Corporate Social Responsibility Report is no place for greenwash says KPMGs European head of climate change and sustainability

May 12th, 2011 by KPMG

Carbon Smart today launches its second report, ‘Stuck on the starting blocks’, on sustainability assurance in the FTSE350.

KPMG provided publically available sustainability assurance opinions to the report’s top three ranked companies; Vodafone, BHP Billiton and Associated British Foods.

All three companies’ sustainability disclosures were described by Carbon Smart as best practice, while the average score for KPMG clients within the ranking was significantly higher than those of any other assurance provider, at above 75 percent. This is the second time Vodafone has topped the report’s ranking.

Vincent Neate, KPMG’s European head of Climate Change & Sustainability, comments  “Robust, independent assurance of sustainability reporting should be a cornerstone of the increasingly strategic and professional approach to sustainability being taken across the corporate world”

Vincent Neate, head of Climate Change & Sustainability at KPMG (©KPMG - click image to expand)

“After all, investors and other stakeholders need to know that what they read – and may rely on – in a CSR or sustainability report is meaningful and accurate; there is no place for greenwash.

Companies take the auditing of their financial accounts very seriously. The finance director of any major PLC will be 99 percent confident in the accuracy of their financial statements – and will pay a multi-million pound fee to ensure it receives the stamp of approval from a rigorous and respected auditor.

When it comes to providing assurance over sustainability reports, however, on the whole, significantly less time and effort is expended with some businesses tending to view it as a ‘tick in the box’ exercise, perceiving it as low quality, low value service, often using a quite different type of assurance provider. This needs to change sooner rather than later.

At some point in the next 20 years, I expect to see assurance providers being held to account on the basis of the assurance they gave on a sustainability report. After all, who’s to say just how big a part may be played within the investment decision-making process by the information (or mis-information) gleaned from a sustainability report?

In this context it’s even more concerning that more than three quarters of FTSE 350 companies (49 FTSE100 and 222 FTSE 250) do not yet have any form of assurance over their sustainability reports. These businesses have a steep learning curve ahead of them given our experience shows the majority of companies that ask us for assurance for the first time are unprepared, with systems that do not produce accurate data. The weaknesses we find in our initial assurance tests may come as a shock, but at least those companies do get off the starting blocks.

Carbon Smart’s analysis shows a modest increase in the number of FTSE 350 companies moving towards giving the subject credibility, by seeking external assurance of their CSR reports.

This is a positive step, but there is a long way to go before CSR assurance has the platform its importance as a wider business issue warrants.”

 

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