Corporate responsibility reporting not an option

More companies around the globe are issuing corporate social responsibility reports, but the U.S. lags most other developed nations.
Written by Heather Clancy, Contributor

A new analysis published by management consulting firm KPMG shows that a vast majority of top companies around the world are now reporting on their corporate social responsibility activities as a matter of course.

In the United States, for example, 83 percent of the top 100 businesses have a CSR component to their annual and ongoing disclosure activities, according to the firm's analysis. That is pretty high, and it was up from 74 percent the last time that KPMG conducted this study in 2008. But there are other countries where the percentage is even higher. In the United Kingdom, for one, the number is 100 percent. Japan, South Africa, France, Denmark, Brazil and Spain, and Finland also support higher percentages than in the United States. Only Denmark is behind, with 82 percent.

KPMG suggests that there are a number of reasons why this has happened, despite the rather lackluster economic climate around the world. These factors were listed as the primary motivators for CSR reporting:

  • Reputation and brand (67 percent)
  • Ethics (58 percent)
  • Employee motivation (44 percent)
  • Innovation and learning (44 percent)
  • Risk management (35 percent)

John Hickox, KPMG Americas Leader for Climate Change & Sustainability, said that approximately one-half of all large companies around the global have reported some sort of financial gain associated with their CSR initiatives. Data quality, as a result, will be something scrutinized more closely in the near future, according to the KPMG practice leaders.

"Assuring the accuracy of this non-financial data becomes critical as more companies work to include [corporate responsibility] information in their annual reports to shareholders," said Peter Minan, audit leader for the KPMG Climate Change & Sustainability practice. "Ultimately, a combination of financial and CR reporting and how they relate to each other would represent a more comprehensive approach to reflecting a company's full business performance in delivering on its strategy."

The fact that risk management was the last of the motivators listed by the companies underscores the current thinking with respect to reporting, which still is largely driving by corporate marketing, communications and branding executives.

This is changing, however. If you were to ask companies like The Coca-Cola Co., PepsiCo or Anheuser Busch InBev about the primary motivators for their water management strategies, as an example, I'd be willing to be that risk management would be foremost. No water, no soda, no beer or other adult beverages.

As more business leaders become clued into the fact that sustainable resource consumption could also inspire innovative new products and services, I believe you'll also see that number rise. But for now, again, it is clear that protecting the brand is the primary motivation for CSR reporting.

This post was originally published on Smartplanet.com

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