The road ahead Capturing value from New Zealand s new reporting landscape 2 November 2017
Agenda Global trends NZ s road ahead KPMG International s survey Emerging trends From paperwork to prosperity Discussion Insights from a director, an investor, an executive and a regulator 2
Global trends in CR reporting: how does NZ shape up? 3
Our global research The 10 th edition of KPMG s survey analysed reporting from a record 4,900 companies in 49 countries. This years survey was our largest. Research samples: N100: Worldwide sample of 4,900 companies comprising the top 100 companies by revenue in each of the 49 countries researched. G250: The G250 is the world s 250 largest companies by revenue based on the Fortune 500 ranking of 2016. The 2017 KPMG KPMG, name a New and the Zealand KPMG partnership logo are registered and a member trademarks firm of of the KPMG KPMG International network of Cooperative independent ( KPMG member International ), firms affiliated a with Swiss KPMG entity. International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 4 4
Growth in global CR reporting since 1993 New Zealand is catching up and records the second largest increase in CR reporting since 2015. 5
New Zealand in 2017: trends in CR reporting 6
Growth in independent assurance Assurance of CR data has more than doubled among the G250 in the last 12 years indicating the value the largest companies see in promoting reliable and credible information. 30% 40% 46% 59% 63% 67% NZ 23% 2005 2008 2011 2013 2015 2017 N100 G250 33% 39% 38% 38% 42% 45% 7
Emerging topics In the 2017 report, KPMG shone the spotlight on four global emerging trends: 1. The UN Sustainable Development Goals (SDGs) 2. Human rights 3. Climate-related financial risk 4. Linking carbon reduction targets to the Global Climate Goal The 2017 KPMG KPMG, name a New and the Zealand KPMG partnership logo are registered and a member trademarks firm of of the KPMG KPMG International network of Cooperative independent ( KPMG member International ), firms affiliated a with Swiss KPMG entity. International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 8 8
In September 2015, the UN adopted the Sustainable Development Goals (SDGs): a set of 17 goals to end poverty, protect the planet, and ensure prosperity for all. KPMG s survey analysed how many companies make a connection between their corporate responsibility activities and the SDGs. The 2017 KPMG KPMG, name a New and the Zealand KPMG partnership logo are registered and a member trademarks firm of of the KPMG KPMG International network of Cooperative independent ( KPMG member International ), firms affiliated a with Swiss KPMG entity. International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 9 9
Reporting companies connecting their CR activities to the SDGs KPMG s survey shows the SDGs have resonated strongly with businesses worldwide in less than two years since their launch. Around four in ten CR reports from both N100 and G250 companies make a connection between the company's CR activities and the SDGs. 10
In 2011, the UN endorsed the Guiding Principles on Business & Human Rights. Six years on, KPMG analysed reports to see how many companies are acknowledging human rights as an issue for their business. The 2017 KPMG KPMG, name a New and the Zealand KPMG partnership logo are registered and a member trademarks firm of of the KPMG KPMG International network of Cooperative independent ( KPMG member International ), firms affiliated a with Swiss KPMG entity. International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 11 11
Reporting companies acknowledging human rights The results show human rights is firmly on the agenda as a global business issue. Almost three quarters of N100 CR reports and nine out of ten G250 reports acknowledge the issue. 12
KPMG analysts studied companies annual financial reports to understand how many acknowledge that climate change poses a financial risk to their business. 13 13
Companies acknowledging the financial risk of climate change in their annual reports They found that only 28 percent of these companies acknowledge the financial risk of climate change in their annual reports. Among the world s 250 largest companies (G250), a higher 48 percent acknowledge the risk. 14
KPMG reviewed CR reports to see how many companies disclose targets to cut their carbon emissions. Analysts also checked to see if companies linked their targets to any external climate goals such as The Paris Agreement 2ºC goal. The 2017 KPMG KPMG, name a New and the Zealand KPMG partnership logo are registered and a member trademarks firm of of the KPMG KPMG International network of Cooperative independent ( KPMG member International ), firms affiliated a with Swiss KPMG entity. International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 15 15
Reporting companies that set carbon reduction targets A solid majority (67 percent) of the world s largest companies (G250) now disclose targets to cut their carbon emissions. 54% 67% In New Zealand, the survey shows 54 percent of reporting companies set carbon reduction targets. G250 New Zealand G250 Base: 233 G250 companies that report on CR Source: KPMG Survey of Corporate Responsibility Reporting 2017 16
However, most carbon targets are not linked to greater climate goals 17
NZ s road ahead The value lies in the strategic response not the statistics In NZ, we need to improve our CR report balance, credibility and transparency Use globally recognised frameworks (GRI and/or <IR>) Reporting is an output: focus on strategies to address material risks and opportunities We face global challenges which require global solutions Acknowledge your role (e.g. UN SDGs and human rights) Account for the full cost of your externalities (e.g. carbon) 2017 KPMG, 2017 KPMG a New International Zealand Cooperative partnership ("KPMG and International"), a member firm a Swiss of entity. the KPMG Member network firms of the of KPMG independent network of member independent firms firms affiliated are affiliated with with KPMG International. International KPMG Cooperative International provides ( KPMG no International ), client services. No member a Swiss firm entity. has any All authority rights toreserved. obligate bind KPMG International 18 The KPMG or any name other and member the firm KPMG vis-à-vis logo third are parties, registered nor does trademarks KPMG International of KPMG have any International such authority Cooperative to obligate or bind ( KPMG any member International ), firm. All rights reserved. a Swiss entity. 18
We need to step up: non-financial is the new financial Business leaders are beginning to view corporate responsibility (CR) not just as a matter of conscience by also as an economic imperative. George Serafeim the Calvert-Serafeim Series, September 2015 19
Your road ahead Strategic response: integration and collaboration between board, financial and sustainability teams Be proactive to investor demand: improve the quality of your reporting 2017 KPMG, 2017 KPMG a New International Zealand Cooperative partnership ("KPMG and International"), a member firm a Swiss of entity. the KPMG Member network firms of the of KPMG independent network of member independent firms firms affiliated are affiliated with with KPMG International. International KPMG Cooperative International provides ( KPMG no International ), client services. No member a Swiss firm entity. has any All authority rights toreserved. obligate bind KPMG International 20 The KPMG or any name other and member the firm KPMG vis-à-vis logo third are parties, registered nor does trademarks KPMG International of KPMG have any International such authority Cooperative to obligate or bind ( KPMG any member International ), firm. All rights reserved. a Swiss entity. 20
Thank you Simon Wilkins Partner +64 9 363 3480 swilkins1@kpmg.co.nz Erica Miles Director +64 9 363 3664 emiles@kpmg.co.nz To find out more download the report at www.kpmg.com/crreporting The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. kpmg.com/nz 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name and the KPMG logo are registered trademarks of KPMG International Cooperative ( KPMG International ), a Swiss entity.