Canadian companies exceed in reporting on sustainability, but lag in other areas: KPMG report
Investor pressure, public and regulatory scrutiny and pandemic-related impacts push companies to take greater steps towards transparency
TORONTO — A new KPMG Global report finds that reporting on sustainability is on the rise in Canada. The vast majority (92 per cent) of Canada’s top 100 companies report on environmental, social, and governance (ESG) performance — an increase of 10% in the last three years, and many (74%) include sustainability-related information in their annual reports — a jump of 25% since 2017.
Yet, while Canadian companies significantly outperform the global peer benchmark on both measures, Canada is still catching up in some areas including in seeking third-party assurance on their disclosures. Currently only 43% of reporting companies seek assurance — although that number has risen sharply from 20% in 2017.
“2020 has been a significant watershed moment for Canadian companies when it comes to reporting on ESG,” said Bill Murphy, Head of Sustainability & Impact Services, KPMG in Canada. “The pandemic, pressure from institutional investors and Canadians at large, and the momentum towards developing universal standards have combined to create an expectation that companies provide substantive disclosures regarding their sustainability performance. An important next step is for companies to seek assurance to build credibility and trust among their many stakeholders.”
The KPMG Survey of Sustainability Reporting 2020, identifies clear trends on the corporate reporting of sustainability performance, as measured against the top 100 companies from 52 countries worldwide. The report is the 11th edition in the series since it began in 1993 and the most extensive to date.
Part of the challenge for companies has been the lack of universal standards for how to measure and report on ESG. However, change is coming. The International Financial Reporting Standards (IFRS) Foundation is already taking steps towards more comprehensive reporting through the establishment of an International Sustainability Standards Board. The call for universal standards has also triggered renewed convergence efforts by existing sustainability frameworks and standards organizations, including GRI, TCFD, International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB).
“A convergence of ESG reporting standards is critical, but it is also a complex undertaking given that the existing frameworks and standards target a divergent range of audiences and objectives,” said Murphy. “But it is essential we sort this out so we level the playing field to provide a clearer path for companies, and ensure that investors, agencies, regulators, and the public can better understand how sustainability performance impacts a company’s overall value creation.”