Nearly all (95 percent of) G250 companies report on their corporate responsibility efforts, and almost half of these report financial gains from their CSR programs, according to research from KPMG. But most companies continue to record these efforts separately from their financials, and the quality of data remains less assured (12 percent error rate for CSR versus 3 percent for fiscals).
The challenge to an integrated reporting approach, says Peter Bakker, president of the World Business Council for Sustainable Development, is the lack of guidelines and accounting and auditing standards. Even if investors find the information available interesting, they have no way to compare CSR data among competitors.
North American companies are five to seven years behind their developed peers in corporate responsibility reporting (though they are catching up). Mike Wallace, director of the Global Reporting Initiative in the U.S., sees increasing acceptance of the GRI reporting scheme among North American business leaders today (ironic since the system originated in Boston in the late 1990s).
Corporations must take the lead, Wallace said this week at KPMG’s Business Perspective on Sustainable Growth: Preparing for Rio+20 event. He cites sports apparel giant Puma’s success in reporting the cost of its impact on the environment (134.3 million in 2010 for carbon emitted and water used). It was the first major corporation to do so.
And if the business community doesn’t embrace integrated CR/financial reporting, government will come up with a metrics that isn’t useful to anyone, says Paul Druckman, CEO of corporate reporting organization The IIRC. He says integrated reporting tells the story of integrated value. It shows that a business will be profitable for the foreseeable future. Reporting last-quarter earnings is no longer sufficient. In fact, corporate responsibility reporting will ultimately revolutionize corporate financial reporting: information will be pulled rather than pushed, technology will allow full transparency, a single global reporting organization will provide standards.
Bakker notes that the economy of the future, scarcity of resources and poverty will force businesses to manage more than money and cash flow. These new sustainability indicators will cause business to take action and effect change. He says this reporting isn’t an objective, but a means to act.
Outcomes from KPMG's Business Perspective on Sustainable Growth: Preparing for Rio+20 will be shared at Rio+20. Both events aim to craft a forward-looking agenda to focus on global green growth. KPMG International is hosting the event, in cooperation with the UN Global Compact, the World Business Council for Sustainable Development and the United Nations Environment Programme.