‘An important next step is for companies to seek assurance to build credibility and trust among their many stakeholders’
It seems Canadian companies are more eager to report on their sustainability compared to years past, according to a KPMG report.
Among Canada’s top 100 companies, 92 per cent are reporting on environmental, social, and governance (ESG) performance, an increase of 10 per cent in the last three years. Also, 74 per cent include sustainability-related information in their annual reports – a jump of 25 per cent since 2017.
"2020 has been a significant watershed moment for Canadian companies when it comes to reporting on ESG," says Bill Murphy, head of sustainability and impact services at 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."
At this point, 43 per cent of those companies reporting sustainability information seek third-party assurance, up from 20 per cent in 2017.
The growth of flexible workplaces has become a new and unlikely weapon in the fight against climate change, according to a recent report.
Who’s doing what
Financial services (94 per cent); industrials, manufacturing and metals (88 per cent); and utilities (88 per cent) are the top three sectors in Canada that include sustainability reporting in their annual reports, says KPMG.
Among those who report:
- 63 per cent reference the Global Reporting Initiative (GRI) Standards in their reporting
- 53 per cent connect business activities to U.N. Sustainable Development Goals (SDGs)
- 62 per cent report carbon reduction targets
- 14 per cent of companies considered at risk of biodiversity loss acknowledge the risks this presents to their business
Also, 62 per cent of Canadian companies acknowledge climate change as a financial risk to their business, but only 36 per cent report in line with the Task force on Climate-related Financial Disclosures (TCFD). The top sectors doing this are automotive (71 per cent), financial services (69 per cent) and oil and gas (60 per cent).
"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," says Murphy. "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."
Environmental employment across Canada is expected to increase by eight per cent over the next decade -- despite the pandemic, according to a separate report.