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The State of Sustainability Reporting in the Trade and Retail Sector

A study to assist Australia trade and retail companies with the preparation of public environmental, social or sustainability report.

Prepared by KPMG Sustainability Advisory Services
Environment Australia
November 2002

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Executive Summary

Effective brand and reputation management are the hallmarks of leading trade and retail companies. The clearly defined global trend towards the mainstreaming of environmental and social criteria in the business arena means future success lies with businesses ensuring they are, and are seen to be, good operators.

Financial performance is no longer the sole driver for business. Companies are becoming aware that business sustainability (and, ultimately, financial performance) is determined by a combination of economic growth, environmental balance and social progress.

Employees, communities, activist groups, government, and increasingly financial institutions are putting pressure on companies to actively demonstrate they control their environmental and social risks and are improving their performance in these areas.

To meet these demands for greater accountability companies are increasingly considering publishing sustainability reports, or "Triple Bottom Line" reports, to communicate their environmental, social and economic performance to internal and external stakeholders.

Australian trade and retail companies are still to embrace sustainability reporting

Sustainability reporting is becoming mainstream for big corporations with 45 per cent of the Global Fortune Top 250 companies now publishing environmental, social or sustainability reports, according to a KPMG global reporting survey released in June 2002.

Locally however, the KPMG International Survey of Corporate Sustainability Reporting 2002 found the reporting rate for the top 100 listed Australian companies decreased from 15 per cent to 14 per cent in 2002.

Similarly, the Australian trade and retail sector is lagging international practice, with only two companies, or 4 per cent, of the Australian trade and retail companies in the BRW 1000 reporting on their environmental or social performance in a separate public report, compared to 26 per cent of trade and retail companies in the Global Fortune Top 250.

The business case for sustainability reporting

The business case for trade and retail companies to publicly report on their environmental and social performance, in addition to their financial performance, revolves around the satisfaction of the increasing demands of three important stakeholder groups: consumers, employees and investors.

While companies operating in the trade and retail sector are positioned at the end of the supply chain and may not be directly exposed to sensitive environmental and social issues, they are increasingly being asked to account for the circumstances under which the products that they sell are being produced and sold. Publishing a sustainability report can assist a trade and retail company to become or remain the retailer of choice.

Benchmarking international trade and retail sustainability reports

Several trade and retail companies use national or international reporting guidelines as a starting point for preparing their reports, in particular the Global Reporting Initiative (GRI) guidelines, which are generally recognised as the emerging international standard for sustainability reporting.

Our review of 24 trade and retail reports against the reporting components recommended by the GRI guidelines revealed that:

In conclusion, the results of the study indicate that there is a significant opportunity for Australian trade and retail companies to further enhance their positioning with key stakeholders through continued development of sustainability reporting practices.