Corporate responsibility reporting in the Construction & Materials sector

Transcription

1 Corporate responsibility reporting in the Construction & Materials sector Key findings from the KPMG Survey of Corporate Responsibility Reporting 2015 June 2016

2 About this research This briefing contains key findings on the Construction & Materials (C&M) sector from the KPMG Survey of Corporate Responsibility Reporting 2015 (published November 2015). The research is based on two samples: The G250: the world s 250 largest companies by revenue as defined by the Fortune listing. Construction & materials companies account for 4 percent of this sample (10 companies). The N100: the largest 100 companies by revenue in each of 45 countries a total of 4500 companies worldwide. Construction & materials companies make up approximately 6 percent of this sample (258 companies). Download the full report at CR reporting rates are in line with global average The rate of reporting on CR in the Construction & Materials sector is in line with the global average for both G250 and N100 companies. This suggests that CR reporting is established as standard business practice in this sector. Sample C&M reporting rate 2015 Global average reporting rate 2015 G250 90% 92% N100 72% 73% CR reporting rates by sector G250 N100 % 100 Mining TMT Automotive Food & Healthcare Oil & gas Utilities Retail Construction Financial Industrials, Chemicals Personal & Transport beverage & materials services manufacturing household & leisure & metals goods Base: 250 G250 companies and 4,500 N100 companies The largest companies see the value of assurance but smaller companies trail Most large construction & materials companies recognize the importance of assuring stakeholders that their non-financial information is accurate and credible. Over two thirds (67 percent) of G250 construction & materials companies invest in third party assurance of their CR reporting, slightly higher than the global G250 average of 63 percent. However, outside the G250 the Construction & Materials sector trails in terms of assurance. Only around one third (36 percent) of N100 construction & materials companies seek third party assurance which is below the global N100 average of 42 percent. 2 Corporate responsibility reporting in the Construction & Materials sector

3 Reporting quality is above average overall but some aspects could improve significantly 90 percent of the largest companies in the Construction & Materials sector publish data on their CR and sustainability performance, but how does the quality of their reporting measure up against other sectors? KPMG analyzed the quality of CR reporting by the G250 against a framework of 7 quality criteria (see breakout box). Researchers awarded each company a reporting quality score out of a maximum of 100. The quality of CR reporting in the Construction & Materials sector is slightly above average. The sector average score is 62 out of 100 compared to the global average of 57 out of 100. KPMG s quality assessment criteria for CR reporting Stakeholder engagement The report should explain how the company identifies and engages its stakeholders and how their views inform CR strategy. Materiality The report should demonstrate a clear, ongoing process to identify the issues that are most significant to the company and its stakeholders. Risk, opportunity and strategy The report should identify environmental and social risks and opportunities, and explain the company s strategic response. Targets and indicators The report should declare time-bound and measurable targets Transparency and balance The report should be open about the CR challenges the company faces, as well as its achievements, and should communicate both effectively. Suppliers and value chain The report should show how the company s CR strategy and targets address the material social and environmental impacts of its suppliers, products and services. Corporate responsibility governance The report should detail how CR is governed within the organization, who has responsibility for it and how CR performance is linked to remuneration. Overall CR quality score Construction & Materials 62% Global average 57% Base: 230 G250 companies that report on CR Construction & materials companies scored well for the quality of reporting on stakeholder engagement. All reporters in the Construction & Materials sector identify the company s key stakeholders and two thirds of reports contain comments from third parties this is more than double the global average. Construction & materials companies also perform well when reporting on the governance of corporate responsibility within their company. Most construction & materials reports (89 percent) identify the primary person/function responsible for CR/ Sustainability management on a day-to-day basis - 20 percentage points ahead of the global average (69 percent). Construction & materials outperforms almost all other sectors when it comes to explaining the potential financial impact of sustainability risks. More than one in five companies (22 percent) quantifies the financial impact of risks compared to a global average of just 8 percent. This is an issue of increasing importance as investors look for better quality information on how sustainability risks and opportunities will affect the companies they invest in. The recently launched Financial Stability Board Task Force on Climate-related Financial Disclosures is just one example of high profile initiatives in this area. 2 Companies in the Construction & Materials sector could, however, significantly improve their reporting on sustainability strategy, risk & opportunity. Less than a quarter (22 percent) clearly define and discuss the social and environmental trends that affect the business. This is the lowest score of all the 15 sectors surveyed and more than 20 percentage points lower than the global average (45 percent). Construction & materials also has the lowest sector average score in terms of communicating the company s long term sustainability vision. Less than half (44 percent) of companies reporting in this sector do this with full clarity, compared to a global average of 70 percent. The sector also does not score well for reporting on its CR and sustainability targets. While most construction & materials companies (4 out of 5) do set targets, not many explain them clearly. Only one third (33 percent) clearly relate their sustainability targets to the material social and environmental issues faced by the company and its stakeholders. This is significantly lower than the global average (58 percent). 2 Corporate responsibility reporting in the Construction & Materials sector 3

4 Construction & Materials sector one of the lowest performers for carbon reporting Companies are under increasing pressure to cut their carbon emissions, as the global economy shifts towards a low-carbon, and ultimately zero-carbon, model. With this in mind, KPMG has analyzed the carbon information published by the world s 250 largest companies (G250) in their CR and annual financial reports, using the following 3 principles: Reporting should be clear about whether the company sees carbon as a material issue and, if 1 so, what data is covered and why. Carbon data should also be assured to ensure accuracy. Where carbon is seen as material, reporting 2 should show that the company has set clear targets to reduce its carbon emissions and how it is performing against those targets. Reporting should communicate carbon data 3 clearly and explain how carbon reduction helps the business. While four out of five construction & materials companies do report on carbon the quality of reporting is one of the lowest of all sectors, scoring 43 out of 100. Only the Oil & Gas sector had a lower score. One area where the Construction & Materials sector trails others is the reporting of carbon emissions beyond Scope 1. Only 25 percent of construction & materials carbon reporters report on supply chain emissions (Scope 3 upstream) compared with a global average of 50 percent and no companies include data on downstream emissions. Scope of emissions reported Scope 1 Scope 2 Scope 3 (upstream) Scope 3 (downstream) 0% 7% 25% 50% 63% Consruction & Materials 79% 88% 84% Global Average Base: 205 G250 companies that report on carbon The sector s low scores for carbon reporting are largely due to the high number of Chinese companies in the construction & materials G250 sample (around half). The quality of carbon reporting in China and some other Asia Pacific countries is significantly lower than in other regions. Most Chinese construction & materials companies report only limited data on their emissions and none report targets to reduce emissions. Construction & materials one of the lowest sectors for quality of carbon reporting (scores 68 out 63 of 100) Transport & leisure Chemicals Automotive TMT Personal & Utilities Mining Healthcare Retail Food & Financial Industrials, Construction Oil household beverage services manufacturing & materials & gas goods & metals Base: 205 G250 companies KPMG member firms can provide you with a bespoke assessment of the quality of your corporate responsibility reporting and a benchmarking report that compares your reporting with sector or country peers, and the global cross-sector average. For further information, contact your local KPMG member firm professional listed on page 6 of this briefing. 4 Corporate responsibility reporting in the Construction & Materials sector

5 About the KPMG Survey of Corporate Responsibility Reporting 2015 KPMG has been tracking corporate responsibility (CR) reporting trends for 22 years and The KPMG Survey of Corporate Responsibility Reporting 2015 is the ninth edition. It is one of the largest surveys of CR reporting trends globally. Definition of the Construction & Materials sector In the KPMG Survey of Corporate Responsibility Survey 2015, the Construction & Materials sector was classified in line with the International Classification Benchmark (ICB) system and includes Building Materials & Fixtures and Heavy Construction. G250 Construction & materials companies by region 10% G250 50% Asia Pacific Europe Americas 40% Base: 10 G250 construction & materials companies N100 Construction & materials companies by region 20% 24% 11% N100 Asia Pacific Europe Americas Africa & Middle East 45% Base: 258 N100 construction & materials companies Download the full report from kpmg.com/crreporting Corporate responsibility reporting in the Construction & Materials sector 5

6 Local Contacts Argentina Martin Mendivelzua Germany Simone Fischer Nigeria Tomi Adepoju Switzerland Isabelle Hirs Schaller Australia Adrian V. King Global Head, KPMG Sustainability Services Austria Peter Ertl Azerbaijan Vugar Aliyev Baltics Marko Siller Belgium Mike Boonen Brazil Ricardo Zibas Canada Bill J. Murphy Chile Luis Felipe Encina China Maria Cheng Colombia Maria Teresa Agudelo Cyprus Iacovos Ghalanos Czech Republic Milan Flosman Denmark Jakob Blicher-Hansen Greece George Raounas Hungary István Szabó India Santhosh Jayaram Indonesia Iwan Atmawidjaja Ireland Eoin O lideadha eoin.olideadha@kpmg.ie Caroline Pope caroline.pope@kpmg.ie Israel Oren Grupi ogrupi@kpmg.com Italy PierMario Barzaghi pbarzaghi@kpmg.it Japan Kazuhiko Saito kazuhiko.saito@jp.kpmg.com Yoshitake Funakoshi Yoshitake.Funakoshi@jp.kpmg.com Kazakhstan Gregor Mowat gmowat@kpmg.ru Luxembourg Jane Wilkinson jane.wilkinson@kpmg.lu Malaysia Kasturi Paramanathan kparamanathan@kpmg.com.my Mexico Jesus Gonzalez jesusgonzalez@kpmg.com.mx Norway Anette Ronnov anette.ronnov@kpmg.no Peru Rosario Calderon rccalderon@kpmg.com Philippines Henry D. Antonio hantonio@kpmg.com Poland Krzysztof Radziwon kradziwon@kpmg.pl Portugal Martim Santos martimsantos@kpmg.com Romania Gheorghita Diaconu gdiaconu@kpmg.com Russia, Ukraine, Georgia & Armenia Igor Korotetskiy Ikorotetskiy@kpmg.ru Singapore Sharad Somani sharadsomani@kpmg.com.sg Slovakia Quentin Crossley qcrossley@kpmg.sk South Africa Shireen Naidoo shireen.naidoo@kpmg.co.za South Korea Sungwoo Kim Regional Leader, Asia Pacific KPMG Sustainability Services sungwookim@kr.kpmg.com Spain Jose Luis Blasco Vazquez Regional Leader, Europe, Middle East & Africa, KPMG Sustainability Services jblasco@kpmg.es Taiwan Niven Huang nivenhuang@kpmg.com.tw Charles Chen charleschen@kpmg.com.tw Thailand Paul Flipse pflipse@kpmg.com.th UAE and Oman Raajeev B. Batra raajeevbatra@kpmg.com UK Vincent Neate vincent.neate@kpmg.co.uk Paul Holland paul.holland@kpmg.co.uk US Katherine Blue kblue@kpmg.com Uruguay Martin Clerino martinclerino@kpmg.com Venezuela Jose O. Rodrigues jrodrigues@kpmg.com Finland Tomas Otterström tomas.otterstrom@kpmg.fi Netherlands Wim Bartels bartels.wim@kpmg.nl Sweden Daniel Dellham daniel.dellham@kpmg.se France Philippe Arnaud parnaud@kpmg.fr New Zealand Gabrielle Wyborn gwyborn@kpmg.co.nz Jenny Fransson jenny.fransson@kpmg.se The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation KPMG International Cooperative ( KPMG International ), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. CREATE CRT June 2016 Publication name: Corporate responsibility reporting in the Construction & Materials sector Publication number: Publication date: June 2016 kpmg.com/socialmedia