Contact: Madonna Jarrett
Deloitte Touche Tohmatsu
Director, Global PR & CEO Communications
+1 212 492 3738

Boao, China, April 22, 2007— An opportunity awaits Chinese business to lead by example in understanding the value of measuring financial and non-financial performance indicators of business health, according to comments made by Deloitte CEO William G. Parrett at the BOAO Forum for Asia. Drawing on the findings of the second edition of the 2007 Deloitte Touche Tohmatsu global survey, "In the Dark II:  What many boards and executives STILL don’t know about the health of their business," released yesterday in China, Mr. Parrett said that more than 70 percent of companies worldwide are not yet measuring non-financial indicators of business health. The report suggests this is because companies lack sufficient tools or because such intangible results are not yet embedded into the business operations and governance decision making of companies.

Mr. Parrett said, "China has a unique opportunity to be innovative and lead in measuring non-financial indicators of business health—including corporate social impact—as over time investor demands will move toward understanding a company's overall commitment to its people, community and its bottom line." The results of the second survey indicate that 57 percent of the companies interviewed are under increasing pressure to measure non-financial indicators and more than two-thirds of those surveyed admit they are fair or poor at measuring non-financial performance indicators.

"As the fourth largest economy, China is in a powerful position to make a significant and positive impact," continued Mr. Parrett. "Beijing has pledged to meet World Health Organization standards for urban air quality and is partnering with organizations to use green products as part of the overall 2008 Summer Olympic Games business plan. These efforts can eventually produce measurable value in providing best practices that could be utilized throughout China.

"Emerging economies like China need to encourage business to focus on their overall impact on the environment, the diminishing water supply and infrastructure issues if they are to sustain current business success and brand acceptance in the global marketplace. CSR has to be embedded into the business strategy as business must play its part in supporting its communities. In the long run, Chinese companies will benefit by measuring the impact of business on societal issues such as pollution and water scarcity as part of the overall business plan."

According to the report, the value of non-financial metrics is more important than just a few years ago. More companies are including non-financial data in their annual reports or their shareholder briefings and compensation structures continue to involve non-financial targets. More than a third of the respondents (37 percent) say that a company's performance is determined more by intangible assets and capabilities than by hard assets. As companies gain experience with non-financial metrics, they discover a wide range of predictive, forward-looking managerial tools. Fifty-four percent say forward-looking information is of greater value to management and the board than historical information.

"As more and more companies embed CSR into their business strategy, measuring the effectiveness in contributing to the communities where they live and work will help to raise customer satisfaction and employee engagement as well as brand reputation and ultimately, investor confidence," Mr. Parrett said.

"The aspiration of China to make the 2008 Beijing Olympics a 'Green Olympics' presents an ideal opportunity for Chinese businesses to enhance their brand reputation and boost investor confidence further, nationally and internationally, through their inclusion of non-financial performance measurements as non-financial fundamentals are clear indicators of a company's inner strength, ability to withstand economic volatility and regeneration," said Mr. Peter Bowie, Deloitte China CEO.

Despite the recognition in the value of measuring these non-financial performance indicators, the survey suggested that there are impediments to companies doing so. Some identified in the report include underdeveloped tools, organizational skepticism, unclear accountability, time constraints and the concern that such metrics may reveal too much information to competitors.

Mr. Parrett said, "One critical element is the fact that reliable non-financial performance metrics are difficult to discern. I am confident that this situation will improve, given the market and governance pressures facing companies, as well as the growing perceived value in doing so."

"In the Dark II: What many boards and executives STILL don’t know about the health of their business" is a detailed summary of a 2006 survey of 175 participants whose titles range from senior manager and the C-suite to the board of directors.  Organizations from around the world, including China, responded to survey questions and in-depth telephone interviews.

For the full survey, go to: www.deloitte.com/Inthedark.

To order broadcast-standard video of Deloitte CEO William G. Parrett discussing key findings on the survey, go to: www.thenewsmarket.com/deloitte.

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