Sustainability Risk Disclosure Practices of Listed Companies in Australia

Abstract

This paper investigates the extent to which the top 100 ASX listed companies disclosed economic, environmental and social sustainability risk factors during the 2014/15 financial year in light of the changes introducing Recommendation 7.4 to the third edition of the Corporate Governance Principles and Recommendations in 2014. While all companies complied with the Recommendation, questions of substance over form were raised because some companies had risks that were not disclosed according to Recommendation 7.4. Our conclusion outlines how this research contributes to the growing literature on sustainability and corporate governance. We add to the continuing debate on mandatory versus voluntary disclosures, advocating that Australia may need to introduce mandatory guidelines, beyond the ASX, to regulate the disclosure of material economic, environmental and social risks. Additionally, we conclude that Recommendation 7.4 is unlikely to substantially change Australian corporate reporting and disclosure practices – that, for most companies, it is ‘business as usual’. However, under business as usual, we can naturally expect to see further increases in sustainability and alternative reporting frameworks, such as integrated reporting, as well as increasing use of the Internet to report and disclose sustainability risks.

A Structured Literature Review about the Role of Management Accountants in Sustainability Accounting and Reporting

“…Interestingly, a common aspect of some studies located in both of these countries is their attention to the environment and natural resources, like carbon or water [52,53]. The fact that Oceania boasts the highest number of publications seems to confirm the strong interest and the relevant role that this region has been playing and still plays in the development of studies related to business and supplementary reporting, such as the Intellectual Capital Report [37,54] and the Integrated Report [55][56][57][58] and in the measurement, management, and disclosure of intangibles and non-financial capitals.…”

Investigating risk disclosures in Italian integrated reports

“…As such, the success and survival of the organisation rely upon its ability to manage and balance relationships with stakeholders by conveying a satisfactory level of disclosure on both financial and non-financial issues (Gray et al, 1995;García-Sánchez et al, 2013). In particular, non-financial disclosure, including information on risks and their impact on the financial viability of the organisation, is pivotal to meet the expectations of stakeholders (Saggar and Singh, 2017;Dumay and Hossain, 2019). This particularly applies to risks arising from the social and environmental impacts of organisational activities (Dumay and Hossain, 2019;Leopizzi et al, 2019), what in this paper we term "bigger risks".…”

Does Structural Capital Affect SDGs Risk-Related Disclosure Quality? An Empirical Investigation of Italian Large Listed Companies

“…Over time, corporate disclosures have progressively added social and environmental risks beside the solely financial risk disclosure [33], and previous studies on risk disclosure and reporting have observed this phenomenon from several perspectives and according to different theoretical frameworks.…”

“…Among nonfinancial risk areas, environmental risk has received the most attention from scholars [48,49], and it is also one of the most reported sustainability issues [50]. Among studies focused on nonfinancial risks disclosure in general terms, Dumay and Hossain [33] investigated the sustainability risk mandatory disclosure practices of listed companies in Australia and two studies based on the Italian context, one before the EU transposition introduced Decree No. 254/2016 [5] and one after this decree [43].…”