Discuss about the Future of Corporate Sustainability Reporting.
A sustainability report is a report of an organization that provides information on the organizations economic, social, and environmental and governance performance and function in an organization, the emphasis of sustainability report is on social and environmental performance (Roy, Salaam, and Parvez, 2015). Sustainably report not only outlines the performance of the organization, but it also increases the organization’s commitment towards sustainable development.
Organizations improve their sustainability reporting by producing reports on the sustainability performance. The key to analyzing the quality of an excellent sustainable report is obtained from guidelines in Global reporting initiative (GRI). Social and ethical issues are critical to the performance of any organization even as it seeks to improve its profitability as addressed in the sustainability report (Junior, Best, and Cotter 2014).
Social issues are critical in the reputation and the performance of the organization and if not critically considered could deteriorate the relationship between the organization and its environment and examples of these are seen in the case of Volkswagen Emissions Scandal and the Toshiba Accounting standards.
Social issues in accounting have a disparate impact on the stakeholders of any organization (Kozlowski, Searcy and Bardecki 2015) even in the accounting industry. I will discuss the current social issues in accounting and their effect on the stakeholders mostly considering the organization called dominos.
A sustainability report is a key to the stakeholders of any given company in the making of vital decisions whether financial or not. Some of the choices could include whether to invest in the organization or provide funding among other reasons but the first question that is asked even before looking at the state of sustainability, below are the needs for sustainability report:
There is a heightened expectation of the surrounding environment and other smaller institutions concerning the role and benefits of the organization that is situated around them, therefore, need sustainability report in meeting this expectation.
Organizations especially government agencies have a mandate of managing the public resources properly in a manner that promotes sustainable development fulfilling the interest of the citizens who are stakeholders in the government agencies.
There is a need for organizations especially in public sector to be transparent about their management and how it affects the society, this is only possible when they produce a sustainability report.
The issue of sustainability report has become a global issue with the growth of national policies that advocate for this report by organizations with Global Reporting Institute (GRI) as the framework that is globally known for the provision of independent reporting framework (Ballou, Heitger, Landes and Adams 2006).
The use of sustainability report has continued to become one of the best criteria for determining the social responsibility of organizations in Australia and the world at large. It communicates the plans of the organization to both the internal and external stakeholders of an organization thereby influencing their r planning and decision making concerning their role or involvement in the organization.
The global reporting initiatives are used as the reporting guidelines and standard for non-official measures. It provides metrics, quality analysis, and quality check process to increase and guide the reporting procedure in the organization (Barkemeyer Preuss and Lee 2015).
Recently there have been training on the use of this framework in reporting especially in the united states to enable organizations to produce sustainability report which is almost becoming essential for all organizations.
An organization that produces this report mainly use the ‘triple bottom line’ framework. Triple bottom line (TBL) is framework comprising of three parts; financial (economic), social and environmental. The organization uses TBL in the evaluation of their performances brings the idea that an organization must not only focus on earning profits but also the improvement of people’s lives and the environment (Samudhram, Siew, Sinnakkannu and Yeow 2016).
Currently, several awards are given to best sustainability reporting that is recognized in Australia and overseas. These are The Australasian Reporting Award (ARA) which was established in 1951in Australia, and over time it became to be known abroad. The other one is The Association of Certified Chartered Accountants (ACCA) which provides the award for over 20 countries around the globe.
Practices in sustainability reporting
The methods in sustainability reporting include:
Concentration on material matters: To determine the issues that matter most companies use GRI guidelines (Higgins, Milne, and Van Gramberg 2015).
Companies are changing their sustainability report to align with the company’s strategy and in addressing the issue of internal and external stakeholders.
Some companies have continued to partner with GRI to learn how to produce sustainability reports.
Companies have opted to engage stakeholders in making the sustainability report to provide connectivity in gaining input from all the stakeholders.
Social issues in accounting and their impact on stakeholders.
Current social issues have ended up affecting different stakeholders. Differently, stakeholders mentioned in the accounting sector include the shareholder, management, the customers and the bank employees.
Social and ethical issues: in recent times there has been a reduction in ethics among some accountants (Herremans, Nazari and Mahmoudian 2016) leading to unethical behavior while attending to stakeholders resulting to scandals, this, in turn, leads to a reduction of customers and the shareholders will lose profits.
Unqualified accountants: there has been the rise of unqualified accountants on the internet who carry out accounting poorly after opening a business on the internet, this has led to lack of trust in online banking and accountants.
Online technology: with the introduction of online technology there has been the introduction of accounting applications, despite their sufficiency, there is a lot one individual learn by meeting accountants on one on one basis hence customers end up missing in vast accounting knowledge while shareholders shares reduce (Endrikat, Hartmann and Schreck 2017).
Business amalgamation and social roles: to sustain themselves a lot of banks have opted for merges, this has led to merging of accountants who conflict in interest and knowledge thereby reducing the delivery of services offered by the accountants to the customers due to the conflict in social roles.
Remuneration: There have been cases with the demand of pay rise if the pay is not made the accountants are not motivated (Sierra?García, Grima and García?Benau, 2015) hence they may provide common services leading to a reduction in customers and the shareholders will surely lose.
Human resource management: One of the most significant problems is in human resource management especially in dealing with conflict in the organization, if conflict, whether agency conflicts are not dealt with correctly the whole organization, will perish.
According to a study by Australian Center for Corporate Social Responsibility (ACSR) in Australia and New Zealand, 53% of the organizations observed said that they wanted sustainability report to be mandatory.
According to a study by the state of sustainability reporting in Australia 40% of organizations were attributed to the use of GRI in their sustainability report and 30% of this 40 % could clearly show how GRI worked and its use.
In a study by UNCTAD in countries in its membership between May 2012 and June 2013, the number of companies that published sustainability report increased from 96 to 157 companies.
Some companies are confused between focusing on whether to focus on critical organizational issues or to focus on meeting their social responsibility
Most organizations have opted to produce the sustainability report alongside is annual report example National Australia Bank (NAB) and Dominos amongst many others.
Dominos is involved in the generation of sustainability reports as it generates its annual reports, some of the activities it is engaged in within the community are the provision of relief during a disaster, provision of food to the needy, provision of funds in the education of youths and leadership and entrepreneur activities.
I recommend that sustainability reporting should be made mandatory in the organization after they have been adequately taught how to produce the reports.
From the finding, there is the growth of organizations generating a sustainable report, but most of them are not doing it according to the GRI standards which means that there is a need for more information on GRI so that companies can implement them.
Most of the social issues that are affecting companies can also be dealt with by the generation of sustainability reports in the organizations (Visser and Tolhurst 2017), the use of sustainability report should, therefore, be encouraged in such institutions.
Organizations should work further with all the stakeholders in the production of sustainability report in ensuring that there is cohesion in the application of the report (Ioannou and Serafeim 2017). Moreover, investment in new technology is not bad but organizations should invest carefully to avoid interfering with the environment ecosystem because of trying to improve its production.
Conclusion
In conclusion sustainability report is a documented story that provides information concerning the economic, governance and social information about a company, there is need to implement this model by using the GRI model, implementation of sustainability report will help in dealing with cases of social and environmental issues and it will also help other stakeholders in making financial decisions whether to invest, bank or own shares in a company.
Reference
Ballou, B., Heitger, D.L., Landes, C.E. and Adams, M., 2006. The future of corporate sustainability reporting. Journal of Accountancy, 202(6), p.65.
Barkemeyer, R., Preuss, L. and Lee, L., 2015. On the effectiveness of private transnational governance regimes—Evaluating corporate sustainability reporting according to the Global Reporting Initiative. Journal of World Business, 50(2), pp.312-325.
Cahyandito, M.F., Corporate Sustainability Reporting. Abstrak.
Endrikat, J., Hartmann, F. and Schreck, P., 2017. Social and ethical issues in management accounting and control: an editorial.
Herremans, I.M., Nazari, J.A. and Mahmoudian, F., 2016. Stakeholder relationships, engagement, and sustainability reporting. Journal of Business Ethics, 138(3), pp.417-435.
Higgins, C., Milne, M.J. and Van Gramberg, B., 2015. The uptake of sustainability reporting in Australia. Journal of Business Ethics, 129(2), pp.445-468.
Hronová, V.K.Š., Corporate Sustainability Reporting. INNOVATION MANAGEMENT, ENTREPRENEURSHIP AND SUSTAINABILITY 2017, p.505.
Ioannou, I. and Serafeim, G., 2017. The consequences of mandatory corporate sustainability reporting.
Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: A historical analysis on a world-wide phenomenon. Journal of Business Ethics, 120(1), pp.1-11.
Kozlowski, A., Searcy, C. and Bardecki, M., 2015. Corporate sustainability reporting in the apparel industry: an analysis of indicators disclosed. International Journal of Productivity and Performance Management, 64(3), pp.377-397.
Roy, M.K., Salam Sarker, M. and Parvez, S., 2015. Sustainability in Banking Industry: Which way to move? ASA University Review, 9(2).
Samudhram, A., Siew, E.G., Sinnakkannu, J. and Yeow, P.H., 2016. Towards a new paradigm: Activity level balanced sustainability reporting. Applied ergonomics, 57, pp.94-104.
Sierra?García, L., Zorio?Grima, A. and García?Benau, M.A., 2015. Stakeholder engagement, corporate social responsibility and integrated reporting: an exploratory study. Corporate Social Responsibility and Environmental Management, 22(5), pp.286-304.
Visser, W. and Tolhurst, N., 2017. The world guide to CSR: A country-by-country analysis of corporate sustainability and responsibility. Routledge.
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