by Brianna Crandall — December 4, 2015—Despite increasing pressure on companies to reduce their carbon footprints as governments across the world commit to combat climate change, 41% of the largest U.S. companies do not communicate emissions reduction plans to their stakeholders, according to Currents of Change: The KPMG Survey of Corporate Responsibility Reporting 2015. Audit, tax and advisory firm KPMG is the U.S. member firm of KPMG International Cooperative, whose member firms operate in 155 countries.
KPMG survey highlights
Of the U.S. companies that do state carbon reduction targets in their corporate responsibility or annual reports, less than one-third provide a rationale to explain why those targets were selected. Globally, 47% of the world’s largest 250 companies (G250) do not include carbon reduction targets in their key company reports.
The U.S. government has set long-term targets to reduce emissions under President Obama’s Climate Action Plan, which, when fully implemented, are expected to cut nearly 6 billion tons of carbon pollution through 2030. However, many large U.S. companies do not appear to be aligned with this initiative, finds KPMG.
Only 17% of the U.S. G250 companies that report on carbon publish emissions reduction targets with a timeframe of 15 years or more, according to the KPMG report analyzing carbon information published by G250 companies in annual financial and corporate responsibility reports. This lack of long-term planning is also a global phenomenon, as only 14% of all G250 companies that report on carbon declare timeframes of at least 15 years.
Katherine Blue, National Sustainability Network leader at KPMG LLP, pointed out:
While government initiatives are in place to spur greenhouse gas reduction efforts, there is no U.S. regulatory driver for mandatory economy-wide emissions reduction targets, which may in part explain why many companies don’t state reduction targets.
Need for quality and consistency in reporting
Global carbon pollution reduction efforts are becoming more coordinated, as evidenced by efforts at the 2015 Conference of Parties (COP21) currently meeting in Paris to broker a universal climate change agreement. As global and national initiatives gain momentum, companies face high stakeholder expectations to provide consistent information on carbon emissions. However, KPMG’s analysis indicates that the type and quality of information that companies report on varies.
Based on a scoring methodology that analyzes carbon reporting quality factoring in the identification of climate change and carbon reduction as material; data quality and accuracy; information about targets and progress against them; and how carbon data is being communicated, the 71 U.S. companies in the G250 scored 51 out of 100%, matching the average of all G250 companies, but lagging behind the U.K. and Germany, which recorded quality scores of 70% and 75%, respectively.
Blue continued:
Many U.S. companies are evolving their emissions reporting from a compliance-based approach centered on the accurate disclosure of certain data required by regulators, towards a more holistic approach, in which information that is material to the business is reported to stakeholders in a way that enables them to assess performance against targets.
This focus on disclosing regulated information rather than sharing data material to the business may explain why U.S. companies lag [behind] their European counterparts in areas such as communicating longer-term goals, disclosing downstream emissions, and explaining the context of reported emissions.
Additional key findings
- Business benefits of emissions reductions not emphasized — Only 43% of the U.S. companies that report on carbon explain in their reporting how their businesses benefit from reducing carbon emissions.
- Lack of reporting on downstream emissions — While 93% of the U.S. companies that do report on carbon declare emissions from their own operations, a mere 7% report the emissions from the use or disposal of their products.
About the report
The KPMG Survey of Corporate Responsibility Reporting is now in its 9th edition, and was first published in 1993. Research is carried out by professionals in KPMG member firms and is based on publicly available information published by companies in their corporate responsibility reports, annual financial reports and Web sites. In the 2015 edition, the sample of the world’s 250 largest companies is based on the 2014 Fortune 500 listing.
