At least 85% of the Top 100 companies listed on the JSE Securities Exchange provided annual reports on sustainability-related issues this year, according to professional services firm KPMG.
The 2003 KPMG Survey on Integrated Sustainability Reporting in South Africa, released recently, also indicates that 77% of the companies referenced an internal code of ethics or code of corporate conduct.
‘With the emphasis on increased transparency, complemented by the recommendations of the King II [report on corporate governance for South Africa] and the general trend of increased corporate governance, integrated sustainability reporting has become a mainstream practice for most JSE-listed companies,” says KPMG’s director of sustainability services, Shireen Naidoo.
‘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,” Naidoo says.
The pressure for companies to improve disclosure is not unique to South Africa, but reflects the rising global tide of corporate sustainability reporting. Sustainability, in this context, refers to the triple bottom line of social, environmental and economic performance.
This survey is the most comprehensive research of its kind in South Africa and allows companies to benchmark their relative progress to date.
In contrast to previous surveys, which focused primarily on general sustainability reporting, this year’s report analyses the incorporation of recommendations of the revised King II report.
The aim of the research is to provide information on current corporate attitudes, approaches and activities regarding sustainability; to identify sustainability trends; and to 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 international Association of Chartered Certified Accountants and the Institute of Directors, shows that South African companies are taking serious steps to improve the quantity and quality of information that is presented to stakeholders.
Other survey findings show that:
l Health and safety, employment equity and social investment are the most frequently disclosed areas.
l Disclosure of employee integrity assessment, board confirmation of compliance to ethical standards and incorporation of Global Reporting Initiative guidelines are areas that local companies are still grappling with.
Altogether 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 that produced reports.
Reports are also being provided by sectors not traditionally targeted by campaigners, such as financial services — 35% of stand-alone reporting by Top 100 companies were from the financial services sector.
Sectors that lagged behind were retail and IT. No stand-alone reports were received from IT 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,” says Naidoo.
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.