Harmonization of Sustainability Reporting Regulation: Analysis of a Contested Arena

Abstract

This paper presents the case for the sustainability reporting field as a contested arena and examines the behavior and the influence of the various actors, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the International Integrated Reporting Council (IIRC), and the European Commission, including the European Financial Reporting Advisory Group (EFRAG) and the International Financial Reporting Standards (IFRS) Foundation in influencing the shape of the regulation in the arena. Drawing on the arena concept and documentary analysis, this study explores the dynamic in which each actor is attempting to change the rules within the arena and how this contributes to the harmonization and future direction of sustainability reporting. The findings of this study show that the actions and behavior of the various actors are premeditated and strategically calculated to maintain their influence, relevance, and defend their technical authority in the arena. The findings also suggest that sustainability reporting regulation is still far away from harmonization due to the perceived hegemony in the arena, and diversity in the overarching objective of the various actors and the inability of each actor to renounce its particular perspective and orientation. Insights are provided for policy makers on the urgent need to decide and reclassify the specific rules required in upholding the sustainability reporting arena.

Influence and behaviour of the new standard setters in the sustainability reporting arena: implications for the Global Reporting Initiative’s current position

“…This is because materiality is dynamic and issues that are material from outside-in (impact) today can become material issues from inside-out tomorrow, which represents the objective and importance of sustainability reporting. Hence, our results contribute to the literature on external actors’ behaviour in sustainability reporting arena (Afolabi et al , 2022; Humphrey et al , 2017) because we do not only reveal the true agenda of the new institutions but we also show that in the areas of policy issues and standards development, standard setters can conceal their real agenda to gain acceptance.…”

“…Thirdly, through a public consultation process, they examine stakeholders’ displeasure with or support for the issue in the arena with a view to mediating the relationship between the central arena participants and audience of wider stakeholders by developing guidelines and frameworks that could be of interest to all (Stolowy and Paugam, 2018). This affords them the opportunity to play the role of mediator, investigating stakeholders’ views on issues in the arena via their consultation paper and provide solutions through relevant guidelines and frameworks, which can inform rule enforcer final decision and direction to follow in the arena (Afolabi et al , 2022). Therefore, sustainability institutions have an audience, which includes groups and network of bodies in the arena and possess the potential to mobilise guidelines and frameworks in support of a specific faction in the arena, which is consistent with the characteristics of an issue amplifier (Georgakopoulous and Thomson, 2008).…”

“…Likewise, other studies have been critical of the underlying agenda of sustainability institutions, such as the IIRC, and how the network of bodies engaged in their development may influence their action (Flower, 2015; Thomson, 2015; Van Bommel, 2014). In a similar vein, Afolabi et al (2022) have conceptualised the regulation of sustainability reporting terrain as a contested arena and problematised the behaviour of different institutions, such as the SASB and IIRC, in influencing the regulatory system of the arena. Hence, due to different actions that can occur amid the ongoing changes in the sustainability reporting terrain, there is a significant concern about the current position of the GRI, being the first to emerge and the most accepted standard among businesses globally.…”

“…Hence, it advances the literature on sustainability standards setting for sustainable development (Abela, 2022; Adams and Abhayawansa, 2022; Giner and Luque-Vilchez, 2022) by reconstructing the awareness of the importance of the GRI standards amid the ongoing changes and different dynamics at play inhibiting sustainability reporting harmonisation and sustainable development. Finally, while Afolabi et al (2022) have examined the historical behaviour of external actors (GRI, IIRC, SASB, EFRAG, IFRS Foundation) using documentary analysis and arena framework, we shift the research lens by extending the analysis and focusing more critically on the intricacies around European’s standard-setting arrangement via a direct comparison of the GRI, EFRAG/European Commission and the IFRS Foundation’s/ISSB’s current actions on the key tensions in the arena. This provides a detailed account of acceptable actions and institutional behaviour required to maintain the core agenda of sustainability reporting standardisation, particularly towards achieving sustainable development in Europe.…”

Business for ocean sustainability: Early responses of ocean governance in the private sector

“…the EU Directive 2014/95 on non-financial disclosure, the proposal for a Corporate Sustainability Reporting Directive and the Environmental, Social and Governance (ESG) disclosures introduced by the Sustainable Stock Exchanges}. The growing attention to sustainability reporting can be also linked to the development of global standard settings such as Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Sustainability Accounting Standards Board (SASB), and more recently by European Financial Reporting Advisory Group (EFRAG) and the International Financial Reporting Standards (IFRS) (Afolabi et al 2022). In accordance with these frameworks and standards, in our analysis we adopted a broad approach to exhaustively cover the different types of non-financial information published by companies (Hahn and Ku ¨hnen 2013;Amini et al 2018).…”