With Australia set to move to an emissions trading regime by 2010, the coming reporting season will see sustainability reporting assume even greater significance.

KPMG has found that the trend towards environmental, social and corporate governance (ESG) reporting is driven by an increasing recognition of the potential for sustainability-related factors to materially affect a company’s short and long-term financial performance as well as its social ‘licence to operate’ through meeting community expectations.

“ESG reporting, once confined to specialist investment analysts, is now an area of broader interest as analysts seek information which in turn can be built into investment models. Effective sustainability reporting has a key role to play in bridging the communications gap,” says KPMG Senior Partner Rob Hogarth.

KPMG and the Group of 100 (G100), representing the senior finance officers of Australia’s leading enterprises, have developed a good practice guide for companies and organisations engaged in the preparation of sustainability reports.

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Commenting on the release of the guide, National President of G100 Tony Reeves says sustainability reporting has ‘gone mainstream’. “Stakeholders are increasingly interested in understanding the approach and performance of companies managing the sustainability aspects of their activities, including the potential for value creation,” he explains.

Sustainability Reporting: A guide is not meant to be viewed as a reporting template or blueprint since different companies will have different approaches reflecting the business sectors in which they operate. However, the guide highlights key principles, which can be applied across all organisations.

Meanwhile, KPMG International has released a survey investigating mergers and acquisitions (M&A) in the renewable energy sector for 2008. Turning Up the Heat – an insight into M&A in the renewable energy sector in 2008 found that the “over-heated” European renewable energy market has diverted value to the emerging Australian market. The report found a significant increase in both the number of deals and the prices being paid for renewable energy companies.

Director of KPMG’s Advisory practice Mathew Panopoulos said that wind energy is likely to be Australia’s primary beneficiary of higher targets in the developing renewable energy sector, given the significant pipeline of wind energy projects in feasibility, approval or construction stage.

According to the survey, the rate and size of M&A activity in the renewable energy sector is increasing rapidly – 2007 saw an estimated $US55.7 billion ($58.3 billion) spent globally in M&A transactions, an increase of 47 per cent from 2006.