CSR Reporting is Quickly Becoming a Key Part of Business Strategy

Two new reports reveal the growing importance of corporate responsibility reporting as part of the core strategies of leading global companies.

A KPMG InternationalSurvey of Corporate Responsibility Reporting 2011, survey shows that even amid the pressures of a tough economy -- and maybe because of it -- more U.S. companies are formally reporting their Corporate Responsibility (CR) activities to stakeholders.

However, compared to their European counterparts they are only "scratching the surface" of corporate responsibility, concentrating more on communication than on actual performance, according to KPMG.

The report looked at corporate responsibility reports for more than 3,400 companies -- including the world's 250 largest, and the 100 largest in each of 34 countries.

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.

Most countries in the "Leading the Pack" quadrant of the KPMG analysis are from European nations. Six European countries were on the top 10 list of nations where their largest companies report CR activities.

Similar evidence of the growing importance of corporate responsibility was presented in a "BSR/GlobeScan State of Sustainable Business Poll 2011," released last week at a BSR Conference 2011 in San Francisco.

For the second straight year, more than eight in 10 respondents (84 percent) are optimistic that global businesses will embrace CSR / sustainability as part of their core strategies and operations in the next five years. BSR and GlobeScan surveyed nearly 500 business leaders drawn from BSR's global network of nearly 300 member companies.

"Even with the current uncertainties in the global economy, companies remain highly focused on the value of sustainable business strategies," said BSR President and CEO Aron Cramer. "This year's survey indicates that sustainability holds a critical, valued seat at the table when it comes to defining corporate strategies for growth."

Bolstering the Brand

John R. Hickox, KPMG's America's leader for Climate Change & Sustainability, said the KPMG survey found reputation and brand (67 percent), ethics (58 percent) were cited by the companies as the top priorities and impetus behind CR reporting.

"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 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," KPMG's Hickox said.

Former U.S. Vice President Al Gore echoed this sentiment at the BSR Conference. "Sustainability is now on the agenda for so many companies around the world in a way it was not in the past," he said.

Krista Bauer, director of Global Programs at GE and also a speaker at the BSR Conference in San Francisco stressed the fact that corporate responsibility strategies open the door to new ways of looking at business.

"For every dollar that we spend, how many people do we impact? And for every activity that we engage in, how do we make it sustainable," she said.

"It's got nothing to do with units out the door, with margin to the company, or with any sort of commercial angle or metric. And that's been entirely liberating because it has opened our eyes to a lot of things ... that GE doesn't make but that GE can enable," she added.

Tax Aspects of a Green Strategy

John Gimigliano, the KPMG's U.S. firm's tax leader for CC&S, emphasized 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," he added.