China is catching up with Asian counterparts in terms of corporate responsibility reporting rates, however the quality of the CR reports still lag behind global standards, according to a survey by KPMG.
China is catching up with Asian counterparts in terms of corporate responsibility (CR) reporting rates, however the quality of the CR reports still lag behind global standards, according to a survey by KPMG.
The 8th KPMG Survey of Corporate Responsibility Reporting covers the top 100 companies by revenue in 41 countries – a total of 4,100 companies across 15 industry sectors.
It finds that CR reporting is on the rise in China (including Hong Kong) with 75 percent surveyed companies publishing CR reports in 2013, up from 59 percent in 2011. The survey ranks China fifth out of 11 jurisdictions in Asia Pacific in terms of CR reporting rates.
Meanwhile, the global average of CR reporting rates rose to 71 percent from 64 percent in the same period. The U.S. average stands at 76 percent, followed by Europe (73 percent); Asia Pacific, including China (71 percent) and Middle East & Africa (54 percent).
Sean Gilbert, Director, Climate Change & Sustainability, KPMG China says: “Reporting requirements from the Shanghai Stock Exchange and CR guidelines for state-owned enterprises have been in place since 2008. It is likely the recent growth reflects the greater expectations in the marketplace regarding corporate social responsibility. Reporting is a practical way to show responsiveness, and companies also want to avoid being left behind those who have already issued reports.”
“In addition, the Hong Kong Stock Exchange plans to raise the obligation level of some recommended disclosures in the Environmental, Social and Governance Reporting Guide to "comply or explain" by 2015. This will also help raise awareness of CR reporting among Hong Kong companies,” he adds.
In terms of quality of CR reports by the largest 250 companies surveyed, Chinese firms scored only 39 out of 100, compared to companies in Italy, Spain and the UK which achieved 76 to 85. It also lags behind the global average (59) and its Asian peers in Korea (60) and Japan (55).
“The quality of CR reporting in China varies quite dramatically from thoughtful documents to ones that only speak of broad ambitions and values with little detail about actual actions or outcomes. Reporting should outline a strategic focus, targets and follow-up actions, rather than an exhaustive list of unconnected social or environmental activities.” Gilbert says. “When the department that drives CR reporting does not have a mandate to set strategy for the company or influence other departments’ goals, programs and priorities, it is often reflected in the quality of the reporting.”
Separately, the survey points out companies worldwide are generally weak in reporting issues related to suppliers and the value chain in CR reports, i.e. their reports fail to show how CR strategy and targets address material impacts of suppliers, products and services. Improvement is needed for disclosing stakeholder engagement and how CR is governed within the firm and how the companies link CR performance to remuneration.
Gilbert concludes: “The challenge for companies is to use the CR reporting process to identify the most important environment and social issues for their business and stakeholders. They can then bring those issues into the heart of corporate strategy to manage risks, unlock opportunities and build long-term value.”
- Ends -
About the Survey
This KPMG Survey of Corporate Responsibility Reporting 2013 is published primarily for business leaders, company boards and CR and sustainability professionals. It provides a snapshot of current global trends in CR reporting with benchmarks, guidance and insights to help companies worldwide determine their own approaches to CR reporting and to assess and improve the quality of their reports. This year the survey, which has been regularly published since 1993, covers a record 41 countries and 4100 companies across 15 industry sectors.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG China has 16 offices in Beijing, Shanghai, Tianjin, Shenyang, Nanjing, Hangzhou, Fuzhou, Xiamen, Qingdao, Guangzhou, Shenzhen, Chengdu, Chongqing, Foshan, Hong Kong SAR and Macau SAR, with around 9,000 people.
KPMG China refers to the member firms of KPMG International in Mainland China, Hong Kong SAR and Macau SAR.