Corporate Sustainability Disclosure in Emerging Markets

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Corporate Sustainability Disclosure Practices in Emerging MarketsD. Social IndicatorsEmployee wages and benefits was the most frequently disclosed of the five social indicatorsand one of the most fundamental ways a company can contribute to communitydevelopment in emerging economies. In all, 90 companies disclosed information on thevalue of employee wages and/or other benefits, making this indicator the second mostoften disclosed among the study’s universe after governance structures. Of the 90disclosing, 18 reported some type of breakdown such as employment category or gender.Most enterprises reported, at minimum, information on expenditures on post-employmentbenefits, such as pensions, in their financial statements.One of the most significant positive economic and social contributions an enterprise canmake to the country in which it operates comes through the creation of jobs and deliveringskills training to an unskilled work force. As displayed in Figure 5, 83 firms stated the totalnumber of their employees; of these, more than half (46) provided some form ofbreakdown such as by gender, employment type or country. In all, 26 companies in thestudy’s universe disclosed the average number of hours of training per year theyadministered per employee, and 10 of provided a breakdown, for example, by employmentcategory or gender.Figure 4. Number of Firms Reporting on Social Indicators0 20 40 60 80 100Employee wages and benefits7218Total workforce3746Average hours of training1610Workdays lost due to occupationalaccidents, injuries and illnessCollective agreements1424No breakdown by employmentcategory, gender or otherfactorBreakdown by employmentcategory, gender or otherfactorSource: UNCTAD16 - Copyright © 2009 Social Investment Forum, Washington, DC
Corporate Sustainability Disclosure Practices in Emerging MarketsOnly 14 companies disclosed the percentage of their work force covered by collectivebargaining agreements. The low rate potentially can be attributed to a lack of willingnesson the part of companies to discuss union representation or the mere fact that many do nothave unionized work forces. Unions and many labor and human rights groups regardrepresentation as the best safeguard against workplace abuses, especially in countrieswhere enforcement of labor laws is lax.The number of workdays lost due to occupational accidents, injuries and illness can reflectthe degree to which enterprises contribute to creating a healthy, safe and productive workenvironment. As depicted in Figure 4, the indicator was disclosed by 24 enterprises. Table 3displays the distribution of these 24 enterprises among the various industry sectors. Whilethe sample is small, companies operating in more labor-intensive industries and those moresusceptible to injuries, such as energy, materials and industrials, were more likely to disclosethese statistics. In fact, companies in the materials sector were responsible for the majorityof the disclosures on workdays lost, both in absolute and in relative terms. The energy andindustrials sectors also had a relatively high disclosure rate.Table 3. Number of Workdays Lost by Industry SectorWorkdays lost by sector Disclosure No DisclosureEnergy 5 9Materials 11 6Industrials 3 6Consumer Staples 2 6Financials 3 22Source: UNCTADE. Governance FactorsAs mentioned earlier, governance disclosures, especially those addressing board oversight,were among the most common among the 100 firms analyzed, with 96 of the companiesissuing information to shareholders in this area. Risk management objectives, systems andactivities (88 percent), ownership structure (87 percent) and internal control systems (86percent) also ranked high among disclosures, while policies on whistleblowers (45 percent),descriptions of decision making processes for approving transactions (53 percent) andprocedures for assessing and eliminating conflicts of interest among board members (54percent) were among the least reported. (See Figure 5.)By country, governance disclosure rates were relatively uniform, ranging from an average of8.4 companies per governance indicator for Malaysia to 6.1 for Korea, with an average of7.3 for all countries. Some outliers included:• China—only two firms disclosed whistleblower protections for employees.• Korea—only one company reported the decision making processes for approvingtransactions with third parties.• Malaysia—only two described whistleblower policies.• Russian Federation—only two reviewed performance evaluation processes forboard and management and only one mentioned a whistleblower policy.December 2009 - 17
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