Tag Archives: ESG Reporting

September 17, 2025 · 11:15 pm

My contribution as foreign expert reviewer

I have just returned back to base after a productive two-day foreign expert meeting.

Once again, it was a positive experience to connect with European academic colleagues, to review and discuss research proposals worth thousands of Euros.

My big congratulations go to the successful scholars who passed the shortlisting phase, based on our evaluation scores.

The best proposals will eventually receive national government funds for transformative projects that will add value to society and the natural environment.

#Academia #AcademiaService #ForeignExpert #ForeignExpertReviewer #Review #AcademicReviewer #ResearchProposal #ResearchProjects

Leave a comment

Filed under academia, Business, education technology, Market Research, Marketing, performance appraisals, Stakeholder Engagement, Strategic Management, Strategy, Sustainability, technology, tourism

Tagged as , , , , , ,

April 11, 2025 · 12:34 pm

Restaurants communicating about sustainable practices: Guidelines for ESG reporting of food and beverage operations

The following content was drawn from one of my academic articles published through the International Journal of Hospitality Management. It has been adapted for a blog post.

Stakeholders including the regulatory authorities, among others, are increasingly encouraging hospitality businesses to publish information about their environmental, social and governance (ESG) activities. In many cases, they are already preparing ESG disclosures that shed light on their sustainable production and consumption policies and practices.

The environmental dimension

Generally, many hospitality chains are already monitoring the usage of their energy, water, raw materials and other resources, to minimize their running costs. For example, their restaurants could turn off certain appliances when not in use, invest in efficient lighting, appliances, cooking methods, as well as in water conservation practices (Madanaguli et al., 2022). In addition, they could generate their energy from renewable sources. Other aspects that are related to ESG’s ‘E’ dimension include environmental protection measures, sustainable sourcing of food items and their components (as the responsible procurement of items from local suppliers would reduce their environmental impact), as well as waste minimization efforts before, during and after food consumption, among others laudable practices (Elkhwesky, 2022). Hospitality businesses may avail themselves of food waste tracking systems to optimize their production and consumption activities, and to identify areas for improvement (Okumus et al., 2020). Such systems could help them reduce food scraps that will probably end up in landfills, if they recycle them into compost, that may be used for local farming or landscaping.

Very often, they gather and hold records about their recycling efforts as well as on their generated waste and emissions that can ultimately affect biodiversity and eco-systems including climate change, water and marine resources (Klaura et al., 2023). If this is the case, their captured data can be utilized to identify inefficiencies in their restaurants and to better understand how sustainable practices (like the ones mentioned in the above text) could reduce their costs as well as their overall financial performance. Moreover, it enables them to be in a good position to disclose information about their sustainability credentials.

Restauranteurs should prioritize purchasing from local sources to support the domestic economy and reduce transportation emissions. Food and beverage preparers could utilize seasonal menus to ensure that the dishes they serve and/or their ingredients are fresh and in-season. This reasoning is congruent with the farm-to-fork or farm-to-table initiatives adopted by various hotels and restaurants (Bux and Amicarelli, 2023). Frequently, hospitality businesses are opting for organic certified products and food components, to reduce the environmental impact associated with conventional agricultural practices. In a similar vein, many practitioners are investing in ant-based and insect-based items as more consumers are recognizing their nutrition benefits (Motoki et al., 2022). A number of colleagues are recognizing that such protein foods would result in lower externalities on the environment.

In this day and age, it is imperative that food and beverage service providers utilize sustainable food items in their menus. They are pressured by stakeholders to use eco-friendly packaging made from recycled, biodegradable, compostable, and/or reusable materials for food delivery and takeaway services as opposed to single-use plastic waste that pollute the natural environment. In sum, the hospitality businesses’ environmental responsibilities comprise sustainable sourcing of food items, sound inventory management, innovative food preparation practices, responsible consumption of food, and the use of eco-friendly packaging, to minimize their environmental footprint, and contribute to broader sustainability goals.

The social dimension

Most practitioners are taking into account non-financial information about hospitality businesses’ labor practices related to their own employees as well as to other workers employed by organizations in the value chain (including distributors, suppliers, subcontractors, et cetera) (Bullock et al., 2024). Report preparers may usually gather information about the conditions of employment of human resources, training and development records, health and safety measures, work life balance initiatives, living wage policies as well as on issues related to equal opportunities, diversity and inclusion in their workplace environment. A number of contributions reported that there is scope for hospitality owner-managers to delegate responsibilities to employees to enhance their morale and job satisfaction (Camilleri, 2022, Gewinner, 2020). Frequently, they indicated that it is in their businesses’ interest to provide regular training and development opportunities on sustainable practices like food hygiene and safety, meal portion control as well as on food waste management, among others (Okumus, 2020). Notwithstanding, they are expected to communicate about their active engagement with suppliers. It is within their responsibility to ensure that they treat their marketplace stakeholders in a fair manner. They are expected to forge long lasting, mutual relationships with trustworthy suppliers and partners, who are recognized as responsible employers by stakeholders in society.

Hospitality businesses ought to be encouraged to source food items from local suppliers to promote community well-being. They should prioritize suppliers that are renowned for their dependability, responsible human resources management and environmental sustainability practices. Working closely with reliable suppliers could help improve the efficient sourcing of products and may result in timely delivery of fresh items (Vaughan, 2024). The practitioners’ engagement with suppliers would increase their chances of receiving food products and ingredients in an optimal condition, to reduce the likelihood of spoilage and of overstocking their inventories.

In addition, the social dimension may usually involve aspects related to the businesses’ engagement with customers as well as with societal stakeholders. Hospitality practitioners can promote their sustainable procurement and food production practices with customers. The food and beverage businesses’ communications and corporate disclosures about their sustainable credentials can influence their consumers’ behaviors. They could even induce their patrons to reduce food loss and waste in their households.

Report preparers could make reference to responsible marketing practices. They can raise awareness about their transparent pricing and on how they avoid deceptive or misleading tactics (Aschemann-Witzel et al., 2023). They might communicate about their commitment to protect their consumers’ personal data. It this case, practitioners may reveal that they are using secure systems to prevent data breaches and unauthorized access to information. In addition, they could publicize the provision of accessible facilities for disabled patrons. Furthermore, they may shed light on their cultural sensitivity, as well as on their engagement with local communities through food donation programs to philanthropic and charitable institutions, among other socially responsible behaviors. Their proactive collaboration with local communities, NGOs, and other stakeholders can help them achieve the sustainable development goal related to the responsible production and consumption (of food) to reduce the accumulation of waste originating from their operations (UNEP, n.d.). Conversely, they may decide to monetize their waste resources by utilize sharing economy platforms and functional mobile apps to sell surplus/excessive food to consumers, at reduced prices.

In a nutshell, the hospitality practitioners’ social responsibility aspects cover aspects related to their engagement with responsible suppliers, employees, customers and with the community at large. Restauranteurs are expected to communicate about their organizations’ responsible food production and consumption practices with a wide array of stakeholders. Their corporate reporting can add value to their business in terms of increased profits, as they benefit from an improved brand image and corporate reputation, among other positive outcomes.

The governance dimension

Listed hotel chains are frequently disseminating content about their corporate governance efforts, as they publish rules, regulations, collective agreements with trade unions and codes of conduct through offline and online channels (Yu et al., 2025). Such information would usually serve as formal guidelines for their organizations’ modus operandi. They also shed light on how the businesses are directed and controlled among internal and external stakeholders. Ultimately, it is in the organizations’ interest to build stakeholder relationships and to maintain open lines of communication with different parties, including with creditors, investors, shareholders, employees, customers, suppliers, regulatory institutions and with local communities, among others.

There is scope for hospitality businesses to report about governance aspects including details about their organizations’ standards of integrity, accountability, board structure, executive compensation, and shareholder rights among other matters in their ESG reports. Such disclosures would probably make also reference to their businesses’ ethical dispositions as well as to risk management practices (e.g. compliance with health and safety, security issues, financial and operational aspects, reputation management, etc.) as these issues can help them build brand equity, instill trust in their activities and enhance their corporate reputation.

Specific disclosures about governance matters related to responsible food production and responsible consumption may include reference to accountable and transparent leadership that prioritizes the prevention of food loss and waste. The higher echelons of the organization ought to implement clear policies and procedures that ensure sustainable supply chain management. They are expected to monitor responsible food and beverage operations, at all times, from the procurement stage, through food preparation and consumption, in order to reduce food loss and waste. Food and beverage service providers ought to comply with relevant national legislation (where they operate their business) as well as with food safety and hygiene standards to protect their consumers’ health and wellbeing. They should handle, prepare and store their food and its components, in clean environments, to minimize spoilage, contamination and waste. This argumentation is congruent with substantive legislative instruments that are present in different jurisdictions, which require restaurants, among other entities, to implement sustainable measures that improve resource efficiency and prevent the generation of waste (EU, 2023a, GovUK, 2024, NEA, 2024).

A number of regulatory standards encourage practitioners to utilize food labeling that feature expiration dates (as well as nutrition information), to reduce food loss (Clodoveo et al., 2022). They may establish dedicated committees or sustainability champions to lead responsible food and beverage operations and initiatives that are intended to achieve continuous improvements in preventative and mitigative measures that reduce waste generated from hospitality businesses. Such practices may require ongoing training and development of employees on food and beverage practices like offering reduced portions and implementing efficient inventory management, to minimize food waste as much as possible.

Hospitality businesses may refer to the industry standards (that are duly mentioned in this paper), and they can even obtain certifications from some of them, including Green Key Certification, International Standards Organization’s ISO 14001: Environmental Management Systems (EMS), among others, to improve their sustainability credentials for their food and beverage operations. These regulatory instruments can play a critical role in fostering ESG accounting, reporting, auditing and assurance. Fig. 1 clearly illustrates key elements that can be disclosed in ESG reports.

Fig. 1. The environmental, social and governance (ESG) dimensions (Camilleri & Carroll, 2024).

Regulatory instruments including standards and metrics for ESG reporting

Currently, several governments and intergovernmental institutions are encouraging big businesses to report information about their environmental, social and governance performance, in addition to their financial statements. Many of them are developing rules, regulations and guiding principles for corporations and listed enterprises. With regards to the materiality of their disclosures, report preparers need to take into account pertinent information (in terms of the reliability and completeness of the content they feature in their ESG reports) including on aspects related to critical issues related to sourcing of food and its ingredients, inventory management, preparation of meals (such as hygiene standards, use of local and organic ingredients), as well as other relevant details about measures that were undertaken to reduce food loss and waste. Hospitality businesses are expected to be transparent in their disclosures, to track progress vis-a-vis their efforts to reduce waste (year after year), and to identify areas that should be improved. Their ESG disclosures could also link food loss reduction initiatives with broader sustainability and financial performance metrics. This could enable them to evaluate their social, economic and environmental impacts of responsible food and beverage operations, and to develop comprehensive strategies and courses of action, for the future, to address their deficits.

Large entities, including hospitality chains as well as international food and beverage franchises, are usually expected by their stakeholders to prepare non-financial reports about their ESG performance in accordance with certifiable standards and/or eco-labels. They are bound to comply with relevant legislation about sustainability accounting, disclosures, audit and assurance practices applicable in specific jurisdictions where they operate their business,

For example, the European Union’s (EU’s) Non-Financial Reporting Directive (NFRD) Directive 2014/95/EU was one of the regulatory instruments that encouraged large undertakings to disclose non-financial information relating to ESG matters in their annual reports. Subsequently, the European Union built on the foundations of NFRD when it launched its Corporate Sustainability Reporting Directive (CSRD). Arguably, the latter directive has improved the harmonization and standardization of ESG disclosures (across the EU), in terms of their transparency, consistency, comparability and reliability aspects. While the NFRD was primarily focused on large public-interest entities (PIEs), the CSRD has extended reporting obligations to more companies, including large private companies and subsidiaries of non-EU parent companies operating within the EU member states (EU, 2023b). Business practitioners, including hospitality firms are encouraged to utilize renowned international standards to prepare their ESG disclosures. They may refer to Global Reporting Initiative’s (GRI’s) and/or to the Sustainability Accounting Standards Board’s (SASB’s) standards, among others. Whilst the former was not specifically designed to disclose information about food and beverage operations, GRI’s principles can still be applied in the hospitality industry sector.

Organizations could utilize the Global Reporting Initiative’s (GRI’s) guidelines to prepare non-financial reports that shed light on their ESG initiatives (Koseoglu et al., 2021, Li et al., 2025). They could refer to GRI’s Standards that are intended to support organizations in various aspects of their operations. Several GRI standards and guidelines can be used to address and reduce food loss and food waste in hotels and restaurants. While GRI does not have a specific standard solely focused on food waste, various standards cover aspects related to sustainability, waste management, and social responsibility that can be applied in this context. GRI has formulated topic standards related to the management approach (GRI 103 2016), procurement practices (GRI 204 2016), waste (GRI 306 2020), supplier environmental assessment (GRI 308 2016), labor/management relations (GRI 402 2016), occupational health and safety (GRI 403 2018), training and education (GRI 404 2016), marketing and labeling (GRI 417 2016): among others, that could be used to assess the businesses’ credentials, with regards to their responsible production and sustainable consumption of food. 

Key takeaways

The underlying rationale behind this contribution is to promote responsible food and beverage operations within the hospitality industry. The sustainable sourcing of food products and their ingredients, their sound inventory management and control, the responsible preparation, production and consumption of food, can ultimately lead to a reduction in food loss and waste in hospitality settings including from hotels, restaurants and cafes, among others. The good practices that were mentioned in this article clearly address the environmental impact as well as social and economic dimensions, thereby promoting a holistic approach for the sustainability of food and beverage service providers.

This research raises awareness on the significance of non-financial accountability standards in the hospitality industry context. It makes reference to some of the most popular regulatory instruments and standards, including those set by the GRI, SASB and FLW among others, to promote ESG disclosures in corporate sustainability reports. Indeed, practitioners can utilize the standards mentioned in this paper, to account, measure and disclose their ESG performance. Arguably, such standards are instrumental to provide stakeholders with the necessary information to trace, evaluate and compare the sustainability efforts of hospitality firms.

This contribution builds on previous research that identified laudable food and beverage operations in the hospitality industry’s value chain; from the procurement of resources required for food production, leading to the point when surplus food and leftover items are reused, recycled or upcycled. It clarifies that excessive, edible and unspoilt food could be donated to food banks and/or to those in need, or even sold at discounted pricing through sharing economy platforms. Moreover, it also indicates that inedible foods can be converted into sustainable resources like garden compost or could be transformed into biogases, including methane (through anaerobic digester systems), that may be utilized for different purposes.

This research identifies and explains several ESG dimensions associated with food and beverage operations. It sheds light on several regulatory instruments comprising principles and standards, that may be adopted by practitioners to guide them in their ESG disclosures of their sustainable initiatives. Notwithstanding, this article puts forward a novel theoretical model that illustrates various responsible practices related to each of three (3) ESG dimensions. It clearly indicates that the hospitality businesses’ kitchen behaviors can be measured and accounted for in ESG reports, to provide stakeholders with a true and fair view of their sustainability credentials.

Future research directions

There is scope for further research focused on the main themes of this contribution. Academic colleagues may conduct primary research activities to explore the hospitality practitioners’ good practices, or lack thereof. They may reveal how they are planning, organizing, implementing and measuring the effectiveness of their responsible value chain activities. Prospective researchers may avail themselves of various methodologies and sampling frames, to explore this topic in depth and breadth. They could identify specific organizations including sustainability champions, that have a proven track record in: (i) reducing materials and resources, as well as in reusing and recycling surplus or leftover foods; (ii) utilizing sharing economy platforms and mobile apps to sell surplus foods at discounted prices; (iii) donating food to community projects; and/or iv) recycling inedible foods for compost purposes, among other options.

New submissions to journals could promote the positive multiplier effects of engaging in responsible food and beverage operations in terms of operational efficiencies and cost savings, improved corporate image and reputation, and the like. They could raise awareness on the business case for responsible food production and consumption behaviors. Alternatively, future researchers could prepare theoretical and/or discursive papers that clearly explain how, where, when and why hospitality firms are accounting their sustainable ESG activities. They may refer to specific standards and metrics presented in this article.

In addition, they may prepare comparative analyses of different ESG reporting frameworks (e.g., GRI and SASB among others). Their research might reveal the strengths and weaknesses of each framework and could possibly evaluate their standards and metrics in detail. Scholars could explore the enablers and barriers associated with ESG accounting, reporting, auditing, and assurance. They may focus on organizational aspects, financial and technological issues, regulatory interventions, and/or on cultural influences that could either support or hinder the widespread adoption of sustainable food and beverage initiatives in the hospitality sector.

Suggested citation: Camilleri, M. A. (2025). Sustainability accounting and disclosures of responsible restaurant practices in environmental, social and governance (ESG) reports. International Journal of Hospitality Management, 126, https://doi.org/10.1016/j.ijhm.2024.104051

Leave a comment

Filed under ESG Reporting, food loss, food waste, Hospitality, hotels, Integrated Reporting, restaurants, Sustainable Consumption, sustainable production, sustainable supply chains

Tagged as , , , , , , , , , , , ,

December 18, 2024 · 12:12 pm

Sustainability accounting and disclosures of responsible restaurant practices in environmental, social and governance (ESG) reports

This is an excerpt from one of my latest open-access articles published via International Journal of Hospitality Management

Suggested citation: Camilleri, M.A. (2025). Sustainability accounting and disclosures of responsible restaurant practices in environmental, social and governance (ESG) reports, International Journal of Hospitality Management, 126, https://doi.org/10.1016/j.ijhm.2024.104051

Currently, humanity is generating more than one billion tons of food waste, including packaging, biodegradable edible food scraps, fruits and vegetables, among others. Together, these items accumulate about one hundred and thirty-two (132) kilograms per capita and almost one-fifth (1/5) of all food available to consumers (Department of Energy, 2024). Out of the total food that was wasted in 2022, sixty per cent (60 %) was produced by private households, twenty-eight per cent (28 %) originated from food and beverage service providers including hotels, restaurants, pubs and cafes, and twelve percent (12 %) came from retail stores (UNEP, 2024).

Frequently, food items and their ingredients are wasted because of a decline in quality, due to contamination, overstocking and/or spoilage issues, as they are not consumed before their expiry date, resulting in their decay (Pearson et al., 2025). Notwithstanding, the preparers of food tend to over-produce perishable items that are uneaten by consumers. Such spoilt products and surplus food will usually end up in municipal landfills, resulting in negative repercussions for our fragile natural environments, bio diversities and ecosystems (EuroStat, 2023). In other words, the piling up of food waste is inevitably causing pollution and irreparable damage| including global greenhouse gas emissions (GHG) that can exacerbate climate change for our planet.

At the time of writing, food loss and waste are triggering eight to ten per cent (8–10 %) of annual (GHG) emissions and are taking up the equivalent of almost a third of the world’s agricultural land. The disposal, handling and accumulation of food waste is costing the global economy about USD 1 trillion (UNEP, 2024). Therefore, the reduction of food loss is critical to increase the efficiency of the globe’s food systems, to improve food security for every nation and its citizens, whilst decreasing production costs in the value chain.

In this light, the rationale of this contribution is to raise awareness on responsible food and beverage operations in the hospitality industry. Primarily, it identifies sustainable practices that are intended to reduce food loss and waste from the value chain through sustainable sourcing of food products, by implementing sound inventory management systems as well as by promoting ecofriendly behaviors during responsible food preparation and consumption practices. A thorough review of the extant literature suggests that, currently, there are just a few articles that shed light on responsible food and beverage operations (Oke et al., 2023, Yong et al., 2024), although a number of institutions and organizations are raising the agenda on sustainable food production behaviors among practitioners (EU, 2021, HOTREC, 2017).

Secondly, this article highlights the importance of sustainability accounting and reporting during each stage of food preparation, production and consumption (Huang et al., 2023, Lee et al., 2024, Lin et al., 2024). It clearly explains in a pragmatic manner how environmental, social and governance (ESG) accountability standards, like the ones formulated by Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and the Food Loss and Waste Accounting and Reporting Standard (FLW Standard) among others, could be applied in the hospitality industry context.

Therefore, the research objectives of this contribution are threefold: (i) It identifies and discusses about sustainable practices that hotels, restaurants and cafes can implement to minimize food loss and waste; (ii) It sheds light on different regulatory instruments including guiding principles and standards, that can be utilized for ESG accounting, disclosures, audit and assurance of food and beverage services, including those operated by hospitality practitioners; (iii) It advances a theoretical model that clearly summarizes different aspects related to ESG dimensions.

This paper is also available through ResearchGate, Academia, Social Science Research Network (SSRN) and Open Access Repository.

Leave a comment

Filed under CSR, ESG Reporting, food loss, food waste, Hospitality, hotels, restaurants, Sustainable Consumption, sustainable production, sustainable supply chains

Tagged as , , , , , , , ,

January 30, 2024 · 7:08 pm

Stakeholder engagement disclosures in sustainability reports

This is an excerpt from one of my latest articles, published through Business Ethics, the Environment and Responsbility.

Suggested citation: Galeotti, R. M., Camilleri, M. A., Roberto, F., & Sepe, F. (2023). Stakeholder engagement disclosures in sustainability reports: Evidence from Italian food companies. Business Ethics, the Environment & Responsibility, Ahead-of-print, 1–20, https://doi.org/10.1111/beer.12642 

Abstract

More businesses are embedding stakeholder engagement (SE) practices in their corporate disclosures. This article explores the extent to which SE practices are featured in the sustainability reports (SRs) of 48 Italian food and beverage businesses, following the latest Global Reporting Initiative (GRI) standards. The researchers analyze the content of their SRs dated 2020 and 2021. They utilize a panel regression technique to examine the relationship between stakeholder engagement disclosures (SED) and corporate financial performance (CFP), and to investigate the mediating role of SR assurance. The results show a positive and significant relationship between SED and CFP. They also confirm that there is a moderating effect from SR assurance on this causal path. However, the findings reveal that SED in SRs of Italian food companies is still moderate. This contribution builds on the logic behind the stakeholder theory. It implies that there is scope for food companies to forge relationships with stakeholders. It indicates that it is in their interest to disclose material information about their SE practices in their SR and to organize third party assurance assessments in order to improve their legitimacy with stakeholders.

1 INTRODUCTION

The sustainability agenda has gained significant attention within the global food sector (Rueda et al., 2017), and it is becoming a growing concern among stakeholders (Al Hawaj & Buallay, 2022). The food industry is heavily reliant on natural and technological resources such as water, energy, chemicals, and fossil fuels, and therefore, has a substantial impact on the environment and the society (Buallay, 2020; Camilleri, 2021; Ramos et al., 2020). The actions of food manufacturers and retailers can significantly affect the health of individuals. Their ability to choose, process, package, transport, and promote sustainable food could have an impact on what people consume and on their overall well-being. As they interact directly with consumers, they are subject to intense scrutiny and requests for transparency. Stakeholders, including governmental institutions, consumers, and the global community, have called upon food companies to adopt more sustainable practices and to pay more attention to food sustainability (Friedrich et al., 2012; Troise et al., 2021). Very often, they are raising awareness about value creation opportunities to persuade them to engage in responsible production and consumption behaviors (Attanasio et al., 2021), and to forge relationships with marketplace stakeholders (Camilleri, 2020).

The interactions between firms and their external environment constitute a vital characteristic of a sustainable business model, owing to the unique value stream that stakeholder engagement (SE) can offer. In this context, sustainability disclosures can act as a catalyst to foster trust, enhance procedures and systems, promote the firm’s vision and strategy, decrease compliance expenses, and generate competitive advantages (Cardoni et al., 2022). Companies operating in the food sector are principally challenged in their efforts to deliver Sustainability Reports (SRs) that provide useful information to both internal and external stakeholders (D’Adamo, 2022). Research examining the role of sustainability reporting in enhancing firm performance in this sector is limited. Some studies suggest a positive relationship between strong sustainability reporting and return on assets (ROA) (Al Hawaj & Buallay, 2022), increased sales (Sen & Bhattacharya, 2001) or reduced cost of capital (Garzón-Jiménez & Zorio-Grima, 2022).

Given the complexity of the food sector, which is a typical multistakeholder context (Al Hawaj & Buallay, 2022), it is particularly relevant for food companies to ensure that their SRs provide accurate and thorough disclosures of their SE practices. SE is a complex and distinct activity that has emerged in the preparation of SRs (Greenwood, 2007) and it is crucial to reflect on the way it is conducted (Petruzzelli & Badia, 2023). The reporting entities cannot ignore their stakeholders’ relationships from their corporate disclosures. If they conceal any material information on this matter from their SR, they risk damaging their reputation and image (Ardiana, 2019; De Micco et al., 2021; Manetti, 2011; Miles & Ringham, 2020).

Academic research on SE is an evolving area of investigation due to the increasing scientific and professional interest in sustainability reporting issues (Camilleri, 2015; Stocker et al., 2020). Prior studies have indicated that many companies fail to provide complete disclosures of SE processes (Moratis & Brandt, 2017), and show an inadequate level of SE procedures (Petruzzelli & Badia, 2023; Venturelli et al., 2018). However, despite the significance of this subject, the number of empirical academic contributions on SE remains limited, making it important to further explore this topic. In such a context, several scholars are calling for further studies that seek to investigate how, why, where, and when firms are engaging with stakeholders. In addition, they are encouraging them to explore whether they are disclosing the details about their stakeholder relationships in their SRs (Gagné et al., 2022; Gao & Zhang, 2006; Hörisch et al., 2015).

The purpose of this article is twofold. The first one is to investigate the extent to which SE is featured in the SRs of 48 Italian unlisted food companies (that were relying on GRI’s new standards in the period 2020–2021), with the objective to verify their focus on SE disclosures (SED) process. The authors examine their SR’s content, in terms of the report preparers’ motivations and methods. They also verify whether they indicated specific stakeholders in their disclosures. This paper raises awareness on the role of SE in the sustainability reporting of food companies. It clarifies how and to what extent food companies are communicating directly with stakeholders, gathering feedback from them, and how explicitly they are involving them in the SR process. To this aim, the researchers developed an SE index composed of 7 categories and 21 items derived from prior literature on the topic and adapted from the latest Global Reporting Initiative (GRI) standards. The proposed index provides a systematic approach to examining the SE practices and activities disclosed by sample firms. Content analysis (a binary coding system) of GRI SRs was carried out to calculate the overall SED score. The second goal of this contribution is to investigate the relationship between SED and corporate financial performance (CFP). In addition, this research analyzes the moderating effects of SR assurance on SED-CFP causal link. Hence, this contribution addresses the following research questions:

  • RQ1: What is the state and extent of SED in the SRs of food companies?
  • RQ2: Is there a relationship between SED in SRs and CFP in the food industry? If there is, how and to what extent, is this relationship mediated by SR assurance?

This research explores the above-mentioned questions and provides insights on the SE processes of Italian Food companies. It builds on the Stakeholder Theory (ST; Freeman, 1984), as it seeks to explain whether SE processes are integrated in their SRs. The authors anticipate that the exploratory content analysis on the sample firms’ SRs indicate that the average level of SE is not significantly high in food companies in Italy, however, there is an increasing pattern of SED during the study period. While SE seems common practice, many firms are failing to provide the details on their stakeholder relationships in their SRs. The findings suggest that most of the engagement modes disclosed are unidirectional (level 1—Inform) with minimal emphasis on deep involvement strategies (level 3—Involve). Furthermore, only 32% of the sample seek assurance on the information disclosed.

Results from the panel data analysis provide evidence that there is a significant positive association between SED and CFP. Findings also show that SR assurance by accounting firms accentuates this effect. An extensive literature review suggests that this study, to the best of the authors’ knowledge, is the first to use food companies’ SRs to investigate the impact of SED on CFP introducing the interactive variable of SR third-party assurance, which adds new knowledge to SE and sustainability reporting literature from a specific industry in an advanced economy. Considering the maturity of Italian sustainability reporting and assurance practices (KPMG, 2022; Larrinaga et al., 2020) the Italian context is particularly relevant in explaining the interest of food companies into properly communicating SE activities in SRs. In these terms, this study contributes to a deeper understanding of the underexplored area of SE in a specific industry, highlighting the strategies used by Italian food companies to manage the SE communication process. Specifically, it provides insights to improve the framing of SED and gives evidence of the value relevance of SED and SR assurance for companies operating in the food sector. Therefore, this research sheds light on the advancement and enhancement of food company–stakeholder relations, particularly from the perspective of value co-creation. The findings will help managers identify key focus areas where they can improve the SED process aiming at creating shared value and foster mutually beneficial relationships with stakeholders.

The remainder of this study is structured as follows. The next section deals with the paper’s conceptual framework and hypotheses development. This is followed by the research design and methodology. Finally, the results, discussion, including recommendations, limitations, and hints for future research are presented.

Read further (this publication is available in its entirety, as it is an open-access article).

Leave a comment

Filed under Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Stakeholder Engagement, Sustainability

Tagged as , , , , , , , , ,

January 11, 2022 · 11:00 am

The European Union’s corporate sustainability reporting directive (CSRD)

The European Union (EU)’s non-financial reporting directive (NFRD) law requires that large undertakings including corporations, listed businesses and government entities, among others, to disclose information on the way they operate and manage social and environmental challenges. This helps investors, civil society organisations, consumers, policy makers and other stakeholders to be in a better position to evaluate their non-financial performance (Camilleri, 2015; Camilleri, 2018; EU, 2014).

Recently, the EU (2021) put forward its proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the existing reporting requirements of the NFRD. In sum, the proposal extends the audit requirement to large companies and listed businesses in regulated markets (except listed micro-enterprises). They will be expected to introduce more detailed reporting requirements, according to mandatory EU sustainability reporting standards. At the time of writing this contribution, it is envisaged that the first set of standards would be adopted by October 2022 (EU, 2021).

References:

Camilleri, M.A. (2015). Environmental, social and governance disclosures in Europe.  Sustainability Accounting, Management and Policy Journal, 6(2), 224-242. https://www.emerald.com/insight/content/doi/10.1108/SAMPJ-10-2014-0065/full/html

Camilleri, M.A. (2018). Theoretical insights on integrated reporting: The inclusion of non-financial capitals in corporate disclosures, Corporate Communications: An International Journal, 23(4), 567-581. https://www.emerald.com/insight/content/doi/10.1108/CCIJ-01-2018-0016/full/html

EU (2014). Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups. European Commission, Brussels, Belgium. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0095

EU (2021). EU Taxonomy, Corporate Sustainability Reporting, Sustainability Preferences and Fiduciary Duties: Directing finance towards the European Green Deal COM/2021/188 final https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021DC0188

Leave a comment

Filed under Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Integrated Reporting

Tagged as , , , , , , , ,

March 11, 2020 · 12:46 pm

The market for socially responsible investing

This is an excerpt from my latest paper, entitled: “The market for socially responsible investing: A review of the developments”. 

How to Cite: Camilleri, M.A. (2020). The market for socially responsible investing: A review of the developments. Social Responsibility Journal. DOI. 10.1108/SRJ-06-2019-0194.

There are various ratings and reference indices that are utilized by investors to evaluate financial and SRI portfolios (Scalet and Kelly, 2010). Typically, the SRI indices constitute a relevant proxy as they evaluate the ESG performance of listed businesses (Joliet and Titova, 2018; Le Sourd, 2011). A large number of SR contractors, analysts and research firms are increasingly specializing in the collection of ESG information as they perform ongoing analyses of corporate behaviors (Dumas and Louche, 2016). Many of them maintain a database and use it to provide their clients with a thorough ESG analysis (including proxy advice), benchmarks and engagement strategies of corporations. They publish directories of ethical and SRI funds, as they outline their investment strategies, screening criteria, and voting policies (Leite and Cortez, 2014). In a sense, these data providers support the responsible investors in their selection of funds.

 

SRI Indices, Ratings and Information Providers

KLD / Jantzi Global Environmental Index, Jantzi Research, Ethical Investment Research Service (Vigeo EIRIS) and Innovest (among others) analyze the corporations’ socially responsible and environmentally-sound behaviors as reported in Table 1. Some of their indices (to name a few) shed light about the impact of products (e.g. resource use, waste), the production processes (e.g. logging, pesticides), or proactive corporate activities (e.g. clean energy, recycling). Similarly, social issues are also a common category for these contractors. In the main, the SRI indices benchmark different types of firms hailing from diverse industries and sectors. They adjust their weighting for specific screening criteria as they choose which firms to include (or exclude) from their indices (Leite and Cortez, 2014; Scalet and Kelly, 2010). One of the oldest SRI indices for CSR and Sustainability ratings is the Dow Jones Sustainability Index. The companies that are featured in the Dow Jones Indices are analyzed by the Sustainable Asset Management (SAM) Group (i.e. a Swiss asset management company). Another popular SRI index is FTSE Russell’s KLD’s Domini 400 Social Index (also known as the KLD400) which partners with the Financial Times on a range of issues. Similarly, the Financial Times partners with an ESG research firm (i.e. EIRES) to construct its FTSE4 Good Index series. Smaller FTSE Responsible Investment Indices include the Catholic Values Index, the Calvert Social Index, the FTSE4Good indices, and the Dow Jones family of SRI Indices, among others. The KLD400 index screens the companies’ performance on a set of ESG criteria. It eliminates those companies that are involved in non-eligible industries. Impax, a specialist finance house (that focuses on the markets for cleaner or more efficient delivery of basic services of energy, water and waste) also maintain a group of FTSE Indices that are related to environmental technologies and business activities (FTSE Environment Technology and Environmental Opportunities). The Catholic Values Index uses the US Conference of Catholic Bishops’ Socially Responsible Investment Guidelines (i.e. positive screening approach) to scrutinize eligible companies (e.g., corporations with generous wage and benefit policies, or those who create environmentally beneficial technologies). This index could also exclude certain businesses trading in “irresponsible” activities. listed businesses according to their social audit of four criteria: the company’s products, their impact on the environment, labor relations, and community relations. The latter “community relations” variable includes issues such as the treatment of indigenous people, provision of local credit, operations of overseas subsidiaries, and the like. The responsible companies are then featured in the Index when and if they meet Calvert’s criteria. This index also maintains a target economic sector weighting scheme. Other smaller indices include; Ethibel Sustainability Index for Belgian (and other European) companies and OMX GES Ethical Index for Scandinavian companies, among others.

 

Table 1. Screenings of Responsible Investments

Positive Screens Negative Screens
Community Investment Alcohol
Employment / Equality Animal Testing
Environment Defence / Weapons
Human Rights Gambling
Labour Relations Tobacco
Proxy Voting

 

Generally, these SRI indices are considered as investment benchmarks. In a nutshell, SRI Indices have spawned a range of products, including index mutual funds, ETFs, and structured products (Riedl and Smeets, 2017). A wide array of SRI mutual funds regularly evaluate target companies and manage their investment portfolios. Therefore, they are expected to consider other important criteria such as risk and return targets (Trinks et al., 2018; Leite and Cortez, 2015; Humphrey and Lee, 2011). For instance, iShares lists two ETFs based on the KLD Index funds, and the Domini itself offers a number of actively managed mutual funds based on both ESG and community development issues (such as impact investments). In addition, there are research and ratings vendors who also manage a series of mutual funds, including Calvert and Domini (Scalet and Kelly, 2010).

 

Discussion

The SRI indices serve as a ‘seal of approval’ function for the responsible businesses that want to prove their positive impact investment credentials to their stakeholders. Currently, there are many factors that may be contributing for the growth of SRI:

 

Firstly, one of the most important factors for the proliferation of SRI is the access to information. Today’s investors are increasingly using technologies, including mobile devices and their related applications to keep them up to date on the most recent developments in business and society. Certain apps inform investors on the latest movements in the financial markets, in real-time. Notwithstanding, the SRI contractors are providing much higher quality data than ever before. As a result, all investors are in a position to take informed decisions that are based on evidence and research. Investors and analysts use “extra-financial information” to help them analyze investment decisions (GRI, 2019; Diouf and Boiral, 2017). This “extra-financial information” includes ESG disclosures on non-financial issues (Brooks and Oikonomou, 2018). These sources of information will encourage many businesses and enterprises to report on their responsible and sustainable practices (Diouf and Boiral, 2017). The companies’ integrated thinking could be a precursor for their integrated reporting (Camilleri, 2018; 2017b; GRI, 2019). Business can use integrated disclosures, where they provide details on their financial as well as on their non-financial information for the benefit of prospective investors and analysts, among other stakeholders.

 

Secondly, the gender equality issue has inevitably led to some of the most significant developments in the financial services industry. Nowadays, there are more emancipated women who are in employment, who are gainfully occupied as they are actively contributing in the labor market. Many women are completing higher educational programs and attaining relevant qualifications including MBA programs. Very often, these women move their way up the career ladder with large organizations. They may even become members on boards of directors and assume fiduciary duties and responsibilities. Other women are becoming entrepreneurs as they start their own business. During the last decades, an increased equality in the developed economies has led to SRI’s prolific growth. As a result, women are no longer the only the beneficiaries of social finance, as they are building a complete ecosystem of social investing (Maretick, 2015). “By 2020 women are expected to hold $72trn, 32% of the total. Most of the private wealth that changes hands in the coming decades is likely to go to women (The Economist, 2018). This wave of wealth is set to land in the laps of female investors who have shown positive attitudes toward social investing, when compared to their male counterparts. Maretick (2015) reported that half of the wealthiest women expressed an interest in social and environmental investing when compared to one-third of the wealthy men.

 

Thirdly, today’s investors are increasingly diversifying their portfolio of financial products. The default investment is the market portfolio, which is a value-weighted portfolio of all investable securities (Trinks and Scholtens, 2017). A growing body of evidence suggests that many investors do not necessarily have to sacrifice performance when they invest in socially responsible or environmentally sustainable assets. A relevant literature review denied the contention that social screening could result in corporate underperformance (Trinks and Scholtens, 2017; Lobe and Walkshäusl, 2011; Salaber 2013). Investors have realized that strategic corporate responsibility is congruent with prosperity (Porter and Kramer, 2011; Schueth, 2003). In fact, today’s major asset classes including global, international, domestic equity, balanced and fixed-income categories also comprise top-performing socially responsible mutual funds (Riedl and Smeets, 2017). Therefore, various financial products are reflecting the investors’ values and beliefs (Fritz and von Schnurbein, 2019). Consequentially, the broad range of competitive socially responsible investment options have resulted in diverse, well-balanced portfolios. In the U.S. and in other western economies, top-performing SRI funds can be found in all major asset classes. More and more investors are realizing that they can add value to their portfolios whilst supporting socially and environmental causes.

 

Fourthly, there are economic justifications for the existence of mutual funds in diversified portfolios. Although SRI funds are rated well above average performers no matter which ranking process one prefers to use (Scalet and Kelly, 2010; Schueth, 2003), other literature suggests that there are situations where the positive or negative screens did not add nor destroy the financial products’ portfolio value (Auer, 2016; Trinks and Scholtens, 2017; Hofmann et al., 2009). This matter can result in having mixed investments where there are SRI products that are marketed with other financial portfolios.

Currently, the financial industry is witnessing a consumer-driven phenomenon as there is a surge in demand for social investments. This paper mentioned a number of organizations that have developed indices to measure the organizational behaviors and their laudable practices. Very often, their metrics rely on positive or negative screens that are used to define socially responsible and sustainable investments (Leite and Cortez, 2014; Hofmann et al., 2009). However, despite these developments, the balanced investors are still investing their portfolio in different industries. As a result, they may be putting their money to support controversial businesses. Perhaps, in the future there could be alternative screening methods in addition to the extant inclusionary and exclusionary approaches. Several corporations are willingly disclosing their integrated reporting of financial and non-financial performance; as stakeholders including investors, demand a higher degree of accountability and transparency from them (Diouf and Boiral, 2017). As a result, a growing number of firms, are recognizing the business case for integrated thinking that incorporates financial and strategic corporate responsible behaviors. They can support the community through positive impact investments by allocating funds to reduce their externalities in society. Alternatively, they may facilitate shareholder activism and advocacy, among other actions (Viviers and Eccles, 2012). In sum, the responsible businesses’ stakeholder engagement as well as their sustainable investments can help them improve their bottom lines, whilst addressing their societal and community deficits.

 

References (This is a list of all the references that appeared in the full paper)

Aras, G. and Crowther, D. (2007), “What level of trust is needed for sustainability?”, Social Responsibility Journal, Vol. 3, No. 3, pp. 60-68.

Aras, G. and Crowther, D. (2009), “Corporate sustainability reporting: a study in disingenuity?”, Journal of Business Ethics, Vol. 87, No. 1, pp. 279-288.

Auer, B.R., (2016). “Do Socially Responsible Investment Policies Add or Destroy European Stock Portfolio Value?”, Journal of Business Ethics, Vol. 135, No. 2, pp. 381-397.

Barber, R. (1982), “Pension Funds in the United States Issues of Investment and Control”, Economic and Industrial Democracy, Vol. 3, No. 1, pp. 31-73.

Becchetti, L., Ciciretti, R., Dalò, A. and Herzel, S. (2015), “Socially responsible and conventional investment funds: performance comparison and the global financial crisis”, Applied Economics, Vol. 47 No. 25, pp. 2541-2562.

Bengtsson, E. (2008a), “Socially responsible investing in Scandinavia–a comparative analysis”, Sustainable Development, Vol. 16, No. 3, pp. 155-168.

Bengtsson, E. (2008b), “A history of Scandinavian socially responsible investing”, Journal of Business Ethics, Vol. 82, No. 4, pp. 969-983.

Benijts, T. (2010), “A framework for comparing socially responsible investment markets: an analysis of the Dutch and Belgian retail markets”, Business Ethics: A European Review, Vol. 19, no. 1, pp. 50-63.

Berger, A. N., Demsetz, R. S. and Strahan, P. E. (1999), “The consolidation of the financial services industry: Causes, consequences, and implications for the future”, Journal of Banking & Finance, Vol. 23, Nos. (2-4), pp. 135-194.

Berry, T. C. and Junkus, J. C. (2013), “Socially responsible investing: An investor perspective”, Journal of Business Ethics, Vol. 112, No. 4, pp. 707-720.

Bilbao-Terol, A., Arenas-Parra, M., Cañal-Fernández, V. and Bilbao-Terol, C. (2013), “Selection of socially responsible portfolios using hedonic prices”, Journal of Business Ethics, Vol. 115, No. 3, pp. 515-529.

Brooks, C. and Oikonomou, I. (2018), “The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance”, The British Accounting Review, Vol. 50, No. 1, pp. 1-15.

Brundtland, G. H. (1989), “Global change and our common future”, Environment: Science and Policy for Sustainable Development, Vol. 31, No. 5, pp. 16-43.

Bugg-Levine, A. and Emerson, J. (2011), “Impact investing: Transforming how we make money while making a difference”, Innovations: Technology, Governance, Globalization, Vol. 6, No. 3, pp. 9-18.

Busch, T., Bauer, R. and Orlitzky, M. (2016), “Sustainable development and financial markets: Old paths and new avenues”, Business and Society, Vol. 55, No. 3, pp. 303-329.

Camilleri, M. A. (2015a), “Valuing stakeholder engagement and sustainability reporting”, Corporate Reputation Review, Vol. 18, No. 3, pp. 210-222.

Camilleri, M. A. (2015b), “Environmental, social and governance disclosures in Europe”, Sustainability Accounting, Management and Policy Journal, Vol. 6, No. 2, pp. 224-242.

Camilleri, M. A. (2017a), “Measuring the corporate managers’ attitudes towards ISO’s social responsibility standard”, Total Quality Management & Business Excellence, pp. 1-13 https://www.tandfonline.com/doi/full/10.1080/14783363.2017.1413344 (Accessed 14 August 2019).

Camilleri, M.A. (2017b), “The integrated reporting of financial, social and sustainability capitals: a critical review and appraisal”,  International Journal of Sustainable Society, Vol. 9 No. 4, pp. 311 – 326

Camilleri, M. A. (2018), “Theoretical insights on integrated reporting: The inclusion of non-financial capitals in corporate disclosures”, Corporate Communications: An International Journal, Vol. 23, No. 4, pp. 567-581.

Camilleri, M. A. (2019), “The circular economy’s closed loop and product service systems for sustainable development: A review and appraisal”, Sustainable Development, Vol. 27, No. 3, pp. 530-536.

Capelle‐Blancard, G. and Monjon, S. (2012), “Trends in the literature on socially responsible investment: looking for the keys under the lamppost”, Business Ethics: A European Review, Vol. 21, No. 3, pp. 239-250.

Carroll, A. B. (1999), “Corporate social responsibility evolution of a definitional construct”, Business and Society, Vol. 38, No. 3, pp. 268-295.

CDFA (2005), “Inside Out: The State of Community Development Finance”, CDFA, London, UK.

Charmaz, K. and Belgrave, L. L. (2007), “Grounded theory”. The Blackwell Encyclopedia of Sociology. Wiley, Hoboken, New Jersey, USA.

Colgate, M. and Lang, B. (2001), “Switching barriers in consumer markets: an investigation of the financial services industry”, Journal of Consumer Marketing, Vol. 18, No. 4, pp. 332-347.

Crifo, P. and Mottis, N. (2016), “Socially responsible investment in France”, Business and Society, Vol. 55, no. 4, pp. 576-593.

Diouf, D. and Boiral, O. (2017), “The quality of sustainability reports and impression management: A stakeholder perspective”, Accounting, Auditing & Accountability Journal, Vol. 30, No. 3, pp. 643-667.

Dumas, C. and Louche, C. (2016), “Collective beliefs on responsible investment”, Business and Society, Vol. 55, No. 3, pp. 427-457.

Durand, R. B., Koh, S. and Limkriangkrai, M. (2013a), “Saints versus Sinners. Does morality matter? Journal of International Financial Markets”, Institutions and Money, Vol. 24, No. 4, pp. 166–183

Eichholtz, P., Kok N. and Quigley, J. M. (2010), “Doing well by doing good? Green office buildings”, American Economic Review, Vol. 100, No. 5, pp. 2492-2509.

Emmelhainz, M. A. and Adams, R. J. (1999), “The apparel industry response to “sweatshop” concerns: A review and analysis of codes of conduct”, Journal of Supply Chain Management, Vol. 35, No. 2, pp. 51-57.

Entine, J. (2003), “The myth of social investing: A critique of its practice and consequences for corporate social performance research”, Organization and Environment, Vol. 16, No. 3, pp. 352-368.

Epstein, M. J. (2018), “Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts”, Routledge, Oxford, UK.

EUROSIF (2019), “SDGs for SRI Investors”, http://www.eurosif.org/wp-content/uploads/2018/01/Eurosif-SDGs-brochure.pdf (Accessed 14 August 2019).

Fabozzi, F. J., Ma, K. C. and Oliphant, B. J. (2008), “Sin stock returns”, The Journal of Portfolio Management, Vol. 35, No. 1, pp. 82–94.

Freireich, J. and Fulton, K. (2009), “Investing for social and environmental impact: A design for catalyzing an emerging industry”, Monitor Institute, pp. 1-86.

Friedman, A. L. and Miles, S. (2001), “Socially responsible investment and corporate social and environmental reporting in the UK: An exploratory study”, The British Accounting Review, Vol. 33, No. 4, pp. 523-548.

Friedman, M. (2007), “The social responsibility of business is to increase its profits”, In Corporate ethics and corporate governance, (pp. 173-178), Springer, Berlin, Germany.

Fritz, T. M. and von Schnurbein, G. (2019), “Beyond Socially Responsible Investing: Effects of Mission-Driven Portfolio Selection”, Sustainability, Vol. 11, No. 23, pp. 6812-6827.

Garriga, E. and Melé, D. (2004), “Corporate social responsibility theories: Mapping the territory”, Journal of Business Ethics, Vol. 53, Nos. 1-2, pp. 51-71.

Giamporcaro, S. and Gond, J. P. (2016). “Calculability as politics in the construction of markets: The case of socially responsible investment in France”, Organization Studies, Vol. 37, No. 4, pp. 465-495.

Global Footprint Network (2019), “Do we fit on the planet?”, (http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/ (Accessed 10 August 2019).

GRI (2019), “Linking GRI standards and the EU directive on non-financial and diversity disclosure”, https://www.globalreporting.org/standards/resource-download-center/linking-gri-standards-and-european-directive-on-non-financial-and-diversity-disclosure/ (Accessed 16 August 2019)

Ghoul, W. and Karam, P. (2007), “MRI and SRI mutual funds: A comparison of Christian, Islamic (morally responsible investing), and socially responsible investing (SRI) mutual funds”, Journal of Investing, Vol. 16, No. 2, pp. 96-102.

Gillan, S. L. and Starks, L. T. (2000), “Corporate governance proposals and shareholder activism: The role of institutional investors”, Journal of Financial Economics, Vol. 57, No. 2, pp. 275-305.

Glaser, B. and Strauss, A. (1967). “Grounded theory: The discovery of grounded theory”, Sociology: The Journal of the British Sociological Association, Vol. 12, No. 1, pp. 27-49.

Guay, T., Doh, J.P. and Sinclair, G. (2004), “Non-governmental organizations, shareholder activism, and socially responsible investments: Ethical, strategic, and governance implications”, Journal of Business Ethics, Vol. 52, No. 1, pp. 125-139.

Hellsten, S. and Mallin, C. (2006), “Are ‘ethical’or ‘socially responsible’investments socially responsible?”, Journal of Business Ethics, Vol. 66, No. 4, pp. 393-406.

Hofmann, E., Penz, E. and Kirchler, E. (2009), “The ‘Whys’ and ‘Hows’ of ethical investment: Understanding an early-stage market through an explorative approach”, Journal of Financial Services Marketing, Vol. 14, No. 2, pp. 102-117.

Hong, H. and Kacperczyk, M. (2009), “The price of sin: The effects of social norms on markets”, Journal of Financial Economics, Vol. 93, No. 1, pp. 15-36.

Hsieh, H.F. and Shannon, S.E. (2005), “Three approaches to qualitative content analysis”, Qualitative Health Research, Vol. 15, No. 9, pp. 1277-1288.

Humphrey, J.E. and Lee, D.D. (2011), “Australian socially responsible funds: Performance, risk and screening intensity”, Journal of Business Ethics, Vol. 102, No. 4, pp. 519-535.

Humphrey, J. E. and Tan, D. T. (2014), “Does it really hurt to be responsible?”, Journal of Business Ethics, Vol. 122, No. 3, pp. 375–386.

Humphrey, J. E., Warren, G. J. and Boon, J. (2016), “What is different about socially responsible funds? A holdings-based analysis”, Journal of Business Ethics, Vol. 138, No. 2, pp. 263-277.

Jackson, J. (2009), “How risky are sustainable real estate projects? An evaluation of LEED and ENERGY STAR development options”, Journal of Sustainable Real Estate, Vol. 1, No. 1, pp. 91-106.

Jackson, E. T. (2013), “Interrogating the theory of change: evaluating impact investing where it matters most”, Journal of Sustainable Finance and Investment, Vol. 3, No. 2, pp. 95-110.

Joliet, R. and Titova, Y. (2018), “Equity SRI funds vacillate between ethics and money: An analysis of the funds’ stock holding decisions”, Journal of Banking & Finance, Vol. 97, pp. 70-86.

Kempf, A. and Osthoff, P. (2007), “The effect of socially responsible investing on portfolio performance”, European Financial Management, Vol. 13, No 5, pp. 908-922.

Krumsiek, B. J. (1997), “The emergence of a new era in mutual fund investing: Socially responsible investing comes of age”, The Journal of Investing, Vol. 6, No. 4, pp. 25-30.

Lane, M.J. (2015), “The Mission-Driven Venture: Business Solutions to the World’s Most Vexing Social Problems”, Wiley, Hoboken New Jersey, USA.

Leite, P. and Cortez, M.C. (2014), “Style and performance of international socially responsible funds in Europe”, Research in International Business and Finance, Vol. 30, pp. 248-267.

Leite, P. and Cortez, M.C. (2015), “Performance of European socially responsible funds during market crises: Evidence from France”, International Review of Financial Analysis, Vol. 40, pp. 132-141

Le Sourd, V. (2011), “Performance of socially responsible investment funds against an efficient SRI index: The impact of benchmark choice when evaluating active managers”, EDHEC-Risk and Asset Management Research Centre, Nice, France.

Lincoln, Y.S. and Guba, E.A. (1985), “Naturalistic Inquiry”, Sage,  Beverly Hills, CA, USA.

Logue, A.C. (2009), “Socially Responsible Investing for Dummies”, John Wiley and Sons, Indianapolis, IN, USA.

Lydenberg, S. D. (2002), “Envisioning socially responsible investing”, Journal of Corporate Citizenship, Vol. 7, pp. 57-77.

Majoch, A. A., Hoepner, A. G., and Hebb, T. (2017), “Sources of stakeholder salience in the responsible investment movement: why do investors sign the principles for responsible investment?”, Journal of Business Ethics, Vol. 140, No. 4, pp. 723-741.

Mair J. and Milligan K. (2012), “Q and A roundtable on impact investing”, Stanford Social Innovation Review, http://ssir.org/articles/entry/qa_roundtable_on_impact_investing (Accessed 20 August, 2019).

Maretick, M. (2015), “Women Rule: Why the Future of Social, Sustainable and Impact Investing is in Female Hands”, TriplePundit. http://www.triplepundit.com/2015/04/womenrule-future-social-sustainable-impact-investing-female-hands/# (Accessed 02 September 2019)

Martí-Ballester, C. P. (2015), “Investor reactions to socially responsible investment”, Management Decision, Vol. 53, No. 3, pp. 571-604.

Matten, D. and Moon, J. (2008). “Implicit and explicit CSR: a conceptual framework for a comparative understanding of corporate social responsibility”, Academy of Management Review, Vol. 33, No. 2, pp. 404-424.

McCann, L., Solomon, A. and Solomon, J. (2003), “Explaining the growth in UK socially responsible investment”, Journal of General Management, Vol. 28, No. 4, pp. 15-36.

McLaren, D. (2004), “Global stakeholders: Corporate accountability and investor engagement”, Corporate Governance: An International Review, Vol. 12, No. 2, pp. 191-201.

Miller, A. (1992), “Green Investment”, In Owen, D. (ed.), Green Reporting: Accountancy and the Challenge of the Nineties. Chapman and Hall, London, UK, pp. 242–255.

Nilsson, J. (2009), “Segmenting socially responsible mutual fund investors: The influence of financial return and social responsibility”, International Journal of Bank Marketing, Vol. 27, No. 1, pp. 5-31.

Ogrizek, M. (2002), “The effect of corporate social responsibility on the branding of financial services”, Journal of Financial Services Marketing, Vol. 6, No. 3, pp. 215-228.

Oikonomou, I., Platanakis, E. and Sutcliffe, C. (2018), “Socially responsible investment portfolios: does the optimization process matter?”, The British Accounting Review, Vol. 50, No. 4, pp. 379-401.

Ooi, E. and Lajbcygier, P. (2013), “Virtue remains after removing sin: Finding skill amongst socially responsible investment managers”, Journal of Business Ethics, Vol. 113, No. 2, pp. 199-224.

Paul, K. (2017), “The effect of business cycle, market return and momentum on financial performance of socially responsible investing mutual funds”, Social Responsibility Journal, Vol. 13, No. 3, pp. 513-528.

Pienitz, R. and Vincent, W. F. (2000), “Effect of climate change relative to ozone depletion on UV exposure in subarctic lakes”, Nature, Vol. 404, No. 6777, pp. 484-487.

Porter, M. E. and Kramer, M. R. (2011), “The big idea: Creating shared value”, Harvard Business Review, Vol. 89, No. 1, pp. 1-12.

Rendtorff, J.D. (2009), “Responsibility, Ethics and Legitimacy of Corporations”, Society and Business Review, Vol. 4 No. 3, pp. 266-268.

Renneboog, L., Ter Horst, J. and Zhang, C. (2008), “Socially responsible investments: Institutional aspects, performance, and investor behaviour”, Journal of Banking and Finance, Vol. 32, No. 9, pp. 1723-1742.

Rhodes, M. J. (2010), “Information asymmetry and socially responsible investment”, Journal of Business Ethics, Vol. 95, No. 1, pp. 145-150.

Richardson, B.J. (2008), “Socially Responsible Investment Law: Regulating the Unseen Polluters”, Oxford University Press, Oxford, UK.

Richardson, B. J. (2009), “Keeping ethical investment ethical: Regulatory issues for investing for sustainability”, Journal of Business Ethics, Vol. 87, No. 4, pp. 555-572.

Riedl, A. and Smeets, P. (2017), “Why do investors hold socially responsible mutual funds?”, The Journal of Finance, Vol. 72, No. 6, pp. 2505-2550.

Rojas, M., M’zali, B., Turcotte, M. and Merrigan, P. (2009), “Bringing about changes to corporate social policy through shareholder activism: Filers, issues, targets, and success”, Business and Society Review, Vol. 114, No. 2, pp. 217-252.

Salaber, J. (2013), “Religion and returns in Europe”, European Journal of Political Economy, Vol. 32, No. 1, pp. 149–160.

Sandberg, J. (2011), “Socially responsible investment and fiduciary duty: Putting the freshfields report into perspective”, Journal of Business Ethics, Vol. 101, No. 1, pp. 143-162.

Sandberg, J. (2013), “(Re‐) interpreting fiduciary duty to justify socially responsible investment for pension funds?”, Corporate Governance: An International Review, Vol. 21, No. 5, pp. 436-446.

Scalet, S. and Kelly, T.F. (2010), “CSR rating agencies: what is their global impact?”, Journal of Business Ethics, Vol. 94, No. 1, pp. 69-88.

Schepers, D. H. and Prakash Sethi, S. (2003), “Bridging the Gap Between the Promise and Performance of Socially Responsible Funds”, Business and Society Review, Vol. 108, No. 1, pp. 11-32.

Scholtens, B. and Sievänen, R. (2013), “Drivers of socially responsible investing: A case study of four Nordic countries”, Journal of Business Ethics, Vol. 115, No. 3, pp. 605-616.

Schueth, S. (2003), “Socially responsible investing in the United States”, Journal of Business Ethics, Vol.  43, No. 3, pp. 189-194.

Silva, F. and Cortez, M.C. (2016), “The performance of US and European green funds in different market conditions”, Journal of Cleaner Production, Vol. 135, pp. 558-566.

Smith, M. P. (1996), “Shareholder activism by institutional investors: Evidence from CalPERS”. The Journal of Finance, Vol. 51, No. 1, pp. 227-252.

Sparkes, R. (2001), “Ethical investment: whose ethics, which investment?”, Business Ethics: A European Review, Vol. 10, No. 3, pp. 194-205.

Sparkes, R. and Cowton, C. J. (2004), “The maturing of socially responsible investment: A review of the developing link with corporate social responsibility”, Journal of Business Ethics, Vol. 52, No. 1, pp. 45-57.

Sparkes, R. (2017), “A historical perspective on the growth of socially responsible investment”, In Responsible investment  Routledge, Oxford, UK, (pp. 39-54).

Starr, M.A. (2008), “Socially responsible investment and pro-social change”, Journal of Economic Issues, Vol. 42, No. 1, pp. 51-73.

The Economist (2018), “Women’s wealth is rising”, https://www.economist.com/graphic-detail/2018/03/08/womens-wealth-is-rising (Accessed 7 August 2019).

Thornley, B., Wood, D., Grace, K. and Sullivant, S. (2011), “Impact Investing a Framework for Policy Design and Analysis”, InSight at Pacific Community Ventures and The Initiative for Responsible Investment at Harvard University, Cambridge (MA), USA.

Trinks, P. J. and Scholtens, B. (2017), “The opportunity cost of negative screening in socially responsible investing”, Journal of Business Ethics, Vol. 140, No. 2, pp. 193-208.

Trinks, A., Scholtens, B., Mulder, M. and Dam, L. (2018), “Fossil fuel divestment and portfolio performance”, Ecological economics, 146, pp. 740-748.

Viviers, S. and Eccles, N.S. (2012), “35 years of socially responsible investing (SRI) research-general trends over time”, South African Journal of Business Management, Vol. 43, No. 4, pp. 1-16.

Willis, A. (2003), “The role of the global reporting initiative’s sustainability reporting guidelines in the social screening of investments”, Journal of Business Ethics, Vol. 43, No. 3, pp. 233-237.

Walker, H. and Brammer, S. (2009), “Sustainable procurement in the United Kingdom public sector”, Supply Chain Management: An International Journal, Vol. 14, No. 2, pp. 128-137.

 

Leave a comment

Filed under Corporate Social Responsibility, Impact Investing, Marketing, Socially Responsible Investment, SRI

Tagged as , , , , , , , , , , , , , , , , , , , , , , , , ,

June 25, 2018 · 9:40 am

The Corporations’ Non-Financial Disclosures

susty.png

The American Institute of Certified Public Accountants’ Jenkins Report may be considered as one of the major documents that has provided the foundations for non-financial disclosures. Notwithstanding, there were other guidelines that were developed by other non-governmental organizations (NGOs), including; the Global Reporting Initiative, AccountAbility, Accounting for Sustainability (A4S), the World Intellectual Capital Initiative (WICI), the Enhanced Business Reporting Consortium, the CDP (formerly known as the Carbon Disclosure Project), the International Corporate Governance Network, the Sustainability Reporting Standards Board and the Climate Disclosure Standards Board, among others. The International Standards Organization (ISO), Forest Stewardship Council (FSC), Greenpeace, Rainforest Alliance and Home Depot Certifiable, Fair Trade and the US Department of Agriculture’s USDA Organic Labelling, among others, have formulated uncertifiable, multi-stakeholder standards and instruments to support organizations in their CSR communication. In addition, certain listed corporations are adopting Fortune’s reputation index, the KLD Social index or RepTrak (Camilleri, 2017). Such measures require corporate executives to assess the extent to which their organization behaves responsibly towards the environment and the community. Despite the development of these guiding principles and indices, their appropriateness remains doubtful (Camilleri, 2015).

In 2010, the development of ISO 26000 had represented a significant milestone in integrating socially and environmentally responsible behaviors into management processes. ISO 26000 was developed through a participatory multi-stakeholder process as the International Labor Organization (ILO) had established a Memorandum of Understanding (MoU) to ensure that ISO’s social responsibility standard is consistent with its own labor standards. In fact, ISO 26000’s core subject on ‘Labor Practices’ is based on ILOs’ conventions on labor practices, including; Human Resources Development Convention, Occupational Health and Safety Guidelines, Forced Labor Convention, Freedom of Association, Minimum Wage Fixing Recommendation and the Worst Forms of Child Labor Recommendation, among others. Moreover, ISO’s core subject on ‘human rights’ is based on the Universal Declaration of Human Rights (that was adopted by the UN General Assembly in 1948). On the other hand, many academic commentators argue that ISO 26000 has never been considered as a management standard (Camilleri, 2017). The certification requirements have not been incorporated into ISO 26000’s development and reinforcement process, unlike other standards, including ISO 9000 and ISO 14001. Notwithstanding, ISO 14001 belongs to a larger set of ISO 14000 certifications that conform with the European Union’s Eco-Management and Audit Scheme (EMAS).

The European Union (EU) has developed its non-binding guidelines for the non-financial disclosures of large, public-interest entities that engage more than 500 employees (Stubbs and Higgins, 2015; EU, 2014). The European Parliament mandated Directive 2014/95/EU on non-financial reporting; that was subsequently ratified by the European member states. Therefore, large undertakings are expected to disclose material information on their ESG behaviors. These entities are required to explain any deviations from their directive’s recommendations in their annual declaration of conformity, as per the EU’s “Comply or Explain” principle (Camilleri, 2015; EU, 2014). Their non-financial disclosures include topics, such as; social dialogue with stakeholders, information and consultation rights, trade union rights, health and safety and gender equality, among other issues. Moreover, the organizations’ environmental reporting could cover; material disclosures on energy efficiencies, the monitoring of efficiency levels their energy generation capacities, assessments on the co-generation of heating facilities, the use of renewable energy, greenhouse gas emissions, water and air pollution prevention and control from the production and processing of metals, mineral industry, chemical industry, waste management, livestock farming, etc. (Camilleri, 2015). Therefore, large undertakings are expected to bear responsibility for the prevention and reduction of pollution. The EU recommends that the large organizations implement ILO’s Tri-partite Declaration of Principles on Multinational Enterprises and Social Policy, as well as other conventions that promote the fair working conditions of employees. It also makes reference to the OECD Guidelines for Multinational Enterprises, the 10 principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and mentions ISO 26000 Guidance Standard on Social Responsibility (EU, 2014). Following, the EU’s mandate for non-financial reporting, it is expected that 6,000 European public interest entities will be publishing their sustainability reports in 2018, covering financial year 2017-2018 (GRI, 2017).

 

Additional Reading:

Camilleri, M.A (2015). Environmental, Social and Governance Disclosures in Europe. Sustainability Accounting, Management and Policy Journal. 6 (2), 224 – 242. Emerald.  http://www.emeraldinsight.com/doi/abs/10.1108/SAMPJ-10-2014-0065 Download this paper

Camilleri, M.A. (2015). Valuing Stakeholder Engagement and Sustainability Reporting. Corporate Reputation Review, 18 (3), 210-222. Palgrave Macmillan DOI:10.1057/crr.2015.9 http://www.palgrave-journals.com/crr/journal/v18/n3/full/crr20159a.html Download this paper

Camilleri, M.A. (2017). Measuring the corporate managers’ attitudes toward ISO’s social responsibility standard. Total Quality Management & Business Excellence. (forthcoming). http://dx.doi.org/10.1080/14783363.2017.1413344 http://www.tandfonline.com/doi/full/10.1080/14783363.2017.1413344 Download this paper

Camilleri, M.A. (2017). Corporate Sustainability, Social Responsibility and Environmental Management: An Introduction to Theory and Practice with Case Studies. Springer, Heidelberg, Germany. ISBN 978-3-319-46849-5 http://www.springer.com/us/book/9783319468488

CSRWire (2015). Environmental, Social and Governance Reporting in Europe. http://www.csrwire.com/blog/posts/1574-environmental-social-and-governance-disclosures-in-europe

 

 

Leave a comment

Filed under Corporate Governance, Corporate Social Responsibility, CSR, ESG Reporting, Integrated Reporting, Marketing, Socially Responsible Investment, SRI, Stakeholder Engagement, Sustainability, sustainable development

Tagged as , , , , , , , , , , , , , , , , , , ,

January 12, 2018 · 7:10 pm

The Integrated Reporting of Financial, Social and Sustainability Capitals

An excerpt from my latest paper, entitled, “The Integrated Reporting of Financial, Social and Sustainability Capitals: A Critical Review and Appraisal” that will be published by the International Journal of Sustainable Society (this journal is indexed in Scopus).

 

A thorough literature review suggests that the integrated report is more than just a summary of financial, social, sustainability and governance information in corporate disclosures (Adams, 2015). The integrated disclosures constitute a full picture of a company’s overall business performance. Organisations are looking at all aspects of their value-creating capitals, including; financial; manufactured; intellectual; human; social (and relationship); as well as natural capitals (IR, 2013). These capitals complement and compete against each other. Therefore, the practitioners who would like to comply with IIRC’s <IR> framework will probably experience a dynamic process of adaptation, learning and action to redesign their disclosures. They may have to change their internal management systems, processes and strategies to incorporate ESG issues into their core business model (Camilleri, 2015b, Adams, 2015, Churet & Eccles, 2014; Eccles & Krzus, 2010).

Relevant academic literature has yielded many recommendations, ideas and concepts that have surely improved corporate reporting (Crowther, 2016). This contribution also reported how “integrated thinking” in corporate reporting involves the inclusion of material information on financial and non-financial matters (Adams & Simnett, 2011). Moreover, it linked the organisations’ integrated reporting with the conceptual developments that were conspicuous in the stewardship, institutional and legitimacy theories, among others. This paper has indicated that these theoretical insights have focused on the rationale for the inclusion of non-financial information in corporate disclosures (Adams et al., 2016; Eccles & Krzus, 2010). Although, there are reasonable arguments in favour and against integrated reporting; in sum, the researcher believes that the IIRC’s framework has proved to be a useful instrument for those responsible organisations who are communicating about their financial and non-financial capitals (IIRC, 2017). The framework contains guiding principles and content elements that will enable organisations to disclose a true and fair view of their holistic activities. Conversely, the avoidance of ESG disclosures from their corporate reports can result in a highly-distorted picture of current and future business activities (Camilleri, 2017).

This research has evidenced how the theoretical insights from academic literature have led to the development of integrated reporting. It explained that the organisations’ stewardship behaviours, including their ‘integrated thinking’ can help them improve their legitimacy among stakeholders and institutions. The researcher contended that IIRC’s <IR> framework supports organisations in their holistic reporting approaches as it takes into account material information on financial, manufactured, intellectual, human, social and natural capitals.

Indeed, the IIRC’s <IR> framework was a recent development in corporate reporting. This framework has its inherent limitations that were duly pointed out in this paper. However, this contribution maintains that integrated reporting provides a road map for those organisations who would like to pursue the sustainability path (Dacin et al., 2007). The framework is based on the general notion that integrated accounting considers both financial and non-financial information to give a true and fair view of the company’s overall business performance. When practitioners embed ESG disclosures and “integrated thinking” they help to catalyse positive behavioural change within their respective organisation (Adams & Simnett, 2011). This integrated thinking influences the practitioners’ ethical behaviours and their stance on financial and non-financial performance (Camilleri, 2015b). The researcher believes that the framework’s strategic focus calls for both internalisation and externalisation processes. Internalisation is a process through which the organisation’s human resources adopt the framework’s external ideas, opinions, views or concepts, as their own. This process starts with learning about the reporting framework, and why its development makes sense to the organisation, as a whole. The internal stakeholders will probably experience a process of adaptation until they finally accept that their organisation’s integrated reporting of financial and non-financial capitals creates value over time. Thus, the internalisation process can be understood as a process of acceptance of a new set of norms and working practices that will improve the organisation’s performance, in the long term.

The organisations’ internal transformation may lead to significant changes in terms of the embeddedness of ESG performance in their operational processes. The non-financial disclosures will shed light on the externalities that affect stakeholders and other unrelated parties. In other words, through integrated reporting; the internal effects of integrated reporting are finally externalised outside the organisations’ boundaries. At times, organisations may intentionally or unintentionally conceal ESG information from stakeholders. Certain unethical practices may result from conscious or unconscious organisational behaviours or simply from misconduct when dealing with extensive information outputs.

In conclusion, this contribution suggests that the <IR> framework is a step in the right direction as integrated reporting leads to the re-evaluation of the organisations’ legitimacy (Beck et al., 2015; Dacin et al., 2007; Brown & Deegan, 1998). Hence, IIRC’s framework encourages organisations to report both positive and negative behaviours that substantively affect their ability to create value over the short, medium and long term. Practitioners are also expected to provide an adequate and sufficient context about their strategy, governance and prospects in a balanced way (Camilleri, 2017).

 

References

Adams, C. A. & Larrinaga-González, C. (2007). Engaging with organisations in pursuit of improved sustainability accounting and performance. Accounting, Auditing & Accountability Journal, 20(3), 333-355.

Adams, C. A. & Frost, G. R. (2008). Integrating sustainability reporting into management practices. Accounting Forum. 32, (4), 288-302.

Adams, S., & Simnett, R. (2011). Integrated Reporting: An opportunity for Australia’s not‐for‐profit sector. Australian Accounting Review, 21(3), 292-301.

Adams, C. A. (2015). The international integrated reporting council: a call to action. Critical Perspectives on Accounting, 27, 23-28.

Adams CA, Potter B, Singh PJ and York J (2016). Exploring the implications of integrated reporting for social investment (disclosures) British Accounting Review, 48(3), 283-296.

Beck, C., Dumay, J., & Frost, G. (2015). In pursuit of a ‘single source of truth’: from threatened legitimacy to integrated reporting. Journal of Business Ethics, 1-15.

Bhimani, A., & Langfield-Smith, K. (2007). Structure, formality and the importance of financial and non-financial information in strategy development and implementation. Management Accounting Research, 18(1), 3-31.

Brammer, S., Jackson, G., & Matten, D. (2012). Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-economic review, 10(1), 3-28.

Brown, N., & Deegan, C. (1998). The public disclosure of environmental performance information—a dual test of media agenda setting theory and legitimacy theory. Accounting and business research, 29(1), 21-41.

Brown, J., & Dillard, J. (2014). Integrated reporting: On the need for broadening out and opening up. Accounting, Auditing & Accountability Journal, 27(7), 1120-1156.

Burritt, R. L., & Schaltegger, S. (2010). Sustainability accounting and reporting: fad or trend?. Accounting, Auditing & Accountability Journal, 23(7), 829-846.

Camilleri, M. A. (2015a). Valuing stakeholder engagement and sustainability reporting. Corporate Reputation Review, 18(3), 210-222.

Camilleri, M. A. (2015b). Environmental, social and governance disclosures in Europe. Sustainability Accounting, Management and Policy Journal, 6(2), 224-242.

Camilleri, M. A. (2017). Corporate sustainability, social responsibility and environmental management: an introduction to theory and practice with case studies. Springer, Heidelberg, Germany.

Camodeca, R., & Almici, A. (2017). Implementing Integrated Reporting: Case Studies from the Italian Listed Companies. Accounting and Finance Research, 6(2), 121-135.

Campbell, D., & Cornelia Beck, A. (2004). Answering allegations: The use of the corporate website for restorative ethical and social disclosure. Business Ethics: A European Review, 13(2‐3), 100-116.

Cheng, M., Green, W., Conradie, P., Konishi, N., & Romi, A. (2014). The international integrated reporting framework: key issues and future research opportunities. Journal of International Financial Management & Accounting, 25(1), 90-119.

Churet, C., & Eccles, R. G. (2014). Integrated reporting, quality of management, and financial performance. Journal of Applied Corporate Finance, 26(1), 56-64.

Crowther, D. (2016). A social critique of corporate reporting: Semiotics and web-based integrated reporting. Routledge. Abington, Oxford, UK.

Dacin, M. T. (1997). Isomorphism in context: The power and prescription of institutional norms. Academy of management journal, 40(1), 46-81.

Dacin, M. T., Oliver, C., & Roy, J. P. (2007). The legitimacy of strategic alliances: An institutional perspective. Strategic Management Journal, 28(2), 169-187.

Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management review, 22(1), 20-47.

Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures–a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282-311.

Deegan, C 2007, ‘Organisational legitimacy as a motive for sustainability reporting’ in J. Unerman, J. Bebbington, B. O’Dwyer (ed.) Sustainability accounting and accountability, Routledge, London, United Kingdom, pp. 127-149.

Deephouse, D. L. (1996). Does isomorphism legitimate?. Academy of management journal, 39(4), 1024-1039.

de Villiers, C., Rinaldi, L., & Unerman, J. (2014). Integrated Reporting: Insights, gaps and an agenda for future research. Accounting, Auditing & Accountability Journal, 27(7), 1042-1067.

DiMaggio, P. J., & Powell, W. W. (Eds.). (1991). The new institutionalism in organizational analysis (Vol. 17). Chicago, IL: University of Chicago Press.

Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of management, 16(1), 49-64.

Dumay, J., Bernardi, C., Guthrie, J., & Demartini, P. (2016). Integrated reporting: a structured literature review. In Accounting Forum. 40(3), 166-185.

Eccles, R. G., & Krzus, M. P. (2010). One report: Integrated reporting for a sustainable strategy. John Wiley & Sons, Hoboken, New Jersey, USA.

Eccles, R. G., Serafeim, G. & Krzus, M. P. (2011). Market interest in nonfinancial information. Journal of Applied Corporate Finance, 23(4), 113-127.

Eisenhardt, K. M. (1988). Agency-and institutional-theory explanations: The case of retail sales compensation. Academy of Management journal, 31(3), 488-511.

Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of management review, 14(1), 57-74.

Erlingsdóttir, G. & Lindberg, K. (2005). Isomorphism, Isopraxism and Isonymism-Complementary or Competing Processes? (No. 2005/4). http://www.lri.lu.se/pdf/wp/2005-4.pdf (accessed 19 April, 2017).

EU (2014). Non-financial reporting. http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm (accessed 15 November 2015).

EU (2015). Implementing the UN Guiding Principles on Business and Human Rights – State of Play. Commission Staff Working Document SWD(2015)144 final.. European Commission, Brussels, Belgium. http://ec.europa.eu/DocsRoom/documents/11621/attachments/1/translations/ (accessed 15 November 2015).

EU (2017) Corporate Social Responsibility. European Commission, Internal Market, Industry, Entrepreneurship and SMEs. Brussels, Belgium.

http://ec.europa.eu/growth/industry/corporate-social-responsibility_en (accessed 15 November 2015).

Fernandez-Feijoo, B., Romero, S., & Ruiz, S. (2014). Effect of stakeholders’ pressure on transparency of sustainability reports within the GRI framework. Journal of Business Ethics, 122(1), 53-63.

Flower, J. (2015). The international integrated reporting council: a story of failure. Critical Perspectives on Accounting, 27, 1-17.

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.

Harding, T. (2012). How to establish a study association: Isomorphic pressures on new CSOs entering a neo-corporative adult education field in Sweden. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 23(1), 182-203.

Hedberg, C. J. & Von Malmborg, F. (2003). The global reporting initiative and corporate sustainability reporting in Swedish companies. Corporate social responsibility and environmental management, 10(3), 153-164.

Higgins, C., Stubbs, W., & Love, T. (2014). Walking the talk (s): Organisational narratives of integrated reporting. Accounting, Auditing & Accountability Journal, 27(7), 1090-1119.

Hopwood, A. G. (2009). Accounting and the environment. Accounting, Organizations and Society, 34(3), 433-439.

Idowu, S. O., Capaldi, N. & Zu, L. (2013). Encyclopedia of corporate social responsibility. Springer, Heidelberg, Germany.

Ioannou, I. & Serafeim, G. (2012). What drives corporate social performance? The role of nation-level institutions. Journal of International Business Studies, 43(9), 834-864.

Ioannou, I. & Serafeim, G. (2016). The consequences of mandatory corporate sustainability reporting: evidence from four countries. Harvard Business School Research Working Paper No. 11-100 https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1799589 (accessed 14 April, 2017

IR (2013). International IR Framework, International Integrated Reporting Council. available at: http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf (accessed 16 May, 2017).

IR (2017). Integrated Reporting. International Integrated Reporting Council https://integratedreporting.org/the-iirc-2/ (accessed 19 May, 2017).

Lozano, R. & Huisingh, D. (2011). Inter-linking issues and dimensions in sustainability reporting. Journal of Cleaner Production, 19(2), 99-107.

Maniora, J. (2015). Is integrated reporting really the superior mechanism for the integration of ethics into the core business model? An empirical analysis. Journal of Business Ethics, 140(4), 755-786.

Maniora, J. (2017). Is integrated reporting really the superior mechanism for the integration of ethics into the core business model? An empirical analysis. Journal of Business Ethics, 140(4), 755-786.

Meyer, J. W., Boli, J., Thomas, G. M. & Ramirez, F. O. (1997). World society and the nation-state. American Journal of sociology, 103(1), 144-181.

Muth, M. & Donaldson, L. (1998). Stewardship theory and board structure: A contingency approach. Corporate Governance: An International Review, 6(1), 5-28.

Ness, K. E. & Mirza, A. M. (1991). Corporate social disclosure: A note on a test of agency theory. The British Accounting Review, 23(3), 211-217.

Neu, D., Warsame, H. & Pedwell, K. (1998). Managing public impressions: environmental disclosures in annual reports. Account. Org. Soc., 23, 265–282

O’Dwyer, B. (2003). Conceptions of corporate social responsibility: the nature of managerial capture. Accounting, Auditing & Accountability Journal, 16(4), 523-557.

Parent, M. M. & Deephouse, D. L. (2007). A case study of stakeholder identification and prioritization by managers. Journal of Business Ethics, 75(1), 1-23.

Perego, P., Kennedy, S., & Whiteman, G. (2016). A lot of icing but little cake? Taking integrated reporting forward. Journal of Cleaner Production, 136, 53-64.

Rensburg, R. & Botha, E. (2014). Is integrated reporting the silver bullet of financial communication? A stakeholder perspective from South Africa. Public Relations Review, 40, 44-152. https://doi.org/10.1016/j.pubrev.2013.11.016

Scott, W. R. (1995). Institutions and organizations (Vol. 2). Thousand Oaks, CA: Sage.

Simnett, R., & Huggins, A. L. (2015). Integrated reporting and assurance: where can research add value?. Sustainability Accounting, Management and Policy Journal, 6(1), 29-53.

Stacchezzini, R., Melloni, G. & Lai, A. (2016). Sustainability management and reporting: the role of integrated reporting for communicating corporate sustainability management. Journal of Cleaner Production, 136, 102-110.

Stubbs, W. & Higgins, C. (2014). Integrated reporting and internal mechanisms of change. Accounting, Auditing & Accountability Journal, 27(7), 1068-1089.

Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of management review, 20(3), 571-610.

Thomson, I. (2015). But does sustainability need capitalism or an integrated report: S commentary on ‘The International Integrated Reporting Council: A story of failure’ by Flower. Critical Perspectives on Accounting, 27, 18-22. https://doi.org/10.1016/j.cpa.2014.07.003

Trevino, L. K. (1986). Ethical decision making in organizations: A person-situation interactionist model. Academy of management Review, 11(3), 601-617.

Leave a comment

Filed under Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Integrated Reporting

Tagged as , , , , , , ,

November 11, 2017 · 10:44 am

The conceptual developments that paved the way for Integrated Reporting

IR

The International Integrated Reporting Council’s <IR> Framework’s broader view of value creation and its multiple capital concept calls for an enhanced stewardship of the organisations’ capitals; whilst promoting a better understanding of the interdependencies between the capitals (IIRC, 2013, p.8). Relevant theoretical perspectives as well as sound empirical research suggest that the practicing organisations’ underlying motive behind their non-financial disclosures is to maximise their financial capital and profit. This argumentation is synonymous with many conceptual theories in academic literature that seek to justify the rationale for voluntary, integrated reporting (Adams et al., 2016; Idowu et al., 2013; Deegan, 2002, Suchman, 1995; Scott, 1995; Eisenhardt, 1989):

  • The Agency Theory

In the twentieth century, corporations were clearly distinguishing the difference between ownership and control of wealth. The business owners were considered as principals as they employed executives (agents) to manage their firms. The latter executives acted as agents for the principals, and they were morally responsible to maximise their shareholders’ wealth (i.e. the prinicipals’ wealth). The executives have accepted their agents’ status because they perceived the opportunity to maximise their own utility. The agency theory suggests that the company executives and their principals are motivated by opportunities for their own personal gain (Eisenhardt, 1989). Rightly so, the principals may invest their wealth in profitable companies and design governance systems in ways that maximise their investments. On the other hand, agents accept the responsibility of managing their principals’ undertakings to secure their employment prospects.

However, at times, there may be interest divergence between the managers and their principals. There may be situations where the agents may feel constrained by their principals’ imposed structures and controlling mechanisms (Davis et al., 1997). This matter could lead to unproductivity outcomes and will ultimately bring significant losses to the principals themselves. In the event where the agent would have no discretion at all, the firm would be owner-managed. In this case, having a situation where principals are autocratic towards their agents could result in serious repercussions for the businesses’ prospects. The crux of the agency theory is that principals are expected to delegate authority to agents to act on their behalf (Ness & Mirza, 1991). It is this delegation that at times allows agents to opportunistically build their own utility at the expense of the principals’ utility. This happens when there are unaligned objectives; where managers may be motivated by their individualistic, self-serving goals, rather than being stewards for their principals (Eisenhardt, 1989).

  • The Stewardship Theory

The stewardship theory is the collective-serving model of behaviour that is driven by the organisations’ intrinsic values and a genuine desire to do what is best for society and the planet (Donaldson & Davis, 1991). The stewardship behaviours benefit principals through the positive effects of profits on corporate dividends and share prices. Consequently, the stewards place higher value on cooperation than defection (these terms are also found in the game theory), because they perceive greater utility in cooperative behaviours. Stewardship theorists assume that there is a strong relationship between successful organisations and their principals’ satisfaction. The stewards protect and maximise their shareholders’ wealth because by so doing, they maximize their utility functions toward principals.

Stewards who successfully improve their organisational performance will also satisfy other stakeholder groups who have their own vested interests. Therefore, pro-organisational stewards are motivated to maximise organisational performance, whilst satisfying the competing interests of shareholders. The utility that they gain from pro-organisational behaviours is higher than the utility that could be gained through individualistic, self-serving behaviours. This theory suggests that stewards believe that their interests are aligned with those of the corporation that engaged them (Muth & Donaldson, 1998). Ideally, the stewards ought to be committed to improve their organisational performance rather than satisfying their personal motivations. This theory’s ideals are closely aligned with <IR>’s principles for value creation. IIRC’s <IR> Framework emphasises the stewardship of multiple capitals, including; financial, manufactured, intellectual, human, social and natural capital.  In the past, the accountability of social and environmental capitals has often been found to be completely lacking in financial reporting (Adams et al., 2016; Muth & Donaldson, 1998). In addition, some anecdotal evidence suggests that companies are not always presenting a true and fair view of their negative impacts. On the other hand, there are other organisations who may be reluctant to promote their responsible and sustainable behaviours. This may be due to a lack of awareness on the business case for such activities. The motivations for undertaking stewardship behaviours, including; material ESG initiatives (that may be reported within integrated reports) seem to fall into two increasingly converging camps: doing good practices (this is consistent with the predictions of the stewardship theory) or doing well (this is consistent with both institutional and legitimacy theories).

  • The Institutional Theory

Different components of the institutional theory explain how certain processes become established as authoritative guidelines for societal behaviours. Very often, structures and institutions are created, diffused, adopted, and adapted over space and time; and eventually they may also fall into decline and disuse. Unlike the efficiency-based theories which focus on profit maximisation or on the interactions between markets and governments, the institutional theory considers a wider range of variables that could influence the decision-making processes in organisations.

This theory clarifies how firms respond to their institutional environments in which they operate. Stakeholders, including; governments, regulatory authorities, non-governmental organisations (NGOs), and organisations within the supply chain can exert their influence on any business. Scott (1995) held that, in order to survive, organisations must conform to norms and rules that are prevailing in their operating environment. Their compliance with the institutions’ formal regulations and ethos will earn them legitimacy among stakeholders (Beck et al., 2015; Dacin, 1997; Deephouse, 1996; Suchman, 1995). The institutional theory’s applications have expanded even further; as more research is showing how the institutions effect organisational behaviours, particularly on CSR issues. Historically, the notion of CSR has emerged from the institutionalised forms of social solidarity from liberal market economies. The institutional theory offers promising ways of investigating what lies at the heart of the publics’ concern. Therefore, corporations may be influenced by the institutions’ voluntary principles, policies and programmes. Their responsible behaviours have often been triggered by socio-political forces and pressure groups. In this case, CSR practice rests on the dichotomy between the corporations’ voluntary engagement and their socially binding responsibilities (Brammer et al., 2012). The fact that CSR is ‘voluntary’ is a clear reflection of the practicing organisations’ institutional context. Alternatively, CSR may be driven by legal, customary, religious or other defined institutions.

Undoubtedly, numerous institutions have played a dynamic role, both individually and collectively in the development of integrated reporting. While governments have been the primary force for the promotion of financial reporting standards through security exchange commissions; other institutions like IIRC or GRI have facilitated the growth and diffusion of ESG reporting among practicing organisations. For the time being, it may appear that there is a demand for CSR reporting mechanisms by marketplace stakeholders. For this reason, corporations are communicating their ESG credentials (Camilleri, 2015a). This way, they are accountable and transparent about their modus operandi with regulators, industry, and stakeholder groups. Moreover, the corporations continuous engagement with external institutions, particularly multi-governmental organisations, social and environmental NGOs as well as the standard-setting organisations have brought valuable principles and guidelines in the realms of sustainability reporting (Camilleri, 2015a).

Isomorphism has been constructed in conjunction with the applications of the institutional theory (Erlingsdottir & Lindberg 2005; Dacin, 1997; DiMaggio & Powell, 1991). This concept has largely been propagated through global cultural and associational processes. Isomorphic developments arise when ideas or innovations travel and are adopted in different contexts (Harding, 2012; Dacin, 1997; Deephouse, 1996).. For instance, despite all possible configurations of local economic forces, power relationships, and forms of traditional culture it might consist of, a previously-isolated island society that has made contact with the rest of the globe would quickly take on standardised forms that are similar to a hundred other nation-states around the world (Meyer, Boli, Thomas & Ramirez, 1997). Similarly, the notion of isopraxism refers to ideas that are translated and modified by different actors to suit their own needs.

Isomorphism and its related notion, isopraxism are potentially helpful for framing our interpretation of why corporate reporting approaches may converge (or not) over time. For example, the principles-based and non-mandatory <IR> Framework could potentially create explicit and implicit reporting norms that shape the non-financial information of organisations that ought to be communicated through their integrated reporting. In this sense, isomorphism may be useful to understand how and why the disclosures of ESG content can become widely accepted across companies, over time (Adams et al., 2016; Deephouse, 1996). In a similar vein, isopraxism has been used to describe instances where identifiable institutional forces lead to new and different actions within specific organisational and social instances. Therefore, isopraxism suggests that organisations may be intrigued to move toward more integrated approaches to reporting. At times, legitimate organisations may be willing to voluntarily disclose their adapted ESG reports, out of their own volition. However, they may not necessarily label them ‘integrated’, or join the IIRC’s <IR> Framework (Erlingsdottir & Lindberg 2005; Harding 2012).

  • The Legitimacy Theory

Very often, the institutional environments provide regulatory frameworks and may be considered as a considerable breath of narratives pertaining to non-financial disclosures, in different jurisdictions. Hence, there is a possibility that responsible organisations will become legitimate if they comply with relevant societal rules that are found in the countries where they operate (Beck et al., 2015; Deegan, 2002). The stakeholders perceive that organisations are legitimate when “their actions are desirable, proper, or appropriate within some socially-constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574). This conception suggests that the role of the legitimacy theory is to justify the organisations’ behaviour, particularly when they implement and develop social and environmental initiatives. It goes without saying that the stakeholders will recognise those legitimate organisations that are upholding their social contract in accordance with the expectations of society. Therefore, the drivers of institutional legitimacy may be influenced by the organisations’ external environment; according to the culturally-defined values and beliefs. On the other hand, stakeholders will severely sanction irresponsible organisations when they do not respect social norms and ethical values.

Suchman (1995) described legitimacy as an operational resource assuming a “high level of managerial control over legitimating processes” (p. 576). Others suggested that legitimacy is strategic as it emanates from recurring conflicts between management and stakeholders (Dacin, Oliver & Roy, 2007; Suchman 1995). Organisational legitimacy could be achieved by forging strong relationships with external stakeholders (Camilleri, 2017). For this reason, organisations may decide to change and adapt their corporate disclosures according to their stakeholders’ expectations to achieve legitimacy. On the other hand, changes in disclosure patterns may be driven by internal decisions on materiality. Corporate reporting could be considered as a mitigating factor that is driven from inside the organisation (Campbell & Beck, 2004). Therefore, the managers’ agenda is to strategically enhance their legitimacy through stakeholder engagement. They may also make financial and ESG disclosures widely available to interested parties to achieve legitimation. This position is consistent with <IR>’s framework. Within this context, the <IR> framework provides significant support to organisations who are willing to disclose their non-financial reports. However, when organisations utilise IIRC’s framework for their very first time, they may inevitably have to adapt their financial and ESG reports as per <IR>’s recommended framework. Hence, <IR>’s reporting guidelines provide a passive avenue for institutional legitimsation. It is through the development of such guiding principles that society and external stakeholders are continuously influencing organisations to restore their ethical and social disclosures (Campbell & Beck, 2004).

The conditions for legitimacy are often constructed by responsible organisational behaviours. For example, relevant research on the legitimacy theory reported that there were organisations who were voluntarily disclosing their non-financial reports. Companies were seeking external legitimation by reporting their environmental performance (Brown & Deegan, 1998). Other corporations who decided to follow GRI’s reporting guidelines or resorted to the <IR>’s framework were increasingly aligning their internal reflections with external outputs (Beck et al., 2015). Initially, the rationale behind their integrated reporting was to improve their organisations’ external legitimation among stakeholders. However, at a later stage they realised that their external reports were informed by their organisation’s strategic positioning, and not constrained by the promulgation of the voluntary guidelines (Beck et al., 2015). Evidently, more organisations are conforming to the prevailing definitions of legitimacy through their disclosures of responsible and sustainable actions. Consequently, these responsible organisations’ leadership sets the agenda for stakeholder engagement and ESG reporting. The underlying objective is to build or enhance reputation (Aerts & Cormier, 2009) that will positively impact on the organisations’ capital flows.

 

This is an excerpt from my latest working paper, “Theoretical Insights on Integrated Reporting: Valuing the Financial, Social and Sustainability Disclosures”.

Leave a comment

Filed under Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, ESG Reporting, Stakeholder Engagement

Tagged as , , , , , , , , ,

May 24, 2017 · 6:44 pm

Integrated Reporting: Valuing the Financial, Social and Natural Capital

The end of year financial statements usually focus on financial capital, whereas organisational performance relies on resources – such as the expertise of people, intellectual property that was developed through research and development, and interactions with the environment and the societies in which they operate.  In this light, Integrated Reporting (<IR>) was developed to fill such reporting gaps. The IR Framework categorises different stocks of value, including; Financial Capital; Manufactured Capital; Intellectual Capital; Human Capital; Social (and Relationship) Capital; as well as Natural Capital.

 

 

The International Integrated Reporting Council (IIRC) has promoted the concept of integrated thinking and reporting. In 2013, the International Integrated Reporting Council (IIRC) released a framework for integrated reporting. By doing so, IIRC has paved the way for the next generation of annual reports that enable stakeholders to make a more informed assessment of the organisation’s strategy, governance, performance and prospects. IIRC has aligned capital allocations and corporate behaviours with the wider goals of financial stability and  sustainable development. Its framework established the following ‘Guiding Principles’ and ‘Content Elements’:

Guiding Principles

  1. Strategic focus and future orientation –gives an insight of the organisation’s strategy;
  2. Connectivity of information – provides a holistic picture of the combination, inter relatedness and dependencies between the factors that affect the organisation’s ability to create value over time;
  3. Stakeholder relationships – describes the nature and quality of the organisation’s relationships with its key stakeholders;
  4. Materiality – discloses relevant information about matters that substantively affect the organisation’s ability to create value over the short, medium and long term;
  5. Conciseness – provides sufficient context to understand the organisation’s strategy, governance and prospects without being burdened by less relevant information;
  6. Reliability and completeness – includes all material matters, both positive and negative, in a balanced way and without material error;
  7. Consistency and comparability – ensures consistency over time and enabling comparisons with other organisations to the extent material to the organisation’s own ability to create value.

Content Elements

  1. Organisational overview and external environment – What does the organisation do and what are the circumstances under which it operates?
  2. Governance – How does an organisation’s governance structure support its ability to create value in the short, medium and long term?
  3. Business model – What is the organisation’s business model?
  4. Risks and opportunities – What are the specific risk and opportunities that affect the organisation’s ability to create value over the short, medium and long term, and how is the organisation dealing with them?
  5. Strategy and resource allocation – Where does the organisation want to go and how does it intend to get there?
  6. Performance – To what extent has the organisation achieved its strategic objectives for the period and what are its outcomes in terms of effects on the capitals?
  7. Outlook – What challenges and uncertainties is the organisation likely to encounter in pursuing its strategy, and what are the potential implications for its business model and future performance?
  8. Basis of preparation and presentation – How does the organization determine what matters to include in the integrated report and how are such matters quantified or evaluated?

The ‘Guiding Principles’ underpin the preparation of an integrated report, whilst, the ‘Content Elements’ are the key categories of information that should be included in an integrated report according to the IR Framework. There are no bench marking for the above matters and the report is primarily aimed at the private sector; but IR could be adapted to the public sector and to not-for-profit organisations. The IIRC has set out a principle-based framework rather than specifying a detailed disclosure and measurement standard. This way each company sets out its own report rather than adopting a checklist approach. Hence, the report acts as a platform which explains what creates value to the business and how management protects this value. This gives the report more business impetus rather than mandating compliance-led approaches.

For the time being, the integrated reporting is not going to replace other forms of reporting but the vision is that large undertakings, including corporations, state-owned entities and government agencies, among others, may be expected to pull together relevant information already produced to explain the key drivers of their non-financial performance. Relevant information will only be included in the report where it is material to the stakeholder’s assessment of the business. The term ‘materiality’ suggests that there are legal connotations that may be related to environmental, social and governance (ESG) reporting, Yet, some entities out of their own volition are already including ESG information in their integrated report.

In sum, the integrated reports aim to provide an insight into the company’s resources, relationships (that are also known as the capitals) and on how the company interacts with its external environment to create value.

1 Comment

Filed under Business, Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Integrated Reporting, Stakeholder Engagement, sustainable development

Tagged as , , , , , , , , ,