'Green' Honesty is the Best Policy

GLOBE-Net - Twice as many top U.S. companies have publicly released sustainability data on their environmental, social and governance activities in 2008 compared with three years earlier.  Ethics outweighed economics for the first time as the primary reason for such disclosures, according to the KPMG International Survey on Corporate Responsibility Reporting.

KPMG analyzed reports from the Global Fortune 250 and the 100 largest companies by revenue in 22 countries, including the United States.

Of the top 100 U.S. companies, 74 percent published Corporate Responsibility (CR) information in 2008 either as part of their annual financial report or as a separate document, up from 37 percent in 2005.  The rate of reporting is 45 percent on average in the other 21 countries.  The highest numbers are found in Japan (88 percent) and the United Kingdom (84 percent).   Canada stands at 60 percent.

Globally, 80 percent of the Global Fortune 250 companies release CR data, up from 64 percent three years ago. 

Meanwhile, 70 percent of all companies studied wrote in their annual reports that ethical considerations were a primary driver for making CR disclosures, while 50 percent cited economic concerns as the leading reason.    This is a big change from 2005 when 74 percent cited economic considerations as the main reason and 53 percent picked ethical reasons.

“More U.S. companies are beginning to see the link between profits and principles. Even in a difficult economy we expect this trend to continue, as enhanced transparency and disclosure on non-financial matters will likely grow in importance,” says Eric Israel, a managing director and sustainability services leader for the Advisory practice at KPMG.   

One reason for doing so, according to Israel, is that U.S. lawmakers and regulators have taken a hard look at sustainability issues lately.  Well over 200 bills in a recent session of Congress addressed climate change and greenhouse gases, up from 30 pieces of similar legislation just five years earlier.   Ten Northeastern U.S. states opened the nation’s first market for trading and greenhouse gas permits this year, with buyer demands for “allowances” four times the existing supply. 

Israel explained that companies provide sustainability reports to discuss how the organization is monitoring and managing non-financial information and risks, such as climate change, supply chain integrity, or corruption issues. The company may also provide data on potential business strategies, such as new product development, the implementation of energy cost-saving and waste-reduction programs, or the redesign of business processes to improve performance. 

KPMG issues its sustainability reporting studies every three years.  Six have been published so far.  Analysts search only publicly available information such as websites, corporate reports and financial statements.  This year, the 22 countries surveyed were Australia, Brazil, Canada, Czech Republic, Denmark, Finland, France, Hungary, Italy, Japan, Mexico, Norway, Portugal, Romania, South Africa, South Korea, Spain, Sweden, Switzerland, The Netherlands, the United Kingdom and the United States.

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