Undisclosed Risk: Corporate Environmental and Social Reporting in Emerging Asia

Author
D.Krechowicz, H. Fernando
Publisher
World Resource Institute
Publication date
June 2009
Type
Books
Category
Transparency and Reporting
Environment/Climate Change
Discipline
Environmental Management
Language
English
Link
http://pdf.wri.org/undisclosed_risk_emerging_asia.pdf
Free/Pay for content
Free
 

This report focuses on corporate transparency on environmental risks, and lays the groundwork for understanding environmental disclosure and reporting issues in emerging markets through an investor lens. It is the second report in a series establishing the link between issues like climate change, air pollution, water supply, and natural resource depletion and traditional financial analysis on corporate value and financial strength for companies in six key Asian economies — India, Indonesia, Malaysia, Philippines, Thailand, and Vietnam.

Key Findings

  • Sustainability reporting in the six focus countries has improved in the past 5 years through the efforts of national governments, training and consulting organizations, national securities regulators, accounting professional associations and others.
  • Company disclosure in emerging Asia is typically focused on community giving and philanthropic activities. In general, such reporting is of more interest to stakeholder groups such as local communities and employees than to investors. We found most of the sustainability information disclosed to be of limited relevance to mainstream investors.
  • Indian companies examined in this study were ahead of the field, with the majority producing sustainability reports that we evaluated as average or above-average and somewhat relevant to investors. In contrast, the Vietnamese companies surveyed had the least progressive disclosure.
  • Companies with above average reporting are responding to external pressures, including pressure from stakeholders and parent companies, as well as reputation and supply chain concerns.
  • Each country, with the exception of Vietnam, has some form of regulations, codes, awards, support organizations, or market initiatives that encourage sustainability reporting. Malaysia is the most advanced in this respect.
  • Investors and equity analysts in emerging Asia often obtain pertinent information on sustainability risks through non-public informal channels. This practice likely gives some investors a competitive advantage. However, it does little to help tip the scale toward mainstreaming corporate sustainability reporting in the region.
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