The Top 100 companies listed on the JSE Securities Exchange SA (JSE) have taken on the integrated sustainability reporting challenge, says professional services firm KPMG in its latest sustainability report released today.
The 2003 KPMG Survey on Integrated Sustainability Reporting in South Africa indicates that 85% of the Top 100 companies provided annual reporting on sustainability related issues and 77% of the companies referenced the existence of an internal code of ethics or code of corporate conduct.
With the emphasis on increased transparency, complemented by the King II recommendations and the general trend of increased corporate governance, integrated sustainability reporting has become a mainstream practice for most JSE listed companies. This survey has shown that, while many companies have begun to incorporate the King II recommendations, there remains significant room for further detailed disclosure in accordance with the code as this detailed information is what is truly valuable for stakeholders, says KPMG Director of Sustainability Services, Shireen Naidoo.
The pressures for improved disclosure are not unique to South Africa, but reflect the rising global tide of corporate sustainability reporting. Sustainability, in this context, refers to the so-called triple bottom line of social, environmental and economic performance.
This South African survey is the most comprehensive research of its kind and allows companies to benchmark their relative progress to date.
In contrast to previous surveys, which focused primarily on general sustainability reporting, this years report analyses the incorporation of recommendations of the revised King II Report on Corporate Governance for South Africa.
The aim of the research is to provide information on current corporate attitudes, approaches, and activities regarding sustainability; identify sustainability trends; and stimulate broader debate on
effective ways to incorporate integrated sustainability into company decision-making and operations, as recommended by King II.
The survey, endorsed by the Association of Chartered Certified Accountants (ACCA) and the Institute of Directors, shows that South African companies are taking serious steps in improving the quantity and quality of information that is presented to stakeholders. Other findings of the survey show that:
Health and Safety, employment equity initiatives and social investment prioritisation are the most frequently disclosed areas; while disclosure of employee integrity assessment, board confirmation of compliance to ethical standards and incorporation of Global Reporting Initiative Guidelines are areas that companies are still grappling with.
20% of the Top 100 JSE companies provided non-financial reports. This compares with 16% that produced non-financial reports a year ago and 45% of the Global Fortune 250 Companies.
Reports are also appearing in sectors not traditionally targeted by campaigners, such as financial services. 35% of stand-alone reporting in the Top 100 companies were from the financial services sector.
Laggard sectors were retail and information technology where there were no stand-alone reports from information technology companies.
Good environmental stewardship and social responsibility are clear examples of good management and there is no disputing the clear link between good management and business performance. It is also becoming of increasing value to companies to be able to demonstrate responsible behaviour through transparent and credible reporting, explains Naidoo.
She says that as the practice of disclosing non-financial performance continues to evolve, it is becoming more common for key stakeholders to demand that companies provide some level of third party assurance on their social, economic and environmental performance. More often than not, especially for those companies operating in emerging markets, or where the key social or environmental risks are present, third party assurance acts as a means of overcoming issues of diminished trust.
