Corporate Sustainability Disclosure in Emerging Markets

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