Australia’s biggest companies are trailing behind the global best in corporate responsibility (CR) reporting by failing to adequately acknowledge human rights as a business issue and recognising climate change as a financial risk, according to one big four firm.
In a survey of nearly 5,000 companies across 49 countries, KPMG’s Survey of Corporate Responsibility Reporting 2017, found that only 55 per cent of Australia’s top 100 entities acknowledged human rights as an issue in their CR reports, compared to the 90 per cent reflected in the largest 250 companies in the world, the G250.
Further, the global average of the top 100 companies was 18 per cent higher than Australia.
“Publicly reporting on human rights is an indicator that a company has started considering right related risk,” said KPMG Australia chief executive Gary Wingrove.
“It is important that [Australian corporates] move to catch up by assessing and acting upon human rights risk — and then tell their investors, consumers and affected stakeholders about their progress.”
However, KPMG partner for Human Rights and Social Impact Services, Richard Boele, believes Australian corporates will start to take notice of human rights once new legislation kicks in over the next few months.
“Human rights will soon rise up the corporate risk list when legislation is introduced in Australia - modelled on the UK law - over the next few months which will require public disclosure of business efforts to eradicate forced labour and other related practices in their operations and supply chains,” Mr Boele said.
“Directors should be aware that board approval and a director’s signature are likely to be required for public ‘modern slavery statements’.
“Boards will need to sufficiently understand their human right risk and the effectiveness of their current policies and processes in order to confidently report.”
The tenth edition of the survey also found that only 40 per cent of the top 100 Australian companies acknowledged climate change as a financial risk, below global levels.
KPMG global leader for sustainability reporting and assurance, Adrian King, however, believes there may be some mitigating factors behind the poor results.
“Earlier this year, prudential regulator APRA warned that climate change risk must be regarded as a risk management issue for business, as many of these risks are financial in nature and are foreseeable, material and actionable,” Mr King said.
“We expect these results are impacted by the timing of the reporting in Australia (i.e. June v December year ends) and that there will be a significant increase in activity and disclosures in relation to climate risk in the next reporting cycle as entities get up to speed with this fast evolving and relatively new framework.
“Many of the 30 June 2017 annual reports released in the last few weeks are already demonstrating this.”
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