58% believe that CSR and sustainability should be integrated with financial reporting
While New Zealand lags behind the world when it comes to issuing corporate social responsibility (CSR) and sustainability information, the statistics may not be as bad as they look, according to Mark Hucklesby, Grant Thornton New Zealand Partner and National Technical Director.
The Grant Thornton International Business report (IBR) survey indicated that only 16% of New Zealand businesses reported on their CSR and sustainability initiatives against a global average of 31%, ranking us as the fourth lowest out of the 45 countries surveyed, behind Estonia, Poland and Sweden.
“To a large extent this can be attributed to the small size of many businesses in New Zealand. Only 10.5% of New Zealand businesses employ more than six people, and around 27% of businesses generate more than $1 million in revenue per year. While many would like to be reporting on sustainability and corporate responsibility, the cost of doing so in these smaller businesses can be too high.
“The Government has also put a real focus on reducing corporate compliance costs which will also dampen the uptake of this style of reporting,” he said.
Hucklesby’s observations are backed by the fact that 81% of New Zealand businesses said they don’t foresee their business beginning to report externally on sustainability matters in the next five years, yet when asked if they believe it should be integrated into their reporting, 58% said yes.
“Businesses are seeing the value in “connecting the dots” between its environmental, social, human resource, governance and financial performance, which will deliver more meaningful information to its stakeholders. However, the cost of providing this information remains an over-riding factor, especially as some are still recovering from the hangover of the Global Financial Crisis,” he said.
“In the two years since the last Grant Thornton survey on this topic, there has been a slight increase in the number of New Zealand businesses reporting CSR, up from 13% to 16%. Globally, the number of businesses reporting CSR and sustainability has increased from 25% in 2011, to 31%.
“We believe that this growth trend will continue among larger corporate organisations, government entities and large Not for Profit’s, and more will choose to report on CSR and sustainability issues, and also integrate this information into their financial report. For small businesses the benefits will always need to be measured against the costs incurred,” he said.
Surprising to some, reporting is greatest in India (69%), Vietnam (64%), the Netherlands (64%) the Philippines (60%) and Mexico (52%). Reporting in the US, UK and Australia is 27%, 24% and 19% respectively.
The survey was conducted, during August and September 2013, as part of the quarterly Grant Thornton International Business Report, now in its 22nd year.