Corporate responsibility reporting gains traction

Corporate Responsibility (CR) reporting has evolved into a mainstream business practice over the past two decades, and is now undertaken by over three quarters (83%) of the top 100 companies in Canada (up from 79% in 2011), according to the 8th KPMG Survey of Corporate Responsibility Reporting.

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The survey, which analyzes current global trends across 41 countries with a particular focus on the quality of CR reporting by the world’s top 250 companies, provides insights to help Canadian companies determine their own CR reporting approaches and assess and improve the quality of their reports.

Key implications for Canadian businesses and organizations to consider:

• Supply chain reporting needs more focus: Many companies fail to fully report on the impact of their supply chains. Industry sectors with significant supply chain risks, including chemicals, utilities and oil & gas, tend to have the lowest levels of reporting on supply chain issues.
• Reporting the financial risks: Despite acknowledging the risks to their businesses from environmental and social factors, most large companies are not reporting the potential financial impacts of these risks. The oil & gas and financial services sectors lead the pack in terms of financial risk reporting.

Read: Ethical rot in financial services industry, says survey

• Corporate governance: Less than a quarter of the largest companies around the world report a clear link between Corporate Responsibility performance and executive remuneration. This aspect of corporate governance, linking a clearly defined CR strategy to performance-based executive remuneration, will be a growing trend in Canada in the coming years.
• Third party assurance gains acceptance: It is becoming standard practice to have CR and sustainability data externally assured. The percentage of Canadian companies who include a formal assurance statement in their CR report has grown from 21% in 2011 to 34% in 2013, with the expectation for this to increase over time.

The 2013 survey shows that CR reporting is a standard business practice globally as well as here in Canada, with 71% of companies worldwide publishing a report, compared with 64% in 2011 and 12% in 1993.

The challenge for companies going forward is to use the CR reporting process to identify the most important environmental, social and governance issues for their business and stakeholders. They must then bring these issues into the heart of corporate strategy to manage risks, unlock opportunities and build long-term value.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.