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April 30, 2008

Sustainability on the agenda at KPMG Australia

Sustainability on the agenda at KPMG Australia

Sustainability-related information is firmly on the agenda for many Australian organisations and this is this creating more work for accountancy firms, according to KPMG Australia.

A report from the Big Four firm, entitled ‘Sustainability Reporting in Australia’, found the trend is being driven by a range of forces including the greater focus of analysts and institutional investors on long-term performance, the increasing financial materiality of greenhouse gas emissions, and a global movement towards more overt corporate responsibility and associated competitive positioning.

KPMG Australia sustainability services partner Margaret Smyle told IAB the firm’s sustainability advisory service, carbon advisory service and energy and natural resources teams are catering for a number of streams of work arising from the trend. “However, sustainability is increasingly considered as a material business risk and therefore it is generating work in all our services [such as] advisory, tax and audit,” Smyle said.

Advisory projects on the development of sustainability strategies that will ultimately drive the disclosure process are one of the streams of work KPMG is involved with.

Projects on the preparedness of organisations to report are another line of work. “This focuses on the data collection and reporting processes, and controls and provides organisations with recommendations on the robustness of the data they wish to disclose,” Smyle said.

The firm also provides assurance services on the performance indicators reported in sustainability reports and annual reports, or to regulatory bodies and advisory projects on stakeholder engagement processes used by organisations to identify what their stakeholders view as key issues for the organisations.

Smyle said the rise of disclosure of particular indicators such as carbon emissions is also leading to the increased interest in financial accounting and tax issues related to carbon abatements and the trading of credits in the voluntary carbon market and the emission trading schemes around the world.

KPMG said it identified sustainability-related information as a growth area many years ago and has been providing services in this space since the mid-1980s globally and during the past ten years in Australia. The teams specialising in these areas are growing rapidly and the firm is preparing for more growth in the future. “Recruiting people with the right skills in this space can be a challenge, especially in the context of the existing labour market, and therefore we are recruiting on an ongoing basis,” Smyle said. “We are reviewing our services regularly to ensure that they meet the future needs of organisations.”

The KPMG report found that Australia is not a world leader when it comes to examining the number of companies that currently report on sustainability. “However, it is important to note that there are no regulatory drivers/obligations in Australia, unlike Japan for example,” Smyle said. “It is also important to note that the voluntary nature of reporting in Australia has allowed innovation in reporting and that the quality of the reports produced by some Australian companies are of a very high standard and fair well when compared to international examples.”

Carolyn Canham

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