The KPMG Survey of Corporate Responsibility Reporting 2013€¦ · Scope of this report the survey is based on a detailed study of company reporting on Cr performance, carried out

KPMG InternatIonal

The KPMG Survey of Corporate

Responsibility Reporting 2013

kpmg.com/sustainability

Contents

aboutthissurvey 3

Methodology 5

Corporateresponsibilityreporting:isitreallyworthit? 9

Keyfindings 10

Part1:GlobaltrendsinCRreporting:aviewacross41countries 18

Crreportingrates:asiaPacificseesstrongestgrowth 21

regulationdrivesgrowthinCrreporting 23

anarrowinggapbetweenleadingandlaggingsectors 26

MorecompaniesreportonCrintheannualreportbut‘integratedreports’areinaminority 27

GrIremainstheleadingreportingframework 30

assurancereachesatippingpointamongtheworld’slargestcompanies 32

Dataqualitystabilizesamongtheworld’slargestcompanies 33

Part2:Thequalityofreportingamongtheworld’slargestcompanies 34

Introduction 36

lessonsfromtheleaders 39

1:Strategy,riskandopportunity 47

2:Materiality 53

3:targetsandindicators 57

4:Suppliersandthevaluechain 61

5:Stakeholderengagement 67

6:GovernanceofCr 71

7:transparencyandbalance 75

aboutKPMG’sClimateChange&SustainabilityServices 79

acknowledgements 80

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. theKPMGSurveyofCorporateresponsibilityreporting2013 2

3 theKPMGSurveyofCorporateresponsibilityreporting2013©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

Aboutthissurvey

WelcometotheKPMGSurveyofCorporateresponsibilityreporting2013.

KPMG’ssurveyispublishedprimarilyforbusinessleaders,companyboardsandcorporateresponsibility(Cr)andsustainabilityprofessionals.ItprovidesasnapshotofcurrentglobaltrendsinCrreportingwithbenchmarks,guidanceandinsightstohelpcompaniesworldwidedeterminetheirownapproachestoCrreportingandtoassessandimprovethequalityoftheirreports.

thesurveyisalsointendedtoprovideausefulreflectionofthecurrentstateofCrreportingforotheraudienceswhotakeaninterestinthesubject.theseincludeinvestors,assetmanagersandratingsagencies,manyofwhomareincreasinglyfactoringenvironmental,socialandgovernanceinformationintotheirassessmentsofcorporateperformance.

Corporatestakeholders,includingnGos,customers,academicsandstudents,andpolicymakersshouldalsofindusefulinformationandfoodforthoughtinthesepages.

thisistheeightheditionoftheKPMGSurveyofCorporateresponsibilityreportingandmarks20yearssincethefirstsurveywaspublishedin1993.thisyeartheresearchismorebroad-rangingthanever,covering4,100companiesacross41 countries(thelastsurveyin2011lookedat3,400companiesin34countries).

thegrowthinthenumberofcountriesandcompaniescoveredinthissurveyisjustoneindicationofhowCrreportinghasevolvedintoamainstreambusinesspracticeoverthelasttwodecades.

theformatofthissurveyhaschangedtoreflectthatevolution.theresultsarenowpresentedintwoparts:

Part1:GlobaltrendsinCRreporting:aviewacross41countries(page18)thissectionlooksatthe100largestcompaniesbyrevenuein41countriestoexplorehowmanycompaniesareproducingCrreportsandotherissues,suchasthedriversforreporting,sectorvariances,andtheuseofstandardsandassuranceforCrreports.

Part2:Thequalityofreportingamongtheworld’slargestcompanies(page34)thissectionlooksspecificallyattheworld’slargest250companies.ItassessesthequalityoftheirCrreports,identifiesleadersandusestheseexamplestoofferguidanceandinsights.


5©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient

theKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

Methodology

ScopeofthisreportthesurveyisbasedonadetailedstudyofcompanyreportingonCrperformance,carriedoutbyKPMGmemberfirms’professionalsandbasedonpubliclyavailableinformationinannualfinancialreports,stand-aloneCrreportsandoncompanywebsites.ItincludesinformationprovidedinbothPDFandprintedreportsaswellasinweb-onlycontent.reportspublishedbetweenmid-2012andmid-2013weresoughtinthefirstinstance.Ifacompanydidnotreportduringthisperiod,informationfrom2011wasused.Informationrelatingtoperiodspriorto2011wasnotincludedinthissurvey.the findingsarebasedonanalysisofpubliclyavailableinformationonly,andnotoninformationsubmittedbycompaniestoKPMGmemberfirms.

Figure1:ReportingterminologyusedbyN100

43

25

14

6

6

2 2 1 1

Sustainability

Corporate social responsibility (CSR)

Corporate responsibility (CR)

Sustainable development

Other

Corporate citizenship

Environmental and social report

Anoteonterminology:‘corporateresponsibility’versus‘sustainability’terminologyusedforreportingvariesbetweencompanies.researchconductedforthissurveyshowsthemostcommonlyusedtermsgloballyare‘corporateresponsibility’(14percent)or‘corporatesocialresponsibility’(25 percent)and‘sustainability’report(43percent).reportingundertheseandothertermswasincludedinthissurvey.theuseoftheterm‘corporateresponsibility/Cr’inthisdocumentshouldthereforebetakentoalsocovertheterm‘sustainability’andothersimilarterms.

N100researchthefirstpartofthisreportassessesCrreportingamongthe100largestcompaniesin41countries:4,100companiesintotal.thesearereferredto asthe“n100”companies.KPMGmemberfirmsidentifiedthen100intheircountrybyrevenuebasedonarecognizednationalsourceor,wherearankingwasnotavailableorwasincomplete,bymarketcapitalizationor othersector-appropriatemeasures.

n100companiesincludebothpublicly-listed companiesandthosewithdifferentownershipstructuressuchasprivately-ownedandstate-ownedbusinesses.ninenewcountriesjoinedthesurveythisyear(seechartbelow),whiletwocountriesincludedin2011arenotpartofthe2013survey(BulgariaandUkraine).

KPMGanalystscollecteddataonthefollowingcriteriaforthen100:

• numberofcompaniespublishingCrinformationinstand-alonereportsandannualreportsbycountryandsector

• formatandintegrationofCR reporting

• useofreportingguidelinesandstandards

• rateandtypeofverificationofCrinformation,assuranceprovideranddatarestatements.

thecountriesincludedinthe2013researchwere:

Americas AsiaPacific Europe MiddleEast& Africa

Brazil australia Belgium Poland angola

Canada China(incl.HongKong) Denmark Portugal Israel

Chile India Finland romania nigeria

Colombia Indonesia France russia Southafrica

Mexico Japan Germany Slovakia Uae

US Kazakhstan Greece Spain

Malaysia Hungary Sweden

newZealand Italy Switzerland

Singapore netherlands UK

SouthKorea norway

taiwanPeople, planet, profit

Corporate responsibility & sustainability New countries added to the survey in 2013

Source: KPMG International, The KPMG Survey of Source:KPMGInternational,TheKPMGSurveyofCorporate Responsibility Reporting 2013, December 2013 CorporateResponsibilityReporting2013,December2013


Figure2: Figure3:G250companiesbylocationof G250companiesbyindustrysector(%)headquarters(%)

13

27

6

8

128

5

3

3

3

2

2 2

2 2

211 1 11

13

25

7 117

6

6

5

4

4 3

3 2 2 2

USA Other: Finance,insurance Construction&building

Japan Malaysia &securities materialsChina Austria Oil&gas Food&beverageFrance Thailand Trade&retail PharmaceuticalsGermany Finland Automotive OtherservicesUK Norway Electronics&computers MiningSwitzerland SaudiArabia Communications&media TransportItaly Taiwan Utilities Chemicals&syntheticsSpain Singapore Metals,engineering&

Turkey manufacturing

SouthKorea

Netherlands

Canada

Australia Denmark Companiesincludedunder‘otherservices’include

Brazil Luxembourg entertainment,healthcare,resorts,mail,packageandfreightdelivery.ThenumberofcompaniesineachofthesesectorsIndia Swedenrepresentlessthan1percentoftheG250.Russia Venezuela

MexicoSource:KPMGInternational,TheKPMGSurveyofCorporateResponsibilityReporting2013,December2013Source: KPMG International, The KPMG Survey of

Corporate Responsibility Reporting 2013, December 2013



G250researchthesecondpartofthissurveyassessesthequalityofreportingamongtheworld’slargest250globalcompanies.

thesewereidentifiedasthetop250 companieslistedintheFortuneGlobal500rankingfor2012.Inthissurveytheyarereferredtoas“the G250”companies.theyoperatein 14 industrysectorsandarehead-quarteredin30differentcountries.

KPMGanalystssoughttoassessthequalityofCrreportingbytheG250againstsevenkeycriteria,whicharebasedoncurrentreportingguidelinesandKPMGprofessionals’viewofleadingreportingpractices.

• Strategy,riskandopportunity–reportingshouldincludeaclearassessmentoftheCrrisksandopportunitiesabusinessfacesandshouldexplaintheactionsitistakinginresponse.

•Materiality–CrreportsshoulddemonstratethatacompanyhasidentifiedtheCrissueswiththegreatestpotentialimpactsbothonthebusinessitselfanditsstakeholders.Companiesshouldmakecleartheprocesstheyhaveusedtoassessmateriality,howtheyhaveinvolvedstakeholdersinthisprocess,andhowtheyhaveusedthematerialityassessmenttoinform

theirreportingandmanagementofCrrisksandopportunities.

• Targetsandindicators–companiesshouldusemeaningful(e.g.timeboundandmeasurable)targetsandkeyperformanceindicatorstomeasureprogress,andclearlyreporttheirprogressandperformanceonsettargetsandobjectives.

• Suppliersandthevaluechain–Crreportsshouldexplainthesocialandenvironmentalimpactsofthecompany’ssupplychain,aswellasthedownstreamimpactofproductsandservices,andshowhowthecompanyismanagingthoseimpacts.

• Stakeholderengagement– companiesshouldidentifystakeholdersintheirCrreports,explaintheprocessusedtoengagewithstakeholders,andtheactionstakeninresponsetotheirfeedback.

• GovernanceofCR–reportsshouldmakeclearhowCrisgovernedwithinacompany,whohasresponsibilityforthecompany’sCrperformanceandhowthecompanylinksCrperformancetoremuneration.

• Transparencyandbalance– Crreportsshouldbebalancedandincludeinformationonchallengesandsetbacksaswellasachievements.

onthebasisofKPMG’sanalysis,scoreswereattributedtoeachoftheG250companiestoreflecthowwelltheirCrreportssatisfiedthecriterialistedabove.answersforthecriteriawereweightedtoproduceanoverallscoreoutof100,withgreatestweightgiventostrategy,riskandopportunity,materiality,targetsandindicatorsandstakeholderengagement,toreflecttherelativeimportanceofthesecriteriainachievinghigh-qualityreports.

asaresult,aclusterof10leadingcompanieswasidentified(eachofwhichscored90outof100,ormore)aswellasthehighestscoringcompanyineachofthe14industrysectorsrepresentedintheG250.

Seniorexecutivesfrom14ofthesetop-scoringcompanieswereinterviewedtodiscovermoreabouthowtheyapproachCrreporting.thelessonslearnedareoutlinedonpage39ofthissurvey.


theKPMGSurveyofCorporateresponsibilityreporting20139 theKPMGSurveyofCorporateresponsibilityreporting20139©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

Corporateresponsibilityreporting:isitreallyworthit?

letusbehonest,corporateresponsibility(Cr)reportingisnotwithoutitscritics.

Somepeoplesaythesereportsareawasteoftimeandmoney,believingthemtobesodenseandsodullthatnoonecouldpossiblybothertoreadthem.othersseethemasvehiclesforcorporategreenwash,anopportunityforcompaniestoexaggeratetheirsocialandenvironmentalcredentialswithoutanygenuineintentiontochange.

Someinthecorporateworldseetheproductionofthesereportsastoocomplexandtoocostlyandwithdubiousreturn-on-investment.

WhileIunderstandtheconcernsbehindaccusationslikethese,Ithinksuchviewsarefortunatelyfastbecomingoutdated.

Yes,Crreportsareoftennotaneasyreadandcompaniesshouldseektocommunicatetheinformationinmoredigestibleandengagingways.However,thatisnotanargumentfornotreportingatall.

Yes,greenwashcanbeariskbutastimegoeson,stakeholders-fromnGosandpressuregroupstocustomersandinvestors-areallbecomingmoreadeptatknowingthedifferencebetweenPrspinandCrperformance.Itisnotsoeasytopulltheproverbialwooloverpeople’seyesanymore.

Yes,Crreportingdoneproperlydoesrequirefinancialandhumanresources,butsodoallformsofcorporatereporting.

thepointthatisbeingmissedbymanypeoplewhomakethesecriticismsisthat,inthe21stcentury,Crreportingis–orshouldbe-anessentialbusinessmanagementtool.Itisnot–orshouldnotbe-somethingproducedsimplytomollifypotentialcriticsandpolishthecorporatehalo.

Weareallliving,andsomeofusarerunningbusinesses,inaworldundergoingunprecedentedenvironmentalandsocialchanges.rampantpopulationgrowthisfuellingever-increasingdemandsforlimitedresources.Unpredictableextremeweatherisaffectingsuppliesofkeycommodities.Changingsocialconditionsandexpectationsaredrivingbothincreasedspendingpowerandsocialunrest.

Crreportingisthemeansbywhichabusinesscanunderstandbothitsexposuretotherisksofthesechangesanditspotentialtoprofitfromthenewcommercialopportunities.Crreportingistheprocessbywhichacompanycangatherandanalyzethedataitneedstocreatelongtermvalueandresiliencetoenvironmentalandsocialchange.Crreportingisessentialtoconvinceinvestorsthatyourbusinesshasafuturebeyondthenextquarterorthenextyear.

Whatencouragesmemostaboutthefindingsofthisyear’sKPMGSurveyofCorporateresponsibilityreportingarethesignsthatmanyoftheworld’slargestcompaniesareusingtheprocessofCrreportingtobringCrandsustainabilityrighttotheheartoftheirbusinessstrategy,whereitbelongs.

almostalltheworld’slargest250companiesreportonCr.ofthosethatdo,ninein10usetheirreportstoidentifyenvironmentalandsocialchangesthatimpactthebusinessanditsstakeholders.eightin10reportthattheyhaveastrategytomanagetherisksandopportunities.Sevenin10reportthatthesechangesbringopportunitiesfortheinnovationofnewproductsandservices.anenlightened,butIsuspectgrowing,minorityofaroundonethirdalsoreportopportunitiestogrowtheirmarketshareandcutcosts.

Wherethesecompanieslead,otherswillfollow.thedirectionoftravelisclear.

IbelievethatthedebateonwhethercompaniesshouldreportonCrornotisdeadandburied.asthissurveyfinds,Crreportingappearstobestandardbusinesspracticetheworldover-eveninthosegeographicregionsandindustrysectorsthatonlytwoyearsagolaggedbehind.

thequestionscompaniesshouldaskthemselvesnow,andwhichwehaveendeavoredtoanswerinthispublication,are“whatshouldwereporton?”and“howshouldwereportit?”.and,mostimportantly,“howcanwebestusetheprocessofreportingtogeneratemaximumvaluebothforourshareholdersandforourotherstakeholders?”.

YvodeBoerKPMG’sGlobalChairman,ClimateChange&SustainabilityServices


Keyfindings

GlobaltrendsinCr reportingCRreportingseesexceptionalgrowthinemergingeconomies• Therehasbeenadramaticincreasein

CrreportingratesinasiaPacificoverthelasttwoyears.almostthreequarters(71percent)ofcompaniesbasedinasiaPacificnowpublishCrreports–anincreaseof22percentagepointssince2011whenlessthanhalf(49percent)didso.

• TheAmericashasnow overtakeneuropeastheleadingCrreportingregion,largelyduetoanincreaseinCrreportinginlatinamerica.Seventysix percentofcompaniesintheamericasnowreportonCr,73 percentineuropeand71percent inasiaPacific.

KPMGvIeW

• ThehighestgrowthinCRreportingsince2011hasbeenseenin:India(+53percentagepoints),Chile(+46),Singapore(+37),australia(+25),taiwan(+19)andChina(+16).

• CRreportingisnow undeniablyamainstreambusinesspracticeworldwide,undertakenbyalmostthreequarters(71percent)ofthe4,100companiessurveyedin2013.thisglobalCrreportingrateisanincreaseof7percentagepointssince2011whenlessthantwothirds(64 percent)ofthecompaniessurveyedissuedCrreports.

• Amongtheworld’slargest250companies,theCrreportingrateismoreorlessstableat93percent.

Toreportornottoreport?ThedebateisoverCompaniesshouldnolongeraskwhetherornottheyshouldpublishaCrreport.Webelievethatdebateisover.thehighratesofCrreportinginallregionssuggestitisnowstandardbusinesspracticeworldwide.theleadersofn100orG250companiesthatstilldonotpublishCrreportsshouldaskthemselveswhetheritbenefitsthemtocontinueswimmingagainstthetideorwhetheritputsthematrisk.

theimportantquestionsnoware“what?”and“how?”–or,inotherwords,it isnowaboutthequalityofCrreportingandthebestmeanstoreachrelevantaudiences.thisincludesassessingwhatismaterialforthebusiness,properengagementwithstakeholders,havinganhonestcommunicationstrategyincludingopennessaboutchallengesandputtinginplacetheunderlyingprocessestogatherandcheckdata.

Anarrowinggapbetweenleadingandlaggingindustrysectors

• InallsectorsmorethanhalfofcompaniesreportonCr,meaningreportingcanbeconsideredstandardglobalpracticeirrespectiveofindustry.twoyearsagolessthanhalfofthesectorshadreportingratesabove50percent.atthesametime,thegapbetweenthehighestscoringandlowestscoringsectorhasnownarrowedto22percentagepoints.

• Somesectorshave takenbigstepsoverthepastyears.theautomotiveandtelecommunications&mediasectorsnowhavesomeofthehighestlevelsofCrreporting(77 percentand75percent,respectively),whereasfiveyearsago,in2008,theirCrreportingrateswereamongthelowest(49percentand47 percent).

CRinformationintheannualreport:nowstandardpractice• Overhalfofreportingcompanies

worldwide(51percent)nowincludeCrinformationintheirannualfinancialreports.thisisastrikingrisesince2011(whenonly20percentdidso)and2008(only9percent).thedirectionoftravelisclearandwithmorethanhalfofcompaniesresearchednowincludingCrdataintheirfinancialreports,thiscanarguablybeconsideredasstandardglobalpractice.



• However, includingCRinformationintheannualreportdoesnotimplythatcompanieshaveembracedthetrendofintegratedreporting(Ir):onlyonein10companiesthatreportonCrclaimstopublishanintegratedreport.

UseofGlobalReportingInitiative(GRI)guidelinesisalmostuniversal• Seventyeight percentofreporting

companiesworldwiderefertotheGrIreportingguidelinesintheirCrreports,ariseof9percentagepointssincethe2011survey(over90percentdosoinSouthKorea,Southafrica,Portugal,Chile,BrazilandSweden).

• Amongtheworld’s250largestcompaniestherateisevenhigherthanthen100:82percentofG250companiesthatreportonCrrefertotheGrIguidelinesasopposedto78percentin2011.

Assuranceamongthelargestcompanieshasreachedatippingpoint• Overhalf(59percent)oftheG250

companiesthatreportCrdatanowinvestinexternalassurance.thisisupfrom46percentin2011.

• Two thirdsofthosecompaniesthatinvestinassurancechoosetoengageamajoraccountancyfirm.

KPMGvIeW

Boardsshouldgetbehindintegratedreporting(IR)Basedonmemberfirms’experiencesandresearchthereseemstobeacceptanceofIrasthenextdestinationforcorporatereporting,butfewcompaniesaredoingityet.thereisalsosomenervousnessaroundwhetherIrcouldlimitratherthanenhancecommunicationaroundCrandsustainability,specificallyfornon-financialstakeholdergroups.

Ircanbethecatalystforintegratedmanagement.KPMG’sexperienceinSouthafrica,whereIrisnowmandatory,showsthatthecloseinvolvementofCeosandotherboardmembersisessentialtoreach‘oneview’ofthebusiness,consensusononesetofmaterialissuesandonecombinedbusinessstrategy.Withanintegratedapproachtovaluecreationastheendobjective,boardsupportforIrneedstoscaleup.

KPMGvIeW

AssuranceisnolongerjustanoptionJustasCrreportingitselfisnowastandardbusinesspractice;itisalsobecomingstandardpracticetohaveCrandsustainabilitydataexternallyassured.thetippingpointhasbeencrossed,withoverhalftheworld’slargestcompanies(G250)nowinvestinginassurance.ascanbeseenwithothertrendsinCrreporting,thelargestcompaniestendtosetthedirectionthatothercorporationsfollow.

Manycompaniesnowfacesignificantpressuretogivestakeholdersconfidenceinwhattheysayandassurancecanhelpprovidethiscredibility.thequestionforleadersisthereforenolonger“shouldweassureourCrdata?”rather“whywouldwenot?”and“howdowechoosetheappropriateassuranceoptionthatmeetsstakeholders’needsandputsusaheadofourpeers?”.


thequalityofreportingamongtheworld’slargestcompanies

Attentionmustbepaidtoreporting Table1:10G250companiesscoremorethan90outof100forCRreportingquality:onthevaluechain

• InKPMG’sanalysis,theaveragequalityscoreachievedbyG250companiesfortheirCrreportsis59outofapossible100.thisindicates

Company

a.P.MøllerMærsk

Country

Denmark

Sector

transport

significantroomforimprovement BMW Germany automotiveoverall.

CiscoSystems US telecommunications&media

• Reportingontargetsandindicatorsis FordMotorCompany US automotive

mostwell-developedtodate,withanaveragescoreof68outof100.

Hewlett-Packard US electronics&computers

large companiesalsoappeartobe InG netherlands Finance,insurance&securities

reportingonmaterialityandstrategy, nestlé Switzerland Food&beverageatanaveragescoreof66and62.

repsol Spain oil&gas

• Akey areafor improvementisreportingonsuppliersandthevaluechain,whereaverageG250reportingqualitywasassessedat46outof100,followedcloselybystakeholderengagementandgovernance,bothat anaveragescoreof53outof100.

Europeancompaniesserveasanexampleforotherregions• AroundonequarteroftheG250

(63 companies)scorehigherthan80 outof100acrossthequalitycriteria,and10companiesscorehigherthan90.thesecompaniesarelocatedineuropeandtheUS.

• EuropeanG250companiesachievethehighestaveragequalityscorefortheirCrreportsat71outof100.this compareswithaveragescoresof54forcompaniesintheamericasand50inasiaPacific.

• WithinEurope,companiesinItaly(85),Spain(79)andtheUK(76)scoremosthighly.

Siemens Germany electronics&computers

total France oil&gas

Source:KPMGInternational,TheKPMGSurveyofCorporateResponsibilityReporting2013,December2013

IndustrieswithhighCRimpactsshowtrailingscores• Largecompaniesintheelectronics

& computers,miningandpharmaceuticalssectorsproducethehighestqualityCrreports.theiraveragescoresare75,70and70 respectively.

• However somesectorsthatfacesignificantCrrisksandopportunities,andhavesignificantpotentialsocialandenvironmentalimpacts,arepublishingreportswithscoresbelowtheglobalaverage.theoil&gas,trade&retail,metals,engineering&manufacturingandconstruction&buildingmaterialssectorshaveaveragescoresof55,55,48and46outof100,respectively.

Opportunitiesovertakerisks• MostG250CRreports(87percent)

identifyatleastsomesocialandenvironmentalchanges(or‘megaforces’)thataffectthebusiness.Climatechange,materialresourcescarcityandenergyandfuelarethemostcommonlymentioned.

• Morecompaniesseeopportunitiesthanrisks:81percentofreportingcompaniesidentifybusinessrisksfromsocialandenvironmentalfactors,whereasslightlymore(87 percent)identifycommercialopportunities.

• Themostcommonlycitedopportunityofsocialandenviron-mentalchangeisinnovationofnew



productsandservices,mentionedby72percentofreportingG250companies.theopportunitytostrengthenbrandsandcorporatereputationisthenextmostcommonlycited(mentionedby51percentofreportingcompanies),followedbyimprovingmarketposition/growingmarketshare(36percent)andcuttingcosts(30percent).

• Onlyonein10 reportingcompanies(12percent)identifiesimprovedaccesstocapitalorimprovedshareholdervalueasanopportunityofsocialandenvironmentalchange.

• Reputationalriskisthemostcommonlycitedtypeofbusinessrisk,mentionedby53percentofreportingG250companies.

• OnlyasmallnumberofG250Crreports(5percent)includeinformationonthefinancialvalueatstakethroughenvironmentalandsocialrisk.

• Asignificantnumberofreportingcompaniesalsomentionothertypesofriskthataffectcompanyoperationsandnotjustcorporatereputations:

KPMGvIeW

RiskandopportunityneedstobelinkedtovalueManycompaniesnolongerseecorporateresponsibilityasamoralissue,butascorebusinessrisksandopportunities.Moreandmoreinvestorsacceptthatenvironmentalandsocialfactorsputcompanyvalueatstake.thisleadstothequestionofwhatthepotentialfinancialimpactsofthoserisksandopportunitiescouldbeandwhatthecompanyisdoingtomitigateormaximizethem.

veryfewcompaniesareyetdeclaringanyquantifiedriskstothebottomlineintheirCrreporting.Companiesneedtobepreparedforthistochangeandshouldstarttointegratethetopandbottom-lineimplicationsintheirbusinessscenarioplanningandriskmanagement.

regulatoryrisk(48percent), • Mostreportingcompaniesinthecompetitiverisk(45percent),physical G250(83percent)stateintheirrisk(38percent),socialrisks(36 reportsthattheyhaveaCrstrategy.percent)andlegalrisks(21percent).1 Companiesintheamericasaremost

likelynottorefertostrategy:threein• TheAmericasistheonlyregion 10donot.

wherecompetitiveandregulatoryrisksarementionedmoreofteninG250Crreportsthanreputationalrisks.

1Seepage48foradefinitionofdifferenttypesofrisks


thequalityofreportingamongtheworld’slargestcompanies

Figure4:AveragequalityofG250reportsbysector(Scoreoutofapossible100)

• Largecompaniesintheelectronics&computers,miningandpharmaceuticalssectorsproducethehighestqualityCr reports.

Electronics & computers Mining

Pharmaceuticals Utilities

Communications & media Transport

Automotive Food & beverage

Finance, insurance & securities Chemicals & synthetics

Oil & gas Trade & retail

Metals, engineering & manufacturing Construction & building materials

75 70 70 65 65 64 64 59 58 58 55 55 48 46

Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013



Figure5:AveragequalityofG250reportsbycountry2

(Scoreoutofapossible100)

•LargecompaniesinItaly,SpainandtheUKleadtheworldforthequalityofCr reports.•EuropeanG250companiesachievethehighestaverage

qualityscorefortheirCrreportsat68outof100.thiscompareswithaveragescoresof51forcompaniesintheamericasand48inasiaPacific.

85 79 76 70 70 69 68 63 60 55 54 39

Italy Spain

UK France

Australia Netherlands

Germany Switzerland

South Korea Japan

USA China/Hong Kong


Figure6:AveragequalityofG250reportsbycriterion(Scoreoutofapossible100)

•G250companiesasawholescoremosthighlyfor targetsandindicators.thegreatestimprovementneedstobemadeinreportingonsuppliersandthevaluechain.


Targets and indicators Materiality

Strategy, risk and opportunity Transparency and balance

Governance Stakeholder engagement

Suppliers and the value chain

68 66 62 58 53 53 46

2averagescorespercountryareonlygivenforthosecountriesthathavefiveormorecompaniesreportingonCrintheG250.


Moretransparencyneededonmaterialityprocess• Overthreequarters(79percent)of

G250companiesthatissueCrreports,discusstheidentificationofCrissuesthatarematerialtotheirbusinessandstakeholders.

• Thereisroomfor improvementintermsoftransparencyontheprocessusedforidentifyingmaterialissues.41percentofthereportingcompaniesdonotexplaintheprocesstheyuseandonlyasmallminority(5percent)assessmaterialissuesonanongoingbasis.

Targetsandindicatorsarenotyetfullydefined• OneineightreportingG250

companies(13percent)reportsnoCrtargetsatallandaquarter(26percent)donotrelatetheirCrtargetstomaterialissues.

Reportingonsuppliersandthevaluechainislackinginsectorsatrisk• Companiesinthechemicals&

syntheticssectoraretheleastlikelytoreportonsupplychainissues.Sixty percentofG250companiesinthissectorthatreportonCrdonotreportonthesupplychain.Companiesintheelectronics&computerssectorarethemostlikelytodoso.

• G250companiesinEuropearethemostlikelytodiscussindetailtheenvironmentalandsocialimpactsoftheirproductsandservices.almostthreequarters(73percent)ofreportingcompaniesineuropedosowithafurther23percentprovidinglimitedinformation.Intheamericas,lessthanhalf(49percent)providedetailedinformationondownstreamimpactsandthefiguredropstolessthanonethird(32percent)inasiaPacific.

CompaniesintheAmericasandAsiaPacificstruggletoexplainstakeholderengagementprocess• G250companiesinAsiaPacificand

theamericaslagbehindthoseineuropeforexplainingtheprocessusedtoengagestakeholders.Fourin10companiesintheseregionsoffernoexplanationatall.

• Theminingandmetals,engineering&manufacturingsectorsscorehighestforidentifyingkeystakeholdersintheirreports.

• OnlyonethirdofG250companies(31 percent)includestakeholdercommentsintheirCrreports.



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Supplychainreportingneedsmorefocusthissurveyshowsthatsomesectorswithcomplexsupplychains,carryingpotentiallycatastrophicenvironmentalandsocialrisks,havelowlevelsofreportingonsupplychainissues.

recentincidentsincludingoilspillsandfactorydisastersshouldremindbusinessleadershowimportantitistomanagetheenvironmentalandsocialimpactsofthesupplychain.

Putsimply,ifcompaniesdon’tstartmanagingtheseissuestheywon’thavealicensetooperateintheglobalized21stcenturyworld.Companiesurgentlyneedtobuildconfidenceamongcustomers,communities,investorsandotherstakeholdersthattheirsupplychainsarebeingproperlymanaged.transparentcorporateresponsibilityreportingisaneffectivewaytobuildsuchconfidence.

FewlargecompaniesyetlinkCR Transparencyandbalanceislimitedperformancetoremuneration formostcompanies• Aroundonequarterofcompanies • Onlyoneinfive G250companies

(24 percent)reportthatthecompany (23 percent)publishesawell-Boardhasultimateresponsibility balancedreportthatdiscussesforCr. Crchallengesandsetbacksaswell

assuccesses.Companiesinthefood• Inmost G250 companies (61 percent) &beverage,pharmaceuticals,and

Crismanagedonaday-to-daybasisby electronics&computerssectorsareadedicatedCrorsustainabilityunit. mostlikelytodoso.

• Onlyonein10 G250companies(10percent)reportsaclearlinkbetweenCrperformanceandexecutiveoremployeeremuneration.


Global trends in CR reporting: a viewacross 41 countries

© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client the KPMG Survey of Corporate responsibility reporting 2013 services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. 19

Part 1 © 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. the KPMG Survey of Corporate responsibility reporting 2013 20

SincethelastKPMGSurveyofCorporateresponsibilityreportingin2011,therehavebeentwoyearsofdebateinthebusinessworldontheform,scopeandcontentofCr reporting.

Muchofthisdiscussionhasbeeninfluencedbythreeimportantdevelopmentsinthefield.Firstly,the publicationinMay2013oftheGrIG4 Guidelines3forreporting.Secondly,thespreadofmandatoryCrreportingrequirementsincountriesfromIndiatotheUK.4andthirdly,momentumtowardsintegratingnon-financialandfinancialinformationinreportingandtheworkoftheInternationalIntegratedreportingCouncil(IIrC).researchforthissurveyexploredtheimpactofthesechangessince2011,assessingreportingamongthen100–the100largestcompaniesin41countries.

theresearchpresentsapictureofCrreportingasatrulymainstreamglobalbusinesspractice,theimportanceofwhichisrecognizedbycompaniesandregulatorsalike.reportingratesare

nowhighacrossallregionsandindustrysectors.Countriesthatpreviouslylaggedbehindarecatchinguporevenovertakingtheearlypioneersintermsofthequantityofcompaniesreporting.

thistrendisreplicatedattheregionallevel,wheretheamericashasover-takeneuropeastheregionwiththehighestreportingrate.

regulationisanincreasinglyimportantdriverofgrowthinCrreporting,butframeworkssuchastheGrIandvoluntaryguidancefromregulatorsandstockexchangesarealsodrivingupreportingrates.alongsidetheoverallgrowthinreporting,integrationoffinancialandnon-financialinformationisincreasing.

• TheN100 globalaveragereportingratehasincreasedfrom64percentin2011to71percentin2013.

• TheAmericasovertookEuropeastheleadingreportingregion.AsiaPacificsawthemostsignificantincreaseduetoajumpinCrreportingratesincountriessuchasIndia,Singaporeandaustralia,andnewcountrieswithhighreportingratesjoiningthesurvey.

• RatesremainedstaticinEuropeanddroppedintheMiddleEast&Africa,largelyduetoanumberofcountrieswithlowreportingratesjoiningthesurveyforthefirsttime.

Keyfindings:

3 theGlobalreportingInitiative’sG4GuidelineswerepublishedinMay2013,availableat:globalreporting.org/reporting/g4/4 KPMG,UnitednationsenvironmentProgramme,GlobalreportingInitiativeandUnitforCorporateGovernanceinafrica,CarrotsandSticks,

Sustainabilityreportingpoliciesworldwide,2013.



Crreportingrates:asiaPacificseesstrongestgrowth

Crreportingisnowundeniablyamainstreamglobalbusinesspractice–withalmostthreequarters(71percent)ofthen100companiessurveyedpublishingareport,comparedwith64 percentofcompaniesresearchedin2011.thereportingratefortheG250remainedrelativelystablein2013comparedwith2011,withaminimaldecreasefrom95percentto93percentduetothechangingcompositionofthe250eligiblecompanies.

then100growthtrendismostevidentintwooftheregionsstudied,withtheamericasovertakingeuropeastheleadingreportingregionandasiaPacificalmostcatchingupwitheurope.

asiaPacificsawthebiggestoverallincreasefrom49percentin2011to71 percentin2013.thisispartlyduetonewcountriesbeingincludedinthesurvey,suchasIndonesiaandMalaysia,whichbothdemonstratehighreportingrates.However,themajorityoftheincreaseisduetoexceptionallyhighgrowthratesinseveralcountries.

Figure7:Growthinreportingsince1993PercentageofcompanieswithCrreports

%

For example,inIndiatheCrreportingrateincreasedto73percentin2013from20percentin2011,inSingaporetherateincreasedto80percentfrom43 percent,andinaustraliatherateincreasedto82percentfrom57 percent.InthecaseofIndiaandSingaporeitislikelythatmuchofthisgrowthisduetotheintroductionofnewmandatoryandvoluntaryreportingrequirements(seepage23).InaustraliatheincreaseisduetoanumberofcompaniesreportingonCrforthefirsttimein2013,primarilyinthecompanyannualreport.

Intheamericas,theCrreportingrateincreasedfrom69percentin2011to76 percentin2013,largelyduetothechangesinthenumberofcompaniesreportingonCrinlatinamerica.DespitetherateofCrreportingremainingrelativelystableintheUSandCanadaandthenumberofreportingcompaniesinBrazilandMexicodropping,theoverallrateintheregionincreased.

Figure8:

“therehasbeenasurgeinCrreportinginMalaysiawhichIseeasatippingpointinmakingCrstandardbusinesspracticehere,encouragedbytheMalaysianStockexchange’srequirementthatlistedcompaniesreportonCractivities.atthesametime,IthinkmanyMalaysiancompaniesarelessexperiencedinCrthancompaniesineuropeandtheamericas.Forthisreason,manyCrreportsarestilllimitedinscopewithafocusonphilanthropicandcommunityinvestments.However, justasthequantityofreportsisincreasingrapidly,soIexpecttoseerapidprogressinthequalityandsophisticationofreportingprocessesandcontent.”

DatukHewLeeLamSang,Partner,KPMGinMalaysia

CRreportingbyregionPercentageofcompanieswithCrreports

% 100 100

1993 1996 1999 2002 2005 2008 2011 2013

93

71

95

64

83

53

64

4145

2835

2418

12

8080

6060

4040

2020

00Americas Asia Pacific Europe Middle East

& Africa

7671 7173

6154

69

49

Base: 4,100 N100 companies Base N100/G250 companies 2011 N100 Source: KPMG International, The KPMG Survey of Source: KPMG International, The KPMG Survey of 2013 Corporate Responsibility Reporting 2013, December 2013 G250 Corporate Responsibility Reporting 2013, December 2013

From1993to2002thesurveyincludedonlystandaloneCRreports.From2005onwardsthesurveyincludesCRinformationinannualreportsaswellasseparateCRreportshardcopyorweb-based,duetothetrendofmore theKPMGSurveyofCorporateresponsibilityreporting2013companiesreportingonCRincompanyannualreports. ©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient

servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

22

80

100%

Figure 9: Reporting rates by country

Keyfindings:

•Regulatoryrequirementshave drivenreportingtoitshighestlevelsinFrance,DenmarkandSouthafrica.

•Thehighestgrowthratessince2011 wereseeninIndia,Chile,Singapore,australia,taiwan,romania,China(incl.HongKong)andnigeria.

•ReportingratesalsofellnoticeablyinMexico,Brazil,Spain,Slovakia,FinlandandtheUK.

60

40

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ce

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Net

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in

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and

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en

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ugal

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an

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th K

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New

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*

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Kaz

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E

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2011

2013 * 2011 reporting rate restated for New Zealand.

reportinginChileincreasedsubstantiallyfrom27percentin2011to73percentin2013,duepartlytomanycompaniesreportingonCrforthefirsttimeandanumberofnewcompaniescomingintotheChileann100list.theadditionofColombiatothesurvey,withareportingrateof77percent,addedtotheoverallincreaseintheamericas.

thereportingrateineuropeincreasedonlyslightly,partlyduetolowerthanaveragereportingratesinsomeofthecountriesthatwereincludedinthesurveyforthefirsttimethisyear(e.g.Poland).theMiddleeast&africa(Mea)wastheonlyregiontoseeadropinCrreportingrates:from61percentin2011to54percentin2013.thiswasdespiteahighrateofreportinginSouthafrica(98 percent)whichisconsistentwith2011,andanincreaseinthereportingrateinnigeriato82percentfrom68percent,largelyduetonewregulations(seeoppositepage).theoveralldeclineintheMeareportingrateisduetoanumberofcountrieswithlowerthanaveragereportingrates,suchasUaeandangola,joiningthesurveyforthefirsttimethisyear.

“reportinginChinahascontinuedtogrowwiththreequartersofcompaniesresearchedthisyearproducingCrreports,comparedwith59percentin2011.reportingrequirementsfromtheShanghaiStockexchangeandCrguidelinesforstate-ownedenterpriseshavebeeninplacesince2008.It’slikelyrecentgrowthreflectsthegreaterexpectationsinthemarketplaceregardingCr.reportingisapracticalwaytoshowresponsiveness,andcompaniesalsowanttoavoidbeingleftbehindthosewhohavealreadyissuedreports.”

SeanGilbert,Director,KPMGinChina

Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

“CrisgaininggreaterprominenceamonglargecompaniesinChileastheyincreasinglyunderstandthebenefitsofincorporatingCrintothebusinessandreportingonthis.High-profileprojectsintheminingandenergysectorshavebeendelayedinrecentyearsduetosocialpressureandconcernsabouttheimpactoncommunitiesandtheenvironment,demonstratingthatcompaniesmustaddressCrissuestocontinuetooperate.ChileancompaniesarealsoimplementingCrpoliciesandreportingontheiractivitiestoensuretheyremaincompetitivewithforeignmultinationalsandareinagoodpositiontomeetgovernmentregulations.”

LuisFelipeEncina,Partner,KPMGinChile

2323 ©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclienttheKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

regulationdrivesgrowthinCrreporting

Crreportinghastraditionallybeenvoluntary,however,governmentsandstockexchangesaroundtheworldareincreasinglyimposingmandatoryreportingrequirements.Crreportingregulationsareseeninseveralcountriesthathavealmost100percentreportingrates,includingFrance,DenmarkandSouthafrica.regulationisalsobehindasignificantincreaseinreportingratesintaiwan.

alongsidegovernmentregulation,newguidelinesandstandardsfromstockexchangesandotherorganizationsarealsohavinganimpact.Forexample,inSingapore,theintroductionoftheSingaporeStockexchange(SGX)SustainabilityreportingGuideforlistedcompaniesandarevisedCodeofCorporateGovernance(whichmakesconsiderationofsustainabilityissuespartoftheboard’sremit)hasinfluencedthe37percentagepointriseinreportingrates.

SimilarfactorsareinfluencingCrreportinginnigeria,whichhasoneofthehighestCrreportingrates(82percent)notonlyinafrica,butalsoglobally.the CentralBankofnigeria

issuedguidelinesin2012mandatingthatfinancialservicescompaniesestablishsustainabilityprocessesandreportonthem.Inaddition,theSecuritiesandexchangeCommissionof nigeriaupdatedtheCorporateGovernanceCodein2011torecommenddisclosureofsustainabilitypractices.

InIndia,wheremuchCrreportingisfocusedoncommunityinvestmentanddevelopment,thereportingrateisincreasingduetorecentregulatoryrequirements.thetop100listedcompaniesinIndiaarerequiredbytheSecuritiesexchangeBoardtoreportontheiradoptionofIndia’s‘nationalvoluntaryGuidelinesforSocial,environmentalandeconomicresponsibilitiesofBusiness’intheirannualreportingfromfinancialyear2012/13.thenewCompaniesact,whichwillimpactreportsfromfinancialyear2014/15,requiresallregisteredcompaniestoestablishaBoardCommitteeonCorporateSocialresponsibility,investatleast2percentofnetprofitsonsociallyresponsibleprojects,andexplaintheiractivitiesintheirannualreport.

Trendsinmandatoryandvoluntaryreportingpoliciesresearchreleasedin2013bytheGrIincollaborationwithKPMG,theUnitednationsenvironmentProgramme(UneP)andtheCentrefor

CorporateGovernanceinafrica,examinesmandatoryandvoluntaryreportingpoliciesin45countries.theresearchfoundthat:

• thereare134 separatemandatorypoliciescoveringdifferentaspectsofCrreportingandafurther53voluntarypolicies

•manypoliciesarebasedona‘reportorexplain’approach

•sustainabilityreportinghasbecomealistingrequirementonseveralstockexchangesinnon-oeCDcountries,includingBrazil,China(incl.HongKong),MalaysiaandSouthafrica.5

CRreportingdropsinsomecountriesCrreportingratesdroppedinsomecountriescomparedwith2011,despitetheoverallupwardtrend.thebiggestdropswereseeninMexicoandBrazil(10fewercompaniesreportinginboth)andtheUK(9fewercompaniesreporting).thesedecreasescanbeexplained,atleastinpart,bythechangingcompositionofthen100inthesecountriesfollowingtheglobalfinancialcrisis.InSpain,forexample,mergersandacquisitionsamongbigfirmsinthebankingsectorhaveresultedinsomesmallercompanies,whicharelesslikelytoissueCrreports,beingincludedintheSpanishn100.

“InDenmarkthebiggestcompaniesare requiredeithertoreportontheirCractivities,or,iftheydonot,toexplainintheirannualreportswhytheydonotdoso.From2014this‘reportorexplain’approachwillbeextendedwithrequirementsforcompaniestoreportonhumanrights,climatechangeandemployeediversity.WhilethereportingrateinDenmarkisveryhigh,manycompaniesstrugglewithreportingonCrastheyremainfocusedondisconnectedenvironmental,health,humanresourcesorphilanthropicinitiatives.thelegislationhasencouragedcompaniestodevelopamorestructuredapproachtoCrasitisincreasinglydifficulttoreportwithoutanunderlyingCrstrategyandclearmanagementapproach.”

ChristianHonoré,Partner,KPMGinDenmark

5 KPMG,UnitednationsenvironmentProgramme,GlobalreportingInitiativeandUnitforCorporateGovernanceinafrica,CarrotsandSticks,Sustainabilityreportingpoliciesworldwide,2013.

theKPMGSurveyofCorporateresponsibilityreporting2013 24©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

Figure 10:

Rateofcorporateresponsibilityreportingacross41countries-2011and2013 (%ofcompaniesreportingonCR)

Canada 79 83

Mexico 66 56

USA 83 86

Brazil 88 78

Chile 27 73

Colombia – 77 Angola – 50

Americas Israel 18 19 Nigeria 68 82 SouthAfrica 97 98 UAE – 22

2011 2013 MiddleEast&AfricaReporting rates in percentages

SpotlightonreportingrequirementsThefollowingcountrieshavehighCRreportingratesorsignificantrecentgrowthinCRreporting,relatedtoreportingrequirements:

Denmark France India Indonesia Japan Malaysia Nigeria FinancialStatements GrenelleIIActrequires Thetop100listed LawNo.40/2007 Mandatoryand MalaysiaStock CentralBankofNigeriaActrequireslarge largecompaniesto companiesinIndiaare requiresLimited voluntaryguidelines Exchangelisting requiresfinancialcompaniestoreport reportannuallyonCR requiredbythe LiabilityCompaniesto forcertaintypesof requirementthat servicescompaniestoonCRactivities,or,if activitiesandadvises SecuritiesExchange reportonCRinthe companiestoreport companiesdescribe reportonCRandthetheydonot,toexplain reportsaresubjectto Boardtoreporton annualreport.Publicly- onenvironmental CRactivitiesandlaw SecuritiesandExchangeintheirannualreports independent CRintheirannual listedcompaniesare impacts,including thatallpubliclylisted CommissionofNigeriawhynot. verification. reportingfromfinancial alsorequiredtoreport GHGemissions. companiespublish CorporateGovernance

year2012/13. onCRintheannual CRinformationinthe Coderecommendsreport. annualreport. companiesdisclose

CRpractices.

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclienttheKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.25

Belgium – 68 Poland – 56 Denmark 91 99 Portugal 69 71 Finland 85 81 Romania 54 69 France 94 99 Russia 58 57 Germany 62 67 Slovakia 63 57 Greece 33 43 Spain 88 81 Hungary 70 78 Sweden 72 79 Italy 74 77 Switzerland 64 67 Netherlands 82 82 UK 100 91 Norway – 73

Europe

Australia 57 82 China(incl.HongKong) 59 75 India 20 73 Indonesia – 95 Japan 99 98 Kazakhstan – 25 Malaysia – 98 NewZealand 43 47 Singapore 43 80 SouthKorea 48 49 Taiwan 37 56

AsiaPacificBase: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

Norway Singapore South Africa UK USA NorwegianAccounting SingaporeStockExchange KingCodeof Companieslistedonthe DisclosurerequirementsAct(andamendment (SGX)Sustainability GovernancePrinciples LondonStockExchange oftheU.S.Securities&in2013)requireslarge ReportingGuideforlisted andKingReporton mustreportonGHG ExchangeCommissioncompaniestoreport companiesandCodeof Governance(KingIII), emissionsfrom2013. (SEC),Dodd-FrankActonsocial,environ- CorporateGovernance andJohannesburg CompaniesActrequires requiresdisclosureonmentalananti- encourageCRreporting, StockExchange(JSE) largeandmediumsized conflictmineralsandcorruptionactivities. andEnergyConservation

Act2012requireslargecompaniestoreporton

requirecompaniestopublishanintegratedreportincludingCR

companiestodiscloseCRinformationrelevanttocompanyperformance

PresidentialExecutiveOrder13514requiresfederalagenciestoreport

Source: KPMG, United Nations Environment Programme, Global Reporting Initiative and Unit for Corporate Governance in Africa, Carrots and Sticks, Sustainability reporting

energyuse. performance. intheannualreport. onCRperformance. policies worldwide, 2013.


Trade

& re

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rs

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Autom

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s

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anarrowinggapbetweenleadingandlaggingsectors

Keyfindings:

•ThegapbetweenthesectorswiththehighestandlowestCrreportingrateshasnarrowedtojust22 percentagepoints,from32in2011and42in2008.

•Reportingrateshave changedonlyincrementallyinmostsectorssince2011,reflectingthematurityofreporting.

•Ninesectorsmoved fromhavingaminorityofcompaniesreportingin2008toamajorityin2013.

•Theautomotiveandtelecommunications&mediasectorsnowhavesomeofthehighestlevelsofCrreporting(77percentand75 percent).Fiveyearsago,theirCrreportingrateswereamongthelowest(49percentand47 percent).

Companiesoperatingin15differentsectorsareincludedinthissurvey.

reportingisnowthenormacrossallthesesectors,withatleast62percentofcompaniesineverysectorproducingareport.thereislittlechangesince2011inthetypesofindustriesthataremostorleastlikelytoreport.Heavyindustryandresource-basedsectorsstillleadthewaywiththehighestreportingrates,andservicesandtrade&retailstilllagbehind.However,thegapbetweenreportingratesamongtheleadersandlaggardsisnarrowing.

lookingbacktothe2008survey,ninesectorshavemovedfromhavingaminorityofcompaniesreportingfiveyearsagotoamajorityin2013:automotive,communications&media,construction&buildingmaterials,finance&insurance,food&beverage,metals,engineering&manufacturing,pharmaceuticals,trade&retailandtransport.ofthese,themostsignificantincreaseswereintheconstruction,pharmaceuticalsandtrade&retailsectors.

Figure11:Sectorreportingtrends

% 100

66

84 8484

6762

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7778 77 7574 7269 7267 70

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27 theKPMGSurveyofCorporateresponsibilityreporting2013

Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

MorecompaniesreportonCrintheannualreport,but‘integratedreports’areinaminorityIrhasgainedsignificantmomentumsincethelastsurveyin2011,drivenbytheworkoftheIIrCtodefineaframework,bytheKingCodeofGovernancePrinciplesandtheKingreportonGovernance(KingIII)inSouthafrica,andworldwidebycompanies’owneffortstopresentinvestor-relevantnon-financialinformationinreports.

ManycompaniesaretakingtentativestepstowardsIrbypresentingCrdataalongwithfinancialdataintheirannualcompanyreports.Companiescontinuetotakedifferentapproachestointegration,andnotallcompaniestaketheIIrCconceptanddefinitionasthestartingpoint.researchforthissurveyshowsthatmorecompaniesarecombiningtheirnon-financialwithfinancialdata,butthatfewcompaniesfeelconfidentinstatingthattheyproduceanintegratedreport.

“SincetheKingCodeofGovernancePrinciplesandtheKingreportonGovernance(KingIII)cameintoeffecton1March2010,agrowingnumberofSouthafricanorganizationshavebeenproducinganintegratedreport.Itisespeciallyencouragingthatthisgrowthisnotonlydrivenbycompliance,butratherbytherealizationthatintegratedreportingisabetterwayofprovidinginsightsintotheorganization’sstrategyanditsabilitytocreatevalueintheshort,mediumandlongterm.”

NeilMorris,Partner,KPMGinSouthAfrica

Forthefirsttimeinthissurvey,themajorityofcompanies(51percent)includeinformationonCrintheirannualfinancialreport.thisfigurehasrisendramaticallysince2008,whenitwasjust9percent,andsince2011whenitwas20percent,showingagrowingacceptancethatCrissuesarematerialforbusiness.

ofthosecompaniesthatincludeCrinformationintheirannualreports,themajority(58percent)dosoinaseparatechapter,ratherthanintegratingCrdataintothewidernarrativeonbusinessperformanceandvalue.anincreasingnumberbutstillaminority(42percent),arestartingtomakethelinkbetweenCrandbusinessstrategybyincludingCrinformationintheDirectors’report.

ofcompaniesthatincludeCrintheDirectors’report,mostalsocontinuetopresentCrinformationinaseparatechapteroutsidetheDirectors’report.thissuggeststhatmanycompaniescontinuetoseeavalueinprovidingaseparatenarrativearoundCrperformance,andenablinginterestedreaderstolookintothisaspectofcompanyperformanceingreaterdetail.ItcouldalsomeanthatcompaniesarenotyetsurehowtofullyintegratetheirCrinformationwiththewidernarrativeonbusinessperformance.

theresearchalsoshowsthatonlyaminorityofcompaniesclaimthattheypublishanintegratedreport.Justonein10companiesthatreportonCr(10 percent)dosoandevenfewer(3 percent)referencetheworkoftheIIrC.ItremainstobeseenhowthiswillchangewiththelaunchofthefinalIIrCframework,andasmorecompaniesusetheframeworkandshareexperienceswiththeirpeers.

HowwillIRchangecompanyreporting?Inthebroadestsense,

Irisaboutaligningbusinessreportingwithbusinessstrategy,explaininghowenvironmental,social,governanceandothernon-financialfactorsimpactonabusiness’sabilitytooperate,createandsustainvalueovertheshort,mediumandlongterm.

Formanybusinesses,Crinfor-mationhasanimportantroletoplayinthisbroadervisionofreporting,butitisimportanttorecognizethattheCrinformationrequiredinanintegratedannualreportmaybedifferenttothattraditionallyprovidedinCrreports.thisisbecauseanannualreportfocusesonlyonthemattersthataremostrelevanttothebusinessstrategy,andwillnormallyprovideinformationthatisspecificallyaimedatmeetinginvestorneeds.ManycompaniesmaychoosetoreportinmoredetailonCrinaseparatereportinordertomeettheneedsofotherstakeholdersinterestedinCrpoliciesandperformance.

themajorityofcompaniesthatstatetheyproduceanintegratedreportarebasedinSouthafrica,drivenbyKingIII.ninetythreepercentofn100companiesthatreportonCrinSouthafricastatethattheirreportisintegrated.


Figure 12: Figure13:Corporate responsibility in annual reporting FormatofCRinformationinannualreports

In a specific section/chapter on CR only

In a specific section/chapter on CR and in the Directors’ report

In the Directors’ report only

24

18

58

•Morethanhalf(51percent)ofn100companiesnowreportonCrintheirannualfinancialreport.thisproportionhasincreaseddramaticallyinthelastfiveyearsfromjust4percentin2008and20 percentin2011.

•Ofthecompaniesthatincludeinformationintheirannualreport,42 percentnowincludeinformationonCrintheirDirectors’report,comparedwithjustoveraquarterin2011.

Keyfindings:

5149

73

1

89

• 10 percentofcompaniesclaimtohaveintegratedtheirannualreporting,andofthese,mostdonotyetrefertotheIIrCconceptordefinition.

• ThenumberofreportsthatstatetheyareintegratedarebyfarthehighestinSouthafricaat93percentduetotherequirementsofKingIIIandtheJohannesburgStockexchange.

Keyfindings:

CRinformationinannualreport

NoCRinformationinannualreport

Base: 4,100 N100 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013 Base: 2,080 N100 companies that include CR information

in annual reports Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

Figure14:Doesthereportstateitisanintegratedreport?

No

Yes, the report states it is integrated, but does not refer to the IIRC

Yes, the report states it is integrated and it refers to the IIRC

The report does not state it is integrated, but there is reference to the IR trend/IIRC

Base: 2,897 N100 companies that report on CR Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013



“Companiesneedtofindanapproachtointegratedreportingthatenablesthemtoreportonvaluecreationinitsbroadestsense–financial,social,environmentalandeconomic.WhiletheworkoftheIIrCisinvaluableinaddressingtheneedsofthelongterminvestor,businessesmustalsothinkabouthowCrinformationispresentedinawaythatmeetstheneedsoftheirotherstakeholders.Wearelikelytoseemanydifferentapproachesascompaniesembracetheconceptofintegration.CompaniesmaychoosetocontinuetogivereadersmoredetailonCrinitiativesinastand-alonereport,inaseparatechapteroftheannualreportorthroughtheirwebsite.Iwouldrecommendthatcompaniesdevelopacommunicationsstrategybasedontheneedsofdifferentstakeholders.”

WimBartels,KPMG’sGlobalHeadofSustainabilityReporting&Assurance

“thereleaseofthefirstInternational<Ir>Frameworkcreatesthecatalystforashiftfromthoseinnovatorsincorporatereportingmovingtowardsintegratedreporting,toasignificantnumberofearlyadopters.Itisremarkablehowmuchawarenesshasbeencreated,withthisreporthighlightingthemomentumtowardsincorporatingcorporateresponsibilityintoannualreports.themomentumisnotedandIthankKPMGfortheinsights,itonlyencouragestheIIrCtohelpmakethisbreakthroughnowthatthereisaFrameworkforcompaniestouse.IcanonlyreiteratethewordsofWimBartelswhenhestatesthat‘Wewouldrecommendthatcompaniesdevelopacommunicationstrategybasedontheneedsofdifferentstakeholders’.”

PaulDruckman,ChiefExecutive,InternationalIntegratedReportingCouncil


GrIremainstheleadingreportingframework

Intheabsenceofregulatoryrequirements,voluntaryreportingguidelinessuchastheGrIplayanimportantroleinimprovingconsistencyinCrreportingandthequalityofdisclosure.

researchconductedforthissurveyshowsthattheGrIremainsthemostwidelyusedvoluntaryreportingframework,farexceedingtheuseofnationalstandardsandotherguidelines.overthreequarters(78percent)ofglobaln100companiesnowrefertotheGrIintheirCrreport,anincreaseof9percentagepointssince2011.amongtheworld’slargest250companiestherateincreasedto82 percentin2013from78percentin2011.thosewhodonotrefertotheGrIframeworkeitherstatethattheyusetheirownframeworksdevelopedin-house,nationalreportingguidelinesornoneatall.

Inseveralcountrieswheremorethan75 percentofreportingcompaniesrefertoGrI,itislikelythisislinkedtolocalregulatoryreportingrequirements.Forexample,inBrazil,Finland,Southafrica,Spain,andSwedenreportingrequirementsreferencetheGrIorexplicitlyrequireorrecommendthatcompaniesreportusingtheGrIguidelines.

“thereisastrongbeliefamonglargecompaniesinSouthKoreathattheapplicationofglobalstandardsandguidelinessignificantlyenhancesthecredibilityoftheirreporting.atthesametime,Koreancompanieshaveahistoryoffocusingresourcesonimprovingdisclosure.theGrIguidelinesareperceivedtobemorecrediblethanacompany’sownstandardsorthosefromlocalorganizations.”

SungwooKim,Partner,KPMGinSouthKorea

“Inthiseraofprofessionalreporting,companiesneedtobeabletoexplaintostakeholdersthebasisonwhichtheirreporthasbeenprepared.UseofanexternalframeworksuchastheGrIwillincreasinglybeseentobeessentialtodemonstratecredibility.thereiscurrentlyalackofconsistencyinhowtheGrIisusedandthisisreflectedinreportingquality.alignmentbetweencompaniesonhowtheyapplytheGrIframework,andhowtheyfocusreportingonmaterialissuesinlinewiththelatestG4Guidelines,isthenextstep.”


©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclient

“theGlobalreportingInitiativeundertakesanarrayofoutreachactivities,engagingwitheveryonefrommultinationalcorporations,labororganizationsandcivilsociety,togovernment,academiaandmarketregulators.thesustainabilitychallengeisaglobalone,andGrIisinauniquepositiontoinformdebatesthroughitsglobalnetworkofthousandsofexpertsandsustainabilityleaders,GrI‘FocalPoints’,whichareregionalofficesinBeijing,Delhi,Johannesburg,newYork,Melbourne,Mumbai,SaoPauloandsoon,Bogota–andover70certifiedtrainingpartnersineveryregionintheworld.SinceKPMG’s2011surveywaspublished,thetrendtoregulatesustainabilityreportinghasincreasedmarkedly,anditisnosurprisethatthefiguresinKPMG’ssurveyarehighestinthosecountriesthathaveintroducedregulationinoneformoranother.”

ErnstLigteringen,ChiefExecutive,GlobalReportingInitiative

Figure15:UseoftheGRIGuidelines

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Figure 16: Where are the GRI Guidelines used most?

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Keyfindings

• Morecompaniesthanever nowrefertotheGrIguidelinesintheirCrreporting.

• In37ofthe41countriessurveyed,morethanhalfofn100companiesrefertotheGrIguidelinesintheirCrreporting.

• Morethan90percentdosoinSouthKorea,Southafrica,Portugal,Chile,BrazilandSweden.

• Lessthan50percentdosoinKazakhstan,romania,Denmarkandnigeria.

Base: N100 companies with standalone report or GRI-based section in the annual report Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

32theKPMGSurveyofCorporateresponsibilityreporting2013©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

assurancereachesatippingpointamongtheworld’slargestcompaniesexternalassuranceofCrreportsisstillvoluntaryinmostcountries,withjustFranceandSouthafricapioneeringamandatoryapproachamongthe41 countriessurveyed.Despitethis,manycompaniesdoseekoutassurance,motivatedbyaneedtodemonstratecredibilitywithexternalstakeholders,tomeettherequirementsofsustainabilityindicesandbythevalueassurancecancreateinternallythroughmorereliabledataandaclearerunderstandingofCrissues.

theoverallrateofCrreportassuranceamongn100companiesin2013,includingthenewcountriesaddedtothesurveythisyear,isequalto2011at38percent.amongcountriescoveredinboththe2011and2013surveys,therateofassuranceamongcompaniesthatreportonCrincreasedto41percentin2013.thelowestratesofassuranceareseenincountrieswhereCrreportingisstillinitsinfancy,includingIndonesia,Israel,Kazakhstan,Malaysia,nigeria,SingaporeandtheUae.

Figure17:RatesofassuranceforCRreporting

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ofthen100companiesthatchoosetoassuretheirCrreports,72percentoptforalimitedratherthanreasonablelevelofassurance,10percentforareasonablelevelofassuranceandafurther8percentoptforacombinationofthetwolevels.overhalf(52percent)choosetoverifytheirwholereportratherthanselectedindicatorsorchaptersandthemajority(67percent)continuetooptforamajoraccountancyfirmtoprovideassuranceservices.

Incontrasttothen100,assuranceratesamongtheworld’s250largestcompanieshavereachedatippingpointwithoverhalf(59percent)ofcompaniesthatreportonCrnowoptingforassurance,upfrom46percentin2011.

astheG250grouphasledreportingtrendsoverthelast20years,itislikelythistrendwillbereflectedamongthen100infutureyears.

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“WithmorecompaniesmovingtowardsdeeperintegrationofCrintotheirbusinessstrategyandmanagementprocesses,webelievethatexternalstakeholderswillseekinformationfromauditorsprovidingindependentassuranceofCrinformationanddemonstratingthatthecompanyisasseriousaboutCrdataasitisaboutitsfinancialinformation.atKPMGwebelievememberfirmshavearoletoplaytoassistorganizationsandstakeholdersinthatjourney.”

LarryBradley,KPMG’sGlobalHeadofAudit

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Keyfindings

• ThenumberofcompaniesthatchoosetohavetheirCrreportsassuredbymajoraccountancyfirmsincreasedslightlyto67 percentin2013,comparedwith 64percentin2011.

Major accountancy organizations

Other providers

Base: 1,099 N100 companies that report on CR and use external assurance Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

33

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

Dataqualitystabilizesamongtheworld’slargestcompanies

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• OnequarterofN100 reportingcompaniesrestatedCrdatafrompreviousyears.ofthosethatrestateddata,33percentstatethereasonforrestatementswasupdatedorimprovedmethodologies.

• ThenumberofG250companiesrestatingdatadroppedfromathirdin2011toonequarterin2013.ofthosethatrestateddata,49percentcitedupdatedorimprovedmethodologies.

ascompaniesseektointegratereportingandpresentrelevantCrdatatoinvestorsalongsideestablishedmetricsforfinancialdisclosure,itismoreimportantthaneverthatCrdataisrobust.Highlevelsofrestateddatayearuponyearriskserodingconfidenceincompanydata,reportingsystemsandprocesses.

thenumberofn100companiesthatmadeanyCrdatarestatementsincreasedslightlyto25percentin2013from21percentin2011.thenumberofcompaniesthatrestatedanyCrdatadroppedamongtheG250fromonethirdtojustoveronequarter(26percent)suggestingthatthequalityofdataisimprovingamongthebiggestcompaniesasCrreportingsystemsandprocessesmature.

themostcommontypeofrestatementfoundinbothn100andG250Crreportsrelatetoanupdatedorimprovedmethodologybeingappliedbycompanies,suggestingthatcompaniesarestrengtheningtheirinternalreportingsystemsandprocessesandimprovingthequalityofdatafordecisionmaking.

thepercentageofrestatementsduetoerrororomissionamongthen100decreasedto21percentin2013,comparedwith29percentin2011.amongtheG250,thenumberofrestatementsduetodataerrorsoromissionsalsodecreasedto22percentin2013from35percentin2011.

Figure19:ReasonsforrestatementsofCRdata

Restatements due to updated (improved) estimation/calculation methodology

Update of definitions applied

Restatements due to error or omission

Update of scope (not relating to change in acquisition/divestments)

Base: 587 N100 companies that report on CR and restated CR data Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013


the KPMG Survey of Corporate responsibility reporting 2013 35

The quality of reporting among the world’s largest companies

© 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

the KPMG Survey of Corporate responsibility reporting 2013 36

Part 2 © 2013 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

Introduction

asoutlinedintheprevioussection,Crreportingisabusinessnormtoday,butweneedtolookbehindthequantitativedatatounderstandwhethertheincreaseinthevolumeofreportsismatchedbyanimprovementinthequalityofreporting.

thisyear,forthefirsttime,theKPMG tosupplementtheresearch,seniorSurveyofCorporateresponsibility representativeshavebeeninterviewedreportingincludesanin-depth fromseveralofthecompaniesthatassessmentoftheCrreportspublished scoredmosthighlyintheKPMGbytheG250companies(theworld’s250 assessment.theysharedinsightslargestcompaniesbasedontheFortune intohowtheyhaveachievedbestranking).thequalityofG250reportshas practicesinreporting,theirmotivationbeenassessedusingsevencriteria: fordoingsoandthebusinessbenefits• strategy,riskandopportunity theyhavegainedasaresult.• materiality• targetsettingandindicators• suppliersandthevaluechain• stakeholderengagement• governanceofCR• transparencyandbalance.

Figure 20: KPMG’s CR reporting quality assessment, 7 key criteria

STAKEHOLDER ENGAGEMENT Report explains how stakeholders are engaged and how their views inform CR strategy, materiality process, targets, etc.

RISK, OPPORTUNITY & STRATEGY Report identifies social and environmental risks /opportunities and explains the company’s strategic response.

MATERIALITY Report demonstrates clear, on-going process to identify most significant issues.

TARGETS & INDICATORS Report declares timebound and measurable targets.

TRANSPARENCY & BALANCE Report is open about challenges as well as achievements. Communicates effectively.

SUPPLIERS & VALUE CHAIN Report shows how CR strategy and targets address material impacts of suppliers, products and services.

GOVERNANCE OF CR Report shows how CR is governed within the company, who has responsibility, and how CR performance is linked to remuneration.




AlmostallG250companiesissueCRreportsbutthequalityofreportingisinconsistenteachG250company’sreportwasassessedagainstthequalitycriteriaandawardedanoverallscore.thisproducedanaveragequalityscoreof59outof100amongthe93percentofG250companiesthatpublishaCrreport.

thehighestaveragescoreswereseenforreportingontargetsandindicators(68)andmateriality(66).Companiesscoredlowestforthequalityoftheirreportingonsuppliersandthevaluechain(46),governance(53)andstakeholderengagement(53).theresultssuggestthereisroomforimprovementinthequalityofcompanyreportingonCr.

thehistoricaltrendhasbeentoreportondataandnumbersratherthanthedetailsaroundprocesses.also,issuessuchassupplychainmanagementandgovernancehaveonlybecomesubjecttopublicscrutinyfairlyrecentlyandsocompanyprocessesforthesemaynotyetbeasrobustastheycouldbeinmanycompanies.thequalityofreportingmattersbecauseitistakenasindicativeofthequalityofmanagement/whatisactuallyhappeninginsidethecompany.

Poorqualityreportstendtobeassociatedwithpoorperformanceinthemindofthereader.Fewcompaniespractice‘totalgreenwash’thesedaysbutreaderscertainlygivemorecredencetoahigherqualityreport.

Aclusterof10companiesofthosesurveyedsetthepaceonequarterofG250companies(63)achievedanoverallqualityscoreof80orabove.thesecompaniesdemonstratedasuperiorunderstandingoftheimpactofsocialandenvironmentalissuesontheirbusinessandreportedontheirstrategy,performanceandinteractionwithstakeholdersmorethanothers.

tencompaniesscored90ormore.theyare:• A.P.MøllerMærsk

Transport-Denmark• BMW

Automotive–Germany• CiscoSystems

Telecommunications&media–US• FordMotorCompany

Automotive–US• HewlettPackard

Electronics&computers–US• ING

Finance,insurance&securities–TheNetherlands

• NestléFood&beverage–Switzerland

• RepsolOil&gas–Spain

• SiemensElectronics&computers–Germany

• TotalOil&gas–France

“thequalityofCrreportinginChinavariesquitedramaticallyfromthoughtfuldocumentstoonesthatonlyspeakofbroadambitionsandvalueswithlittledetailaboutactualactionsoroutcomes.reportingshouldoutlineastrategicfocus,targetsandfollow-upactions,ratherthananexhaustivelistofunconnectedsocialorenvironmentalactivities.WhenthedepartmentthatdrivesCrreportingdoesnothaveamandatetosetstrategyforthecompanyorinfluenceotherdepartments’goals,programsandpriorities,itisoftenreflectedinthequalityofthereporting.thatsaid,itisaprocessandChinamustberecognizedforgoingfromverylimiteddisclosuretothemuchhighernumbersofcompaniesreportingtodayinjustafewshortyears.”

SeanGilbert,Director,KPMGinChina


Table2: Table3: Table4:AveragequalityofG250reportsbysector AveragequalityofG250reportsbycountry AveragequalityofG250reportsbycriterion

Sector Averagescore Country Averagescore Qualitycriteria Averagescore(outofapossible100) (outofapossible100) (outofapossible100)

electronics&computers 75 Italy 85 targets&indicators 68

Mining 70 Spain 79 Materiality 66

Pharmaceuticals 70 UK 76 Strategy,risk&opportunity 62

Utilities 65 France 70 transparency&balance 58

telecommunications&media 65 australia 70 Governance 53

transport 64 netherlands 69 Stakeholderengagement 53

automotive 64 Germany 68 Suppliers&thevaluechain 46

Food&beverage 59 Switzerland 63 Source:KPMGInternational,TheKPMGSurveyof

Finance,insurance&securities 58 SouthKorea 60CorporateResponsibilityReporting2013,December2013

Chemicals&synthetics 58 Japan 55

oil&gas 55 US 54

trade&retail 55 China(incl.HongKong) 39

Metals,engineering&manufacturing 48

Construction&buildingmaterials 46


Electronics&computercompaniesleadthepackCompaniesintheelectronics&computerssectorleadtheG250intermsofthequalityofCrreporting,withanaveragescoreof75,followedbymining(70)andpharmaceuticals(70).thelowestscoringsectorsareoil&gas,trade&retail,metals,engineering&manufacturing,andconstruction&buildingmaterials.

Note:TableincludesonlythosecountrieswithfiveormorecompaniesintheG250thatreportonCR.


Europeinfrontonreportingqualityeuropeancompanieshaveasignificantleadoverotherregionsinreportingqualitywithanaveragescoreof71,comparedwithaveragescoresof54intheamericasand50inasiaPacific.

therearealsopronouncedregionaldifferencesinscoresforcertaincriteria.Forexample,companiesintheasiaPacificregionscore45onaveragefortransparencyandbalance,comparedwith53intheamericasandanaverage

europeanscoreof73.Forreportingonsuppliersandthevaluechain,averagequalityscoresare31inasiaPacific,comparedwith48intheamericasand58ineurope.

Italy,SpainandtheUKhavethehighestaveragescores,reflectingtherelativematurityofreportinginthesemarketscomparedwithcountriessuchasChina(incl.HongKong)wherewidespreadreportingisanewerphenomenon.



LessonsfromtheleadersKPMG’sanalysishasidentifiedaclusterof10exemplarG250companieswhoseCrreportingscoredparticularlyhighlyagainstourqualitycriteria,andafurthereightwhosereportsscoredmosthighlywithintheirspecificsector.

anumberofthesecompaniesagreedtosharetheirexperienceswithreadersofthissurvey.organizationswiththeirownexperienceinCrreportingmayrecognizemuchofwhatthesecompaniessay,whilethosethatarelesspracticedmayfindsomeusefullessons.

Table5:Companiesthatparticipatedininterviews:

Weaskedtheexemplarcompaniesthefollowingquestions.

•WhatarethefundamentalsforpublishinghighqualityCrreports?

•WhatbenefitshaveyougainedfromCrreporting?

•HowdoyouthinkCrreportingislikelytoevolve?

•Whatchallengesdoyoufaceinfurtherimprovingthequalityofyourreports?

Company Country Sector

a.P.MøllerMærsk Denmark transport

Bayer Germany Pharmaceuticals

BMW Germany automotive

CiscoSystems US telecommunications&media

enel Italy Utilities

FordMotorCompany US automotive

Hewlett-Packard US electronics&computers

InG netherlands Finance&insurance

nestlé Switzerland Food&beverage

repsol Spain oil&gas

Siemens Germany electronics&computers

tesco UK trade&retail

total France oil&gas

vale Brazil Mining



Gettingthefundamentalsright

EstablishrobustprocessesallthecompanieswespoketoagreedthatthefoundationsofqualityCrreportingarerobustsystemsandprocessesforcollectingdataandidentifyingmaterialissues.

“Gettingthebasicsright,suchasagoodmaterialityprocess,enablesustocreateareportthatbothsatisfiestheneedsofexternalstakeholdersandisrelevanttoourbusiness,”saidannetteStube,DirectorofGroupSustainabilityata.P.MøllerMærskGroup.“themoresolidourprocessesthebetterthereport.”

“themoresolidourprocessesthebetterthereport.”

AnnetteStube,DirectorofGroupSustainability,A.P.MøllerMærskGroup

thereis,however,no“onesize-fits-all”solutionforcollectingdata.Manyofthesecompanieshavedevelopedtheirownsystemsratherthanbuyingoff-the-shelfproducts.Inevitablyittakestime,andsometrial-and-error,togetthesesystemsrightbutthemoreintegratedtheyareintothebusiness,themoreeffectivetheyare.

attesco,forexample,Crisacorepartofthebalancedscorecardusedacrosstheentirecompanytomonitorperformanceagainstthebusinessstrategy.

LeadfromthefrontGettingtherightprocessesinplaceisimportant,butgoodprocessesarenouseiftheyarenotimplemented.

thatimplementationneedstobedrivenfromtheverytopoftheorganization,accordingtothecompanieswespoketo.

“leadershipsupportisamusttosecurethebuy-inandengagementofthefunctionswhicharecrucialtodevelopmentofthereport,”saidUrsulaMathar,HeadofGroupSustainabilityandenvironmentalProtectionatBMW.

asKersten-KarlBarth,DirectorofCorporateSustainabilityatSiemenssaid,“theSiemensSustainabilityBoard,whichischairedbytheChiefSustainabilityofficer,isthecentralsteeringcommitteeforsustainabilityatSiemens.Initsregularmeetingsitdirectsoursustainabilityprogramaspartofoursustainablestrategy,adoptsappropriatemeasuresandinitiativesandmonitorsprogress.”

ItisperhapsnosurprisethatthesecompaniesallhaveleaderswhoarepersonallyengagedwithandcommittedtoCr.

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientttheKPMGSurheKPMGSurvveeyofCorporateryofCorporateresponsibilitesponsibilityryreporting20eporting201133 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.4141

atvale,forexample,seniorleadersplayhands-onrolesinCrreporting,helpingtoestablishprioritiesandidentifyissuesanddilemmastobecovered.

notonlydoesthishelptosecurethenecessarytimeandresourcesforqualityreporting,butitalsogivesCrteamsthelicensetobetransparentandbalancedintheirdisclosure,reportingchallengesandsetbacksaswellassuccesses.

asJohnviera,GlobalDirectorofSustainabilityofFordMotorCompanysaid,“Wehavesupportfromthetopdownandthathasenabledustoreportinamorecredibleway.”

However,evenincompanieswherereportingiswell-established,seniormanagersdocomeandgoandprioritiescanchange.Crteamsmustcontinuallydemonstratethebusinessvalueofreportingtoensurecontinuedsupport.

“Crreportingcostsmoneyandtime,soitisimportantthatinternalstakeholdersunderstandtheaddedvaluewegetfromthereport,”saidUteMenke,HeadofSustainabilityandexternalreportingatBayer.

“Byreachingoutbeyondourownfourwalls,wecancreateabetterreport.”

JohnViera,GlobalDirectorofSustainability,FordMotorCompany

Stakeholderengagement:gettherightbalancethecompaniesagreedontheimportanceofgoodstakeholderengagementindeliveringqualityCrreporting.

“Byreachingoutbeyondourownfourwalls,wecancreateabetterreportthatmeetstheneedsofourstakeholders.Italsogivesconfidencetoourseniorleadersthatwearefocusedontherightissues,”saidJohnvieraofFord.

However,thesecompaniesrecognizeitisunrealistictosatisfyalltheinformationexpectationsofallstakeholders.

eduardoGarcíaMoreno,DirectorofCorporateresponsibilityandInstitutionalServicesatrepsolnoted,“Weneedtorespondtomanystakeholders;somedemandmoreconciseinformationwhileothersrequiremoredetaileddata.”

abalancingactisrequiredandthisiswherearobustmaterialityprocessisessential.

“Wegetahugevolumeofenquiriesfromstakeholders.Wecanneverrespondtoeverything,soweusematerialitytoidentifyourprioritiesanddrivethoseforward,”saidKathyMulvany,SeniorDirectorofCorporateaffairsatCiscoSystems.

CompaniesthatpublishstakeholderviewsandcommentsintheirCrreportssaytheybenefitsignificantlyfromtheaddedcredibilitytheseindependentvoicesbring.However,someareconcernedthatthemovetowardsintegratedreportingcouldleadtoconstraintsonformatandcontentandmakeitmoredifficulttoincludestakeholdervoicesinthefuture.

“Weusematerialitytoidentifyourprioritiesanddrivethoseforward.”

KathyMulvany,SeniorDirectorofCorporateAffairs,CiscoSystems

BetransparentontargetstheexemplarcompaniesbelievetheirCrperformanceishelpedbypubliclydeclaringtheirCrtargets,andbeingopenabouttheirperformanceagainstthosetargets.

asJoshHardie,CorporateresponsibilityDirectorattescoPlCsaid,“Publishingareportdoesincentivizeustopushourselvesfurther.Ifyoumissatargetyouhavetobeopenaboutit,andyoudon’twanttomissitagain.”

atBayer,UteMenkebelievesthattargetshavebenefitsaboveandbeyondshowingexternalstakeholderstheprogressthecompanyhasmade.“Internallythetargetshelppushsustainabilityfurtherintotheorganization,”shesaid.


CreateownershipthecompaniesinterviewedgotogreatlengthstogenerateasenseofownershipofCracrossallfunctionsinthebusiness.Forexample,valeengagesonethousandemployeeseveryyeartoproduceitsCrreport.

“Wehavetomakesurepeopleunderstandwhythereportmatters,”saidvaniaSomavilla,executiveDirectorofHumanresources,HealthandSafety,Sustainabilityandenergyatvale.

“Whenweproducedourfirstreportweinvestedalotoftimeinexplainingourapproach,discussingwhytransparencyisimportantandintroducingpeopletothereportingguidelines.Wedidn’tjustgiveourviewbutlistenedtotheirperspective.thishasbeengoodforourreportingandhascontributedtoawiderculturalchangeintheorganizationaroundtransparency.”

Usereportingframeworksthesecompaniesclaimbothinternalandexternalbenefitsfromusingreportingframeworks.

SeveralsaidthatframeworkshelpCrteamstomakethecasefordisclosinginformationandtoexpandthescopeofthecompany’sCrreporting.Ifseniormanagersaremotivatedtoachieveahighframeworkrating,itismorelikelytheywillcommittotransparentandbalancedreportingoverall.

Intervieweesalsosaidthatframeworkshelptoachieveconsistencyinreportingbetweendifferentcompanies,makingiteasierforexternalstakeholderstocompareandcontrast.

this,theyfeel,enhancesthecredibilityoftheirreporting,increasingtrustandimprovingrelationships.

“Consistentreporting,inatransparentwayusinganacceptedformat,givesusthecredibilityandwherewithaltohavethoseimportantconversationswithstakeholders,”saidJohnvieraofFord.

thatsaid,anumberofcompaniesemphasizedthatwhileexternalframeworksareusefulreferencetools,theyarenosubstituteforusingtheirownjudgementtodeterminewhatandhowtoreport.

“WewritethereportandthenticktheGrIframeworkboxes,nottheotherwayaround,”saidleonWijnands,GlobalHeadofSustainabilityatInG.“Sofar,we’veneverbeeninasituationwherelookingattheGrIframeworkhasmadeusrealizewemissedsomething.”

althoughthereisbroadsupportforframeworksamongthesecompanies,thereisalsofrustrationoverthedisparitiesbetweendifferentframeworks.

“theproliferationofexternalframe-worksisfrustratingforcompaniesandaddsunnecessarycomplexity,”saidellenJackowski,livingProgressStrategy,Hewlett-Packard.

InvestinexternalassuranceCompaniesremarkedthattheconstructivecriticismandchallengetheygetfromhavingtheirCrdataassuredhelpsthemtoimprovetheclarityandcredibilityoftheirCrreporting.Someobservedspecificimprovementssuchasagreaterfocusonmateriality.

“assurancehashelpedusbemorefocusedonmateriality,tobemorefactualinourreportingandtoimprovethestrengthofoursystemsinternally,”saidUteMenkeofBayer.“Itissomethingthatmanyofourclientsandstakeholdersnowexpect.”

Janetvoûte,GlobalHeadofPublicaffairsatnestlénotedthatbyassuringitsCrdatathecompanysendsastrongsignaltoitsstakeholdersaboutitscommitmenttoCr.ItsCreatingSharedvaluereportispublishedatthesametimeasitsannualreportandaccounts,andbothareexternallyassured.

“assurancehashelpedusbemorefocusedonmateriality”

UteMenke,HeadofSustainabilityandExternalReporting,Bayer



thebenefitsofreporting

DrivesperformanceandinnovationManyofthecompaniesinterviewedcitedimprovedbusinessperformanceandinnovationasoneoftheprimarybenefitsfromCrreporting.

FulvioConti,ChiefexecutiveandGeneralDirectorofenelnoted,“ourmaterialityassessmentiscentraltothequalityofourreport.Itmeanswefocusonthemostrelevantissuesforboththecompanyandourstakeholders,aligningourcompetitiveadvantagewiththeadvantageofsocietiesandcommunitiesinwhichweoperate.”

atHewlett-Packardforexample,reportingthecarbonfootprintofthecompany’sownoperationshelpedtocreatemanagementawarenessofthedownstreamcarbonemissionsofitsproductsandencouragedthecompanytoaddressthem.

atInG,Crreportingresultedinasignificantshifttowardsrenewableenergyinitsutilitypowerportfolio.

“reportingourprojectfinanceenergyportfolioanditsshifttowardsrenewables,sparkedtheinternaldebateabouttheforceofsustainabilitytrends,”saidleonWijnandsofInG.

JohnvieraofFordagreed.Hesaid,“throughourriskassessmentsandreportingonclimatechangemanyyearsback,ourseniorexecutiveswereabletoidentifynewopportunitiesforinnovationinourproductsandproductionfacilities.”

BayerisanotherexampleofaG250companywherereportingonCrhashelpedtostimulateinnovation.“ourclimateprogrambeganwithafocusonefficiencyandhasledtoinnovationinourproductsandservices,suchasoursustainablehousingproducts,”saidUte Menke.“apartfromdisclosingthesedevelopmentstransparently,reportingalsoplaysaroleinthisthroughitsimpactoninternalawarenessandincreasinglydetailedandreliabledatamanagement.”

“ourmaterialityassessmentiscentraltothequalityofourreport.”

FulvioConti,ChiefExecutiveandGeneralDirector,Enel

Enhancesreputationinternallyandexternallyreportinghasasignificantpositiveimpactonemployeeprideandmotivation.Manycompanieshighlightthepositiveroletheirreportplaysinrecruitmentofnewemployeesandsomealsoemphasizeditsimportanceinretention.reportingisalsoseenasanimportanttoolforstrengtheningrelationshipswithexternalstakeholders.

leonWijnandsatInG,said,”thereportplaysanimportantroleinourcommunicationwithstakeholders.Itisouropportunitytoanswertheirquestionsandtoshareourstanceonkeyissues.Weareusingthecontentmoreandmorethroughouttheyeartocommunicatewithclients,customersandothers.”

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclientservicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated. ttheKPMGSurheKPMGSurvveeyofCorporateryofCorporateresponsibilitesponsibilityryreporting20eporting201133 4444

“actionsthatonepartofthebusinesstakescanbeveryrelevanttoanother.”

JoshHardie,CorporateResponsibilityDirector,TescoPLC

However,positiveeffectsaredependentonthequalityandcredibilityofreportedinformation.asJohnvieraofFordnotes,“togetareputationalbenefityouneedyouractionstomatchyourwordsandtoreportinaconsistentandtransparentwayagainstanacceptedframework.thatgivesyouthecredibilitytohavetheconversationswithnGosandothers.”

ForCisco,producingareportisparticularlyimportanttobuildingcredibilitywithcustomers,wholooktoCiscotoprovideproductsandsolutionsthatcanhelpthemoperatemoresustainably.

“ourproductsandserviceshelpcustomerstooperatemoresustainably,forexampletoreduceenergyandavoidemployeetravel,”saysKathyMulvanyofCisco.

“ourreportshowsthemthatwewalkthetalk,andifwecandoit,theycandoittoo.Itimprovesourcredibilityandthathelpsusengagewithcustomersandhelpthemsolvetheirsustainabilityproblems.”

ImprovesinternalcommunicationtheprocessofCrreportingcaninitselfbeapowerfulinternalcommunicationstool.

allcompaniesinterviewedsaidthatCrreportingimprovesinternalawarenessofCrandthat,onapracticallevel,thereportactsasausefulrepositoryofinformationforallemployeestouseintheirworkandincommunicatingwithexternalstakeholders,includinginvestorsandanalysts.

Insuchlargecompanies,itcanalsobeeasyforinnovativepracticesinonepartofthebusinesstobeunknowninotherparts.Crreportingcanhelpdifferentfunctionstolearnfromeachother,andforcompaniestoidentifyopportunitiestoscaleuptheirworkonCrandsustainability.

asJoshHardiefromtescosaid,“the processofcollectingandanalyzinginformationhelpsusidentifyopportunitiestouseourscaletoincreaseimpact.actionsthatonepartofthebusinesstakescanbeveryrelevanttoanother.reportingplaysaroleinhelpingtosharethatinformation.”



Futuretrendsandchallenges

thesecompaniesexpectthattheirCrreportingwillbecomemoreintegratedwithfinancialreportingoverthenextfiveyearsandmorefocusedonmateriality,drivenbytheGrIG4Guidelines.

CompaniesincludingBayerarealreadymakingthemovetointegrationandothersexpecttofollow,butthereisnoclearorcommonviewoverwhatformIrwilltakeinpractice.

asvaniaSomavillafromvalesaid,“InfiveyearsIbelieveintegratedreportingwillbethenorm,that’swhyweareveryactiveinthedebateonthisissue.However,althoughwerecognizetheimportance,therearemanyhurdlestoovercomeandsoonweexpecttohaveaviewofwhatintegratedreportinglookslikeforvale.”

thereisoptimismthatIrwillhelpmainstreaminvestorstobecomemoreengagedwithsustainabilityissues.

“InfiveyearsIbelieveintegratedreportingwillbethenorm.”

VaniaSomavilla,ExecutiveDirectorofHumanResources,HealthandSafety,SustainabilityandEnergy,Vale

However,therearealsoconcernsthatthedepthandbalanceofCrreportingmaybelostifitconformstothemoreformalizedstyleandtoneofmanyannualreports.

“Itisimportantthatintegrationdoesn’tresultinreportsthataremorelegalistic.Ifsustainabilityreportinginitscurrentformcompletelydisappears,thatwillbealoss,”saidJohnvieraofFord.

CompaniesalsoexpecttocommunicatearoundCrmorefrequentlyinfuture.Forexample,tescohasalreadymovedtopublishingahalfyearlyCrperformanceupdatealongsideotherongoingcommunication.

InGalsorecognizedtheneedforfrequentcommunication.“Weneedtocommunicateaseventsoccur,not12 monthsafter,”saidleonWijnandsof InG.

Finally,thesecompaniesexpectthetraditionalformatsofCrreportingtoevolveandfragmentwithashiftawayfromthe‘all-in-one’or‘encyclopedia’approach.

“Weuseourothersustainabilitycommunicationstotellourstories,whileusingourreporttobeclearandconciseandtransparentaboutourprogress,”saidellenJackowskiofHewlett-Packard.

“Weneedtocommunicateaseventsoccur,not12monthsafter.”

LeonWijnands,GlobalHeadofSustainability,ING

BertrandJanus,HeadofCSrreportingattotalagreed.Hesaid,“oneoftheproblemsincorporateresponsibilityreportingisthatcompaniestrytouseonedocumenttodomanydifferentjobs.reportingandcommunicationaretwodifferentthings.Itisimportanttodistinguishbetweenthemandtousedifferenttoolstomeetthedifferentobjectivesinvolved.Weconsiderourannualreporttobethemain‘report’whichfreesustocommunicateindifferentwaysandtotellourstorybetterbyusingvariousmedia.”

Forcompaniesincludingvaleandrepsoltheevolutionofreportingwillincludemorelocallevelreporting,enablingthemtoengagemoreeffectivelywithemployeesandexternalstakeholdersatthelocallevel.



Climate Change Energy & Fuel

Water Scarcity

Weath

Resource

Population

Growth

Material

Scarcity 1:Strategy,riskandopportunity

Buildinglongtermvaluein Figure21:achangingworld Tensustainabilitymegaforces

today’sbusinessesoperateinaworldincreasinglyshapedbysocialandenvironmentalmegaforces.6theglobalpopulationisgrowingandshiftingtocities;wealthpatternsare

ation changing;naturalresources,including tserowaterandfoodsupplies,arebecoming feDmoredifficulttoaccessand/ormorecostlytoproduceasdemandincreases;theclimateiswarmingandecosystemsaredeclining.

Dec

line

Ecos

yste

m

thesemegaforcesdonotfunctioninisolationfromeachother–theyareinterlinkedinacomplexsystem.

Food

secu

rity

Businessleadersneedtounderstandthesemegaforcesandbealerttothecommercialrisksandopportunitiestheypresent,bothnowandinthe

noi t

future.onlythencantheycreate

aziUrban

robuststrategiesforlongtermsuccessandplanforthebusinessmodelsoftomorrow.

Crreportingshouldthereforedemonstratethatthecompany:

• isawareofsocialandenvironmentalmegaforcesandhowtheyimpact “Ciscotechnologiesandsustainabilitythebusiness bestpracticeshelpCiscoandour

customersimproveproductivityand•understandsand,ideally,has efficiencywhilereducingcost,benefiting

quantifiedtheresultingrisksand ourbusinessesandtheplanet.”opportunities

•hasastrategyinplacetominimizeriskandexploitopportunitiesandisclearabouttheactionsitistaking.

Source:KPMGInternational,ExpecttheUnexpected,February2012.

“Weareinvestingingrowth,andwewillachieveouraspirationsonlyasaresponsiblebusinesspartnerandemployer.Whetheritisanewship,portorrig,ourinvestmentsaremadewithafocusonthelongterm.Byconnectingpeopleandbusinessestoglobalsupplychainsinsmarterandmoreefficientways,weaspiretobuildbetterandstrongereconomiesintheregionsweserve.”

l

JohnT.Chambers, NilsS.Andersen,ChiefExecutiveand ChiefExecutive,Chairman, A.P.MøllerMærsk

6 KPMGInternational,ExpecttheUnexpected, CiscoSystems GroupFebruary2012.kpmg.com/expecttheunexpected


MegaforcesarewidelyacknowledgedbutidentificationisinconsistentoftheG250companiesthatreportonCr,most(87percent)identifyatleastsomesocialandenvironmentalmegaforcesthataffectthebusiness.Climatechangeandmaterialresourcescarcityarethemostfrequentlynamed,identifiedby55percentand47percentrespectively.

“Iwantustogettoapositionwherewecanmakethesamepresentationaboutourcompanyresultstothemainstreaminvestorsastothesociallyresponsibleinvestors.”

ChristophedeMargerie,ChiefExecutive,Total

“enterprisescanpursueinnovativebusinessmodelsandnewopportunitiestodelivertransformativesolutionsthatcanhavedeepimpactsonsocieties.Moreover,thefinancialcommunityisnowundeniablyrecognizingandshapingthelongtermbenefitsofcontributingtosustainabledevelopment,thataimforpositivesocialorenvironmentaloutcomeswhilegeneratingfinancialreturns.It’sbeentwoyearssinceenel’sCSrUnitandInvestorrelationsUnitstartedworkingtogethertowardsanintegratedcommunicationaboutthecompanyeSG–environmental,Social,Governance-performancetobothinstitutionalandmainstreaminvestors.”

FulvioConti,

Figure22:Doesthereportidentifyglobalenvironmentalandsocialmegaforcesthataffectthebusiness?

Climate Change 55

Material resource scarcity 47

Energy and fuel 43

Water scarcity 34

Population growth 28

Urbanization 21

Health 19

Ecosystem decline 18

Wealth 15

Ageing population 12

Food security 12

Other 3

Deforestation 2

No discussion of megaforces 13

0 20 40 60 80 100%

Base: 233 G250 companies that report on CR Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

SixtypesofCRriskKPMGhasidentifiedsixkeytypesofriskscompaniesfacefromsocialandenvironmentalmegaforces.7Forthisreport,memberfirms’professionalsreviewedG250Crreportstofindoutwhattypesofriskslargecompaniesareidentifying.

•Physical: •Competitive:Damagetoassetsandsupply Impactsoffast-changingmarketchainsfromphysicalimpactssuch dynamics,anduncertaintyofasstorms,floods,watershortages supplyandpricevolatilityofkeyandsea-levelrise. inputs.

•Regulatory: •Social:Complexandrapidchangesto Conflicts,socialunrest,theregulatorylandscape. communityandworkerprotests,

laborshortages,migration,etc.•Reputational:

Damagetocorporatereputation •Legal:frombeingseentodothewrong exposuretopotentiallegalaction,thing. forexample,overnon-disclosureof

environmental,socialandgovernanceinformation.

49

ChiefExecutiveand 7KPMGInternational,ExpecttheUnexpected,February2012.kpmg.com/expecttheunexpected.GeneralDirector,Enel

©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclienttheKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.

Figure23:Doesthereportidentifyriskstothebusinessasaresultofglobalsocialorenvironmentalmegaforces?

Reputational risk

Regulatory risk

Competitive risk

Physical risk

Social risk

Legal risk

Other type of risk

Risks not identified

2

19

21

36

38

45

48

53

0 20 40 60 80 100%


Figure24:Mostfrequentlyidentifiedrisksbyregion

“Siemenshasdefinedsustainabilitytomeanactingresponsiblyonbehalfoffuturegenerationstoachieveeconomic,environmentalandsocialprogress.Weareconvincedthatsustainability,inthissense,isabusinessopportunity,andonethatisworthseizing.oneSiemens,ourframeworkforsustainablevaluecreationandcapital-efficientgrowth,addressesthisbusinessopportunity.”

Kersten-KarlBarth,DirectorofCorporateSustainability,Siemens

Americas

Asia Pacific

Europe

0 20 40 60 80 100%

Physical risk

Regulatory risk

Reputational risk

Competitive risk

Social risk

Legal risk



Figure25:Mostfrequentlyidentifiedrisksbysector

Automotive

Chemicals & synthetics

Telecommunications & media

Construction & building materials

Electronics & computers

Finance, insurance & securities

Food & beverage

Metals, engineering & manufacturing

Mining

Oil & gas

Pharmaceuticals

Trade & retail

Transport

Utilities

0 20 40 60 80 100%

Physical risk

Regulatory risk

Reputational risk

Competitive risk

Social risk

Legal risk


MegaforceriskshitoperationsnotjustreputationsMostreportingcompanies(81percent)identifyatleastsomemegaforce-relatedrisksintheirreports,butoneinfivedonotmentionanyrelatedrisksatall.europeanG250companiesaremarkedlymorelikelytoacknowledgeenvironmentalandsocialrisksthancompaniesintheamericasorasiaPacific.

Crhastraditionallybeenseenasareputationalissue,andreputationalriskisstillthemostcommonly

mentionedtypeofrisk,citedin53percentofG250Crreports.However,theresearchalsoclearlyshowsthatasignificantnumberofcompaniesnowacknowledgeothertypesofenvironmentalandsocialrisks.almosthalftheG250companiesthatreportmentionregulatory(48percent)andcompetitive(45percent)risks.Socialrisksareacknowledgedbymorethanonethird(36percent).

Intheamericas,competitiveandregulatoryrisksaremorecommonlymentionedthanreputationalrisks,andalmostallmentionsoflegalriskinreportsfromthisregionarefromcompaniesheadquarteredintheUS.

FewcompaniesreportvalueatriskonlyasmallnumberofG250Crreports(5percent)includeinformationonfinancialvalueatstakethroughenvironmentalandsocialrisk.althoughthesecompaniesarecurrentlythe

“theworldhasfacedandresolvednumerouschallengesoverthepastcenturies.Focusingonlyontherisksofsustainabilitydoesnotaddressthekeychallengeofourtime-providingdecentlivesfor9billionpeopleby2050withinthecarryingcapacityofourplanet.Businessesplayacrucialroleintheworldbyfindingprofitablesolutionstochallenges.Itisthereforeencouragingtoseethatbigbusinessisnowseeingsustainabilitythroughalensofopportunityasmuchas,ormorethan,throughthelensofrisk.”

YvodeBoer,KPMG’sGlobalChairman,ClimateChange&SustainabilityServices



minority,afurther38percentofreportingG250companiesacknowledgethattheseriskscarryfinancialimpactsbutdonotgosofarastoquantifythevalueatstake.Financialquantificationofrisksismostprevalentinthefinancialandoil&gassectors.almostthreequartersoftheG250companiesthatquantifyatleastsomeoftheirenvironmentalandsocialrisksinfinancialtermsareintheoil&gasandfinancialservicessectors.

Crmighthavebeenseen10yearsagoasanethicalorreputationalissueprimarily,butenvironmentalandsocialfactorsnowpresentdirectbottom-linerisksinmost

Figure26:Doesthereportidentifyopportunitiesasaresultofglobalsocialorenvironmentaltrends?

Innovation(e.g.newproduct/service)andlearning

Improvereputationorbrand(e.g.strengthenedconsumerrelationships)

Improvemarketposition(marketshare)

Costsavings

Improveemployeemotivation

Strengthensupplierrelationships

Accesstocapitalorincreasedshareholdervalue

Improvedrelationshipswithgovernmental/regulators

Noopportunitiesidentified

Figure 27:

“everynon-financialriskmighthaveafinancialimpactifwedon’tmanageitproperly.”

UteMenke,HeadofSustainabilityandExternalReporting,Bayer

0 20 40 60 80 100%

51

36

30

24

21

12

11

13

72


Does the report state that the company has a CR strategy?

Americas

AsiaPacific

Europe


87 13

90 10

71 29

0 20 40 60 80 100%

Yes

No

“thereisareputationalbenefitfromourworkonsustainabilitybutthemotivationisaboutmuchmorethanreputation.Ifourbusinessistosucceedlongtermweneedtouseresourcesefficientlyandtocontributetothrivingcommunities.thisisessentialtoourfuturecompetitiveness.”


“reportingonsustainabilitystrategyvarieswidelyamongUScompaniesandsectors. Somecompaniesdonotreportonsustainabilitystrategyseparatelyfromcorebusinessstrategy,particularlywhereprogramshavegrownorganicallyandareembeddedinthebusinessculture.Somecompaniesmayalsodecidenottodisclosetheirstrategycompletelyoncommercialgrounds.Ideallythesustainabilitystrategyshouldaligncloselywith,orbeembeddedin,thecorporatestrategy.IseesuccessfulorganizationsusingCrasthelensofthebusinesstodriveadditionalbusinessvalue.”

JohnHickox,Partner,KPMGintheUS



2:Materiality

CriticaltotheevolutionofCRreportingthesocialandenvironmentalimpactsofacompany’sactivitiescanbemanyandvarious,butnotallimpactsareequallyimportanteithertothebusinessoritsstakeholders.Companiesneedamaterialityprocesstoidentifyandprioritizetheissuesattheheartoftheirlongtermviabilityandtofocusmanagementandreportingresourcesonthese.

WiththeintroductionoftheGrIG4GuidelinesandthegrowthofIr,materialityissettobecomeanevenmorecriticalelementinCrreporting,andcreatesanopportunityforcompaniestoproducemorefocusedreports.


•clearlyidentifiesanddisclosesitsmaterialissues

•conductsamaterialityassessmentregularlyandhasanongoingprocessforassessingthechangingimportanceofissuestothebusinessanditsstakeholders

• takestheviewsofinternalandexternalstakeholdersintoaccountwhenassessingmateriality

•managesitsmaterialissuestoimproveperformanceovertime.

MoretransparencyisneededonmaterialityprocessesourresearchshowsthatmaterialityiswidelyreferredtoasaguidingprincipleforCrreporting,withmorethanthreequartersofG250reportsidentifyingissuesthatarematerialtothebusiness(79percent).

Companiesinthemining,construction&buildingmaterials,pharmaceuticalsandtelecommunications &mediasectorsaremostlikelytoidentifymaterialissues,whilecompaniesinthetrade&retail,automotiveandfinancesectorsareleastlikelytodoso.

However,ourresearchdidnotassesswhethercompaniesareeffectiveinidentifyingtherightissues.InKPMGmemberfirms’experience,acompany’sunderstandingofwhatistrulymaterialtothemandtheirstakeholderscanvarywidely.athoroughandongoingprocesstoidentifymaterialissuesisessentialifmaterialityistobeusefulasaguidingprincipleforstrategicdecisionmakingratherthanforreportingalone.

Figure 28:

“thematurityofminingcompaniesinidentifyingtheirmaterialissuesislargelyafunctionofthelongtermhorizonofthesector.Companiesoftenhavetotakea30-40yearviewontheiroperatingenvironmentwhenmakinginvestmentdecisions.Havingagoodhandleonmaterialissuesthatmayaffecttheseinvestmentsiscriticaltobuildingresilience,managinglongtermriskandfuture-proofingtheoperatingmodel”

WayneJansen,KPMG’sGlobalHeadofMining

Does the report identify material issues? Sector view.

Mining



Pharmaceuticals

Oil & gas

Utilities

Transport




Food & beverage


Automotive

Trade & retail

100

89 11

88 12

88 12

86 14

85 15

83 17

82 18

82 18

80 20

78 22

75 25

71 29

62 38

0 20 40 60 80 100%

Yes Base: 233 G250 companies that report on CR Source: KPMG International, The KPMG Survey of

No Corporate Responsibility Reporting 2013, December 2013


Figure29:Howoftendocompaniesassessmaterialissues?

1958

18

5

Not stated

A limited process is in place/infrequent assessment of materiality

A process is in place to assess materiality at specified intervals (e.g. each reporting cycle)

A process is in place to assess material issues on an ongoing basis

Base: 180 G250 companies that report on CR and identify material issues Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

Roomforimprovementonmaterialityprocessthereisroomforimprovementintermsofexplaininghowmaterialissuesareidentifiedandhowoftenthisisdone.ManyG250companiesarenotable,orchoosenotto,explaintheprocessused.ofthecompaniesthatidentifymaterialissuesintheirreports,41percentdonotexplaintheprocess.

onlyasmallnumberofG250companies(5percent)thatreportonmaterialityassessmaterialissuesonacontinuousbasis.europeancompaniesinthefinanceandinsurancesectoraremostlikelytodoso.Infact,11ofthe12G250companiesthatcontinuouslymonitormaterialityarebasedineurope,andfiveofthosearebanks.

Materialityneedstobeintegratedintothebusinesswithcontinuousmonitoring,sonewissuescanbeassessedastheyemerge,notoncetheyhavebecomearisktothebusiness.Companiesthatusematerialityasatoolforongoingassessmentsofriskandopportunity,ratherthanasawaytomeetreportingrequirements,areinastrongerpositiontoanticipateandmanageriskeffectively.

“Wearealerttotrendsasthey “throughourmaterialityprocesswerepresentnewrisksandopportunities haveidentifiedrisksandopportunitiesthatcouldaffectourbusinessandthisis thatweren’tonourradarbefore.”fedintothereportingprocess.”


VaniaSomavilla,ExecutiveDirector,HumanResources,HealthandSafety,SustainabilityandEnergy, Vale



Figure30:Doesthereportstatehowstakeholderviewsareconsideredintheprocessofdefiningmaterialissues?

34

45

21

Link between stakeholders and materiality process clear

Limited explanation of link between stakeholders and materiality process

No explanation

Base: 180 G250 companies that report on CR and identify material issues Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

MorethanonethirdofG250strugglewithstakeholderinputtomaterialityprocessStakeholderviewsarecriticaltoathoroughassessmentofmaterialissues.Companiesthatcanclearlyexplainhowstakeholdersareinvolvedintheprocessofdefiningmaterialissuesaremorelikelytoreflecttheissuesthatreallymatterintheirreports.ofthecompaniesthatreportonmaterialissues,lessthanhalf(45percent)clearlyexplainhowstakeholderinputisusedtoidentifythoseissues.themajority(55percent)offeronlypartialexplanationornoexplanationatall.

“Wehaveformallybuiltstakeholderviewsintoourreportingviaourmaterialityprocess.thisincludesregularstakeholderforumsheldaroundtheworld,whereweheardirectlyfrommanyofourkeystakeholders,complementedbywebandmediascans,stakeholdersurveysandface-to-facemeetings.”

“WelistentoawiderangeofstakeholdersandincorporatetheirviewsintoourCSrinitiatives.thecompany’smaterialissuesaresetbasedonnissan’sbusinessactivitiesandstakeholders’demands.theprogressontheseissuesismanagedandreportedbyusingtheCSrScorecard.Inadditiontothecurrentlyincludedenvironmentalissues,theMaterialityMatrixwillalsoincludeawiderrangeofsubjectsinthecomingsustainabilityreport.”

“lastyearwereallyfocusedonmaterialityforthefirsttimeinmanyyearsandweareusingthistodefinethecontentofourreport.Itishelpingustoproduceashorterandmorefocusedreportthatanswersthemostimportantquestions.”

NorikoIkari,JanetVoûte,GeneralManagerof EllenJackowski,GlobalHeadof

PublicAffairs, CSRDepartment, LivingProgressStrategy,Nestlé Nissan Hewlett-Packard



3:targetsandindicators

targetsandkeyperformanceindicators(KPIs)arecriticalinordertoimproveCrperformanceovertime,provideafocusformanagersanddriveinnovation.

robusttargetsmustbelinkedtothebusiness’smaterialCrissues;haveaclearbaselineandtimelineforachievement;bemeasurable;andbesupportedbyclearKPIsformanagingandmeasuringprogress.


•setsperformancetargetsforsustainabilitythataretime-boundwithaclearbaselineandenddate

•assignstargetsrelevanttoitsmaterialCrissues

•hasaprocesstomeasureprogressagainsttargets

• istransparentonitsperformanceagainstCrtargets.

QualityofCRtargetsisinconsistentacrosssectorsMost(87percent)G250companiesthatissueCrreportsdodisclosetargetsinthosereports.thismayseemahighrate,butitmeansthatonein10reportingcompanieshasnoCrtargetsatall.

Inaddition,notalldisclosedtargetsarerobust.aroundonequarterofreportingcompanies(26percent)settargetsthatarenotlinkedtotheirmaterialissues.onlyhalf(56percent)backthemajorityoftheirtargetsupwithaclearbaselineandenddate.

“It’simportanttocombinelonger-termstrategictargetswithobjectivesfornextyear.Weinvolvecolleaguesatalllevelsinthetargetsettingprocess.thisisveryvaluableandweendupwithbettertargets.”

UrsulaMathar,VicePresidentSustainabilityandEnvironmentalProtection,BMWGroup

Figure31:Doesthereportincludetargetsrelatingtomaterialissues?

23

3826

13

Targets for more than 50% of material issues

Targets for up to 50% of material issues

The report contains some targets but it is not clear how these relate to material issues

There are no targets


“Food&beveragecompaniesareoneoftheleadingsectors onsettingCrtargetslinkedtotheirmaterialissues.thisislargelydrivenbyincreasingcustomer,investorandregulatorpressure.thechallengestothefoodandbeveragesectorareclearlymounting:therehasbeenaseriesofhighprofilefoodqualityscandalsrecently;nGosarerankingfoodbusinessesontheirpublicreporting,orlackthereof;andtragediesresultingfromunsafemanufacturingconditions,areallhighlightingtheneedtomovebeyondcorporateresponsibilitymerelyasabranddifferentiator.theemotivenatureofasectorthatproducesthefoodthatconsumerseathasmovedthesectortoprogressfurtherandfasterthanmanyothersinunderstandingmaterialissues,settingprioritiesandreportingagainstthem.therecentincidentsareforcinga‘wartsandall’approachtoreportingandIexpectthistrendtocontinue-particularlyamongstthosebusinessesthatneedtoengenderstakeholdertrust.”

WillyKruh,KPMG’sGlobalChairofConsumerMarkets


Metals,engineering&manufacturingcompanieshavethelowestrateoftargetsetting.Inthissector,fourin10largecompaniesissueCrreportsthatlacktargets.

Bycontrast,thereareanumberofsectorswhereallreportingG250companiesdeclareatleastsomeCrtargetsintheirreports(althoughitisnotalwaysclearhowtheyrelatetomaterialCrissues).thesesectorsincludepharmaceuticals,transport,miningandconstruction&buildingmaterials.

threesectorsperformwellforlinkingCrtargetstomaterialissues:pharmaceuticals,electronics&computersandfood&beveragecompanies.

Figure 32:

NotalllargecompaniesreportprogressagainstCRtargetsCompaniesineuropeleadwhenitcomestoreportingonhowtheyperformedagainsttheirCrtargets.ahealthy87percentofeuropeancompaniesthatdiscloseCrtargetsactuallyreportonperformanceagainstallormostofthosetargets.Intheamericasthreequartersdo(74percent)andaroundhalfinasiaPacific(58percent).threesectorsstandoutforreportingontheirperformanceagainstsettargets.ofthecompaniesthatsettargetsintheirCrreports,100percentofelectronics&computercompanies,88percentofpharmaceuticalcompaniesand87percentoftelecommunications&mediacompaniesreporttheirperformanceagainstalltargetsset.

Does the report include targets relating to material issues? Sector view.

Pharmaceuticals


Food & beverage

Transport

Utilities



Oil & gas

Automotive

Mining



Trade & retail


0 20 40 60 80 100%

25

33

22

29

50

62 13 25

59 17 12 12

56 11 22 11

50 33 17

46 8 38 8

44 25 25 6

40 20 20 20

36 29 29 6

35 12 35 18

33 33 34

33 22 45

33 25 29 13

28 36 16 20

27 9 27 37

Targets for more than 50% of material issues

Targets for up to 50% of material issues

Some targets but not clear how these relate to material issues

No targets


“Withourenvironmentalgoals,wefoundthatsecuringinternalbuy-infromexecutiveswascritical.Webroughtanumberofexecutivestogethertoensureweweresettingtherightgoalsandthatwehadtheirsupporttocommittherequiredresourcesandfundingtomakeprogressagainstthesegoalsoverthefive-yeartimeline.”


“theresearchshowsthattheconnectionbetweenCrplansandactionneedstobesignificantlystrengthenedinmanycompanies.WhereasalmostalllargecompaniesreportthattheyhaveaCrstrategy,farfewerbackthatstrategyupwithtargetsforthebulkoftheirmaterialissues.KPMGmemberfirmsrecommendthatcompaniesconductagapanalysisonthisissueanddefinearoadmaptoimprovethelinkbetweenplansandactions.Inaddition,declaringtargetsbutnotreportingprogressagainstthemdamagescredibility.theresearchresultsontransparencyshowthatleadingcompaniesarenotafraidtobeopenaboutchallengesandmissedtargetsandfindbenefitsindoingthis,suchasarenewedcompanyfocusonachievingthemissedtargets.”




“ItisclearthatsustainabilityisbecomingpartofbusinesslanguageandcultureinSingaporeandacrossasiaPacific.Howeverasthissurveydemonstrates,quantitydoesnotalwaysequatetoquality.SomecompaniesreportontheirCractivities,butshownoevidenceofrobustreportingprocesses,strategicobjectives,orclearKPIsandtargets.DevelopingmeaningfulKPIsandtargetsprovidessubstancetostrategy.Italsosetsthefoundationforcontinuousimprovementascompaniesmeasureperformance,identifytrendsandadapttofuturedevelopments.assustainabilityreportingcontinuestomature,weanticipatethatothercompaniesacrosstheregionwillfollowtheleadofthosewhohavealreadyputinplacethecriticalbuildingblocksofsustainability.”

SharadSomani,Partner,KPMGinSingapore

“ourreporthastolookbackwardsatpastperformancebutalsobeforwardlookingandgoaloriented.thisrequirestwodifferentprocessesandyouhavetohaveagoodsysteminplaceforbothaspects.”


Figure33:Docompaniesreportonperformanceachievedtodateagainsttargetsset?Regionalview.

Americas

Asia Pacific

Europe

Performance against all/most targets

Performance against some targets

No information on peformance against targets

Base: 199 G250 companies that report on CR and set targets Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013

Figure34:Docompaniesreportonperformanceachievedtodateagainsttargetsset?Sectorview.

0 20 40 60 80 100%

87 8 5

58 21 21

74 15 11


Pharmaceuticals


Utilities

Trade & retail

Oil & gas


Automotive

Mining

Transport

Food & beverage




100

88 12

87 13

84 8 8

80 10 10

76 12 12

75 10 15

71 29

67 33

67 17 16

63 25 12

50 50

45 22 33

29 43 28

0 20 40 60 80 100%

Performance against all/most targets

Performance against some targets

No information on performance against targets

Base: 199 G250 companies that report on CR and set targets Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013



4:Suppliersandthevaluechain

Growingpublicconcernandscrutinyacompany’smostsignificantCrimpactsareoftenfoundnotinitsownoperations,butinitsvaluechain–upstreaminthesocialandenvironmentalimpactsofitssuppliers,anddownstreamintheimpactsofitsproductsandservices(throughuseanddisposal).

recentevents,suchastheapril2013collapseofagarmentfactoryinBangladesh,8haveincreasedpublicattentionontheresponsibilityoflargecompaniestomanagetheirsuppliers.IntheUS,corporateattentiontoconflictmineralsinthesupplychainhasgrownfollowingtheDodd-FrankWallStreetreformandConsumerProtectionactof2010.

“Becauseoursuppliernetworkisverylarge,itisnotpossibleforustoinspectallsupplierstothesameextent.Wehavethereforeestablishedarisk-basedsystemofappropriateprocessestoenableustosystematicallyidentifypotentialrisksinoursupplychain.tofurtherencouragesustainablebusinessconductthroughoutourentireglobalsupplychain,wearecommittedtobuildingoursuppliers’competenceandintensifyingknowledgetransfers.”

Kersten-KarlBarth,DirectorofCorporateSustainability,Siemens

thenewGrIG4Guidelinesalsoincludeagreaterfocusonthesupplychain,reinforcingtheimportanceofmanagementanddisclosureinthisarea,andtheIIrCisencouragingmoredisclosurearoundthevaluechainthroughitsIrframework.assessingimpactsinthesupplychainismorecomplexthanmeasuringcompanies’ownimpacts,andmeasurementmethodologiesaresubjecttomoreuncertainties.However,thatshouldnotpreventcompaniesfrompartneringwiththeirsupplierstoimproveenvironmentalandsocialfootprints.Indeed,therisksofnotdoingsoincreaseeveryyear.


•hasidentifiedthesocialandenvironmentalimpactsassociatedwithitssuppliersandhasestablishedsystemsformanagingthem

Figure 35:

•hasformalizedCRrequirementsfor itssupplychainandhasmechanismsinplacetoimprovesupplierperformance(suchasasuppliercodeofconductandCrcriteriaforsupplierselection)

•workswithsupplierstohelpthemimproveCrimpactsovertime

•auditssuppliersagainstitscodeofconduct

•setstargetsfor reducingtheimpactofitssupplychainandmeasuresprogressagainstthem

•hasidentifiedthesocialandenvironmentalimpactsassociatedwiththeuseanddisposalofitsproductsandservices.

Do companies discuss the sustainability impacts of their supply chain? Regional view.

Americas

Asia Pacific

Europe

0 20 40 60 80 100%

34 40 26

389 53

29 40 31

Supply chain impacts discussed in detail Base: 233 G250 companies that report on CR

Limited discussion Source: KPMG International, The KPMG Survey of No discussion Corporate Responsibility Reporting 2013, December 2013

8http://www.bbc.co.uk/news/world-asia-22420025.


Figure 36: SupplychainreportingislowinDo companies discuss the sustainability impacts of their supply chain? sectorswithsignificantpotentialSector view impacts

59 35 6

44 31 25

41 41 18

39 42 19

33 56 11

33 33 34

27 36 37

25 62 13

22 33 45

20 20 60

17 33 50

14 32 54

8 38 54

7 44 49

aroundtwothirds(64percent)ofG250Electronics&computers companiesthatreportonCrinclude

Telecommunications somediscussionofsupplychainissues&media

intheirreports.Automotive

Trade&retailInbotheurope(74percent)andthe

Food&beverageamericas(69percent)aclearmajority

Mining ofcompaniesthatreportonCrincludeMetals,engineering thisissue,butinasiaPacificcompanies&manufacturing

thatdosoaretheexceptionratherthanPharmaceuticals

therule(47percent).MostoftheG250Construction&buildingmaterials companiesthatdonotreportonthis

Chemicals&synthetics issuearebasedinChina(incl.Transport Hong Kong)andJapan.Oil&gas

Utilities

Finance,insurance&securities

0 20 40 60 80 100%

Supplychainimpactsdiscussedindetail “IncreasinglytheworldhasstrongerBase: 233 G250 companies that report on CR Limiteddiscussion Source: KPMG International, The KPMG Survey of expectationsaroundcompaniesandNodiscussion Corporate Responsibility Reporting 2013, December 2013

theirsupplychain–therearemanystoriestobetoldbutyouhavetogetintoyoursupplychaintoreallyunderstandwhatishappening.Youcan’tmanagewhatyoudon’tmeasure.”

EllenJackowski,LivingProgressStrategy,Hewlett-Packard



thecompaniesleastlikelytoreportonsupplychainissuesatallarethoseinthechemicals&syntheticssector(60percentthatreportonCrdonotreportonsupplychainissues),utilities(54percent),oil&gas(54percent)andtransport(50percent)sectors.

thisissurprisinggiventhescaleofpotentialimpactsinthesupplychainsofthesesectors.Forexample,suppliermanagementissueswerereportedtobeatthecoreoftherecentoilrigdisasterintheGulfofMexico.9

CoveringvaluechainissuesindetailinCrreportsprovidesanopportunityforcompaniestoshowstakeholders,includinginvestors,thatpotentialimpactshavebeenidentifiedandarebeingproperlymanaged.

WhileamajorityofG250companiesoveralldoreportonsupplychainissues,muchofthediscussioninCrreportsislimited.thenumberoflargecompaniesthatreportindetailisfarlower.Infact,thereisonlyonesectorinwhichamajorityofreportingG250companiespublishdetaileddiscussionofCrissuesinthesupplychain:electronics&computers(59percent).

Inalltheothersectors,detailedreportingonthisissueisstillaminorityactivity,althoughtelecommunications&media(44percent),automotive(41percent)andtrade&retail(38percent)havehigherratesthanothersectors.

thelowestratesofdetailedreportingonthesupplychainareseenamongchemicals&syntheticscompanies(20percent),oil&gas(14percent),transport(17percent),utilities(8percent),andfinance&insurance(7percent).

“Weoutsourceallourmanufacturingso,understandably,ourstakeholderscarealotaboutwhatishappeninginoursupplychainaswellasourownoperations.ongreenhousegasemissions,forexample,wetrytoleadbyexamplebybeingtransparentaboutourownemissionsandaskingoursupplierstodothesame.”


“Crinthesupplychainisnoteasytomanageandnoteasytoreporton.theissuesareverydiverse,rangingfromimprovingworkingconditionsinfactoriesacrosstheworldtosourcingmoreresponsibleagro-commoditiesandimprovingthelivelihoodsofthefarmersinvolved.Cooperationwithsuppliersiskey;notonlyformanagingissuesinthesupplychain,butalsotobuildstrongreportinglines.Iexpectsomeofthefrontrunnerstoreportonthesupplychaininatotallydifferentwayinafewyears.thenextchallengeistoreportonthetruevalueofthecompany,takingbothpositiveandnegativeenvironmentalandsocialimpactsintoaccount.thishelpsthemtotakestrategicdecisionsonthefuturecourseofthecompanyandallowsreaderstobetterunderstandtheverynatureofthebusiness.”

BerndHendriksen,Partner,KPMGintheNetherlands

9 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7990445/BP-oil-spill-contractors-singled-out-as-report-identifies-eight-key-failings.html


ReportingonsupplychaintargetsispatchylessthanhalfofreportingG250companies(49percent)declareanytargetsforthemanagementoftheenvironmentalandsocialimpactsoftheirsupplychain.ofthosethatdodeclaresupplychaintargets,lessthanhalf(49percent)reportprogressagainstthemajorityofthosetargets.thissuggeststhereisstillawaytogobeforeachievementscatchupwithaspirationsinthisarea.Improvedtransparencyonprogresswillhelptobuildtrustandcredibilityamongstakeholders.

Figure37:Targetsettingforsupplychainimpacts

3751

12

Yes comprehensive targets set for supply chain improvements

Yes some targets set for supply chain improvements

No targets set for supply chain improvements


EuropeancompaniesleadinreportingonimpactsofproductsandservicesG250companiesineuropearethemostlikelytodiscussindetailtheenvironmentalandsocialimpactsoftheirproductsandservices.almostthreequartersofeuropeancompaniesthatreportonCr(73percent)doso,withafurther23percentprovidinglimitedinformation.

Intheamericas,half(49percent)ofreportingcompaniesprovidedetailedinformationondownstreamimpactsandthefiguredropstolessthanonethird(32percent)inasiaPacific.

theleadingsectorsfordetailedreportingontheimpactsofproductsandservicesare:telecommunications&media(94percent),electronics&computers(82percent)andpharmaceuticals(75percent).Companiesintheoil&gassector(18percent)andmetals,engineering&manufacturing(9percent)areleastlikelytodoso.

Figure38:Doesthereportdiscusstheimpactsofproductsandservices?

35

53

12

Yes, impacts discussed in detail

Yes, limited/high level discussion

No discussion




“transparencyiscrucialtobuildtrustwithoursuppliersandtorecognizeandmanagepotentialrisks.WeworkwithsupplierstodevelopCrinitiativestogetherandgivethemtimetoaddressissues,ratherthanrelyingsolelyonsupplychainauditsandratings.”

JongSikKim,ChiefOperatingOfficer/President,LGElectronics

“telecommunicationsandelectronicscompaniesstandoutforreportingontheenvironmentalandsocialimpactsoftheirproductsandservices.thesecompanieshavestrongbrandsthatrelyonpositiveconsumerperceptions.theyalsohavegoodstoriestotellabouttheirpositivecontributionstotheenvironmentandsociety:suchasthepoweroftelecommunicationstoconnectpeopleandreducecarbonemissionsfromtravel,andtheroleoftechnologyinsmarter,moreresourceefficientcities.”

GaryMatuszak,KPMG’sGlobalChairforTechnology,Media&Telecommunications

Figure39:Doesthereportexploretheimpactsofproductsandservices?Regionalview

Americas

Asia Pacific

Europe

49 32 19

32 50 18

73 23 4

0 20 40 60 80 100%

Yes, impacts discussed in detail

Yes, limited/high level discussion Base: 233 G250 companies that report on CR Source: KPMG International, The KPMG Survey of

No Corporate Responsibility Reporting 2013, December 2013

Figure40:Doesthereportexploretheimpactsofproductsandservices?Sectorview.



Pharmaceuticals



Automotive


Food & beverage

Transport

Utilities

Mining

Trade & retail

Oil & gas


0 20 40 60 80 100%

94 6

1882

2575

131869

4060

63559

222256

4456

1750 33

153946

6733

115831

255718

36559

Yes, impacts discussed in detail Base: 233 G250 companies that report on CR

Yes, limited/high level discussion Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013 No



5:Stakeholderengagement

Stakeholderengagementisincreasinglyimportantinthedigitalagetoday’sbusinessesoperateinanageoftransparency,wheretheinternetandsocialmediahavecreatedaglobalcommunityofactiveandengagedstakeholders.expectationsofcompaniesarehigherthaneverbeforeinbothdevelopinganddevelopedcountriesandtrustinbusinessismoreeasilydamaged.

Companiesthereforeneedtoreachouttoaneverwidergroupofstakeholders,moreoftenandinmoreinteractiveways.Bydoingsotheycanbenefitfromstakeholderinputtoidentifymaterialissues,monitorandcommunicateperformanceandlearnfromotherperspectivesandideas.

Figure 41:

Stakeholderengagementisbothameansofavoidingconflictandprotectingreputation,andasourceofinnovationandinsightintofuturerisksandopportunities.


•has a process in place to identifyandengagekeystakeholders

• responds to stakeholder feedbackandtakesactionwherenecessary

•seeks out stakeholder views on itsreportingandperformance(forexamplethroughastakeholderadvisorypanel)andreportstheseopenly.

Does the report include clear information about the process used to engage stakeholders? Regional view.

38 23 39

37 23 40

62 20 18

Americas

Asia Pacific

Europe

0 20 40 60 80 100%

Clear explanation of process

Some information given

No information


“StakeholderengagementhasalwaysbeenanimportantactivityinCrreportingbutitcanbeadouble-edgedsword.Historicallytheunwaryhaveperhapssteeredstrategytotheloudestormostfrequentvoicesratherthanthemostmaterialissues.ourresearchprovidessomeevidencethisisabating,butIbelievethatmanagingrelationshipsandcollaboratingmoreeffectivelyhasbecomeacorestrategiccompetenceinamoreinterdependentworld.throughtheworkKPMGmemberfirmshavedonewithclientsinaustralia,SouthafricaandtheUK,weknowcompaniesbenefitfromturningengagedstakeholdersintoallies,partnersandfriends.”

VincentNeate,Partner,KPMGintheUK

“theprocessofproducingandpublishingthereporthaschangedthewayweseeourrelationshipswithstakeholdersandsociety.Ithaschangedourcompanycultureforthebetter.”

MuriloFerreira,ChiefExecutive,Vale


Strongoverallperformance:mining,metals,engineering&manufacturingscorehighestoverall,theG250’sCrreportingperformanceonidentifyingstakeholdersisstrong.threequarters(77percent)ofreportingcompaniesidentifykeystakeholdersintheirCrreports.

CompaniesineuropeandasiaPacificaremorelikelytodoso(eightoutof10)thancompaniesintheamericas(onlyfiveoutof10).

Mining(100percent)andmetals,engineering&manufacturingcompanies(91percent)performmoststronglyamongindustrysectorsintermsofidentifyingtheirkeystakeholdersintheirCrreporting.

However,whenitcomestoexplainingtheprocessusedtoidentifystakeholders,G250companiesinasiaPacificandtheamericaslagbehindthoseineurope,witharoundfourin10companies offeringnoexplanationatall.lessthantwoin10europeancompaniesgivenoexplanationoftheprocess.Clarityontheprocessusedtoengagestakeholdersiscrucial.Withoutit,thereisnowaytoassesswhetheracompany’sengagementprogramiseffectiveornot.ahighproportionofG250Crreports(77percent)includeinformationonhowthecompanyhasrespondedtoatleastsomestakeholderfeedback.

MorespaceneededforstakeholdervoicesoneofthewaysacompanycandemonstrateitscommitmenttoengagingwithstakeholdersistofeatureindependentstakeholdercommentswithinitsCrreport.Commentsthatincludebothcriticismandpraisebuildauthenticityandemphasizeacompany’scommitmenttotransparentreporting.

However,givingvoicetopotentialcriticsremainschallengingformostcompanies:currentlyonlyonethird(31percent)ofG250Crreportsincludestakeholdercomments.ofreportsthatdocommunicatethirdpartyviews,onequarter(26percent)includecommentsfromastakeholderpanel,aformalizedwayofengagingwithrepresentativesfromdifferentgroups.

“theimportanceofidentifyingstakeholdersforminingcompanieshasgrownasexplorationandoperationshavemovedintodevelopingcountriesandfrontierregionswherestakeholderrelationshipscanbecomplexanddifficulttonavigate.Managingstakeholderrelationshipshasbecomekeytosecuringasociallicensetooperateandtobuildingasocialcompactwithgovernments,regulators,otherproducers,communitiesandemployees.Buildingandmaintainingtrust,creatingsharedvalueandcollaborationaregoingtobecriticalelementsofmanagingstakeholderrelationshipsinthefuture.”

WayneJansen,KPMG’sGlobalHeadofMining

Figure42:Doesthereportidentifythecompany’skeystakeholders?Sectorview.

100

91 9

85 15

83 17

82 18

81 19

80 20

78 22

78 22

76 24

75 25

71 29

67 33

65 35

Mining

Metals,engineering&manufacturing

Utilities

Transport

Oil&gas

Telecommunications&media

Chemicals&syntheticsFinance,insurance

&securitiesConstruction&

buildingmaterialsAutomotive

Pharmaceuticals

Electronics&computers

Food&beverage

Trade&retail

0 20

No

Yes

40 60 80 100%




Figure43:Stakeholdervoicesinreporting

Individual experts

Other stakeholder (e.g. community)

Stakeholder panel (i.e. with representatives of different groups)

Academics

Non Governmental Organization (NGO)

41

34

26

8

6

0 20 40 60 80 100%

Base: 73 G250 companies that report on Source: KPMG International, The KPMG CR and include stakeholder voices Survey of Corporate Responsibility Note: CR reports could feature comments Reporting 2013, December 2013 from more than one type of stakeholder

“Socialmediaischangingthewaycompaniesreport.ManycompaniesareusingsocialmediatoolsandtechnologiestocommunicatetheirCractivities,andinparticulartheirCrreportingcontent.SocialmediaenablescompaniestocommunicatemorefrequentlyontheirCrefforts,expandthereachoftheirsustainabilitymessages,receivefeedbackandenhancetransparencywithstakeholders.thisexpandedreachisalsoviewedasariskmitigationtechniquebysome,toelevatetheirsocialcapitalintheeventofnegativedevelopments.”

JohnHickox,Partner,KPMGintheUS

“engagingwithexternalstakeholdersisdefinitelyanimportantpartofhavingagoodreport.Butwedon’tdothisjustforourreport,wetalktostakeholderstoensurethatwehaveagoodcitizenshipstrategy,andthisfeedsintoourreport.”

EllenJackowski,LivingProgressStrategy,Hewlett-Packard

“theimportanceofstakeholderengagementcan’tbeoverstated.thislinktotheoutsideworldisessentialandwehavemadeitaprioritytoincreaseourcapacitytoengageeffectivelywithourstakeholders.”

JanetVoûte,GlobalHeadofPublicAffairs,Nestlé


G


6:GovernanceofCr

AccountabilityiskeyCompaniesthattakeCrseriouslyhavecleargovernancestructuresandaccountabilityforCratthehighestlevelsoftheorganization.Board-levelcommitmentandinterestinCrissuescanbeacrucialfactorinensuringthatCrisembeddedinanorganization,isadequatelyresourcedandthecorrectsystemsandprocessesformanagingissuesareimplemented.

Inanorganizationwhereleadersandemployeeshavemanycompetingprioritiesandlimitedbudgets,linkingCrperformancetoremunerationcanbeessentialinmakingsurethatnecessaryinvestmentsaremadeandthatCrtargetsareachieved.thequalityofCrgovernancecanbehardtoassessfromtheoutside,butCrreportscanprovideaninsightintocompanyapproachesandtheirlikelyeffectiveness.


•hasappointedaprimarypersonand/orfunctionwithultimateresponsibilityforCratthehighestlevelsoftheorganization

•hasanindividual/functionthatmanagessustainabilityonaday-to-daybasisandreportstothecompanyboard

• linkssustainabilityperformancetoremuneration.

CRisaboard-levelconcerntheresearchsuggeststhatCristakenmoreseriouslythaneverasacorebusinessissuebytheworld’slargestcompanies,witharoundtwothirds(69percent)ofcompaniesthatreportonCrclearlyidentifyingwhohasultimateresponsibilityforCratthecompany.Formostcompanies,thisreachestheverytopoftheorganization,with24percentofreporterspointingtothecompanyboard,andafurther20percentnamingaspecificindividualontheboard–eithertheCeooranotherboardmemberinanon-sustainabilityfunction(suchastheChiefFinancialofficer,Chiefoperatingofficer,auditorrisk).Sevenpercentofreportingcompaniesstatethepersonultimatelyresponsible istheChiefSustainabilityofficer,whomayalsobeamemberoftheboard.

Figure44:WhohasultimateresponsibilityforCR?

No one identified as responsible for CR

Company Board

CEO

Chief Sustainability Officer

Board members in another function e.g. risk, audit

Senior manager that is not a board member

Other

7

31

2414

6

14

4

“BillFordcreatedourdepartmentandcontinuedcommitmentatthemostseniorlevelisreflectedintheseniorexecutivelettersinourreport.Wehavesupportfromthetopdownandthathasenabledustoreportinamorecredibleway.”

JohnViera,GlobalDirectorofSustainability,FordMotorCompany

Figure45:WhichfunctionhasresponsibilityformanagingCRonaday-to-daybasis?

1

CR/sustainability unit (separate)

Not reported

Other

Public relations/communications department

Risk department

7

61

28

3




MostG250Crreports(61percent) SeniorleadershipproducesbetterspecifythatadedicatedCror qualityCRreportssustainabilityunitmanagesCrona Companieswhereresponsibilityforday-to-daybasis.ontheonehand,this CrsitswiththeCeo,companyboardcouldbeseenasapositivesignthat orChiefSustainabilityofficerscoremostG250companieshaveprioritized significantlyhigherforthequalityofCrandallocatedtheresourcesto theirCrreportsthancompaniesensurethataspecificfunctionwithin thatdonotstatewhohasultimatetheorganizationistaskedwith responsibilityforCr.measuring,monitoringandreportingonCrperformance.ontheotherhand,thenumberofdedicatedCrunitswithinG250companiescouldbeseenasanindicationthatCrcontinuestobemanagedasaseparateconsiderationratherthanbeingembeddedintoexistingfunctionsofthecompany.ItisalsonotalwaysclearwherethededicatedCrunitreportsto.

Figure 46: How does leadership impact reporting? Average report quality score by type of leadership.

Chief Sustainability Officer

CEO

Company Board

Board member in another function e.g. Risk, Audit

Senior manager that is not a board member

No one identified as responsible for CR


“thereportingprocesshashelpedintroducethelanguageofsustainabilityintothecompany.Inthepast,manydepartmentswereimplementingsomesustainablepractices,butdidnotcallthemthis.oursustainabilityreportingteamhashelpedtobringthesediverseinitiativestogetherintoamorestructuredapproachtosustainability.”

WeijunXie,GeneralManager,DepartmentofResourceDevelopment,ChinaMinmetalsMiningHoldingsLtd.

“acrossthecompaniessuccessfulatembeddingsustainabilityinbusiness-as-usualthereisacommonthemeemergingofthesustainabilityteamasbusinesspartners,verylikethemodelsadoptedforbestpracticeinfinanceandHr.asmallcoregroupactsasthecenterofexcellencebutresponsibilityforcommunication,innovationandactionisclearlydisseminatedthroughthenetworkofline-managersinbusinessunitsordivisionalchampionstakingafacilitativeorsupportiverole.embeddingCrratherthanhavingitasanactivitycarriedoutbyafewonbehalfofthemanyiskeytoanauthenticsustainabilityprogram.”

VincentNeate,Partner,KPMGintheUK

48

65

67

68

70

47

0 20 40 60 80 100



CRperformancenotyetlinkedwithremunerationCompaniesthatlinkemployeeremunerationtoperformanceonsocialandenvironmentalissuesdemonstratetoemployees,investorsandotherexternalstakeholdersthattheyareseriousaboutCrperformanceandaboutensuringthelongtermviabilityofthecompany.thiscanbechallengingforcompaniestoimplement,andasaresult,theoverwhelmingmajority(78percent)ofG250companiesdonotreport alinkbetweenCrperformanceandremunerationofexecutivesoremployeesatanylevel.

ofthesmallgroupofleadingcompanies(22percent)thatdiscussthelinkbetweenCrandremunerationintheirCrreports,twothirdsareheadquarteredineurope.France,Germany,thenetherlandsandtheUK

Figure47:Istherealinkbetweenperformanceandremuneration?

78

12

10

No

Yes partial explanation

Yes clear explanation


standoutforhavingasignificantnumberofcompaniesthatreportonthelinkbetweenCrperformanceandremuneration.IntheUKitislikelythatthisisrelatedtohistoricregulationoverdisclosureofexecutiveremunerationlinkedtocompanylaw,andinGermanytotherequirementsoftheGermanCodeofGovernancewheretransparencyonexecutiveremunerationisexplicitlydefined,leadingtogreateracceptanceoftheideaofreportingonthelinkbetweenremunerationandCr.

outsideeurope,fouroutoffiveaustraliancompaniesintheG250disclosehowstaffareremuneratedinrelationtoCrperformance.thismaybebecausebalancedscorecardsthatincludehealth,safetyandenvironmentissuesareoftenusedtodetermineexecutivebonusesinaustralia.

“oursustainabilityactionplanhastargetsforeveryoperationandthisislinkedtoourcompensation.everyoneinthebusiness,evenourCeo,has20percentoftheiradditionalbonuslinkedtoperformanceonoursustainabilityindicators.”

VaniaSomavilla,ExecutiveDirector,HumanResources,HealthandSafety,SustainabilityandEnergy,Vale

“Crispartofthebalancedscorecardandourquarterlyreportingframework,usedrightacrossthebusinesstoreportonprogressinkeyareas.”


“allboardmembersarepartoftheBMWsustainabilityboardsowehaveateamapproachevenatthemostseniorlevel.Sustainabilityisintegratedintoourtarget-settingprocessesandlinkedtoremuneration,whichisverymotivating.”

UrsulaMathar,VicePresidentSustainabilityandEnvironmentalProtection,BMWGroup


G


7:transparencyandbalance

OpennessaboutchallengesandsetbacksisessentialforbuildingtrustIfCrreportsaretobuildtrustbetweenanorganizationanditsstakeholders,theyneedtoprovidereliableinformationaboutcompanysustainabilityperformanceovertimeandtobeopenaboutCrchallengesandsetbacks,aswellasachievements.

leadingcompaniesgivereadersaclearpictureoftheirCrperformanceovertime,presentingperformancedatathatcanbeeasilycomparedfromyeartoyear,regardlessofwhetherthetrendhighlightsareasofsuccessorfailure.


•acknowledgeschallenges,dilemmasandfailures,aswellasachievements

•usesdatatomonitorperformanceyearafteryearandmakesthisavailabletostakeholders.

Companiesinthefood&beverage,pharmaceuticalsandelectronics&computerssectorstandoutforprovidingwell-balancedreportsthatdiscusschallengesaswellasachievements.thechemicals&synthetics,metals,engineering&manufacturingandconstruction&buildingmaterialssectorshavethelowestoverallrateofbalancedreportingandthegreatestproportionofcompaniesthatdonotdiscusschallengesatallintheirCrreports.

Mostcompanies(88percent)includeatleastsomedatapointsthatcanbeeasilycomparedwithpreviousyears,enablingstakeholderstoassessprogressovertime.Countriesineuropescorehighestoncomparabilityofdata,mostlikelyduetohavingmoreestablishedprocessesfortrackingandreportingondataovertime.

Figure48:Doesthereportdiscusschallenges/dilemmas/failures,aswellasachievements?

48

29

23

Yes, report discusses challenges and is well-balanced

Yes, limited discussion of challenges

No discussion of challenges


ComparabilityofdataisstrongbutmostreportslackbalanceDespitetheimportanceoftransparency,onlyoneinfiveG250companies(23percent)achieveswell-balancedreporting.Mostprovideonlylimitedornodiscussionofchallengesandsetbacks.CompaniesineuropearemostlikelytoreportopenlyonreportingchallengeswiththoseinasiaPacificleastlikelytodoso.thenumberofcompaniesprovidingdiscussionofchallengesandsetbacksisparticularlylowamongcompaniesinChina(incl.HongKong)withonly3percentofcompaniesprovidingawell-balancedviewofCrperformance.

“transparencyisawell-recognizedprincipleforeffectivereporting,andtoachievethis,companiesmustprovidestakeholderswithabalancedaccountofprogress.However,achievingbalanceddisclosurecanbechallengingforcompanieswhomaybeuncomfortablewithadmittingmistakesorfearitmayexposethemtocriticismorevenlegalrisk.”

JoseLuisBlascoVazquez,Partner,KPMGinSpain


Figure49:Doesthereportdiscusschallenges/dilemmas/failures,aswellasachievements?Sectorview.

Food&beverage

Pharmaceuticals

Electronics&computers

Transport

Utilities

Finance,insurance&securities

Telecommunications&media

Automotive

Trade&retail

Mining

Oil&gas

Metals,engineering&manufacturing

Chemicals&synthetics

Construction&buildingmaterials

44 45 11

38 37 25

35 53 12

33 50 17

31 54 15

25 44 31

25 50 25

24 41 35

19 54 27

17 66 17

14 50 36

9 18 73

60 40

67 33

0 20 40 60 80 100%

ReportdiscusseschallengesandiswellbalancedBase:233G250companiesthatreportonCR

Limiteddiscussionofchallenges Source:KPMGInternational,TheKPMGSurveyofNodiscussionofchallenges CorporateResponsibilityReporting2013,December2013

“Wehavestartedtouseourreporttobemoreforwardlooking,seekingtocoverthemorecontroversialissues,thosethatmightkeeptheboardawakeatnight.Itisimportanttotheboardthatourreportisatruereflectionofourbusinessandtheissuesourstakeholdersareconcernedabout.Itmustshowbothoursuccessesandthechallenges,tellingthewholestory.”

VaniaSomavilla,ExecutiveDirector,HumanResources,HealthandSafety,SustainabilityandEnergy,Vale

Figure50:Doesthereportpresentdataforpreviousyearsthatcanbeeasilycomparedagainstthecurrentyear?

5719

12

12

Yes, most data points are easily comparable with previous years

Yes, some data points are easily comparable

Yes, but few data points are easily comparable

No data points are easily comparable


“High-levelcommitmenttotransparencyisveryimportanttothequalityofthereportyouendupwith.transparencyhelpsussolveproblems,andthere’snodoubtitcontributestobetterinteractionswithexternalstakeholders.Intoday’sworldofsocialmediayoucan’taffordnottobetransparent,itistheonlywayforward.”

JanetVoûte,GlobalHeadofPublicAffairs,Nestlé



“Inordertobetransparent,youhavetobesystematic.Itcanbedifficulttotellthebadstoriesaboutwhathasnotgonesowellalongwiththegoodstories,butit’simportantreadersseethatyouarepresentingabalancedview.”

“Ithinkwestillhavesomewaytogobeforestakeholdersfullytrusttheinformationtheyreadincompanyreports.transparentreportingonfailuresdoeshelpwiththis.”

BertrandJanus,HeadofCSRReporting,Total

AnnetteStube,DirectorofGroupSustainability,A.P.MøllerMærsk


©2013KPMGInternationalCooperative(“KPMGInternational”).KPMGInternationalprovidesnoclienttheKPMGSurveyofCorporateresponsibilityreporting2013 servicesandisaSwissentitywithwhichtheindependentmemberfirmsoftheKPMGnetworkareaffiliated.79

aboutKPMG’sClimateChange&SustainabilityServices

AboutKPMG’ssustainabilityservicesKPMGisoneofthepioneersofsustainabilityconsulting–someKPMGmemberfirmsfirstofferedsustainabilityservicesover20yearsago–whichgivesKPMG’snetworkalevelofexperiencefewcanmatch.todayournetworkemploysseveralhundredsustainabilityprofessionalslocatedinaround60countries.

Localknowledge,globalexperienceourglobalnetworkmeansKPMGprofessionalshavein-depthunderstandingoftheeconomic,political,environmentalandsociallandscapeswhereveryourorganizationmayoperate.atthesametime,ourmemberfirmsarecloselyconnectedthroughourglobalCenterofexcellence.

thismeansthat,whateverchallengeyouface,wecanputtogetherateamwithinternationalexperiencetohelpyou.

SustainabilityPlusWedon’tworkinasustainabilityvacuum.Weworkside-by-sidewithKPMGprofessionalsfromtax,auditandadvisoryincludingsectorspecialists,managementconsultants,taxaccountantsandexpertsinIt,supplychain,infrastructure,internationaldevelopmentandmore.Youwon’treceivegenericadviceandone-size-fits-allsolutions,insteadyoucanbenefitfromahand-pickedmulti-disciplinaryteam.

Results-drivenKPMGfirmshelpclientstodevelopfuture-fitbusinessstrategiesbasedonsolidunderstandingoftheissues.Westrivetothinkbigandchallengeconvention,butwithimplementationinmind,workingwithyoutofindpracticalsolutionsthatcancreatesuccessandgrowththroughchange.

ForesightneedsinsightourglobalCenterofexcellencefocusesonthought-provokingresearch,analyzingdriversofglobalchangeanddevelopingpracticalbusinessresponsesthatyoucanapplywithinyourownorganization.

SpecialistsinCRreportingandassurancereportingonenvironmentalandsocialperformanceisnowleadingpracticeinbusinesswhereverintheworldyoumayoperate.

StakeholdersfrominvestorstonGoswanttoknowthatacompanyhasidentifieditsmostsignificantenvironmentalandsocialrisksandimpacts,andisaddressingthemeffectively.theyalsoneedtoknowthattheinformationprovidedbyacompanyisaccurate,credibleandcanbetrusted.

Momentumisalsobuildingtowardsintegratedreportingwhichprovidesaholisticoverviewofanorganization’sfinancialandnon-financialperformance.

KPMGmemberfirmscanhelpyourorganizationto:

•Understandwhatenvironmentalandsocialinformationyoushouldreport

•Choosetherightreportingapproachandframeworksforyourbusiness

• Integratefinancialandnonfinancialinformationinyourreporting

•Reportinformationfor specificpurposessuchastheCarbonDisclosureProjectandsustainabilityindices

•Benchmarkthequalityofyourreportingagainstindustrypeers

•Provideindependentassuranceforyourinternalandexternalreportingsystems

•Provideindependentassuranceofyoursustainabilityperformancereporting

•Verifythesustainabilityperformanceofyoursuppliers.


acknowledgements

thisreportwaspreparedbyKPMG’sGlobalCenterofexcellenceforClimateChange&Sustainability,withthankstothefollowingpeople:

GlobalCenterofExcellenceforClimateChange&Sustainabilityprojectteam:

YvodeBoerGlobalChairman,ClimateChange&Sustainability

WimBartelsGlobalHeadofSustainabilityreporting&assurance

MarkMcKenzieGlobalthoughtleadershipDirector

EllieAustinGlobalthoughtleadershipManager

KPMGinSingapore:BriceJavauxManager

AyeshaCanteenwallaSeniorassociate

Researchers:tomiadepoju,Mariaagudelo,Dimitrisapostolidis,SangjiBae,aseBackstrom,FannyBenard,MikeBoonen,vitalyChaikin,nathalieClément,roopaDavé,GetaDiaconu,lucilaGarcia,CarmenGräbsch,StephanieHime,MauraHodge,SilvanJurt,MaulanaJusuf,viliamKaceriak,JanaKing,SudhirKolukula,IgorKorotetskiy,radoslawKowalski,Marcolarson,Shireennaidoo,Marthaordonez,Patriciareverter,andrewrobinson,Filiparodrigues,louiserosenmeier,CarlosSilva,JamieSinclair,lorenzoSolimene,IstvánSzabó,PerSundbye,adriantan,Danataterka,atsuhiroUeda,rebeccaWong,JennyYeh,ChiZhang.

Theprojectteamwouldalsoliketothank:KatherineBlue,KatieBoden,KarenBrouwer,nunoCarrilho,JamesCheng,roopaDavé,alexandraDawe,BhavaniDaya,JessicaDomínguez,loucieDouma,robertaMoraesCuran,JennyFransson,orenGrupi,ChristianHell,BeckieHerbert,SoebinJang,SanthoshJayaram,ricardoJimenez,

CariannevanKampen,adrianKing,elenaKutepova,MarcoMaffei,JuanJoséMejía,vincentneate,Joostnotenboom,Gloriaojo,PierpaoloPagliarini,KasturiParamanathan,DagmaraPodziemska,Georgeraounas,Serenaritchie,anetterønnov,KazuhikoSaito,KatiSalo,IsabelleHirsSchaller,MarinadeoliveiraSchurr,ang-tingShih,BartSlob,DagmarStastna,victorSuhendra,alintiplic,louisevenables,egon verheijden.

Theprojectteamwouldalsoliketothankthefollowingcompaniesforparticipatingininterviews:a.P.MøllerMærsk,Bayer,BMW,CiscoSystems,enel,FordMotorCompany,Hewlett-Packard,InG,nestlé,repsol,Siemens,tesco,total,vale.

Formoreinformationonthisreport,pleasecontact:

WimBartelsGlobalHeadofSustainabilityreporting&assurancet:+31206567783e:[email protected]



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©2013KPMGInternationalCooperative(“KPMGInternational”),aSwissentity.MemberfirmsoftheKPMGnetworkofindependentfirmsareaffiliatedwithKPMGInternational.KPMGInternationalprovidesnoclientservices.nomemberfirmhasanyauthoritytoobligateorbindKPMGInternationaloranyothermemberfirmvis-à-visthirdparties,nordoesKPMGInternationalhaveanysuchauthoritytoobligateorbindanymemberfirm.allrightsreserved.theKPMGname,logoand“cuttingthroughcomplexity”areregisteredtrademarksortrademarksofKPMGInternational.

Publicationname:theKPMGSurveyofCorporateresponsibilityreporting2013

Publicationnumber:131018

Publicationdate:December2013

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The KPMG Survey of Corporate Responsibility Reporting 2013€¦ · Scope of this report the survey is based on a detailed study of company reporting on Cr performance, carried out