Survey: More Than Half of Fortune 250 Issuing Standalone Sustainability Reports

Survey: More Than Half of Fortune 250 Issuing Standalone Sustainability Reports

A new survey from KPMG International finds a substantial increase in the percentage of companies issuing standalone corporate responsibility (CR) reports, from 45% (112 companies) in 2002 to 52% (129 companies) in 2005.

The report surveys the top 250 companies of the Fortune 500 (dubbing this group the Global 250, or G250) as well as the top 100 companies in the 16 countries where KPMG operates (dubbed the National 100, or N100). The countries include Australia, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, South Africa, Spain, Sweden, U.K., and U.S.

For N100 companies, 33% (525 companies) issued CR reports in 2005, up from 23% in 2002. The statistics rise even higher when adding companies that discuss CR in their annual financial reports instead of in a separate CR report, reaching 64% (161 companies) of G250 companies and 41% (658 companies) of N100 companies in 2005.

More striking was the expansion of the scope of the reports in the past three years, shifting from predominantly environmental, health, and safety (EH&S) reports to full-fledged sustainability reports covering social, environmental, and economic factors.

"Whereas in 2002, 75% of reporters were issuing EHS reports and 14% were issuing sustainability reports, this has flipped in 2005, with 68% providing sustainability reports and 14% EHS reports," Dr. Krut told SocialFunds.com.

Other notable findings included the number of companies using the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, with 40% of reporters referencing GRI as providing their reporting framework. Also, almost three quarters (74%) of respondents noted that their CR behavior is driven by economic factors, while more than half (53%) said that it is driven by ethical considerations.

Some of the report's findings were surprising.

"The quality of reporting is not improving in line with the quantity of reports or their expanded scope," said Dr. Krut. "On some key issues, such as reporting on management systems, performance outside of EH&S areas, targets, and assurance statements, the survey finds little being reported."

"I would like to have seen comments from CSR champions within some of these reporting companies, to tell us about the work they are doing to promote their programs within their firms," she continued.

The survey finds a spike in CR reporting in the financial services sector, rising 138% since 2002 in the G250. The survey also finds increased CR reporting in almost all countries, most dramatically in South Africa, where the number of separate CR reports has risen from 1 to 18 in the last three years. KPMG remained coy about attributing causation, citing academic opinion later in the report to explain the reasoning.

"Increased corporate governance requirements, including the adoption of the King Code of Corporate Governance (King II) for all listed companies, and the advent of the first Socially Responsible Investment (SRI) Index in an emerging market, the Johannesburg Securities Exchange (JSE) SRI Index, have increased the level of transparency and accountability required from companies operating in South Africa," stated the report in a special section on regions with emerging CR reporting. "Moreover, investors and analysts are becoming increasingly interested in how South African companies are managing their levels of social and environmental responsibility outside South Africa by expecting disclosure of CR issues 'up in Africa'."

While most countries exhibited increasing CR reporting trends, the Scandinavian countries of Norway and Sweden bucked this trend, with decreasing prevalence of CR reporting.

"As companies in these countries are such leaders in CSR, I would be interested to know what the reasons are for this finding and if this reflects something of significance for CSR or for reporting practices," Dr. Krut said. "What do they know that we haven't yet figured out?"