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A new study highlights the leaders and losers when it comes to CSR reporting.
Laura Cameron, CFO Europe Magazine
May 5, 2008
Whether it's due to regulation, pressure from stakeholders or genuine anxiety about the fate of our planet, climate change is becoming a boardroom issue. Or, at least, companies are making it appear so.
Corporate Register, an online directory of corporate social responsibility (CSR) reporting, recently studied the latest batch of non-financial reports from the 500 largest listed companies in the world. Two-thirds of the companies issued a CSR report, with nearly 90% of them addressing climate change specifically. In Corporate Register's opinion, companies in Australia and Japan disclose the most thorough, useful information about climate change, followed closely by European firms. Companies in North America lag behind significantly.
It is somewhat surprising that Australian firms should rate so highly, given that the country only ratified the Kyoto Protocol in December, some ten years after the international treaty was agreed. But relative to their peers elsewhere, companies in Australia are more likely to report on absolute and relative greenhouse-gas emissions across their supply chains and to discuss a wide range of mitigation measures.
Despite government officials' sluggish response to climate change, "environmental issues have been very 'top of mind' over the last few years," explains Emma Herd, senior adviser for corporate responsibility and sustainability at Westpac, a Sydney-based bank considered by Corporate Register to be a leader in climate-change disclosure. One reason is a severe drought that began in 2002, which has pushed up food prices and led to water restrictions in many parts of Australia.
Westpac first published an environmental policy back in 1992. According to Herd, the bank's focus on the environment is based on "recognition that greater operational efficiency would deliver cost savings." To make this clear to shareholders, Westpac reports on its progress in reducing direct emissions — energy usage, business travel, recycling and the like — as well as tracking the proportion of its lending that it considers to have "added environmental benefit." All of this information is verified by a third-party assurance company.
Though the policymakers' response to climate change is well advanced in Europe, it appears that the region's companies can do more to explain their own environmental impact. Shareholders will likely appreciate more, and better, information now about how well the firms they invest in are prepared should disaster strike later.