Australian companies lag the rest of the world when it comes to corporate responsibility

Indian labourers loading bricks onto a tractor trolley. Picture: Narinder Nanu/AFP/Getty Images

An international study shows that Australia’s top companies are behind the rest of the world on corporate responsibility with many failing to report human rights and climate as business issues.

A KPMG global survey shows the biggest 100 local entities by revenue lag the world on average in acknowledging human rights as a business issue, while less than half recognise climate change as a financial risk in their annual reports.

The findings are contained in KPMG International’s bi-annual survey of corporate responsibility and sustainability reporting of nearly 5000 companies worldwide, KPMG Survey of Corporate Responsibility Reporting 2017.

The study of the top 100 organisations in each of 49 countries shows a small (2%) increase in global reporting levels, but a plateauing of Australian reporting levels since 2015.

On human rights, Australia’s top 100 entities are behind their counterparts overseas, with only 55% acknowledging the issue for their business, as this chart shows:

Source: KPMG

This compares to almost 9 out of 10 (89%) in the top global group of organisations, and nearly three quarters (72%) among the top 100 organisations in equivalent countries.

Of those Australian companies acknowledging human rights as an issue, 79% disclose a human rights policy. However only 40% refer to the UN Guiding Principles on Business and Human Rights.

“Publicly reporting on human rights is an indicator that a company has started considering rights related risks,” says Gary Wingrove, KPMG Australia’s CEO.

“The results from KPMG’s survey suggest that, with some notable exceptions, Australian corporates are behind their global peers. It is important that they move to catch up by assessing and acting upon human rights risks — and then tell their investors, consumers and affected stakeholders about their progress.”

Richard Boele, a KPMG partner and an expert on modern slavery, says human rights will soon rise up the corporate risk list when legislation is introduced in Australia.

The law, modelled on the UK, will require public disclosure of business efforts to eradicate forced labour and other related practices in their operations and supply chains.

On climate change reporting, there is limited activity in Australia.

Earlier this year, prudential regulator APRA warned that climate change risks must be regarded as a risk management issue for business because they are financial in nature and are foreseeable, material and actionable.

Only 40% of the top 100 Australian entities currently acknowledge climate change as a financial risk in their financial reporting.

The report finds that of those 40%, a relatively high proportion provide some narrative description of the potential impacts.

Very few, however, are quantifying the potential impact of those risks in financial terms.

The largest 100 Australian companies by revenue surveyed included 15 public sector organisations and 10 superannuation funds.

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