The FINANCIAL — Three quarters (75 percent) of the world’s 250 largest companies1 (G250) researched by KPMG acknowledge risks to their business from environmental and social “megaforces”, such as resource scarcity and climate change, in corporate responsibility (CR) reports.
Yet only one in ten (10 percent) that reports on CR clearly links CR performance to remuneration2, suggesting that many companies are failing to incentivise their executives to manage these risks effectively, according to the eighth KPMG Survey of Corporate Responsibility Reporting. The survey also reveal that only 5 percent of G250 reporting companies quantify and report the potential impact of environmental and social risks on financial performance.
Financial quantification of environmental and social risks is most prevalent in the financial and oil & gas sectors, according to the KPMG survey results. Eight of the 11 G250 companies, that quantify at least some of their environmental and social risks in financial terms, are in these sectors.
The KPMG Survey of Corporate Responsibility Reporting 2013 also shows that CR reporting is now a mainstream business activity all over the world practiced by 71 percent of the 4100 companies studied across 41 countries. In 1993, when the KPMG survey was first published, the average global CR reporting rate was only 12 percent.
The greatest growth in CR reporting has been in the Asia Pacific region where the average CR reporting rate has increased from 49 percent two years ago to 71 percent in the 2013 survey, according to KPMG International Cooperative.
Of the opportunities referred to, innovation and learning is the most commonly mentioned – identified in almost three quarters of G250 CR reports (72 percent). Around half (51 percent) of reporting companies mention the opportunity to strengthen their brand and around one third (36 percent) report the opportunity to grow market share.
This year, for the first time, the KPMG Survey of Corporate Responsibility Reporting includes an in-depth assessment of CR reports published by the G250 companies – the world’s 250 largest companies according to Fortune 2012.
KPMG professionals assessed the quality of G250 reports against seven key criteria. Each company’s reporting was awarded an overall quality score. For the 93 percent of G250 companies that publish a CR report, the average quality score was 59 out of 100.
The electronics and computer sector emerged as the leader for quality of reporting, scoring an average 75 out of 100, closely followed by the mining and pharmaceutical sectors, each achieving an average of 70. At the other end of the scale, sectors which trailed with the lowest scores were construction and building materials at 46 and metals, engineering &manufacturing at 48.
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