Half of the Chinese companies surveyed recognise carbon emissions and climate change as pressing issues, yet only 3 percent of them have set carbon reduction targets, a KPMG survey has found. The report highlights that the situation is poised to change when the national emission trading system is introduced in China in 2017.
The KPMG Survey of Corporate Responsibility Reporting 2015 – Currents of change analyses the quality of carbon reporting among the world’s 250 largest companies by revenue (G250) – including 39 in China and Hong Kong. The ninth edition of the survey finds that Chinese companies are lagging behind in terms of carbon reporting initiatives. The report was released prior to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in Paris, where global agreement on reducing carbon emissions is expected.
Of the G250 companies surveyed, four out of five claim they report on carbon emissions and identify carbon/climate change as a concern, though just over half of Chinese respondents said the same. The survey finds that on average, Chinese firms score 10 out of 100 in reporting quality compared to a global average of 51; they are also the least likely to set carbon reduction targets (3 percent) among the G250 (53 percent). In comparison, the vast majority of companies in Germany (94 percent) and the UK (83 percent) have already set such goals.
Maria Cheng, Partner and Head of Business Reporting and Sustainability, KPMG China, says: “While China is only in the early stages of carbon reporting compared to developed countries, the situation is poised to improve as China will introduce an emission trading system in 2017. Carbon reporting will become a higher priority because companies are facing ever-increasing expectations to provide information on carbon emissions and the action they are taking to reduce them, as evidenced by China’s recent release of its first national accounting and reporting standards on greenhouse gas emissions.”
As a developing country and the world’s largest carbon emitter, China is committed to limiting its carbon emissions, which will peak latest by 2030, and China has targeted cutting 60-65 percent of its carbon intensity (emissions per unit of GDP) in 2030 compared to 2005. Moreover, 20 percent of energy will come from non-fossil fuel sources within the next 15 years. China also recently issued its first national standards for accounting and reporting greenhouse gas emissions in 10 key industries, including power generation, steel, chemical engineering and cement.
Cheng continues: “With all these developments, it is important that the board reviews corporate strategy to position the company to grow, and at the same time reduce its carbon emissions.”
Additionally, the survey analyses corporate responsibility (CR) reporting by the 100 largest companies in 45 countries – a total of 4,500 companies across 15 sectors. Seventy eight percent of the top 100 Chinese companies published CR reports, increasing from 75 percent in 2013 and 59 percent in 2011. The global average stands at 73 percent in 2015, up slightly from 71 percent in 2013.
In terms of CR reporting quality, the G250 companies in Asia Pacific scored 52 out of a possible 100, up slightly from 50 in 2013, overtaking their counterparts in the Americas (50) and catching up with organisations in European countries (68). China respondents among the G250 scored an average of 42.
The survey also highlights that more companies in Asia Pacific now clearly identify their stakeholders in their reporting, as well as explain how they engage with those stakeholders and what action they take in response to stakeholder views.
Cheng concludes: “Companies should no longer be asking whether or not they should report on CR. Instead, they should embrace the value CR reporting brings to companies and view it as an opportunity to distinguish themselves from others.”
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About the report
The KPMG Survey of Corporate Responsibility Reporting is now in its 9th edition and was first published in 1993. Research is carried out by professionals in KPMG member firms and is based on publicly available information published by companies in their corporate responsibility reports, annual financial reports and websites.
In the 2015 edition, the sample of the world’s 250 largest companies is based on the revenue. Global trends in CR reporting are based on a study of reporting from the top 100 companies in each of the 45 countries.
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 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.
Today, KPMG China has around 10,000 professionals working in 17 offices: Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR.
KPMG China refers to the member firms of KPMG International in mainland China, Hong Kong SAR and Macau SAR.