KPMG urges companies to address social, environmental effects of their supply chains

Many large corporations – especially in oil and gas – do not fully report on the social and environmental impacts of their own supply chains, according to a recent KPMG report.

KPMG announced Monday the release of its annual survey of corporate responsibility reporting.

The survey “is based on a detailed study of company reporting on corporate responsibility performance, carried out by KPMG member firms’ professionals and based on publicly available information in annual financial reports, stand-alone CR reports and on company websites,” KPMG states.

For the first time this year, KPMG also included an assessment of the quality of reporting among the world’s largest 250 global companies – dubbed the G250.

“This survey shows that some sectors with complex supply chains, carrying potentially catastrophic environmental and social risks, have low levels of reporting on supply chain issues,” according to KPMG.

The report prepared by KPMG’s global center of excellence for climate change and sustainability.

KPMG’s assessment of quality of corporate responsibility reporting was based on seven criteria: strategy, risk and opportunity; materiality; target setting and indicators; suppliers and the value chain; stakeholder engagement; governance of CR; and transparency and balance.

Read more: Lessons Learned

Breaking the top 250 firms into 14 different sectors, there were three statistics for each sector: supply chain impacts discussed in detail; limited discussion; and no discussion.

For example, in electronics and computers, 59% of the companies discussed the sustainability of their supply chain in detail, 35% had limited discussion and 6% had no discussion.

In automotive, 41% had a detailed discussion, 41% had limited discussion and 18% had no discussion.

Near the bottom of the chart, in oil and gas, 14% had detailed discussion, 32% had limited discussion and 54 had no discussion. In finance, insurance and securities, only 7% had detailed discussion, 44% had limited discussion and 49% had no discussion.

“Recent incidents including oil spills and factory disasters should remind business leaders how important it is to manage the environmental and social impacts of the supply chain,” KPMG stated in the report. “Put simply, if companies don’t start managing these issues they won’t have a license to operate in the globalized 21st century world.”

Of the G250 companies that report on corporate responsibility, 87% “identify at least some social and environmental megaforces that affect the business,” KPMG reported. Those megaforces included climate change and material resource scarcity.