Increase in global CSR reporting

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The main driver for corporate responsibility was economic considerations, at 74 per cent, followed by ethical considerations (53 per cent) and innovation and learning (53 per cent). There was also shift from purely environmental reporting to sustainability reporting, including social, ethical, environmental and economic aspects.

The results are significant, according to Professor George Molenkamp, chairman of KPMG Global Sustainability Services. Molenkamp notes that corporate responsibility reporting is easier said than done.

'The real challenge is in the integration of corporate responsibility into the strategy and operations of a complex organisation in a more and more globalising economy,' he points out. 'We have observed increasing professionalism in the form of new global reporting standards.'

By industry, the most dramatic results were seen in the financial sector, which shows more than a two-fold increase in corporate responsibility reporting since 2002. The introduction of the European Union Emissions Trading Scheme and the ratification of the Kyoto Protocol have spurred this growth.

'Corporate responsibility performance has definitely caught the eye of the financial sector as is reflected in recent developments, such as the so-called 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,' Molenkamp says.

Room for improvement

But while the survey shows healthy progress, there is a still a long way to go. Although two-thirds of corporate responsibility reports included a section on corporate governance, most reports lacked specifics on how CR is structured, and how policies are implemented in their organisation.

Compared with environmental issues, coverage of social and economic topics is far more superficial. While the majority of companies express their commitment to these issues, reporting performance remains sketchy, possibly due to the lack of clear social indicators.

Over 32 per cent of companies invite specific feedback on the reports from users, but only eight per cent report on the feedback. In future, companies are expected to come under pressure to demonstrate responsiveness to the issues and concerns raised by stakeholders through the process of engagement.

Independent assurance is increasing, but still used by less than a third of G250 companies. In 2005 the number of reports with an assurance statement increased to 30 per cent from 29 per cent and in 2002.

'While it might be impossible for companies to pledge to meet all of the demands of all of their stakeholders, they should be able to show in their CR reports that the concerns raised have been fed into the decision-making process at the highest level and provide examples of where outcomes have been influenced,' the survey notes.

Summary of major findings

1. Increase:
Corporate responsibility reporting has been steadily rising since 1993 and it has increased substantially in the past three years. In 2005, 52 per cent of the Global 250 compared to 45 per cent in 2002. If annual financial reports with CR information are included, this percentage climbs to 64 per cent.

2. Type of reporting
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%).

3. Top countries
At 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.

4. Industry sectors
Industrial sectors with relatively high environmental impact continue to lead in reporting. At global level (G250), more than 80 per cent of the companies are reporting in the electronics, utilities, automotive and gas sectors. But the most remarkable is the financial sector, which shows more than a two-fold increase in reporting since 2002.

5. Business drivers
The survey analysed G250 reports of the Global 250 companies to determine why companies are committed to corporate responsibility and what influenced the content of the reports. It concluded that business drivers are diverse, both economic (75 per cent) and ethical (50 per cent). The top three are innovation and learning, employee motivation, and risk management and reduction.

Drivers for corporate responsibility
Driver	%
Economic considerations	74
Ethical considerations	53
Innovation and learning	53
Employee motivation	47
Risk management or risk reduction	47
Access to capital or increased shareholder value	39
Reputation or brand	27
Market position (market share) improvement	21
Strengthened supplier relationships	13
Cost saving	9
Improved relationships with governmental authorities	9
Other	11