“A new direction? The “mainstreaming” of sustainability reporting”

Abstract

Purpose The purpose of this paper is to analyse the current developments to “mainstream” and standardise sustainability reporting and the consequences of those changes. Those changes give rise to the colonisation of sustainability reporting through the adoption of financial reporting concepts. Design/methodology/approach This research draws on critical theory, particularly the work of Foucault, to understand the dynamics of accounting change. This approach provides an alternative to the current narrative that the concepts that underpin reporting are universal and timeless. Findings It is suggested that if the aim of mandatory sustainability reporting is to promote companies adopting sustainable business models, then it must properly reflect the context of the company. Both transactive and relationship information is critical to providing an account that can be used to judge the performance of the corporation beyond its production of short-term net positive cash flows. Practical implications The design of standard setting arrangements for sustainability reporting needs to recognise that it may be unhelpful to simply adopt financial reporting concepts for the purposes of directing corporate behaviour towards sustainable development. Social implications Continuing to adopt a view of the corporation as a nexus of contracts with no clear accountability to stakeholders is likely to stymie efforts to deal with the environmental and social crisis facing people and planet. Originality/value Whilst other works have considered the development of sustainability reporting, to the best of the author’s knowledge, this is the first study to consider the impacts of “mainstreaming” it within mandatory corporate reporting.

Swimming against the tide: back to single materiality for sustainability reporting

“…once from the point of view or investors (as in financial materiality) and then again from the point of view of stakeholders (as in social and environmental materiality) – is unlikely to help organisations and users appreciate interdependencies in the Anthropocene. The concept of single materiality that can achieve this understanding is also consistent with the notion of corporate purpose, where corporate existence is rationalised by a broader purpose, extending beyond mere profit-making (Abela, 2022).…”

“…Abela (2022) argues that a focus on accountability will enable organisations to appreciate the relational as well as the transactive. He explains this by contrasting two approaches to dealing with emissions:…”

“…Researchers have examined the: evolution and current developments of the concept of materiality in sustainability reporting (Abela, 2022; Baumüller and Sopp, 2022); differences in the definitions of materiality adopted in different sustainability reporting regulations and by standards setters (Baumüller and Sopp, 2022; Chiu, 2022; Cooper and Michelon, 2022; De Villiers et al , 2022; Giner and Luque-Vílchez, 2022); limitations of various interpretations of materiality (Adams and Mueller, 2022; Adams and Abhayawansa, 2021; Cooper and Michelon, 2022); consequences of different interpretations of the materiality principle (Clark, 2021; Jørgensen et al , 2022); and the practice of materiality determination by companies adopting various sustainability reporting standards or frameworks (Beske et al , 2020; Gerwanski et al , 2019; Jones et al , 2016; Puroila and Mäkelä, 2019; Steenkamp, 2018). …”

“…evolution and current developments of the concept of materiality in sustainability reporting (Abela, 2022; Baumüller and Sopp, 2022);…”

“…Baumüller and Sopp (2022) examined the application of the materiality principle by various sustainability/non-financial reporting standards and its development in mandatory non-financial/sustainability reporting regulations within the EU. The conceptual origins of the IFRS Foundation’s (and subsequently incorporated in ISSB’s proposed standards) approach to sustainability reporting and invariably the definition of materiality underpinning it was analysed by Abela (2022). Adams and Mueller (2022) too examined, inter alia, the concept of materiality proposed in the IFRS Foundation Trustee’s Consultation Paper on sustainability reporting, albeit from the perspective of academics responding to the said consultation paper.…”