Singapore and India are leading the Asia Pacific region in corporate responsibility reporting, with the countries recording two of the highest jumps in reporting rates by its companies since 2011 compared to the rest of the world, said the latest KPMG Survey of Corporate Responsibility Reporting 2013.
The eight edition of the report, released last month, was based on a survey of 4,100 firms or the 100 largest companies in 41 countries by revenue, and also looked at the quality of their corporate responsibility (CR) reports.
In Asia Pacific, 71 per cent of the region’s leading companies now publish CR reports, which is a jump of 22 per cent from 2011 when only less than half of the surveyed, or 49 per cent, produced such documents.
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India experienced the highest growth globally with 73 per cent of companies issuing CR reports - a jump of 53 per centage points from 20 per cent previously, followed by Chile as second highest with a growth of 46 percentage points and Singapore in third place with 80 per cent of companies reporting, a 37 per cent jump from 43 per cent previously.
Other top gainers in the Asia Pacific are Australia (25 percentage points jump) and Taiwan (19 percentage points).
Asia Pacific’s latest numbers show that it is almost on par with Europe, where 73 per cent of companies produce CR reports. Still, the Americas region has the most with 76 per cent of companies, noted KPMG. The lowest growth is seen in the Middle East and Africa at 54 per cent.
If anyone still thinks that Asia is a corporate responsibility dead zone, this survey is clear evidence that they should think again
Sharad Somani, KPMG Singapore head of climate change and sustainability services
“The companies surveyed in the Asia Pacific region clearly recognise that doing business anywhere in a globalised 21st century world requires you to account for not just your financial performance, but also your social and environmental performance,” said Sharad Somani, head of climate change and sustainability services for KPMG in Singapore.
“If anyone still thinks that Asia is a corporate responsibility dead zone, this survey is clear evidence that they should think again,” he added.
Governments and stock exchanges in various countries – not only those in the Asia Pacific – are increasingly enforcing mandatory reporting requirements.
For example, in India, the Securities Exchange Board requires the top 100 listed companies to report their CR initiatives in their annual reporting from financial year 2012 to 2013.
In the city-state, the Singapore Exchange (SGX) encourages triple bottom line reporting with its Sustainability Reporting Guide for listed companies and the Code of Corporate Governance, which requires listed companies to disclose their corporate governance practices in their annual reports, as well as explain any deviations from it.
Singapore also has a Energy Conservation Act of 2012 that requires large companies to declare their energy usage, noted the KPMG survey.
KPMG noted that reporting about corporate responsibility practices and initiatives is now a mainstream business agenda.
When the survey first started in 1993, reporting was only at 12 percent globally, and in 2011, it was 64 per cent. The rise, aside from government and stock exchange requirements, is also due to the benefits gained from reporting such as helping to improve business performance and innovation, said the report based on responses from several companies.
CR reporting also helps in recruiting and retaining employees, and similarly, it is an important tool for building strong relationships with external stakeholders, the report added.
However, despite such benefits, external assurance of CR reports — or the verification of the report by a third-party outfit — is still voluntary in most countries. This is an area that needs improvement, the firm noted.
In the survey, they named Singapore, Malaysia, and Indonesia as some of the countries in the Asia Pacific with the lowest rates of assurance, explaining that this is likely due to CR reporting being in its infancy.
The survey stated, though, that “the tipping point has been crossed”, meaning more than half of the world’s 250 largest companies (59 per cent) are now investing in assurance. Two thirds of these invest in a major accountancy firm for their external assurance, giving their corporate responsibility reports added credibility. And as this kind of validation practice increases among corporations, it could influence other companies to follow suit, the report pointed out.
Somani emphasised that quality is important in CR reporting, in order for sustainability to become fully embedded in the heart of business operations. The increase in quantity of CR reports around the world is a welcome milestone, but the content must reflect sound corporate responsibility efforts.
He said: “Some companies report on their CR activities, but show no evidence of robust reporting processes, strategic objectives, or clear targets.”
Targets are crucial to continuously improve and measure performance, identify trends and adapt to changes in the future, he added.
Somani expects that the growth in quantity of reports will eventually be matched with quality.
“As sustainability reporting continues to mature, we anticipate that other companies across the region will follow the lead of those who have already put in place the critical building blocks of sustainability,” he added.
Read the full report here.