Standardization of sustainability reporting: rationale for better investment decision-making
-
Author(s)Henry Mynhardt ,Inna MakarenkoLink to ORCID Index: https://orcid.org/0000-0001-7326-5374
,
Alex PlastunLink to Linkedin: https://www.linkedin.com/pub/plastun-alexey/57/7bb/444/Link to ORCID Index: https://orcid.org/0000-0001-8208-7135
-
DOIhttp://dx.doi.org/10.21511/pmf.06(2).2017.01
-
Article InfoVolume 6 2017, Issue #2, pp. 7-15
- Cited by
- 2328 Views
-
349 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The role of sustainability reporting in investment decision-making is not clear and obvious. Despite the steady increase of such statements in corporate annual reports, the relationship between the sustainability reporting and the financial performance of companies is not always positive. The main problems of sustainability reporting nowadays are insufficient comparability of reporting, accuracy (lack of materiality, reliability and validity of indicators), lack of common approaches for its verification.
Synthesis of standardization and regulation features of sustainability reporting, which is provided in this paper in different dimensions (countries, regulators standards), allows to identify long-term trends of this reporting to ensure its quality during investment decision-making in traditional and responsible financial markets.
- Keywords
-
JEL Classification (Paper profile tab)G02, G14, M41
-
References42
-
Tables7
-
Figures1
-
- Fig. 1. Instruments of standardization and regulation in SR by the company types in 2016
-
- Table 1. Problematic areas of SR presentation
- Table 2. The number of regulatory instruments used in the SR all over the world, period 2013-2016
- Table 3. Countries with the biggest portion of SR in annual reports of the companies and mandatory requirements used for these purposes
- Table 4. Regulatory instruments for mandatory SR disclosure in financial sector
- Table 5. Exchanges with ESG reporting as a listing rule as of 01/01/2017
- Table 6. SR standards all over the world in 2006-2016 as of 01/01/2017
- Table 7. Regulatory instruments for assurance of SR
-
- Abramson, L., & Chung, D. (2000). Socially responsible investing: Viable for value investors? Journal of Investing, 9(3), 73-80.
- Adams, M., Thornton, B., & Sepehri, M. (2012). The impact of the pursuit of sustainability on the financial performance of the firm. Journal of Sustainability and Green Business, 1.
- Barnett, M., & Salomon, R. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27, 1101-1122.
- Bayoud, N. S., Kavanagh, M., & Slaughter, G. (2012). Corporate social responsibility disclosure and corporate reputation in developing countries: The case of Libya. Journal of Business and Policy Research, 7(1), 131-160.
- Brammer, S., Brooks, C., & Pavelin, S. (2006). Corporate social performance and stock returns: UK evidence from disaggregate measures. Financial Management, 35(3), 97-116.
- Buys, P., Oberholzer, M., & Andrikopoulos, P. (2011). An investigation of the economic performance of sustainability reporting companies versus nonreporting companies: A South African perspective. Journal of Social Sciences, 29(2), 151-158.
- Chong, J., Her, M., & Phillips, G. M. (2006). To sin or not to sin? Now that’s the question. Journal of Asset Management, 6(6), 406-417.
- Cormier, D., & Magnan, M. (2007). The revised contribution of environmental reporting to investors’ valuation of a firm’s earnings: An international perspective. Ecological Economics, 62(3/4), 613-626.
- Detre, J. D., & Gunderson, M. A. (2011). The triple bottom line: What is the impact on the returns to agribusiness? International Food and Agribusiness Management Review, 14(4), 165-178.
- Eccles, R. G., & Serafeim, G. (2014) Corporate and Integrated Reporting: A Functional Perspective. HBS Working Paper Number: 14-094.
- Eccles, R. G., Ioannou, I., & Serafeim, G. (2012). The impact of a corporate culture of sustainability on corporate behavior and performance. Working paper no. w17950: National Bureau of Economic Research.
- Ekwueme, C. M., Egbunike, C. F., & Onyali, C. I. (2013). Benefits of triple bottom line disclosures on corporate performance: An exploratory study of corporate stakeholders. Journal of Management and Sustainability, 3(2), 10-16.
- Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210-233.
- Geczy, C. C., Stambaugh, R., & Levin, D. (2005). Investing in socially responsible mutual funds.
- Gompers, P., Ishii, J., & Metrick, A. (2003). Corporate governance and equity prices. The Quarterly Journal of Economics, 118(1), 107-155.
- Gray, R., & Milne, M. J. (2007). Future prospects for corporate sustainability reporting. Sustainability Accounting and Accountability. Edited by B. O’Dwyer, J. Bebbington, and J. Unerman, Routledge, 184-207. doi: 10.4324/NOE0415384889.ch10
- GRI SDD Database. (2017).
- Hahn, R., & Kühnen, M. (2013). Determinants of sustainability reporting: A review of results, trends, theory, and opportunities in an expanding field of research. Journal of Cleaner Production, 59, 5-21. doi: 10.1016/j.jclepro.2013.07.005
- Hahn, R., & Lülfs, R. (2014). Legitimizing negative aspects in GRI-oriented sustainability reporting: A qualitative analysis of corporate disclosure strategies. Journal of Business Ethics, 123(3), 401-420. doi: 10.1007/s10551-013-1801-4
- Hong, H., & Kacperczyk, M. (2009). The price of sin: The effects of social norms on markets. Journal of Financial Economics, 93, 15-36.
- Humphrey, J., Lee, D., & Shen, Y. (2012). The independent effects of environmental, social and governance initiatives on the performance of UK firms. Australian Journal of Management, 37(2), 135-151.
- Ioannou, I., & Serafeim, G. (2011). The Consequences of Mandatory Corporate Sustainability Reporting. HBS Working Paper Number: 11-100.
- Khavech, A., Nikhasemi, S. R., Haque, A., & Yousefi, A. (2012). Voluntary sustainability disclosure, revenue, and shareholders wealth: A perspective from Singaporean companies. Business Management Dynamics, 1(9), 6-12.
- Klassen, R. D., & McLaughlin, C. (1996). The impact of environmental management on firm performance. Management Science, 42(8), 1199-1214.
- KPMG. (2011). The KPMG Survey of Corporate Responsibility Reporting 2011.
- KPMG. (2013). The KPMG Survey of Corporate Responsibility Reporting 2013.
- KPMG. (2015). Survey of Corporate Responsibility Reporting 2015.
- KPMG. (2016). Carrots Sticks Global trends in sustainability reporting regulation and policy.
- Lewis, J. K. (2016). Corporate social responsibility/sustainability reporting among the Fortune Global 250: Greenwashing or green supply chain? Paper 56.
- McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21(5), 603-609.
- Najah, A., & Jarboui, A. (2013). The social disclosure impact on corporate financial performance: Case of big French companies. International Journal of Business Management and Research, 3(4).
- Ngwakwe, C. C. (2009). Environmental responsibility and firm performance: Evidence from Nigeria. International Journal of Humanities and Social Sciences, 3(2), 97-103.
- Qiua Y., Shaukat, A., & Tharyanb, R. (2016). Environmental and social disclosures: Link with corporate financial performance. The British Accounting Review, 48(1), 102-116.
- Reddy, K., & Gordon, L. W. (2010). The effect of sustainability reporting on financial performance: An empirical study using listed companies. Journal of Asia Entrepreneurship and Sustainability, 6(2), 19-42.
- Schadewitz, H., & Niskala, M. (2010). Communication via responsibility reporting and its effect on firm value in Finland. Corporate Social Responsibility and Environmental Management, 17(2), 96-106.
- Scholtens, B., & Plantinga, A. (2001). Socially responsible investing and management style of mutual funds in the Euronext stock markets.
- Schröder, M. (2004). The performance of socially responsible investments: Investment funds and indices. Financial Markets and Portfolio Management, 18(2), 122-142.
- Shank, T. M., Manullang, D. K., & Hill, R. P. (2005). Is it better to be naughty or nice? The Journal of Investing, 14(3), 82-87.
- SSE initiatives. (2017). Stock Exchanges Fact Sheets.
- Statman, M. (2006). Socially responsible indexes. The Journal of Portfolio Management, 32(3), 100-109.
- Van de Velde, E., Vermeir, W., & Corten, F. (2005). Sustainable and responsible performance. The Journal of Investing, 14(3), 94-101.
- Wensen K. van, Wijnand B., Klein J., Knopf J. (2011). The state of play in sustainability reporting in the EU, SOMO Consultancy and Research for Environmental Management ICLEI-Local Governments for Sustainability Adelphi Consult GmbH.
-
The role of accounting in sustainable development
Inna Makarenko ,
Alex Plastun
doi: http://dx.doi.org/10.21511/afc.01(2).2017.01
Accounting and Financial Control Volume 1, 2017 Issue #2 pp. 4-12 Views: 7675 Downloads: 4737 TO CITEIdeology of Sustainable Development and Sustainable Development Goals influence the transformation of business processes in the companies. Professional accountants are important part of this transformation. In this paper the role of accounting in Sustainable Development Goals achievement is discussed. Different approaches to structuring the role of professional accountants in Sustainable Development are investigated. Among them are types of roles that perform accountants, their professional functions, skills and competencies in the corporate environment. As the result a holistic vision of the role of accounting in sustainable development in the new economic conditions is provided.
-
The relationship between corporate social responsibility and earnings management: accounting for endogeneity
Hyunjung Choi , Byungchul Choi ,
Jungyoon Byun
doi: http://dx.doi.org/10.21511/imfi.15(4).2018.06
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 69-84 Views: 4623 Downloads: 546 TO CITE АНОТАЦІЯThis study examines the relationship between corporate social responsibility (CSR) and earnings management after controlling for endogeneity of CSR. Using a sample of non-financial firms listed on Korean Securities Market between 2002 and 2010, this study finds that ignoring endogeneity biases the estimated relation between CSR and earnings management. Specifically, the results show that the negative and significant relation between CSR commitment and discretionary accruals reported in the previous studies becomes insignificant. However, the negative and significant relation between CSR commitment and real activities manipulation remains significant even when the endogeneity of CSR commitment is taken into account. Therefore, this study provides evidence that proactive CSR engagement significantly affects firm’s practice of real activities manipulation, while it does not affect its practice of discretionary accruals. These results indicate that CSR commitment leads managers to be more responsible in management of operational activities than in accruals management.
-
Does board composition have an impact on CSR reporting?
Patrick Velte
doi: http://dx.doi.org/10.21511/ppm.15(2).2017.02
Problems and Perspectives in Management Volume 15, 2017 Issue #2 pp. 19-35 Views: 4476 Downloads: 1720 TO CITE АНОТАЦІЯCorporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.
