250 has detected the business opportunities of ESG factors and report on the business value. The survey found that majority now found sustainability reporting on a corporate responsibility strategy – including defined objectives. Three-quarters of the Global 250 report they have such a strategy in place.
There is some room for improvement – 40% of the Global 250 and 55% of the 100 largest companies in 22 countries do not integrate ESG information into their Annual Reporting at all – including issues such as supply chain risks and climate change.
"A little surprising, as companies see the business value of sustainability and there is increasing evidence that conducting business responsibly contributes to shareholder value", adds Naidoo. "One would expect that communication channels such as the Annual Report and Annual General Meetings are utilised to communicate about ESG performance with shareholders."
The survey is also a key trend monitor for the use of assurance with ESG reporting. The number of companies that utilise formal assurance made a significant jump to 40% this year after holding steady at 30% in the 2002 and 2005 versions of the survey – with the large accounting firms leading in terms of market share in terms of assurance services. The top two drivers for assurance cited by companies in the survey were improving quality of reported information, and reinforcing credibility among key stakeholders.
The KPMG survey found that use of standards for assurance is on the rise, as is the use of standards for reporting in the form of the Global Reporting Initiative's (GRI) Sustainability Reporting Guidelines currently utilised by nearly all G250 companies for ESG reporting today.