Tag Archives: ESG Reporting

The Corporations’ Non-Financial Disclosures


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




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

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).



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The conceptual developments that paved the way for Integrated Reporting


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”.

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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.

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An Introduction to Socially Responsible Investment

Socially responsible investment (SRI) is the practice of incorporating social and environmental goals into investment decisions. Therefore, SRI is a strategy that encourages corporate practices that promote social responsibility and laudable initiatives such as impact investing, shareholder advocacy and community investing (Sparkes & Cowton, 2004; Guay, Doh & Sinclair, 2004; Schueth, 2003). At the same time, the rationale behind SRI is to consider both financial return as well as responsible investments for societal development. Its goals are based upon environmental issues, human rights, community involvement and labour relations (Ooi & Lajbcygier 2013; Sparkes, 2003; Friedman & Miles, 2001).

SRI’s professionally managed assets have emerged as a dynamic and quickly growing segment of the U.S. financial services industry (Schueth, 2003). In many cases, responsible and sustainable investments are influencing how asset managers invest in diversified portfolios (Lemke & Lins, 2014). This term refers to responsible investments that seek to avoid negative externalities. In fact, the investment portfolios of listed companies are often screened by SRI contractors (Renneboog, Ter Horst & Zhang, 2008). In fact, in recent years, SRI funds have become a popular investment opportunity. Many investors are attracted to businesses that will yield return on investment. Yet, it may appear that a large and growing segment of the population possess a spiritual yearning to integrate personal values into all aspects of life, including finance and investing (Schueth, 2003). As a result, many conscientious investors were avoiding businesses that are involved in alcohol, tobacco, fast food, gambling, pornography, weapons, contraception and abortion, fossil fuel production, and / or the military industries, among others (Logue, 2009; Ronneborg et al., 2008; Ghoul & Karam, 2007; Statman, 2000). In addition, responsible investors have become increasingly aware about the numerous instances of accounting fraud and other scandals that may have eroded their trust in corporate leadership. The areas of concern recognised by the SRI practitioners are often denoted under the heading of environmental, social and governance (ESG) issues, including social justice, human rights, anti-corruption and bribery issues and diversity on the boards (Camilleri, 2015).

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Corporate Governance Regulatory Principles and Codes

The corporate governance principles have initially been articulated in the “Cadbury Report” (Jones and Pollitt, 2004) and have also been formalised in the “Principles of Corporate Governance” by the Organisation for Economic Cooperation and Development (Camilleri, 2015a; Lazonick and O’Sullivan, 2000). Both reports have presented general principles that help large organisations in corporate governance decisions. Subsequently, the federal government in the United States enacted most of these principles that were reported in the Sarbanes-Oxley Act in 2002 (Abbott, Parker, Peters and Rama, 2007). Different governments and jurisdictions have put forward their very own governance recommendations to stock exchanges, corporations, institutional investors, or associations (institutes) of directors and managers, sometimes with the support of intergovernmental organisations. With regards to social and employee related matters, large organisations could implement ILO conventions that promote fair working conditions for employees (Fuentes-García, Núñez-Tabales and Veroz-Herradón, 2008). The corporate disclosure of non-financial information can include topics such as; social dialogue with stakeholders, information and consultation rights, trade union rights, health and safety and gender equality among other issues (EU, 2014). The compliance with such governance recommendations is usually not mandated by law. Table 1 presents a selection of corporate governance principles:



Most of these principles have provided reasonable recommendations on sound governance structures and processes. In the main, these guidelines outlined the duties, responsibilities and rights of different stakeholders. In the pre-globalisation era, non-shareholding stakeholders of business firms were in many cases sufficiently protected by law and regulation (Schneider and Scherer, 2015). In the past, the corporate decisions were normally taken in the highest echelons of the organisation. The board of directors had the authority and power to influence shareholders, employees and customers, among others. Sharif and Rashid (2014) suggested that non-executive directors had a positive impact on the CSR reporting. Moreover, Lau, Liu and Liang (2014) examined how board composition, ownership, and the composition of the top management team could influence corporate social performance. However, with the diminution of public steering power and the widening of regulation gaps, these assumptions have become partly untenable (Lau et al., 2014). In many cases, stakeholders of business firms lack protection by nation state legislation. Notwithstanding, with the inclusion of stakeholders, corporate governance may compensate for lacking governmental and regulatory protection and could contribute to the legitimacy of business firms (Miller and del Carmen Triana, 2009). Schneider and Scherer (2015) argued that the inclusion of stakeholders in organisational decision processes on a regular basis can be regarded as the attempt of business firms to address the shortcomings of a shareholder-centred approach to corporate governance. The casual consultation with stakeholders is often characterised by unequal power relations (Banerjee, 2008).

Previous research may have often treated the board as a homogeneous unit. However, at times there could be power differentials within boards (Hambrick, Werder and Zajac, 2008). Boards are often compared to other social entities, in that they possess status and power gradations. Obviously, the chief executive will have a great deal of power within any organisation. In addition, the directors may include current executives of other firms, retired executives, representatives of major shareholders, representatives of employees and academics. Who has the most say? Is it the directors who hold (or represent) the most shares or does it reflect the directors’ tenures? Alternatively, it could be those who hold the most prestigious jobs elsewhere, or the ones who have the closest social ties with the chairman. These power differentials within top management teams could help to explain the firms’ outcomes. Ultimately, the board of directors will affect processes and outcomes.

A more macro perspective on informal structures opens up new questions regarding the roles of key institutional actors in influencing the public corporation (Hambrick, Werder and Zajac, 2008). Although researchers have long been aware of different shareholder types, there has been little consideration of the implications of shareholder heterogeneity for the design and implementation of governance practices. Managers and shareholders, as well as other stakeholders, have wide variations of preferences within their presumed categories. For instance, there are long-term- and short-term-oriented shareholders, majority and minority shareholders, and active and passive shareholders. In addition, the rise of private equity funds have created a whole new shareholder category, which is becoming more and more influential. The idea of heterogeneity within stakeholder categories, including diversity among equity shareholders, will become a popular topic in future governance research (Miller and del Carmen Triana, 2009). Growing shareholder activism raises questions that could have been overlooked in the past. Who runs, and who should run the company? Corporate governance does not begin and end with principals, agents, and contracts. Beyond the obvious roles of regulatory authorities and stock exchanges, we are witnessing an increasing influence from the media, regulatory authorities, creditors and institutional investors, among others. These various entities may have a substantial effect on the behaviours of executives and boards of public companies. Arora and Dharwadkar (2011) had suggested that effective corporate governance could discourage violation of regulations and standards. Jizi, Salama, Dixon, Stratling (2014) examined the impact of corporate governance, with particular reference to the role of board of directors, on the quality of CSR disclosure in US listed banks’ annual reports after the US sub-prime mortgage crisis. Jizi et al. (2014) implied that the larger boards of directors and the more independent ones are in a position to help to promote both shareholders’ and other stakeholders’ interests. They found that powerful CEOs may promote transparency about banks’ CSR activities for reputational concerns. Alternatively, the authors also pointed out that this could be a sign of managerial risk aversion.

Recently, many businesses have linked executive pay to non-financial performance. They tied executive compensation to sustainability metrics such as greenhouse gas (GHG) reduction targets, energy efficiency goals and water stewardship, in order to improve their financial and non-financial performance (CERES, 2012). Interestingly, the latest European Union (EU) Directive 2014/95/EU on non-financial disclosures EU directive has encouraged corporations and large undertakings to use relevant non-financial key performance indicators on environmental matters including; greenhouse gas emissions, water and air pollution, the use of (non) renewable energy and on health and safety (Camilleri, 2015b).


Abbott, L. J., Parker, S., Peters, G. F., and Rama, D. V. (2007). Corporate governance, audit quality, and the Sarbanes-Oxley Act: Evidence from internal audit outsourcing. The Accounting Review, 82(4), 803-835.

Arora, P., and Dharwadkar, R. (2011). Corporate governance and corporate social responsibility (CSR): The moderating roles of attainment discrepancy and organization slack. Corporate governance: an international review, 19(2), 136-152.

Banerjee, S.B. (2008). Corporate social responsibility: The good, the bad and the ugly. Critical sociology, 34(1), 51-79.

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.

CERES (2012). Executive compensation tied to ESG performance. The CERES roadmap for sustainability. http://www.ceres.org/roadmap-assessment/progress-report/performance-by-expectation/governance-for-sustainability/executive-compensation-tied-to-esg-performance-1 accessed on the 2nd February 2016.

EU (2014). EU adopts reporting obligations for human rights and other “non-financial” information. Lexology http://www.lexology.com/library/detail.aspx?g=41edd30b-e08c-4d26-ba6f-b87158b5ee85 accessed on the 10th February 2016.

Fuentes-García, F. J., Núñez-Tabales, J. M. and Veroz-Herradón, R. (2008). Applicability of corporate social responsibility to human resources management: Perspective from Spain. Journal of Business Ethics, 82(1), 27-44.

Hambrick, D. C., Werder, A. V. and Zajac, E. J. (2008). New directions in corporate governance research. Organization Science, 19(3), 381-385.

Jizi, M. I., Salama, A., Dixon, R. and Stratling, R. (2014). Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. Journal of Business Ethics, 125(4), 601-615.

Jones, I., and Pollitt, M. (2004). Understanding how issues in corporate governance develop: Cadbury Report to Higgs Review. Corporate Governance: An International Review, 12(2), 162-171.

Lau, K. L. A. and Young, A. (2013). Why China shall not completely transit from a relation based to a rule based governance regime: a Chinese perspective. Corporate Governance: An International Review, 21(6), 577-585.

Lazonick, W., and O’sullivan, M. (2000). Maximizing shareholder value: a new ideology for corporate governance. Economy and society, 29(1), 13-35.

Miller, T. and del Carmen Triana, M. (2009). Demographic diversity in the boardroom: Mediators of the board diversity–firm performance relationship. Journal of Management studies, 46(5), 755-786.

Schneider, A. and Scherer, A. G. (2015). Corporate governance in a risk society. Journal of Business Ethics, 126(2), 309-323.

Sharif, M. and Rashid, K. (2014). Corporate governance and corporate social responsibility (CSR) reporting: an empirical evidence from commercial banks (CB) of Pakistan. Quality & Quantity, 48(5), 2501-2521.

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Call for Chapters on CSR

Corporate  Sustainability and Responsibility: The New Era of Corporate Citizenship
CSR Chapter
 This edited book will be published by IGI Global (USA)
Proposals Submission Deadline: January 31, 2016
Full Chapters Due: April 30, 2016
Submit your Chapter here.




The contemporary subject of Corporate Social Responsibility (CSR) has continuously been challenged by those who want corporations to move beyond transparency, ethical behavior and stakeholder engagement. Today, responsible behaviors are increasingly being embedded into new business models and strategies that are designed to meet environmental, societal and governance deficits.

This book builds on the previous theoretical underpinnings of the corporate social responsibility agenda, including Corporate Citizenship (Carroll, 1998; Waddock, 2004; Matten and Crane, 2004), Creating Shared Value (Porter and Kramer, 2011; 2006), Stakeholder Engagement (Freeman, 1984) and Business Ethics (Crane and Matten, 2004) as it presents the latest Corporate Sustainability and Responsibility (CSR2.0) perspective. The CSR2.0 notion is increasingly being recognized as a concept that offers ways of thinking and behaving that has potential to deliver significant benefits to both business and society (The International Conference(s) on Corporate Sustainability and Responsibility, organized by the Humboldt University Berlin in 2014, 2016).

This ‘new’ proposition is an easy term that may appeal to the business practitioners as it is linked to improvements in economic performance, operational efficiency, higher quality, innovation and competitiveness. At the same time it raises awareness on responsible behaviors. Therefore, CSR2.0 can be considered as strategic in its intent and purposes, as businesses are capable of being socially and environmentally responsible ‘citizens’ as they pursue their profit-making activities.



 This book is a concise and authoritative guide to students and well-intended professionals. CSR is moving away from ‘nice-to-do’ to ‘doing-well-by-doing-good’ mantra. This contribution covers many aspects of Corporate Sustainability and Responsibility (CSR2.0).

It will include relevant theoretical frameworks and the latest empirical research findings in the area. It shall provide thorough understanding on corporate social responsibility, sustainability, stakeholder engagement, business ethics and corporate governance. It also sheds light on environmental, social and governance (ESG) disclosures and sustainability reporting; CSR and digital media, socially responsible investing (SRI); responsible supply chain management; the circular economy, responsible procurement of sustainable products; consumer awareness of sustainability / eco labels; climate change and the environmental awareness; CSR in education and training; and responsible behaviors of small enterprises among other topics.This publication will explain the rationale for CSR2.0 as a guiding principle for business success. It shall report on the core aspects of contemporary strategies, public policies and practices that create shared value for business and society.


Carroll, A. B. (1998). The four faces of corporate citizenship. Business and society review, 100(1), 1-7.

Crane, A., & Matten, D. (2004). Business ethics: A European perspective: managing corporate citizenship and sustainability in the age of globalization. Oxford: Oxford University Press.

Freeman, R. Edward (1984). Strategic Management: A stakeholder approach. Boston: Pitman. ISBN 0-273-01913-9.

Matten, D., & Crane, A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management review, 30(1), 166-179.

Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard business review, 84(12), 78-92.

Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard business review, 89(1/2), 62-77.

Waddock, S. (2004). Parallel universes: Companies, academics, and the progress of corporate citizenship. Business and society Review, 109(1), 5-42


Target Audience

This book introduces the concept of corporate sustainability and responsibility (CSR2.0) to advanced undergraduate and / or post graduate students in a structured manner. It is also relevant to policy makers, business professionals, small business owners, non-profit organizations and charitable foundations.


Recommended Topics

• Theoretical Underpinnings on Corporate Sustainability and Responsibility;
• The Evolution of Corporate Sustainability and Responsibility;
• International Policies and Regulatory Instruments for Engagement in Corporate Sustainability and Responsibility;
• Responsible Corporate Governance and Sustainable Business;
• Environmental, Social and Governance (ESG) Disclosures of Sustainable and Responsible Businesses;
• Corporate Citizenship and Sustainable Business;
• Socially Responsible Investing (SRI) for Sustainable Business;
• Responsible Supply Chain Management for Sustainable Business;
• Responsible Procurement of Sustainable Products;
• Corporate Sustainability and Responsibility Communications;
• Corporate Sustainability and Responsibility Reporting and Digital Media;
• Consumer Awareness of Sustainable Products and Responsible Businesses;
• The Use of Eco labels by Responsible Businesses;
• Global Issues, Climate Change and the Environmental Awareness of Sustainable and Responsible Businesses;
• Corporate Sustainability and Responsibility Initiatives in Education and Training;
• Corporate Sustainable and Responsible Behaviors;
• The Business Case for Responsible Behaviors among Small and Medium-Sized Enterprises.


Submission Procedure

Researchers and practitioners are invited to submit on or before January 31, 2016, a chapter proposal of 1,000 to 2,000 words clearly explaining the mission and concerns of his or her proposed chapter. Authors will be notified by February 15, 2016 about the status of their proposals and sent chapter guidelines. Full chapters are expected to be submitted by April 30, 2016, and all interested authors must consult the guidelines for manuscript submissions at http://www.igi-global.com/publish/contributor-resources/before-you-write/ prior to submission. All submitted chapters will be reviewed on a double-blind review basis. Contributors may also be requested to serve as reviewers for this project.

Note: There are no submission or acceptance fees for manuscripts submitted to this book publication, CSR 2.0 and the New Era of Corporate Citizenship. All manuscripts are accepted based on a double-blind peer review editorial process.
All proposals should be submitted through the E-Editorial DiscoveryTM online submission manager.



This book is scheduled to be published by IGI Global (formerly Idea Group Inc.), publisher of the “Information Science Reference” (formerly Idea Group Reference), “Medical Information Science Reference,” “Business Science Reference,” and “Engineering Science Reference” imprints. For additional information regarding the publisher, please visit http://www.igi-global.com. This publication is anticipated to be released in 2016.

Important Dates

January 31, 2016: Proposal Submission Deadline

February 15, 2016: Notification of Acceptance
April 30, 2016: Full Chapter Submission
June 30, 2016: Review Results Returned
July 31, 2016: Final Acceptance Notification
August 15, 2016: Final Chapter Submission


For Further Inquiries:

Mark Anthony Camilleri, Ph.D.

Department of Corporate Communication

Faculty of Media & Knowledge Sciences

Room 603, MaKS Building

University of Malta

Msida, MSD2080


Tel: +356 2340 3742

Mob: +356 79314808

Email: Mark.A.Camilleri@um.edu.mt

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