Corporate Responsibility Reporting Goes Mainstream

Principles as well as profits -- that's the rallying cry of an increasing numbers of shareholders. The pressure is on for businesses to demonstrate that they're good neighbors and citizens, and they're stepping up to the challenge. More and more companies are publishing information on the ethical, economic, environmental, and social impacts of their activities, according to a new survey from KPMG.

Among the world's largest organizations, corporate responsibility (CR) reporting is the rule, not the exception. Eighty percent of the Global Fortune 250 companies now release CR reports, the survey found, up from 64 percent in 2005.

The rise of corporate responsibility reporting is even more dramatic among the largest 100 U.S. companies by revenue. Around three-quarters of these organizations now issue CR reports, twice as many as did so in 2005.

But U.S. companies still lag Japan and the United Kingdom, where CR reporting among the top companies has reached 93 percent and 91 percent, respectively. KPMG expects the upward trend to continue at the national level and predicts that CR reporting will also gain ground among smaller companies.

It's a safe bet that the trend lines wouldn't be pointing so sharply upward unless there was a solid business case for CR reporting. So what's in it for businesses? Ethical and economic considerations are the drivers most frequently cited by the world's largest 250 companies in their own reports, according to KPMG, which may indicate that these organizations "realize they operate in a context where they play key roles in contributing to healthy societies, ecosystems, and economies -- and that it is in their best interest to maintain and improve these spheres."

Interestingly, reputation or brand considerations are a driver for CR reporting for 55 percent of these companies, up from 27 percent three years ago. Perhaps that's a sign of companies' growing awareness that the results of neglecting their responsibilities could hit close to home.

All of this is good news for investors. And there's every reason companies should see CR reporting as an opportunity, too. After all, they're allocating more resources to corporate responsibility activities such as philanthropic efforts and environmental initiatives, as Laurie Brannen reported in our October issue ("The Purpose-Driven Corporation").

Why wouldn't they want to tell that story -- and be rewarded for it?

Download the KPMG International Survey of Corporate Responsibility Reporting 2008 here.