Department of the Environment and Heritage, March 2006
- The State of Sustainability Reporting in Australia 2005 - Full report (PDF - 424 KB)
- The State of Sustainability Reporting in Australia 2005 - Executive summary (PDF - 139 KB)
Sustainability reporting is of considerable interest around the world and is becoming one of the basic criteria for judging the social responsibility of organisations. Business leaders are starting to realise that comprehensive reporting helps support company strategy and shows commitment to sustainable development.
Background to this report
This is the third annual report in a series covering sustainability reporting by Australia's largest companies. The Centre for Australian Ethical Research (CAER), in collaboration with KPMG and Deni Greene Consulting Services, has conducted this project for the Australian Government Department of the Environment and Heritage (DEH).
Conduct of the study
The project involved gathering information on sustainability reporting activities from:
- companies in the S&P/ASX 300 index:
- the top 100 private companies; and
- the top 100 unlisted public companies.
Data was collected using excisting databases of the study team, questionnaires sent to the companies and examination of company websites. Analysis of the data was conducted by the study team.
A broad range of corporate non-financial reports was considered under the heading of 'sustainability reports', including triple bottom line reports, environment reports and community reports. Unless otherwise noted, the term 'sustainability report' is used in this report to refer to all forms of corporate sustainability reporting.
The issues addressed by the study included:
- Production of stand-alone sustainability reports and sustainability sections in annual reports and on corporate websites;
- Independent verification of sustainability reports;
- Benefits of and impediments to producing a sustainability report;
- Identification of the key audience for sustainability reports;
- Benefits of and impediments to independent verification of sustainability reports; and
- Use of the Global Reporting Initiative Guidelines.
A total of 76 companies provided information on their sustainability reporting activities. Sixty-two of the companies contacted for this project chose not to provide any information on their sustainability reporting activities. The 76 companies providing information to the project and the 62 companies declining to do so are all considered to have responded to the survey. The total of 138 companies constitutes a response rate of 28 per cent.
Key results of the study
The study provided a considerable amount of useful information and some surprising results. The key findings were:
Production of sustainability reports
- 61 per cent of the 76 companies that provided information for the study are producing a sustainability report.
- 24 per cent of the entire 486 companies covered by the survey are producing a sustainability report.
- The types of reports produced changed substantially since last year. Sustainability reports now dominate the field of reporting (increasing from 26 per cent to 37 per cent) and corporate social responsibility reports also showed a considerable increase (from 9 per cent to 18 per cent).
- The majority of the reports produced were stand-alone, as opposed to annual report or web site sections.
- 55 per cent of the companies producing reports are in the mining and manufacturing sectors.
- The number of S&P/ASX 300 companies conducting sustainability reporting increased from 42 last year to 52 this year. This is a larger increase in reporting than for the overall top 500 companies.
- The rate of production of sustainability reports among S&P/ASX 300 companies is substantially lower than the rate for all companies surveyed (18 per cent compared to 24 per cent), and only about half the rate of the public and private non-listed companies (18 per cent compared to 35 per cent). The 200 smallest companies within the S&P/ASX 300 have an even lower rate of production of sustainability reports of 8 per cent.
- The highest rate of report production (46 per cent) occurs among foreign-owned proprietary companies. This figure is unchanged since last year.
- 40 of the 119 companies producing a sustainability report/section in Australia in 2004 have their report independently verified, representing 34 per cent of reports, an increase from the 28 per cent independently verified last year.
- One third of verified reports used the services of the major accounting and management consulting firms, while two thirds relied on other organisations such as technical or environmental consulting firms and university departments. This differs from international trends, with international research showing 58 per cent of companies use the major accounting firms.
- The most frequently identified target audience for company reports was their own employees.
Producing a sustainability report - benefits and impediments
- 'Reputation enhancement' was the most frequently cited benefit of producing a sustainability report both last year and this year.
- 'Ability to benchmark performance' was cited much more frequently this year - last year 48 per cent of companies identified this benefit, compared to 68 per cent this year.
- The impediments to producing a sustainability report that were cited most often were 'cost and resource constraints' and 'additional resources required initially'.
Independent verification – benefits and impediments
- The benefit of independent verification most frequently cited is 'enhances reputation/credibility' – this was identified by 83 per cent of those responding.
- The benefit 'addresses risk of publishing incorrect information' was cited by 57 per cent of respondents.
- The primary impediment to independent external verification cited by survey respondents is 'cost and resource constraints'. This impediment was cited by 70 per cent of respondents identifying an impediment.
Use of the GRI Guidelines
- The number of companies using the Global Reporting Initiative (GRI) Guidelines has increased substantially in the past year.
- Reports produced 'in accordance with' the GRI Guidelines increased from five to six, and reports produced 'with reference to' the GRI Guidelines increased from 35 to 61, representing an increase from 30 per cent to 51 per cent of reports using the GRI Guidelines.
- About 60 per cent of the companies using the GRI Guidelines are internationally owned.
Comparison with international trends
- The KPMG International Survey of Corporate Responsibility Reporting 2005 (KPMG 2005) found that reporting rates in Australia are lower than in most of the countries surveyed, by percentage of the top 100 publicly listed companies in each country.
- The average rate of reporting across the 16 countries was 41 per cent, compared with 23 per cent in Australia for the S&P/ASX 100.
- The highest prevalence of sustainability reporting occurs in Japan, with 80 per cent, followed by the UK with 71 per cent.
One of the important findings of the study is that there is a clear difference in the reporting performance of the S&P/ASX 300 companies compared to the sample as a whole. S&P/ASX 300 companies showed a much greater increase in reporting over the past year, though their rate of reporting is still substantially lower than that of the total sample. Foreign-owned companies operating in Australia (both proprietary and public non-listed companies) have a considerably higher rate of production of sustainability reports than Australian companies.
The results of this study indicate that despite the growth in reporting this past year, Australian companies are lagging behind their overseas counterparts. This points to a need for maintaining efforts to encourage further participation in sustainability reporting by Australian companies and for continuing to monitor performance regularly so as to shape the assistance in ways that meet company needs.
The study also makes a number of recommendations regarding possible future research on sustainability reporting.