A Journey to Discover Values

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A Journey to Discover Values An Exploration of Integrated Reporting A Journey 2010 to Discover Values A Study of Sustainability Reporting in China SynTao – Sustainability Solution An Exploration of Integrated Reporting A Journey To Discover Values 2010 A Study of Sustainability Reporting in China Chief author An Jiali Authors Guo Peiyuan, Zhang Hongfu, Chen Ying, Li Wenbo, Anna-Sterre Nette, Zhang Jieya, Gong Jian Translation Gao Xiuping, Wang Qiang, Aurélia Britsch Researched by SynTao Sponsored by Oxfam HK Supported by Center for Environmental Education and Communication, Ministry of Environmental Protection of People’s Republic of China China Credit Information Service (PRC), Ltd. Please note that the statements in this report do not represent the position of Oxfam HK or the other supporting organizations. A Journey to Discover Values 2010 Research Institute SynTao is a management consultancy that focuses on promoting corporate social responsibility (CSR) and socially responsible investment (SRI) in China. We have offices in Beijing and Washington DC. On the basis of our global perspective, local expert team, and extensive partnership network, we provide CSR and SRI related consulting, training and research services to assist our clients to enhance their competitiveness and strategy. SynTao is operating four CSR related websites: SynTao: http://www.syntao.com Caseplace: http://www.caseplace.cn China CSR Map: http://www.chinacsrmap.org China Sustainability Reporting Resource Center: http://www.sustainabilityreport.cn Sponsor Oxfam Hong Kong is an independent international development and humanitarian organisation working against poverty and related injustice. Oxfam works with people facing poverty and with partner organisations on development, humanitarian, policy advocacy and public education programmes. Supporters Center for Environmental Education and Communication, Ministry of Environmental Protection of People’s Republic of China China Credit Information Service (PRC), Ltd. 5 Abstract The year 2010 witnessed the fast transformation of China’s macro economy, industrial restructuring and transition of development mode, all of which posed greater requirements on the sustainability capacity of companies. With the development of society and advent of new media, the implementation of corporate social responsibility has received wider attention and more profound interest. As an important communication tool, sustainability reports1 received greater attention of companies. Relevant parties, in their endeavors to promote the development of reporting, have a growing demand regarding information quality. In 2010, the number of sustainability reports continued to grow and reached 703, a steady but not abrupt growth as compared with the previous years. Both average length and quality of the reports have been improved. In terms of companies’ ownership, the state-owned enterprises (SOEs), which first took the initiative of CSR reporting, are still in the lead, representing 78% of the total reporting companies. The number of listed companies has grown and accounts for 73% of the total number of sampled reports, a slightly lower proportion than in 2009. As regards industry distribution, the manufacturing industry, financial industry, metallurgy industry and power industry published more reports. The area in which reporting companies are found continued to expand, basically covering all provincial administrative areas across China, among which Beijing, Shanghai and coastal areas have more releases than the rest. This study evaluates 71 sampled reports according to the “SynTao Assessment for Sustainability Reporting”, focusing on two dimensions, i.e. information completeness and information quality. The assessment results suggest a higher overall score. Most reports display a complete structure and disclose management and performance information in economic, environmental and social aspects. The information quality, however, still has room for improvement. The main problems regarding information quality include a lack of quantitative information disclosure and an imbalance of disclosed information. Specifically, employee management information and product/service information have been well disclosed. As regards environment disclosure, management information outweighs performance information and the most adequately disclosed topics are energy conservation and emission reduction information as well as “green office” 1. The study focuses on the Chinese companies’ sustainability reports and the sustainability reports targeting Chinese audience by the foreign enterprises in China. Cor- porate sustainability reports (“reports”, “corporate reports” for short) include all non-financial reports dealing with corporate social responsibility information, such as corporate social responsibility (CSR) reports, corporate citizenship reports, corporate health, safety and environment (HSE) reports, corporate environment reports and Global Compact communication of progress (COP) reports. I information. About 90% of the sampled reports disclosed their charity activities. What is noteworthy is that about 60% of the sampled reports disclosed social responsibility strategy information and that many reports were able to analyze and disclose the risks and opportunities for the sustainable development of the companies. This study sets out in-depth analysis of the food and beverage industry and financial industry. The results suggest that the overall reporting quality of the food and beverage industry needs improvement and that their disclosure on food safety is inadequate. The financial industry has a good overall disclosure quality, especially in the aspects of corporate governance and management information. Concerning the environment aspect, 90% of the sampled reports in the financial industry disclosed green loans. The reports in this industry touch upon a variety of social issues that are typical of this industry. This study also analyses the “carbon information” disclosure in the reports. The present study also introduces “Integrated Reporting”, the latest development in international reporting practices. The study analyzes the philosophy of integrated reporting and its application in China and abroad, in order to encourage the Chinese professional agencies and companies to comprehend the theoretical system and application, participate in international dialogues and win China a say in the new round of rule-making game. Based on the overall analysis of the sampled reports, some predictions can be put forward: the number of sustain- ability reports will continue to grow in the next two to three years, but on a slower basis; China’s 12th Five-Year Plan will have some directive effects on Chinese companies’ (especially on the state-owned enterprises) implementation of social responsibility, which will be reflected in the sustainability reports in the years to come. Besides, with the accumulation of experience and improvement of management, the quality of reports will progress, although some companies will encounter a bottleneck in compiling reports. Lastly, external stakeholders may make more use of sustainability reports in the future, and more sustainability reports may be released electronically and come in various forms. II A study of sustainability reporting in China Contents 1. Sustainability Reporting Developments 2 1.1 Sustainability reporting in China 2 1.2 Trends in Sustainability Reporting 5 1.3 The Composition of Reporting Companies 7 2. Assessment of Reporting in China 11 2.1 Assessment Method 11 2.2 Sampling 12 2.3 Assessment Results 13 3. Assessment of Key Industries and Issues 22 3.1 Food & beverages 22 3.2 Banking 27 3.3 Carbon Disclosure 32 4. Integrated Reporting 37 4.1 What is “Integrated Reporting”? 37 4.2 Roles of Integrated Reports 37 4.3 Development History 40 4.4 Integrated Reporting Practices 41 5. Sustainability Reporting Trends 45 Appendix 1: The Chronicle of Sustainability Reporting Events in China 48 Appendix 2: Reporting Companies 2010 in China 50 Interviewees List and Acknowledgements 53 1 A Journey to Discover Values 2010 1. Sustainability Reporting Developments 1.1 Sustainability reporting in increasing. Through social media channels such as China Sina Weibo and microblogs, people could more easily show their concern about company ethics, fueling discussions about sensitive issues such as food safety Sustainability reports released in 2010 in China show and occupational health and safety. significant progress in level of disclosure: reports have moved beyond sole presentation of qualitative • Increasing number of sustainability information and narrative text, and include more often policies adopted by governments qualitative data sets. In 2010, China launched its 12th Five-Year Plan In that same year, the global financial crisis faded and for national development, not only setting higher China rebounded with impressive economic growth, standards for companies’ commitment to their social China’s GDP (gross domestic product) grew by 10.3%, responsibilities but also creating more opportunities enabling the country to surpass Japan as the world’s to develop ethical conduct. The Plan was followed by second largest economy. accelerated efforts of China to pursue the changes in its economic development mode. The central government The fast economic development allowed China has been proactively promoting comprehensive, to accelerate economic restructuring and bring coordinated and sustainable development featuring sustainable growth to the core of its economic
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