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Corporate Sustainability Being Taken More Seriously

By Melissa J. Anderson

According to a new study by KPMG, more and more companies are engaging in sustainability reporting than ever before – because of the realization that it makes good business sense.

The 2011 KPMG International Survey of Corporate Responsibility Reporting [PDF] says, “Companies are increasingly realizing that CR reporting is about more than just being a good corporate citizen; it drives innovation and promotes learning, which helps companies grow their business and increase their organization’s value.”

And, it says, those companies that have yet to begin reporting are running the risk of falling behind their competitors. The report continues:

“It seems clear, therefore, that companies not yet reporting on their CR activities are under significant pressure to start. This will be increasingly critical; not only to stay competitive in a societal context, but also to gain a better understanding of how CR activities impact and benefit the business in areas such as cost savings and new business opportunities.”

The firm analyzed the Corporate Responsibility reports of 3.400 companies around the world, including the 250 largest companies. It found that big companies were much more likely to report on sustainability than smaller ones. For example, 95% of the G250 companies now report on CR activities.

Global Movement

The report shows that corporate responsibility reporting is becoming the standard around the globe – but, some areas are doing better than others. KPMG singled out Europe for leading the way when it comes to reporting quantity and quality:

“European companies continue to lead the pack, with 71 percent of companies reporting on CR, but the Americas is gaining ground with 69 percent, as is the Middle East and Africa region, where 61 percent of companies now report on CR initiatives. However, Asia Pacific continues to trail behind as a region, with just less than half of companies (49 percent) now disclosing CR data to the markets.”

And although two-thirds of G250 non-reporters are headquartered in the United States, reporting in North America has increased significantly in recent years, particularly in Mexico. The report says:

“North American growth rates rose overall on the back of impressive gains by Mexico, where 66 percent of companies now report, versus just 17 percent in 2008. And while the US and Canada certainly continued to close the gap, they enjoyed less impressive growth rates than those overall. In South America, Brazil’s growth is also worth noting, as it brings the country up to an impressive 88 percent overall.”

The report adds that while the Asia Pacific region seems to be lagging when it comes to sustainability reporting, China has picked up the pace in recent years.

“China, new to the survey this year, seems to be in a full-out sprint to catch up to the traditional leaders in this field. Almost 60 percent of China’s largest companies already report on corporate responsibility metrics, bringing the country on par with where Spain, Italy and the Netherlands were just three years ago. While previous data is not available for benchmarking, it is clear that China will enjoy wide-spread CR reporting in the near future.”

This could be due to a desire on behalf of Chinese firms to do business in parts of the world where sustainability reporting is becoming a prerequisite for partnership.

Business Case for Sustainability

According to John R. Hickox, KPMG’s Americas leader for Climate Change & Sustainability (CC&S), CR reporting can help companies grow. He said, “During these tough times, companies look to the value of their brand to carry them through.”

“In addition, managing risk, keeping workers engaged, and innovating for new products or services, or opening new markets can provide additional key foundations for corporate strength,” he explained.

According to the report 67% of G250 companies felt “reputation or brand” was a reason for reporting on sustainability. The next most popular reason for reporting was “ethical considerations” at 58%, and then tied in importance were “employee motivation” and “innovation and learning” at 44%.

Hickox continued, “While corporate responsibility reporting was broadly considered an ‘optional’ activity only a few years ago, more organizations are generating CR reports to meet rising stakeholder demands for greater accountability, transparency and accuracy in assessing parts of the business that are not necessarily financial, but which contribute to the overall value of the company.”

“In addition, we have seen many companies benefit from analyzing their CR reporting data to develop continuous internal improvement programs to effect lasting change,” he added.

As the business case for sustainability reporting gains steam, more companies are likely to consider CR a critical piece of reputation management, corporate values, and employee engagement.

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