A Data-Driven Approach to Evaluation of Sustainability Reporting Practices in Extractive Industries

Abstract

Sustainability reporting is one of the tools that contribute to incorporating sustainable development in the design of extractive operations (i.e., “Design for Sustainability”), and the demand for sustainability reports is increasing due to the increased focus on sustainable development and sustainable financing efforts. The extractive industries are believed to have unique strengths to contribute to achieving the Sustainable Development Goals. Nonetheless, companies are expected to be transparent and accountable not only to investors but to all stakeholders, including communities, suppliers, clients, employees, and governments. Therefore, extractive industries require effective sustainability accounting and reporting to transition and contribute to sustainable development. Through a data-driven approach, this paper examines the scope and consistency of sustainability indicators used in the sustainability reports of eight oil and gas and eight mining companies from 2012 to 2018. Through content analysis and relevant statistical methods, we analyze the ways in which companies reported on their contributions to sustainable development, with a focus on indicators used and trends over time both within each industry and between industries. We demonstrate that extractive industries’ sustainability reporting practices are not consistent over time and that internal issues are better represented than external issues, in particular transportation and supply chain issues. Furthermore, while there are similar trends across the industries in terms of social and environmental indicator reporting, there are significant differences in economic reporting. We conclude that although both industries have established sustainability reporting practices, there are trends that demonstrate what companies are focusing on more, as well as areas for improvement. We see this as an initial step for conceptualizing how these industries can more objectively, consistently, and effectively assess and contribute to sustainable development.

A Quantitative Sustainability Assessment for Mine Closure and Repurposing Alternatives in Colorado, USA

“…The mining industry has been criticized for being slower than other sectors in incorporating innovation in their operations and practices [4,24,133], and this constitutes an important business risk for the mining industry [24]. Our results demonstrated that out of the three winners of the student challenge, shrimp farming provided the most sustainable and innovative repurposing.…”

“…The mining industry has the potential to significantly contribute to sustainable development and has been making efforts to engage in more responsible practices [4,24]. Mine closure is rated among mining's top operating risks [25], and its importance has been increasingly acknowledged in best-practice guidelines and more stringent mine closure regulations that have been put in place since the 1990s [5].…”

The impact of environmental, social, and governance performance on financial performance: Evidence from Japanese companies

“…In other words, social performance can also be associated with the principles, practices, and consequences of a corporation's relations with people, administrations, foundations, communities, and societies. Businesses must incorporate Corporate Social Responsibility (CSR) into all facets of their company plans to fulfill expectations that they will contribute to a sustainable development [63]. Social performance has been proven to have an indirect , positive, and substantial impact on an organization's financial performance.…”

Accounting infrastructure and promissory sustainable extractive industries: an actor-network theory analysis

“…The concepts of assemblage and network offer a lens to explain why sustainability accounting and reporting have not achieved the desired results due to fragility of sustainability reporting with competing interests, divergent green networks, lack of standardization and a non-tight assemblage between EIs and the social. There is a lack of standardized sustainability accounting infrastructure, making it difficult for companies to compare their performance and best practices (Perdeli Demirkan et al , 2021; Ukwatte et al , 2023). Issues pertaining to poor policy implementation, lack of transparency and non-adherence to mandatory and self-regulated guidelines have resulted in EIs firms being reluctant to engage in environmentally and socially sustainable practices (Ukwatte et al , 2023).…”