Corporate responsibility reporting is increasing among U.S. companies to meet stakeholders’ growing demands for more accountability, transparency and accuracy in assessing nonfinancial parts of the business that contribute to the company’s overall value, according to a report released Monday by KPMG International.
KPMG found that 83% of the top 100 U.S. companies by revenue formally report on their CR activities, up from 74% in the firm’s 2008 analysis.
Still, European countries continue to dominate and lead this trend: U.K. (100%), Japan (99%), South Africa (97%), France (94%), Denmark (91%), Brazil and Spain (both 88%), Finland (85%), the U.S. (83%) and the Netherlands (82%).
Why do companies report their CR activities? According to the study, companies cited several factors as the top priorities and impetus behind their reporting as it becomes part of the overall business strategy within their organizations:
- Reputation and brand (67%);
- Ethics (58%);
- Employee motivation (44%);
- Innovation and learning (44%);
- Risk management (35%).
“We have seen many companies benefit from analyzing their CR reporting data to develop continuous internal improvement programs to effect lasting change,” John Hickox, KPMG’s Americas leader for climate change and sustainability, said in a statement.
Hickox noted that about a third of the top 100 companies in 34 countries (N-100) and almost half of the 250 largest companies globally (G250) said they had demonstrated financial gain from their CR initiatives.
As CR reporting has increased, data quality has become an issue, especially among larger, more complex organizations, KPMG said. Restatements are not unusual.
The firm’s analysis found that 27% of G250 and 20% of N-100 companies include some form of CR reporting in their annual reports. Another 18% of the former and 11% of the latter include a chapter addressing CR issues, but without the quality and measurable data of a report.
However, 63% of G250 companies that incorporate CR reporting in their annual report do so in a separate section, rather than integrate the information throughout the report.
The study found differences in CR reporting adoption among industries. The automotive and mining industries lead the pack, more than doubling since KPMG’s 2008 survey among the N-100 companies. Consumer markets and transportation advanced at a much slower pace.
Applying a tax lens to a company's green strategy—frequently a keystone of CR programs—can help drive an organization's return on investment, John Gimigliano, the U.S. firm's tax leader for climate change and sustainability, said in the statement.
“Companies who look critically at their sustainability-related investments around facilities, energy and supply chain discover that federal and state tax incentives can improve ROI, lower effective tax rates and increase cash flow—with some of these benefits running as high as 50% of a project’s cost,” he said.