The road ahead - KPMGgallery.cee.kpmg.com/HU/Newsletters/prezi/CSR_Reporting_2017.pdf · The road ahead The KPMG Survey of Corporate Responsibility Reporting 2017 kpmg.com

The road aheadThe KPMG Survey of Corporate Responsibility Reporting 2017

kpmg.com

© 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

2

The 10th edition of KPMG’s survey analyzes reporting from a record 4,900 companies in 49 countries.

The survey spotlights four major emerging trends within CR reporting:

— Reporting on the UN Sustainable Development Goals (SDGs)

— Reporting on carbon reduction targets

— Reporting on climate-related financial risk

— Reporting on human rights


3

Research samples: the N100 and G250

The N100 refers to a worldwide sample of 4,900 companies comprising the top 100 companies by revenue in each of the 49 countries researched in this study.

N100

The G250 refers to the world’s 250 largest companies by revenue based on the Fortune 500 ranking of 2016.

G250


4

KPMG has been tracking

in corporate responsibility reporting since 1993.

quantitative global trends

This survey finds N100 companies continue to catch up steadily with the G250.

Growth in global CR reporting rates since 1993

Base: 1765 N100 companies that report carbon reduction targets, 156 G250 companies that report carbon reduction targets

Note: The underlying trend of 75 percent applies when looking at the same sample of countries in 2015 and 2017. The overall N100 rate in 2017 is 72 percent due to the inclusion of 5 new countries with relatively low reporting rates in the 2017 research.

Source:KPMG Survey of Corporate Responsibility Reporting 2017

12%18%

24%18%

41%

53%

64% 71% 73% 72%

35%

45%

64%

83%

95%93% 92% 93%

0

10

20

30

40

50

60

70

80

90

100

1993 1996 1999 2002 2005 2008 2011 2013 2015 2017

N100 G250

75%Underlying trend

93%

6© 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

CR reporting in the Americas region has risen by an impressive 6 percentage points in the last two years. It is the region with the highest reporting rate in 2017

Base: 4900 N100 companies

Note: The underlying trends of 78 percent for Asia Pacific and 77 percent for Europe apply when looking at the same sample of countries in both 2015 and 2017. The overall Asia Pacific regional rate in 2017 is 77 percent and the overall European regional rate in 2017 is 73 percent due to the inclusion of new countries with relatively low reporting rates in the 2017 research.


Middle East & AfricaEuropeAsia PacificAmericas

2017

83% 78% 77% 52%

Middle East & AfricaEuropeAsia PacificAmericas

2015

77% 79% 74% 53%


7

The survey finds the mixed picture across Europe continues.

The divergence between Western and Eastern Europe observed in 2015 remains.

CR reporting rates: Western Europe vs Eastern Europe

Base: 2,400 N100 companies in Europe

Note: The underlying trend of 82 percent applies when looking at the same sample of countries in 2015 and 2017. The overall Western Europe rate in 2017 is 75 percent due to the inclusion of 3 new countries with relatively low reporting rates in the 2017 research.

Source:KPMG Survey of Corporate Responsibility Reporting

79%

61%

82%

65%

0

10

20

30

40

50

60

70

80

90

Western Europe Eastern Europe

2015

2017

9 countries now have CR reporting rates of over 90%. Top countries are from Europe, ASPAC, the Americas and Africa.

Source: KPMG Survey of Corporate Responsibility Reporting 2017

99% 99% 97% 94%UK Japan India Malaysia France

99%

Denmark South Africa US Mexico

94% 92% 92% 90%

More than ¾ of the world’s biggest companies now integrate financial and non-financial data in their annual financial reports, suggesting they believe CR information is relevant for investors

Companies that include CR information in annual financial reports

Base: 4,900 N100 companies and 250 G250 companies

Note: The underlying trend of 60 percent applies when looking at the same sample of countries in 2015 and 2017. The overall N100 rate in 2017 is 57 percent due to the inclusion of 5 new countries with relatively low reporting rates in the 2017 research.


78%65% G250

56% N100

2015 2017

60%


“Integrated Reporting” has taken off in Japan, Brazil, Mexico and Spain

Actual number of "Integrated Reports": top countries

Base: 4,900 N100 companies

Note: 2015 Integrated reporting rate restated for South Africa


South Africa

+2

Japan

+21

Spain

+9

The Netherlands

-1

21

88 90

4227 36 27 2621

Brazil

+16

Mexico

+16

622

521

20152017

Assurance of CR data has more than doubled among the G250 in the last 12 years indicating that the largest companies see value in promoting the reliability of this information.

Growth in independent assurance of CR information

Base: 3,543 N100 companies that report on CR, 233 G250 companies that report on CR


42%38%38%39%45%

2015

63%

2013

59%

2011

46%

2008

40%

2005

30%

33%

2017

67%

N100G250

Emerging topics

13© 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

13

In September 2015, the UN adopted the Sustainable Development Goals (SDGs), a set of 17 goals to end poverty, protect the planet, and ensure prosperity for all.

KPMG’s survey analyzed how many companies make a connection between their corporate responsibility activities and the SDGs.


14

KPMG’s survey shows that the SDGs have resonated strongly with businesses worldwide in less than two years since their launch.

Around four in ten CR reports from both N100 and G250 companies make a connection between the company's CR activities and the SDGs.

Number of companies that connect their CR activities to the SDGs



39%N100N100

43%G250G250


There are only three countries where a majority of the top 100 companies reference the SDGs in their CR reporting.

All the top 10 are European or Latin American countries.

World’s top 10 countries for connecting CR activity with the SDGs

Base: 4,900 N100 companies


60 58 47 47Sweden Portugal Mexico France Netherlands

51

Finland Spain Colombia UK Italy

46 46 44 43 41


SDG maturity matrix

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Understanding Prioritization MonitoringPerformance

Number of companies that score Top/Med/Low/0 for each of the 3 categories

Top score (3/3)

Medium score(2/3)

Low score (1/3)

No score (0/3)



SDGs prioritised as most relevant to business


0%

10%

20%

30%

40%

50%

60%

13 8 3 12 5 4 7 9 11 10 6 17 16 1 15 2 14 All


Business case of the SDGsBusiness case example:

“The SDGs offer business an unprecedented economic opportunity.

Pursuing these Goals could deliver valuable market opportunities, unlocking economic

growth of up to $12 trillion and creating 380 million jobs, according to estimates from the Business & Sustainable Development Commission”

Only 8% report clearly on the business case specifically for taking action on the SDGs

Germany

UK

Italy

IndiaSpain



Impact of business activities on any of the SDGs

73% explain the impact of the business on the SDGs

97% companies ONLY describe the positive impacts they have on the SDGs not the negative.



Impact examples

SDG1: “Together with our bottling partners, providing jobs to over 700,000 people globally” SDG8: „Our activities create

jobs, use local suppliers and support local businesses. We contribute to economic growth by paying taxes and royalties to local governments. Our projects create demand for a range of goods and services, such as construction. We assess those we work with to ensure they adhere to principles supporting the eradication of forced labour and modern slavery and the protection of labour rights. We have social investment projects to help create opportunities for individuals.”


21

KPMG reviewed reports to see how many companies disclose targets to cut their carbon emissions.

Analysts also checked to see if companies linked their targets to any external climate goals such as The Paris Agreement 2ºC goal.


A solid majority of the world’s largest companies (G250) now disclose targets to cut their carbon emissions.

Among the N100, the survey shows that 50 percent of reporting companies set carbon reduction targets

G250 companies that set carbon reduction targets

Base: 233 G250 companies that report on CR


67%

G250

58%

2017

2015


23

Most carbon targets are not linked to greater climate goals

Companies linking their carbon reduction targets to national, regional or global goals

23% 23%

6%2%

7% 6%

63%69%

Linked to global 2o target (Paris Agreement

Linked to regional targets (e.g. EU targets)

Linked to national targets (NDCs/INDCs)

Not linked to any other targets

Base: 1765 N100 companies that report carbon reduction targets, 156 G250 companies that report carbon reduction targets


G250N100


24

KPMG analysts studied companies’ annual financial reports to understand how many acknowledge that climate change poses a financial risk to their business.


Only 28 percent of N100companies currently acknowledge the financial risk of climate change in their annual reports.

Among the world’s 250 largest companies (G250), a higher 48 percent acknowledge the risk.

28%

72%

N100

Yes

No

48%

52%

G250

Yes

No

Companies that acknowledge the financial risk of climate change in their annual reports

Base: 4,900 N100 companies and 250 G250 companies



Of those companies that do acknowledge climate change as a financial risk in their financial reporting, a relatively high proportion provide some narrative description of the potential impacts. Very few, however, are currently quantifying the potential impact of those risks.

Base: 1,386 N100 companies & 119 G250 companies that acknowledge climate change as a financial risk in their annual reportSource: KPMG Survey of Corporate Responsibility Reporting 2017Note: Numbers do not add up to exactly 100 due to rounding

Companies describing, quantifying or modelling climate risk in financial reports

76%

63%

2% 2% 3%2%

18%

33%

N100 G250

Provide a narrative description of potential impacts

Quantify potential risks in financial terms

Model potential impacts using scenario analysis

Acknowledge financial risk of climate change but do not describe the potential impacts


27

In 2011, the UN endorsed the Guiding Principles on Business & Human Rights.

Six years on, KPMG analyzed reports to see how many companies are acknowledging human rights as an issue for their business


The results show the human rights is firmly on the agenda as a global business issue.

Almost three quarters of N100 CR reports and nine out of ten G250 reports acknowledge the issue.

CR reports that acknowledge human rights as an issue for the business



73% 90%

Reporting trendsin Hungary


Sustainability reporting has been declined, proportion of local reportsslightly increased in 2017 compared to 2015

Source: KPMG International CR Reporting Survey 2017


Leading industries issue mainly global reports resulting in lower level of local community engagement and transparency



GRI as de-facto standard for sustainability reportingGRI as reporting standard is applied by the majority of leading companies but higher levelof compliance to the latest Standards is to be ensured



Big 4 Firms dominate sustainability reporting assurance

Local reports need to catch up on assurance to increase credibility: global reports have a 3 times higher assurance rate than local reports



SDGs are poorly reflected in local reports



Sustainability targets and results are usually not included in local reports


To find out more download the report at www.kpmg.com/crreporting

Email us at: [email protected]

http://www.kpmg.com/crreporting




KPMG Sustainability Services – The Journey

Panel discussion

ALTEO – sustainability reporting

2007-2014: sustainability is our core business, internal data available fromoperations SDG drive comes from strategy – no report

Acquisition of Sinergy in 2015 and IPO in 2016 – need for formal report More complex processes

Need for data unification

Financial and non-financial reports are really became „public” (transparency,branding)

The report is based on GRI G4 Reporting Guidelines Project Team of external and internal resources/experts

Commitment of the management/CEO

External professional with content proposals and methodology

GRI Aspects and Indicators on the basis of Materiality Analysis

Successfully audited and has been recognized by Green Frog Award The Report is being provided to our Key Stakeholders and has been published

on our web site and on the ALTEO’s Stock Exchange section Integrated Report – financial and non-financial – in 2019

40

Safety first in the chemical industry

Work health and safety

o By 2030 we reduce the number of events resulting fromimproper wearing of personal protective equipment by 40%.

o We will reduce the lost time injury rate• by 25% within 5 years.• by 50% by 2030.

Economic value creation:- Transparency through our audit

services- Efficiency through our tax and

advisory services

Economic and social value creation:- Rural development related

services- Equal rights in HR policies- Mentor programs

Social value creation:- Education related advisory and IT services- Learning&development programs to

employees- Education programs to university students

(dual trainings, competitions)- Lectures, mentoring and donation

Social value creation:- Cooperation with

chambers, professional organizations, universities, etc.

Environmental, economic and social value creation:- Renewable energy

and energy efficiency advisory

- Global EnergyCentre of excellence

Economic value creation:- Infrastructure, technology

developments - Major project advisory

Economic and social value creation:- Ethics&compliance- EU&gov. &NGO work- Risk consulting solutions (IA,

SDD)

Most relevant SDG-s for KPMG in Hungary

4444

SDG IN MOL GROUP AND IN OIL AND GAS SECTOR

FIRST HSE REPORT OF MOL IN 1997

INTEGRATED REPORT SINCE 2009

3 BUSINESSES, 40+ SUBSIDIARIES, 100+

INDICATORS

REASONABLE ASSURANCE FOR SELECTED

INDICATORS

REFERENCE TO SDGS IN REPORT SINCE 2017

IPIECA: MAPPING THE OIL AND GAS INDUSTRY TO THE SUSTAINABLE DEVELOPMENT GOALS: AN ATLAS

KPMG on social media KPMG app

© 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

All rights reserved.

The KPMG name and logo are registered trademarks of KPMG International.

Attila SágodiPartner

KPMG Tanácsadó Kft.1134 Budapest, Váci út 31.

T: +36 1 887 6611M: +36 70 333 1466E: [email protected]

István Szabó Senior manager

KPMG Tanácsadó Kft.1134 Budapest, Váci út 31.

T: +36 1 887 7278M: +36 70 370 1812E: [email protected]

The road ahead - KPMGgallery.cee.kpmg.com/HU/Newsletters/prezi/CSR_Reporting_2017.pdf · The road ahead The KPMG Survey of Corporate Responsibility Reporting 2017 kpmg.com

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