The IT sector, professional services firms, transport and engineering firms are leading the way in terms of CSR engagement and practice, according to the Australian Centre for Corporate Social Responsibility.
It’s 2017 Annual Review of the State of CSR in Australia and New Zealand, launched on Thursday, shows that only seven per cent of Australian and NZ respondents believe it should not be mandatory for companies of any size to report on CSR.
ACCSR managing director Dr Leeora Black said the results were “pleasing” given that back in 2006 a federal government inquiry into mandatory reporting found businesses were generally opposed to the idea.
“Our results are consistent with global trends, where over 50 countries have introduced some form of regulatory sustainability reporting instrument,” Dr Black said.
“The New Zealand Stock Exchange is the latest to consider sustainability reporting disclosure with its review of the NZX Corporate Governance Best Practice Code.”
The survey of 1215 companies also identified the best performers in terms of management capabilities for CSR.
In Australia, the top 10 were Abergeldie, Arup, Deloitte, fan manufacturer Ebmpapst, LexisNexis, PWC, IT consultants Tata Consultancy Services, Transurban, WaterAid and Yarra Valley Water.
In NZ the top three were Air New Zealand, Toyota and Westpac.
The survey showed that while the Sustainable Development Goals (SDGs) were gaining traction in terms of informing CSR efforts, the goals of climate action and gender equality were regarded as the most challenging.
The improved CSR scores for engineering and transport were welcomed, because the two industries have “vital roles to play in developing solutions to societal challenges such as overcrowding of urban centres, heightened pressure on natural resources and the transition to a low carbon economy”, the researchers said.
Banks fall flat
The banking sector, however, has fallen from being one of the best CSR performers in 2006 to being on a par with the utilities sector.
Assessing impact and performance, and reporting on progress towards CSR goals were identified as the main ways respondents intended to address CSR.
“These results are consistent with last year’s findings and reflect the current state of CSR practice with organisations eager to first understand their social, environmental and economic impacts then demonstrate their progress towards addressing them,” the researchers said.
“One factor driving this is the investor community with global asset managers increasingly focused on companies’ social and environmental impacts.
“Other factors include the heightened expectation of transparency, particularly around corporate tax reporting and corruption, as well as climate risk, highlighted by the emergence of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures Recommendations Report.”
Strategic partnerships are also a focus for many companies as a way to efficiently address their impacts, achieve CSR goals and create opportunities.
In terms of what concrete actions companies intend to take, there are some differences between NZ and Australian businesses.
The difference between Australia and NZ
In NZ, 56 per cent of businesses surveyed were looking to develop new products or services with environmentally responsible attributes, while only 47 per cent of companies in Australia reported this as an aim.
Improving supply chain policies and practices is also a higher priority in NZ, with 57 per cent of respondents having this intention, compared to 47 per cent in Australia.
The main priority reported by Australian companies was building stronger relationships with stakeholders – and 83 per cent nominated this aim. For NZ the highest priority, at 82 per cent of firms, was managing regulatory impacts.
The researchers said this “highlights a changing regulatory environment in New Zealand”.
Changes include a review of the NZ Stock Exchange corporate governance reporting requirements to improve corporate disclosure about ESG risks and mitigating factors.
The majority of respondents – 89 per cent in NZ and 87 per cent in Australia – said reporting had helped them build a reputation for being a responsible business.
However, overall the NZ firms were seeing greater value in reporting than their Australian counterparts, many identifying benefits including identifying risks they might face and identifying opportunities to improve efficiency. Eighty-three per cent said it contributed to their brand positioning, and 46 per cent said it improved investor engagement, something only 30 per cent of Australian firms reported.
How companies view the SDGs
Another observation is that the majority of firms mapping their business strategy or CSR strategy against the SDGs are foreign-owned companies with head offices in Europe, the UK or North America.
ASX-listed firms and state governments were among the lowest proportion to map the SDGs to their business strategies.
Of the SDGs, in only one sector is “Affordable and Clean Energy” a top-of-mind goal – engineering; for the actual utilities sector, “Sustainable Cities and Communities” was a top goal along with “Clean Water and Sanitation”, “Gender Equality”, “Good Health and Wellbeing”, and “Industry, Innovation and Infrastructure”.
Across all sectors, “Gender Equality” and “Good Health and Wellbeing” were the top two priorities.
The majority of sectors found “Climate Change” and “Sustainable Cities and Communities” among the most challenging goals.
“Respondents said barriers to progress on the goals include budgetary constraints, limited awareness of the link between sustainability and business strategy amongst decision-makers, poor identification of appropriate partnerships, low prioritisation for resource allocation, regulatory restraints and conflicting stakeholder interests.
“Limited government action represents another perceived barrier to progress.”
However, around one-third of banking, finance, insurance, professional services, transport, and utilities respondents said none of the goals were proving difficult to achieve.
- Read the survey report