Companies Say Corporate Citizenship Boosts Reputation, Motivates Employees, Inspires Innovation

NEW YORK, Nov. 7, 2011 /PRNewswire/ -- Even amid the pressures of a tough economy – and maybe because of it, increasingly more U.S. companies are formally reporting their Corporate Responsibility (CR) activities to stakeholders, though European nations continue to dominate and lead this trend, according to a KPMG International analysis of CR reporting among the top 100 companies (N-100) in 34 nations.

Among the top 100 U.S. companies by revenue, 83 percent report on their CR activities, up from 74 percent in the 2008 KPMG analysis. Six European countries were on the top 10 list of nations where their largest companies report CR activities: United Kingdom (100 percent), Japan (99 percent), South Africa (97 percent), France (94 percent), Denmark (91 percent), Brazil and Spain (both 88 percent), Finland (85 percent), the United States (83 percent), and the Netherlands (82 percent).

Bolstering the Brand

John R. Hickox, KPMG's Americas leader for Climate Change & Sustainability (CC&S), said the KPMG International Survey of Corporate Responsibility Reporting 2011 found reputation and brand (67 percent), ethics (58 percent), employee motivation (44 percent), innovation and learning (44 percent) and risk management (35 percent) were cited by the companies as the top priorities and impetus behind CR reporting as it becomes part of the overall business strategy within organizations.

"During these tough times, companies look to the value of their brand to carry them through," said Hickox. "In addition, managing risk, keeping workers engaged, and innovating for new products or services, or opening new markets can provide additional key foundations for corporate strength."

Stakeholders Demand Non-financial Accountability

"While corporate responsibility reporting was broadly considered an 'optional' activity only a few years ago, more organizations are generating CR reports to meet rising stakeholder demands for greater accountability, transparency and accuracy in assessing parts of the business that are not necessarily financial, but which contribute to the overall value of the company," Hickox said.

"In addition, we have seen many companies benefit from analyzing their CR reporting data to develop continuous internal improvement programs to effect lasting change," said Hickox, noting that about a third of the N-100 companies globally and almost half of the 250 largest companies globally (G250) said they had demonstrated financial gain from their CR initiatives.

Data Quality Seen as an Issue: Peter Minan

KPMG Partner Peter F. Minan, the U.S. firm's audit leader for CC&S, said data quality has become an issue as more companies seek to deliver their CR information to stakeholders, particularly among larger, more complex organizations, with a third of the G250 and more than a fifth of the N-100 companies on average issuing restatements on their CR reports.

"Assuring the accuracy of this non-financial data becomes critical as more companies work to include CR information in their Annual Reports to shareholders," said Minan. "Ultimately, a combination of financial and CR reporting and how they relate to each other would represent a more comprehensive approach to reflecting a company's full business performance in delivering on its strategy."

The KPMG analysis found that 27 percent of G250 and 20 percent of N-100 companies include some form of CR reporting in their Annual Report, while another 18 percent of G250 and 11 percent of N-100 include a chapter addressing CR issues, but without the quality and measurable data of a report. However, 63 percent of the G250 that put CR reporting into their Annual Report to shareholders do so in a separate section, rather than integrating the information throughout the report.

Consider Tax Aspects of Green Strategy: John Gimigliano

In addition, John Gimigliano, the U.S. firm's tax leader for CC&S, emphasizes that applying a tax lens to a company's green strategy -- which is often a keystone of CSR programs -- can help drive an organization's return on investment (ROI).

"At KPMG, we believe an important first step for companies that seek to do well while doing good is to turn to their tax departments," Gimigliano says. "Companies who look critically at their sustainability-related investments around facilities, energy and supply chain discover that federal and state tax incentives can improve ROI, lower effective tax rates and increase cash flow -- with some of these benefits running as high as 50 percent of a project's cost."

Industry Sectors

Meanwhile, the study also found there to be differences in CR reporting adoption among industries, with the automotive and mining industries leading the pack, more than doubling since KPMG's 2008 survey among the N-100 companies, while consumer markets and transportation advanced at a much slower pace.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International.")  KPMG International's member firms have 138,000 professionals, including more than 7,900 partners, in 150 countries.

About KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International performs no professional services for clients nor, concomitantly, generates any revenue.

SOURCE KPMG LLP