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December 11, 2013

Corporate responsibility risk not sufficiently tied to remuneration, says KPMG

Three quarters of the world’s 250 largest companies (G250) researched by KPMG acknowledge risks to their business from environmental and social ‘megaforces’, such as resource scarcity and climate change, in corporate responsibility (CR) reports. Yet only one in ten that reports on CR clearly links CR performance to remuneration, suggesting that many companies are failing to incentivise their executives to manage these risks effectively.

The findings from the eighth KPMG Survey of Corporate Responsibility Reporting, published recently, also reveal that only 5 percent of G250 reporting companies quantify and report the potential impact of environmental and social risks on financial performance.

“Environmental and social risks can impact the supply chain, productivity, financial performance, reputation and brand value. So it is disappointing to see that so many companies still shy away from quantifying these risks in financial terms and few factor in the management of these risks into executive remuneration,” said Yvo de Boer, KPMG’s Global Chairman, Climate Change & Sustainability Services.

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