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KPMG survey says more about commercial considerations than anything else

KPMG’s 2011 survey of companies on sustainability reporting makes some interesting leaps of logic.

I should say first off though, that the research is a useful contribution.

There are some important numbers in it, as I mentioned in an earlier blog post.

These numbers are helpful also because KPMG is a company all CFO’s, non-executives and CEO’s have heard of.

However, their conclusions as to what makes the best corporate sustainability reporters chime exactly with KPMG’s commercial offerings.

One commentator suggested to me today they also chime with leading client names.

Have a look at the below extract:

Leading the Pack
The ‘Leading the Pack’ companies and sectors have achieved top scores in terms of professionalism of their internal systems and external accountability on the one hand and the quality of their communications on the other hand.

They have implemented information systems and processes to ensure reliable information, which is further demonstrated by either few or no CR report restatements.

‘Leading the Pack’ companies have asked for external assurance and both lead in terms of the breadth or the scope of assurance and the level they have provided for part of the full CR report.

On the communications axis, they have applied the GRI Guidelines to best serve the needs of stakeholders and to gain credibility.

Also, they use multiple channels to reach their audiences and have taken (the first) steps towards integrated reporting by merging CR information with their annual report.”

So, where do we start? In the first paragraph professional systems, (classic consultant fodder to peddle, though of course important) are defined partly by those whose CR reports are not restated. 

But as one sustainable investing expert told me today: “there is nothing wrong with restating [e.g. better data quality, new emission factors, changes to the baseline] so long as its clear what you’ve done and why, and so long as you update historic data to reflect these changes…in many ways, honesty about restatements is a positive.”
How else was this KPMG conclusion reached? After all, companies don’t reveal the quality of their data systems via their reports. It’s not clear.

Remember: This ‘survey’ is not a survey in the classic sense: It’s all simply desk research, not interviews or actual surveys in the real sense the word brings to mind.

The most important point to make here, though, may be the implication that reporting to conventions set partly by the vendor community, means real leadership. Reporting policies and numbers is not the same as actual performance.

Leadership is not about pseudo transparency to an incestuous CSR community, but about actual results, not just reporting.

You can be a world class reporter (by the service provider criteria) but still be 4th or 5th in your sector. Look at BP. Lots of vendors crowed about their policies and intentions before their total fall from grace on a performance basis.

‘Leaders of the pack’ also seek external assurance, deep in breadth and broad in scope, says KPMG.

But assurance does not make a leading reporter. It is a product that KPMG sells of course. But having KPMG’s name on a report as an assurer doesn’t really assure anyone that I know, and I know a lot of people. It’s something companies do, but no-one is really sure why.

Stakeholder commentary, good and bad, is what assures people the company takes things seriously, not random fact checking by an accountancy firm.

According to the above KPMG statement, apparently GRI guidelines (paragraph three) are the secret to serving the needs of stakeholders and adding credibility.

Again, no-one I know recognises that. And no consumer, or employee will even know that that means. Most suppliers won’t either.

Certainly the good SRI analysts won’t take much heed. Spanish companies, for example, love the GRI to death, but how many real Spanish corporate responsibility leaders can you name? Not many, if any.

I’m sure KPMG can help you navigate GRI though. No doubt a partner is on hand to help you tick all the boxes all the way to leadership.

Lastly, taking the first steps towards integrated reporting is apparently enough to put you in the leaders of the pack group.

But there is no evidence at all, that integrated reporting is set to be the revolution in transparency and data provision investors and stakeholders need to help companies change course.

I wrote about this last year, which sparked a good debate.

No doubt integrated reporting will be useful to some audiences, in some ways. It will be part of the broad mix of data sets that will help us price risk more effectively, which is really what is going to make the difference.

But it is no panacea for the communications problems companies continue to have around sustainability.

In conclusion, I’m arguing two things here: One, I don’t recognise the above as characteristics of the companies which really lead on sustainability. This is partly on the basis that being a leading reporter, if you are not being a leading company, is pretty worthless.

Secondly, whilst there are some interesting stats here, one should bear in mind KPMG’s reasons for producing this desk research: Sell more assurance, integrated reporting advice and GRI-related services.

The results must be viewed in that rather biased light. A large pinch of salt please. 

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