Are companies improving their sustainability reporting?

The world’s largest companies are improving on climate reporting, but progress is lagging in key areas of sustainability and ESG, KPMG's latest survey of sustainability reporting has found.

According to the study, which analyses sustainability and ESG reports from 5,800 companies across 58 countries and jurisdiction, over 79% of leading firms provide sustainability reports, up from two-thirds of top 100 companies ten years ago.

However, less than half report on the social and governance components of ESG and over 25% have no link to external ESG targets. 

In addition, only one third of the top 100 companies in each country or jurisdiction analysed have a dedicated member of their leadership team responsible for sustainability and less than one quarter of these companies link sustainability to compensation. 

Do companies need to broaden their approach to sustainability reporting?  

The research also found that 71% of the top 100 companies and 80% of the top 250 had set carbon reduction targets. However, action remains slow in key related areas, with less than half of companies currently recognising biodiversity loss as a risk. 

Among the thousands of reports analysed, less than half of the world’s largest companies provided reporting on ‘social’ components (e.g. modern slavery; diversity, inclusion and equity; community engagement; and labor issues), despite an increasing awareness of the link between the climate crisis and social inequality. At the same time, less than half of companies disclosed their governance risks (e.g., corruption, bribery and anti-corruption, anti-competitive behavior or political contributions.) 

Most companies recognise that they must reduce their own emissions to achieve carbon targets rather than relying on carbon credits. The number of companies reporting against Task Force on Climate-related Financial Disclosures (TCFD) guidance has nearly doubled in the past year.

“KPMG’s 2022 Survey of Sustainability Reporting reveals regulation is making a difference. My view is that it is critical to provide guidance and direction to companies and help drive cultural change. Business leaders have accepted they have a responsibility and role to play in helping to slow and potentially avert the unfolding crisis. What’s needed more than ever is globally consistent standards from governments and a collective effort from the world’s major companies to report on all aspects of ESG, recognising the clear links between the environment and wider social equality issues,” said John McCalla-Leacy, Head of Global ESG, KPMG International.