Bulletin

Issue: June 2006

News

Better company disclosure helps in the long term

Australian companies need to focus more carefully on how they report against their social and environmental performance to remain competitive in the global environment.

Professor Adams:
lack of data is most
worrying.

That is the message from La Trobe University Professor of Accounting, Carol Adams who, with Dr Geoff Frost from Sydney University, recently completed an in-depth comparative study into sustainability reporting issues.

The research compared how 100 United Kingdom companies and 100 Australian companies reported sustainability performance information - including environmental and social issues - and was funded by the Chartered Institute of Management Accountants.

Professor Adams says: 'It is time for Australian companies to take note that their long term survival and international competitiveness depends on their ability to limit social and environmental risks, attract and retain the best employees and build trust in their relationships with stakeholders. 'To do this they need to be aware of their social and environmental impacts in order that they can act on them.'

Professor Adams says the research results were quite startling. 'Companies in the UK are, overall, far more effective at reporting against criteria in this area than are Australian companies. The results showed that more than three-quarters of the British companies surveyed reported at least one instance of quantified data on social and environmental sustainability, whereas more than two thirds of companies in Australia provided no quantified data on performance in these areas.'

Similarly, 83 per cent of Australian companies failed to identify specific targets, compared with 41 per cent in the UK, while 88 and 51 per cent respectively failed to identify performance against targets.

'And it does not bode well for the future,' says Professor Adams. 'At least 85 per cent of Australian companies failed to provide any information regarding future targets and only 23 per cent reported that any performance measures were incorporated into their management systems.'

With the Commonwealth's Parliamentary Joint Committee on Corporations and Financial Services Inquiry into Corporate Responsibility, the findings from the Adams/Frost research are timely.

'The lack of insight into how companies incorporate information on social and environmental performance into their strategic decision making processes is most worrying. Given the increasing pressure on companies to report, this study raises the question as to how much social and environmental performance information is being collected and whether or not companies are using it when making strategic decisions,' Professor Adams concludes.