Organisational and professional challenges amid the evolution of sustainability reporting: a theoretical framework and an agenda for future research
Meditari Accountancy Research
ISSN : 2049-372X
Article publication date: 7 June 2021
Issue publication date: 23 June 2021
This paper aims to trace subsequent steps of the sustainability reporting evolution in terms of changes in the organisation fields and professional jurisdictions involved. As such, it highlights the (interrelated) organisational and professional challenges associated with the progressive incorporation of “sustainability” within corporate reporting.
The paper draws on Suddaby and Viale’s ( 2011 ) theorisation of how professionals reshape organisational fields to highlight how organisational spaces, actors, rules and professional capital evolve alongside the incorporation of sustainability within corporate reporting.
The paper shows organisational spaces, actors, rules and professional capital mobilised during the recent evolution of sustainability reporting, starting from a period in which there was no space for sustainability, to more recent periods in which sustainability gained increasing momentum beyond initial niches, and culminating in more integrated forms of sustainability reporting.
Although the analysis is limited to empirical evidence collected by prior research and practice on sustainability reporting, the paper offers a view to imagine how the incorporation of sustainability within corporate reporting relies on and affects organisational fields and professional jurisdictions.
The paper offers a lens to interpret corporate and professional challenges associated with the more recent evolutions of sustainability reporting practice and standard setting. It also allows framing the papers accepted in the special issue on “new challenges in sustainability reporting” and concludes by suggesting an agenda for future research.
- Corporate reporting
- Integrated reporting
- Organisational fields
- Professional jurisdiction
Lai, A. and Stacchezzini, R. (2021), "Organisational and professional challenges amid the evolution of sustainability reporting: a theoretical framework and an agenda for future research", Meditari Accountancy Research , Vol. 29 No. 3, pp. 405-429. https://doi.org/10.1108/MEDAR-02-2021-1199
Emerald Publishing Limited
Copyright © 2021, Alessandro Lai and Riccardo Stacchezzini.
Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
Organisations are increasingly incorporating a sustainability mindset within their governance, business model and strategy. In the past, many organisations have treated sustainability as marginal, with only specific departments and experts involved in addressing specific social and environmental issues. A form of “silo thinking” has predominantly driven organisational behaviour, with the exception of a few enlightened organisations that have treated sustainability as their core mission and value ( de Villiers et al. , 2014 , 2020 ; Dumay and Dai, 2017 ; Rinaldi et al. , 2018 ).
Times have changed and a number of incentives are now motivating organisations to enact sustainability practices in a more holistic manner: corporate reporting is increasingly required not only to disclose social and environmental performance but also to communicate how sustainability is embedded within corporate vision and governance, informs business strategy and sustains financial performance. Indeed, a more holistic, integrated representation of sustainability is increasingly required from companies by both financial and non-financial stakeholders. Engagement with the United Nations Sustainable Development Goals (SDGs) represents one of the more recent examples of sustainability-related disclosure. Even the sustainability metrics and indexes have increased their diffusion among companies and are monitored with greater attention by investors, as well as other stakeholders. This deep change affects the way corporate reporting transforms over time, with significant effects for how sustainability permeates corporate reports ( Bebbington et al. , 2014 ; Unerman et al. , 2018 ).
The “accounting problem” that this paper consequently aims to address refers to the organisational and professional challenges associated with the incorporation of sustainability within corporate reporting. While it is not possible to discuss all the studies in the tumultuous field of corporate (sustainability) reporting, we argue that these studies predominantly deal with the corporate reporting evolution by focusing either on organisational or professional-related challenges. This means that some studies have focused on peculiar aspects of the reporting processes (e.g. the preparation of sustainability reports, assurance mechanisms or disclosure issues), while other papers have devoted attention to the political/professional aspects of the reporting environment, such as focusing on the role of standard setters and similar organisations (e.g. the International Integrated Reporting Council [IIRC]) in modifying the reporting landscape. These studies have predominantly overlooked the interrelations among these kinds of challenges, with very few relevant exceptions ( Humphrey et al. , 2017 ).
We thus believe that a deeper exploration of the interrelations between organisational and professional aspects of corporate reporting may help gain a better understanding of the more recent challenges in corporate reporting, which is experiencing increasing incorporation of sustainability matters and their integration with more traditional financial issues. Further, while some studies have developed a longitudinal analysis of sustainability reporting practices and related institutionalisation processes ( Contrafatto, 2014 ; Farooq and de Villiers, 2019 ), an even longer-term perspective has been overlooked. We believe that a “historical” view of past corporate reporting practices can enhance understandings of contemporary reporting practices ( Carnegie and Napier, 1996 ; Lai et al. , 2019a ) – particularly for those practitioners and organisations that have “discovered” sustainability more recently ( Cho, 2020 ).
Starting from these premises, this paper explores the (interrelated) organisational and professional challenges associated with the evolution of corporate reporting. In particular, the paper traces subsequent steps of the sustainability reporting evolution in terms of changes in organisation fields and the professional jurisdictions involved, by drawing on Suddaby and Viale’s (2011) theorisation of how professionals reshape organisational fields. As such, the paper highlights how organisational spaces, actors, rules and professional capital evolve alongside the incorporation of “sustainability” within corporate reporting.
Based on empirical evidence collected by prior research and practice on sustainability reporting, the paper shows the organisational spaces, actors, rules and professional capital mobilised during the recent evolution of sustainability reporting, starting from a period in which there was no space for sustainability, to more recent periods in which sustainability gained increasing momentum beyond initial niches, and culminating in more integrated forms of sustainability reporting. As such, the paper offers a view to imagine how the incorporation of sustainability within corporate reporting relies on and influences organisational fields and professional jurisdiction.
The analysis of the sustainability reporting evolution in terms of organisational spaces, actors, rules and professional capital involved helps interpret the organisational and professional challenges associated with the more recent evolutions of sustainability reporting practice and standard setting. It also allows framing of the papers accepted in the special issue on “new challenges in sustainability reporting”. Based on the insights collected from prior research and the special issue papers, the paper generates an agenda for future research coherently developed in line with the theoretical frame provided.
2. The evolution of corporate reporting: key phases
A debate about the challenges in sustainability reporting requires consideration of how corporate reporting has evolved over the past decades. As the basis of our analysis, we assume a scheme within the IIRC’s (2011, pp. 6–7) discussion paper, “Towards Integrated Reporting: Communicating Value in the 21st Century”, diffused among practitioners and debated in the integrated reporting literature ( Flower, 2015 ; Thomson, 2015 ). The scheme synthetically explains the current situation as a result of the subsequent three stages of corporate reporting. This scheme refers to various strands of corporate reports (financial statements, management commentaries, governance and remunerations reports and sustainability reports) and argues that these strands must be better integrated ( Flower, 2015 , p. 3) to achieve a new reporting framework. For our purposes, the scheme is relevant because it simplifies subsequent phases in the corporate reporting evolution.
2.1 First phase: 1960s to 1970s – neglecting sustainability
From the early 1960s to the end of the 1970s, there was little interest in themes related to sustainability. Corporate reporting mattered for providing financial information, as its boundaries were mainly constructed around a unique central body of knowledge. All around the world, the cultural debate about reporting dealt mainly with the improvement of (financial) accounting standards to attain more transparent reports, making them comparable among industries and different countries.
2.2 Second phase: 1980s to 1990s – experimenting with sustainability niches
The situation changed rapidly during the final 20 years of the previous century. Accounting was thought of and practised differently, and additional, non-financial knowledge concurred in feeding corporate reporting. There was a need for new matters to be reported alongside those presented in ordinary financial reporting [ International Integrated Reporting Council (IIRC), 2011 ]: more information on business, new governance and compensation matters, environmental questions and social reporting. This shift caused a significant loosening of the identity between “corporate reporting” and “financial reporting”; previously, this identity had been taken for granted and reporting viewed as a homogenous and unique field (Emenyonu and Grey, 1992).
2.3 Third phase: 2000s to 2010s – enhancing sustainability
As a further step, the International Integrated Reporting Council (IIRC) (2011) highlighted that the two first decades of the new century were characterised by a continuous increase in forms of accounting and reporting different from the traditional financial one. At the same time, the IIRC depicted a slow and progressive “substitution” of some types of reporting (mainly, environmental reporting) existing in the previous period and its transformation into “sustainability reporting”. This was not a reduction or collapse, but an increase, for two main reasons: inside “sustainability”, there are many other themes not related just to the environmental matters, but also to social ones, for instance; and sustainability is not just a “silo” with many themes, but a new perspective that is assuming increased relevance and through which we can “read” all management actions in a new way.
2.4 Fourth phase: 2020 and onward – integrating sustainability
In the fourth period, the International Integrated Reporting Council (IIRC) (2011) emphasised the rising of integrated reporting alongside any other type of reporting depicted in the previous periods, including sustainability reporting. Even if this vision (giving relevance to integrated reports) was biased by the nature of the author (the IIRC) and by the circumstances in which it was conceived about 10 years ago, it can currently be re-interpreted as the need and the expectation for a further increase in alternative forms of reporting (in respect to the previous financial one), which is able to offer new challenges ( Dumay et al. , 2017 ). This transformation is occurring in connection with the incoming presence of policy makers, regulators and standard setters, who are now pushing for significant changes in reporting and sometimes are – somewhat unexpectedly – drivers of change in definitively enlarging the spectrum of matters to be reported ( Rowbottom and Locke, 2016 ). At the same time, the need perceived by stakeholders seems to encourage more concise reporting, with significant forms of interconnections among its different parts, to allow the reader to understand the way organisations are producing value for all stakeholders.
3. Corporate (sustainability) reporting and interactions among changes in organisational fields and professional jurisdiction: a theoretical frame
The evolution in corporate reporting is hereafter interpreted by means of the theoretical lens of a framework that is able to highlight the effects of professional and organisation field-level dynamics, considering the critical yet often invisible role that professionals play in institutional work – that is, in the creation, maintenance and transformation of institutions ( Suddaby and Viale, 2011 , p. 423). According to this approach, four distinct and sequential mechanisms allow professionals and professionalisation projects to shape organisational fields ( Beckert, 2010 ). The first mechanism is explained as the definition of a new uncontested space (and its related boundaries): professionals advance their project in occupying (or colonising) new intellectual and economic space, which is the space previously occupied by other professions or professionals. Thus, it is a question of jurisdiction ( Abbott, 1988 ) that is modified to allow people to occupy different spaces and define new boundaries that are usually broader than or different from the traditional ones. This is already occurring in accounting professions, which undertook a project of encroachment into the jurisdiction of the related professions ( Greenwood et al. , 2002 ; Suddaby and Greenwood, 2005 ).
The second dynamic refers to how professionals populate the new identified spaces with new categories of legitimate social actors who serve their interests. They often engage in the institutional work necessary to generate new forms of organisation. Multidisciplinary partnerships, as new forms of accounting in professional organisations, are meaningful ( Suddaby and Greenwood, 2005 ): non-accountants are brought inside the old accounting organisations to allow and favour the enlargement of old boundaries to establish new ones.
The third dynamics appears as a direct consequence of the previous two when, as we see above, professionals’ advance in their jurisdiction is managed by subordinating existing occupations or establishing new areas of practice or new expert occupations ( Humphrey et al. , 2017 , p. 35). In doing so, relevant shifts in the boundaries and rule systems of organisational fields are needed. A key mechanism encourages professionals to use their expertise by promulgating rule systems designated in the broader social system that only professionals understand; this mechanism enables them to change field logics and boundaries, while simultaneously undertaking their professional projects. Many studies show that accountants are fostering rule systems that have a deep influence on market institutions, while also benefitting accounting professions by consolidating their power and legitimacy as the exclusive interpreters of the new rules ( Flood, 2011 ; Venter and de Villiers, 2013 ).
Finally, a fourth relevant dynamic is related to “social skill” ( Fligstein, 2001 ), whereby professionals must manipulate a social order within an organisational field. This skill is based on their unique access to a large range of different forms of capital, as well as their facility in moving between different forms of capitals ( Suddaby and Viale, 2011 , p. 434). Thus, this fourth dynamic refers to how professionals manage the reproduction of professional capital through different strategies: rhetoric and categorisation. Rhetoric is used to influence the direction of change and to legitimise or delegitimise the acceptance of a program of change. Categorisation refers to the process by which professionals connect the view of the client’s problem to the “dictionary of professional legitimate problems” ( Abbott, 1988 , p. 41). By means of these two strategies, actors whose behaviour is inappropriate to their role may suffer penalties ( Zuckermann, 1999 ), while social hierarchies within the new fields are created and enforced by membership strategies (determining inclusion or exclusion from the categories), and quality categories and standards are adopted to grant or deny legitimacy to actors or actions within a field.
Suddaby and Viale’s (2011) framework is useful to provide a meaningful interpretation of what has occurred in the field of corporate reporting, particularly when the need for new matters to be reported – together with those typical of traditional financial reporting – progressively encouraged organisations to provide new and qualified information on their business models; corporate governance systems and mechanisms, including top management compensation; and environmental and social issues [ International Integrated Reporting Council (IIRC), 2011 ]. Similar to a recent analysis on integrated reporting ( Humphrey et al. , 2017 ), we provide an interpretation of these phenomena by examining the connections between professional jurisdictions and changes in organisational fields. In particular, we analyse the interaction between the new needs for disclosure (particularly those typical of sustainability) and practices of reporting by conceiving how these new interactions breed new fields of investigation, corresponding to new organisational fields.
4. Organisational changes and professional jurisdiction in the sustainability reporting evolution
The present section details our interpretation of the empirical evidence collected by prior research and practice on sustainability reporting according to the theoretical framework depicted in the previous section. This interpretation is summarised in Figure 1 .
4.1 First period: 1960s to 1970s – neglecting sustainability
During the lengthy period of post–World War II recovery, where a galloping economy would not have been halted by any constraints, new accounting standards were establishing the basis for increased circulation of capital among countries, especially in wide areas converging to a union (as with the European Union), and for a possible reduction of earnings management procedures, which usually undermined the relevance of financial reporting. All ran alongside the growing economy, without any consideration for the wider needs of the planet.
The knowledge of the people dealing with corporate reporting, in the professional world and in research settings, relied entirely on technical financial accounting tools. A homogenous accounting culture ( Emenyonu and Gray, 1992 ) improved the relevance of financial accounting as the main form of corporate reporting. Moreover, parliaments and governments devoted wide attention to financial reporting, strengthening a tradition derived from laws established in the nineteenth century ( Deegan and Unerman, 2011 ) and moving towards more defined and itemised models to be used in mandatory corporate reporting. This homogeneous culture emphasised the role of accountants in civil society ( Burchell et al. , 1980 ; Walker, 2016 ) and diffused the presence of accounting as a topic to be studied in universities. Finally, accounting profession boundaries have been settled, and are now even protected by law.
Inside these borders, accountants – both practitioners and scholars – held their domain, shared a common language, sought generally accepted accounting principles, and pushed their proposals to be implemented as accounting standards or enforced by law. The strength of this homogenous culture allowed corporate reporting to experience huge development, as it never had in previous decades. In corporate reporting settings, accounting meant financial accounting.
4.2 Second phase: 1980s to 1990s – experimenting with sustainability niches
In the period of the 1980s to 1990s, traditional financial reporting first required enlargement of its previous spaces, owing to new matters to be reported alongside those presented in ordinary financial reporting [ International Integrated Reporting Council (IIRC), 2011 ]: information on business, new governance and remuneration matters, and environmental and social issues. These new themes were mainly just “accepted” by the professionals responsible for corporate reporting, who were mostly unwilling to be involved in environmental or social themes ( Gray et al. , 1993 ; O’Dwyer, 2002 ; Wilmshurst and Frost, 2001 ).
These themes were perceived not yet as a challenge, but as a necessity to be tolerated. They were often considered outside the professional jurisdiction of the people involved, as they were slow to engage with sustainability issues ( Mathews, 1997 ). Their response to the need for sustainability accounting and reporting mostly reflected unwillingness to become involved in this new domain ( Kwakye et al. , 2018 ). Further, the more “traditional” accounting literature was convinced that sustainability remained outside the domain of accounting; as a result, more recently, accounting has become considered a profession unable to integrate economics and sustainable issues ( Burritt and Tingey-Holyoak, 2011 , p. 108).
To some extent, contrasting behaviours emerged in these periods: simple acceptance of the new sustainability issues; tolerance of the new matters reported; indifference regarding the issues; curiosity towards the issues; willingness to manage the new needs with own resources and staff, as they were considered not too ‘technical’; and the need to address the new emerging forms of reporting by requiring the assistance of specialised external professionals. As stated by Bebbington et al. (1994) :
Accountants have low levels of involvement in their company's environmental activities and, from responses to personal opinion questions, appear to experience a conflict between their awareness of environmental issues and an inability to translate this into action within their corporate life.
However, after the very first period in which new themes slightly affected reporting, without receiving much importance – the chief financial officer’s culture was different ( Whelan and Douglas, 2021 ) – a more conscious perception of these new issues arose, and the main question asked was about the role of accountants and accounting departments within companies and organisations in providing the relevant information about these new themes ( Burritt and Tingey-Holyoak, 2011 ).
accounting departments took information from consultants and professionals belonging to other areas of the organisation, as the managerial decision was to allow those spaces be occupied by specialists appointed by top management.
accounting departments and their professionals leveraged external knowledge to cover new expertise related to the new streams of reporting.
Both choices allowed accounting departments and their professionals to concentrate on traditional matters. There is considerable literature dealing with the lack of engagement of the accounting profession with environmental, social and sustainability themes ( Gray and Collison, 2002 ; Lamberton, 2005 ; MacKenzie, 2009 ). However, these departments and professionals were usually responsible for the final result of the reporting package, so they usually could “have a say” about the non-financial content, as the final report emerged by summing up different parts ( Lusher, 2012 ). The boundaries of accounting and reporting departments did not change significantly, nor did the professional jurisdiction of their actors, as they were somewhat separate from the deep changes occurring, yet were mainly responsible for the final results and had power over the outcome of the reporting process. External consultants acted aside the organisation, with the task of providing the information to be reported in the final document. Thus, the professional capital related to social and environmental issues was mainly outside the reporting organisations.
4.3 Third phase: 2000s to 2010s – enhancing sustainability
The relevance of environmental and social themes and the change towards an emphasis on sustainability substantially increased during the two first decades of the new century. This provided and still provides a significant opportunity for accountants and reporting managers ( Farooq and de Villiers, 2019 ) to spearhead environmental, social and sustainability management via their active role in accounting and reporting ( Kwakye et al. , 2018 ; Lai et al. , 2019b ).
The topics highlighted in the previous phase increased momentum under a new lens – they started to be conceived with the lens of sustainability, in line with the idea that sustainable development “meets the needs of the present without compromising the ability of future generations to meet their own needs” ( United Nations, 1987 ). These decades saw a continued increase in forms of accounting and reporting different from the traditional financial one [ International Integrated Reporting Council (IIRC), 2011 ] a slow and progressive “substitution” of some types of reporting (mainly, environmental reporting) existing in the previous period and its transformation into “sustainability reporting”.
A huge increase in the relevance of environmental, social and governance disclosure occurred – increasingly referred to as sustainability. This was demonstrated by new broad streams of literature that provided significant evidence of the relevance of many types of non-traditional accounting and reporting, all over the world ( Argento et al. , 2019 ; Del Baldo, 2017 ; du Toit et al. , 2017 ; Farneti et al. , 2019 ; Guthrie et al. , 2017 ; Ismaeel and Zakaria, 2020; Kassim et al. , 2019 ; McNally et al. , 2017 ; Peña and Jorge, 2019 ; Suárez-Rico et al. , 2019 ), with some differences between developed and developing countries ( Kwakye et al. , 2018 ).
the span of environmental and social matters within sustainability was enlarged to cover more domains with different aims; and
an increasing attitude towards measuring financial results in the long term ( Burritt and Schaltegger, 2010 , pp. 833–834) in the financial market, rather than focusing only on short-term goals.
The relevance of the long term has been growing alongside a broadened relevance of stakeholders other than shareholders ( Burritt and Schaltegger, 2010 , pp. 836–837), thereby combining long term with new theoretical views. These transformations rely on the idea of sustainability not as an outcome, but as a process embedded in organisational life ( Bansal and Hoffman, 2013 ). Thus, the attention is also devoted to the business model ( Melloni et al. , 2016 ; Sukhari and de Villiers, 2019 ), which expresses the underlying conceptions, ideas and thoughts shared by board and management, and declares how an organisation produces value for every stakeholder in the long term.
While new sustainability fields were occupied to satisfy new subjects and new domains – as began in the previous period – bringing much expertise inside and outside traditional offices, the problem of considering and facing a relevant sustainability effort arose in the traditional domains of accounting and reporting, bringing an increasing need to change how to tell the organisation. Accountants started to play a significant role in explaining socio-environmental performance, organising environmental auditing, providing accountability, evaluating environmental risks ( O’Dwyer and Unerman, 2020 ) and providing feedback for sustainability policies and performance ( Kwakye et al. , 2018 ; Özsözgün Çalişkan, 2014 ; Wilmshurst and Frost, 2001 ).
Thus, the introduction of new actors close to sustainability matters – near, outside or inside the field of reporting – not only represented a dynamic resulting from the direction taken in previous decades, when these new spaces began to be populated, but also a question about how the new themes should be intertwined with the old ones. There was not just a need to establish new boundaries around new actors, to protect and isolate their contribution as experts on the new emerging themes, or to place them into a ghetto full of advisors dealing with not strategic matters, but also to redefine the boundaries of the reporting fields, thereby promoting closer interaction among people aimed at providing a more integrated disclosure by drawing on preparers’ different modes of cognition ( Stacchezzini and Lai, 2020 ). This was undertaken while social and environmental (sustainability) accountability was progressively embedded into new and old fields ( Clune and O’Dwyer, 2020 ).
A new challenge of this third phase affected the role of accounting departments and their professionals, if they decided or were allowed (by top management) to enlarge their staff to cover new matters related to the environmental and social (as well as governance) streams of reporting, as is increasingly occurring nowadays ( Farooq and de Villiers, 2019 ). Accountants’ knowledge, skills and experience offered them opportunities to play a leading role in the development of environmental and social accounting ( Lewis, 2000 ). In this case, traditional departments were renovated by new expertise, where accountants managed the advance in jurisdiction they needed inside their workplace, controlling their new colleagues and establishing new areas of practice, promoting a new exchange of knowledge between the old experts of financial reporting and the new professionals. The reproduction of intellectual capital entered into accounting departments as the input of new people devoted to the new subjects to be reported. These new subjects needed to be moulded together with traditional reporting, sometime using its categories and rhetoric, as it had developed over a many-decade-long tradition. The female presence in these professional settings has increased in relevance, although women continue to be under-represented at senior levels in all professional fields ( Siboni et al. , 2016 ).
Over these past decades, this dynamic has been intertwined with the promulgation of new rule systems, as the idea of implementing sustainability requires deep changes inside organisations ( Bansal and Hoffman, 2013 ). Organisations must be sustainable while pursuing their own goals, thereby determining the need to redefine their purposes, not just the boundaries of reporting departments. It is not only an ‘addition’ of new themes to those traditionally reported; rather, the needs of the accounting departments and professionals characterising the previous situation require a rethinking, as well as more stable and structured frameworks. This is occurring alongside a rethinking of sustainability themes within a more comprehensive organisational life, where both strategic and operational issues must be conceived in a different way.
Solutions may be varied and not homogeneous in diverse settings, yet involve the creation of staff able to manage sustainability problems in different areas of the organisations, as well as departments specialised in managing specific critical issues. This is why new rules are emerging, and this is determining a reorganisation of the knowledge involved in reporting, as people charged with reporting must be able to manage sustainability themes. New professional capital is required and their reproduction is becoming necessary for the purpose of reporting.
4.4 Fourth phase: 2020 and onwards – integrating sustainability
Ten years ago, the International Integrated Reporting Council (IIRC) (2011) imagined for the 2020s a growing relevance of integrated reporting – not to replace sustainability reporting, but to rest at the centre of the reporting system. The need for disclosure about diverse sustainability themes, as well as many other more traditional financial aspects, caused managers, professional as well as scholars to reflect on the huge enlargement of corporate reporting, which had the undesirable effect of making organisations produce heavy and bulky documents, suffering the risk of not being read by stakeholders ( du Toit, 2017 ; Lai et al. , 2017 and 2018), as seeking relevant information inside such reports is often time-consuming. Despite the great debate on the pros and cons of integrated reporting as a way to provide evidence of sustainability themes ( de Villiers and Maroun, 2017 ; de Villiers and Sharma, 2020 ) or to explain to financial capital providers how an organisation creates value over time, there can be no doubt about its capability to give new perspectives to corporate reporting. It is widely recognized its active role in proposing an innovative form of reporting and providing the opportunity to generate greater legitimation of a broad vision of a company and/or organisation, in which sustainability attains the role it has in current emerging culture of these times ( Bebbington et al. , 2014 ). The relationship between sustainability and integrated reporting is growing in both practice and research settings ( de Villiers and Maroun, 2017 ).
Currently, around 10 years after the IIRC’s (2011) forecast, we have a clearer idea of the possible evolution of corporate reporting in the decade of the 2020s. There now seems an increasing need for and expectation of a further increase in alternative forms of reporting (beyond the previous financial one), while many stakeholders encourage concise reporting, interconnections among different parts of the subject dealt with in the reports, and a debate about what materiality is. In this new scenario for sustainability reporting, we can identify at least three initiatives that could mould new and challenging paths, with effects on organisational spaces, the actors involved, professional jurisdictions and the intellectual capital involved. The first initiative relates to the IIRC and SASB’s (2020) announcement about their intent to merge, in a major step towards simplifying the corporate reporting system, giving birth to a unified organisation – the Value Reporting Foundation – which has declared it will provide investors and corporations with a comprehensive corporate framework across the full range of enterprise value drivers and standards to drive global sustainability performance. Considering that many organisations are already using both the IIRC Framework and SASB Standards to communicate with investors on how sustainability issues are connected to long-term enterprise value, with these endeavours ultimately benefitting other key stakeholders, the announcement claims that integrated reporting and the SASB standards will link the concepts between them even further ( IIRC and SASB, 2020 ).
The second initiative is the International Financial Reporting Standards ( IFRS) Foundation’s (2020) consultation paper about sustainability reporting. The declared reason for the paper arose from an informal engagement with a cross-section of stakeholders involved in sustainability reporting, where it became clear that sustainability reporting is continuing to increase in importance for those stakeholders, notwithstanding differences in scope and motivation. However, all stakeholders emphasised the urgent need to improve consistency and comparability in sustainability reporting. According to the IFRS Foundation (2020 , p. 4), a set of comparable and consistent standards will allow businesses to build public trust through greater transparency in their sustainability initiatives, which will be helpful to investors and an even broader audience, in a context in which society is demanding initiatives to combat climate change. Thus, the IFRS Foundation is now proposing to become a key player in harmonising sustainability reporting worldwide.
The third initiative is an initiative of the European Commission ( European Financial Reporting Advisory Group [EFRAG], 2020 ), which issued a request for technical advice mandating that the EFRAG undertake preparatory work for the elaboration of possible European non-financial reporting standards in a revised Non-Financial Reporting Directive. The ultimate objective is to allow for the swift development, adoption and implementation of European standards, to be implemented together with the wider revision of the Non-Financial Reporting Directive. Much attention has been deserved to this initiative in the European Union and determined the need to rethink how to consider different interests into non-financial information (NFI) and its materiality ( La Torre et al. , 2018 ).
Paradoxically, these three relevant initiatives – all of which indicate an institutionalisation ( Dacin et al. , 2002 ; Lawrence and Suddaby, 2006 ) of sustainability reporting ( Farooq and de Villiers, 2019 ) – offer different directions that can be taken, and demonstrate the debate among actors in the field – that is, the standard setters already engaged in sustainability processes and the newcomers that aim to acquire expertise and legitimation in the field of sustainability reporting ( Cho, 2020 ). These initiatives are determining a ‘positive’ excitement among actors who usually deal with this issue – at corporate level or in any institution involved in the field of sustainability reporting – such as professionals, managers, executive members of company boards, and researchers in a large spectrum of fields, including accounting and reporting, but not limited to it. Politicians and governors are extraordinary employed in these movements.
The effect of this excitement is the constitution of new spaces inside organisations, where new, hybrid departments must be conceived as rapidly as possible, in alignment with these innovative forms of reporting and the more traditional accounting departments that need to be populated by new experts. To make this process effective, all organisations, including professional bodies and accounting firms, must quickly redefine their professional boundaries and promote a new form of induction to reproduce the intellectual capital needed to be involved.
5. Framing the papers included in the special issue on new challenges in sustainability reporting
The sustainability reporting evolution and the related changes in the organisational fields depicted above are reflected in the research papers accepted in this Special Issue of Meditari Accountancy Research on “new challenges in sustainability reporting”. They testify how the need to occupy new spaces matters for sustainability reporting, the new social actors to be involved in these processes, the possible debates among professionals about their own jurisdictions in the new fields, and the social skills to be manipulated and managed in the new organisational fields. All these new patterns and issues, which can be found in diverse settings and are very different from one another, demonstrate how these changes are affecting a wide spectrum of situations, not limited by geographical, industrial or social constraints, nor by the different ownership or governance of the organisations involved.
What are the main challenges that firms face over time when dealing with sustainability reporting?
Which mechanisms can be adopted to cope with these challenges?
The authors answer these questions by adopting a holistic approach considering multiple dimensions of sustainability and developing a five-year longitudinal case study of an Italian multi-utility large company.
The quality of non-financial reports (NFRs) is the focus of the paper by Jonida Carungu, Roberto Di Pietra and Matteo Molinari ( Carungu et al. , 2021 ), in a scenario where NFR became mandatory under the European Directive no. 2914/95/EU implemented in Italy. The scholars show that this quality does not increase when moving from a voluntary to mandatory basis, especially for companies (about 25%) that publish supplementary sustainability reports and/or plans. The paper demonstrates that preparers may perceive mandatory non-financial reporting as a comprehensive best practice to adequately report their social, economic and environmental performance. The authors find that, in some companies, other sustainability documents (sustainability plans/reports, presentations, etc.) from the 2017 financial year had disclosed specific non-financial aspects more thoroughly, which were the same aspects reported poorly (or absent) in the mandatory NFRs. Some investigated companies (that were previously involved in the process of NFR on a voluntary basis) considered NFR a legal requirement and adopted additional reporting documents to better disclose non-financial matters.
The study by Larissa von Alberti-Alhtaybat, Zaidoon Alhatabat and Khaldoon Al-Htaybat ( von Alberti-Alhtaybat et al. , 2021 ) focuses on developing the sustainability habitus by examining, in an Arab Middle East context, the Aramex organisation, which has been pioneering sustainability practices and reporting. Drawing on Bourdieu’s habitus and field, the paper explores the evolution of sustainability reporting from 2006 to the integrated report prepared in 2018, underlying the role of Aramex as a contributor to developing a sustainability habitus in the region. The paper offers a significant contribution to the literature on sustainability regarding the Arab world ( Ismaeel and Zakaria, 2019 ) as an under-researched area ( O’Dwyer and Unerman, 2016 ).
The paper by Claire Horner and Neil Davidson ( Horner and Davidson, 2021 ) explores the feasibility of implementing the natural inventory model (NIM) developed by Jones (1996 , 2003 ) in biodiverse corridor plantations, from a non-government organisation (NGO) perspective. The majority of areas identified by Greening Australia Tasmania (GAT) as being essential for these wildlife corridors are on privately owned land, used for agricultural purposes; thus, the paper explores whether stewardship of the land sacrificed by landowners may be demonstrated via the quantification and communication of improvement in biodiversity by using the NIM.
The study by Cristina Florio and Alice Francesca Sproviero ( Florio and Sproviero, 2021 ) explores how a company can repair legitimacy after an environmental disaster. The paper shows the situation of a well-known motorcar company after it deviated from correct and sustainable behaviour, as managers and employees acted in their self-interest, rather than in stakeholders’ interests. Environmental issues caused a stock crash of about 22% in the domestic stock exchange, while US$30bn was required to address the issues of the company towards customers, dealers and environmental regulators worldwide. Class actions, recalls and maxi-sanctions also contributed to undermining economic stability. In this severe situation, recovering credibility required a huge effort. Drawing on the discursive nature of legitimacy, the paper conducts a critical discourse analysis and highlights the different tools used, inside discourses, to repair pragmatic legitimacy, moral legitimacy and cognitive legitimacy, thus contributing to the growing literature on how organisations face the legitimacy challenges of sustainability scandals.
Dissanayake’s (2021) paper explores the extent of the Global Reporting Initiative (GRI) sustainability key performance indicator (KPI) usage in sustainability reporting by businesses located and operating in Sri Lanka, as a developing country, as has been undertaken by few other studies. The paper draws from a contingency theory approach ( Chenhall, 2007 ) to highlight the factors promoting or inhibiting the use of the GRI standards in defining sustainability KPIs. The results show that the GRI framework is increasingly used for sustainability reporting in Sri Lanka owing to its flexibility, consistency, legitimacy and focus on continuous improvement. However, the paper also highlights – based on the opinions of interviewed company managers – the extensive number of KPIs in the GRI frameworks, which requires challenging selections to be adapted for companies operating in a developing country context. According to the author, engaging with sustainability KPIs and reporting extends beyond a conventional mechanism to gain strategic legitimacy ( Lai et al. , 2016 ) to importantly signal a certain standard of operations, management of risks and common language to strengthen existing and build new partnerships with foreign companies in global supply chains. However, this could point to a tendency for some companies to adopt an instrumental approach ( Stacchezzini et al. , 2016 ) towards the integrative management of corporate sustainability.
The purpose of the paper by Ana Fialho, Ana Morais and Rosalina Pisco Costa ( Fialho et al. , 2021 ) is to detect whether the introduction of water security as a category in the Carbon Disclosure Project Climate A-List increases the use of impression management (IM) strategies, by investigating how companies reacted to programs of voluntary disclosure of environmental information. The study combines a qualitative content analysis of 15 companies’ reports, belonging to the material sector, to identify the IM strategies adopted, and a quantitative approach to test the main differences of water references between years, industries and regions. The results show that, among three identified IM strategies (justification and commitment, self-promotion and authorisation), self-promotion strategies increased in 2016 as companies reacted to the program for voluntary disclosure of environmental information through strategies of legitimation and image protection.
Drivers of integrated reporting by state-owned enterprises (SOEs) in Europe are examined in the study by Francesca Manes-Rossi, Giuseppe Nicolò, Adriana Tiron Tudor and Gianluca Zanellato ( Manes-Rossi et al. , 2021 ), who present a longitudinal analysis of the level of integrated reporting disclosure in a sample of European SOEs, from 2013 to 2017, in accordance with the IIRC’S framework requirements ( IIRC’S, 2013 ). During this four-year period, an increasing level of disclosure is observed, and the statistical analysis confirms the positive association between the level of disclosure and government ownership, external assurance, investor protection and GRI guideline adoption. In particular, in line with previous studies ( Frias-Aceituno et al. , 2014 ; Kiliç and Kuzey, 2018 ), the results show a positive relationship between GRI adoption and integrated report disclosure, confirming the importance of the GRI guidelines for the organisations that adopt them. Familiarity with these guidelines makes it easier to adopt integrated reporting and provide a higher degree of disclosure, while the multi-stakeholder approach typical of GRI allows SOEs to encompass a wider forum of stakeholders, thereby enhancing the legitimacy discourse with the social environment in which they operate ( La Torre et al. , 2018 ; Venturelli et al. , 2017 ). From an evolutionary perspective, the adoption of the GRI guidelines serves as a fundamental roadmap for drafting integrated reporting, supporting SOEs in providing information on the societal value created.
The paper by Laura Rocca, Davide Giacomini and Paola Zola ( Rocca et al. , 2021 ) examines and assesses local governments’ use of social media in disclosing environmental actions, plans and information as a new opportunity to improve accountability to citizens. This approach should allow local governments to obtain organisational legitimacy and the related sentiment of citizens’ judgement. Based on analysis of 39 local governments’ public pages on Facebook, the researchers computed the sentiment of citizens’ comments, providing a “sentiment analysis” based on different approaches – one using a lexicon dictionary and the other using convolutional neural networks. The results of the study indicate that, even if local governments use Facebook to disclose environmental issues, focusing on their main interest in obtaining organisational legitimacy, there is a clear divergence of interest in environmental topics between local governments and citizens, in a dialogic accountability framework.
The study by Chairani and Sylvia Veronica Siregar ( Chairani and Siregar, 2021 ) is based on a sample of listed companies in the ASEAN 5 (Indonesia, Malaysia, the Philippines, Singapore and Thailand) during the years 2014 to 2018, with total observations of 680 firm-years. The focus of the study is to examine the effect of enterprise risk management (ERM) on financial performance and firm value, as well as the moderating role of environmental, social and governance (ESG) performance. The paper shows that ERM has an insignificant effect on financial performance and firm value. However, the effect of ERM on firm performance and value is significant in the presence of ESG. Moreover, ESG has a significant moderating role.
6.1 insights from prior research on corporate (sustainability) reporting.
The evolution that emerges from empirical evidence collected by prior research and practice on sustainability reporting allows discussion of the most recent organisational and professional challenges in the corporate reporting field. As far as we have observed, the need for new ‘spaces’ for corporate reporting is out of the question. Also companies less pressed by the sustainability urgencies of their stakeholders are seeking ways to drive a new era. Regardless of whether this will bring each organisation to a refurbished edition of the ‘old’ environmental and social reporting, to a new sustainability approach, or to an integrated approach, the need is undisputable and moves organisations towards significant changes. The challenge for every organisation is to enter these new spaces as rapidly as possible to be ready to satisfy this need, which is growing fast.
The way these changes could happen is mostly related to how new spaces are populated by new actors . There we find many differences, depending on organisations’ force and willingness to engage with new expertise inside reporting departments, or to leverage on external skills, to be found outside the reporting department of the organisation or from consultants. This question does not have a single answer, but is connected to many organisations’ features, including their dimension and possibility to enlarge with new competencies, their openness to new knowledge, the pressure exerted by stakeholders about devoting attention to new themes, and the availability of expertise to be used in the accounting and reporting departments of each organisation. Thus, the new challenge is to provide organisations with new expertise, however they obtain it, either within or outside the accounting and reporting department.
Doubt regarding the availability of sustainability expertise used in accounting and reporting departments is relevant, as its solution depends on the capability of the accounting profession and its professionals to advance in their jurisdiction towards the new sustainability themes and their willingness to consider it inside the boundaries of their work. It means an area of practice needs to be embedded in the more traditional profession, to avoid interferences by professionals usually not dealing with reporting. One cannot take for granted the desire of accounting professionals to enlarge their old limits in these new directions. Until a few years ago, there was an overall denial of this possible extension, as many accountants still thought it was beyond the boundaries of their culture. However, the situation is rapidly changing, pushed by the accounting and auditing firms that recognise a new area of business within sustainability, and an unexpected enlargement of their fields of action. Thus, the real challenge for accountants is to consider a rapid embedding of the new sustainability themes in their ancient profession, and to arrange and favour the (re)production of such intellectual capital among new professionals.
This path could be strongly forged by policy makers, accounting standard setters, public regulators and enforcement authorities on accounting and governance, which have all been undergoing a recent shift towards these themes, even when they had no previous experience in them, as recently occurred for the IFRS Foundation. All these institutions, which are seeking new expertise even for themselves, are placing pressure on those who could provide this new expertise. Thus, standard setters and public institutions could promote a boost to an augmented interest for these themes, as well as a new job market, in which accountants can have a say. The process depicted above is currently resulting in a transformation of the social order within the organisational field of reporting. There is an emerging need to encourage access to new professional capitals that must be generated and reproduced inside the “new” organisational fields. This is occurring inside organisations (mainly reporting departments), as well as being mirrored outside them at different levels – in professions, accounting firms, standard setters, legislators and regulators.
At first, the Certified Public Accountant (CPAs) are fully engaged in this enhancement, where new themes must be studied and integrated in the traditional domains of accountants. Owing to the convergence towards the new themes of many kind of professions, accountants should be fast in learning them, to diffuse and reproduce new professional capitals, avoiding new incoming professionals – especially those coming from non-accounting disciplines, but confident with the expertise required by the “sustainability world” (e.g. environmental engineers) – subtract working spaces to their job. They risk losing primacy in the entire reporting process, where other consultants might be able to enter with expertise unknown to accountants and move all the processes into their main domains by offering new overall services. In contrast, if it became accepted that the new areas of practice could be occupied by the “renewed” CPA, their strength would be represented by their shared (accounting) language, rhetoric about reporting disclosure and categorisations developed from decades of practice, which could be used not only as an entry barrier to defend their position but also as unifying tools to allow the new themes to enter the old domain and enable fruitful reproduction of professional capital. Given the large spectrum of traditional CPA fields, as well as an acquired habitude to talk and deal with the accounting and reporting departments of their customers, CPAs have a great opportunity to occupy a relevant space into the fields.
Seemingly, accounting firms oversee the professional reporting market and do not overlook the richness of the new fields, where a complete spread of the required knowledge can be achieved. This offers an advantage to accounting firms in new domains, and a rich opportunity to offer complete services to their customers. The attempt to convert to the new fields some of the personnel usually engaged in traditional corporate advising, or in auditing procedures, is not just expedient (useful to enlarge or preserve accounting firm turnover) to avoid investing money in recruiting new personnel, but could leverage on an acquired common rhetoric inside these firms and a shared habit to categorise in the traditional accounting fields, which would be useful to face the challenges of the new fields. This has always been a typical feature of accounting firms that could bring them rapidly into the new domains.
Standard setters are also involved in this challenging shake-up of the fields involved in reporting – both those already devoted to sustainability (e.g. the SASB) or close to these topics (e.g. the IIRC) and those who have been far from it in the past, such as the International Accounting Standards Board or domestic standard setters in many countries. Many of them are wondering about the need to occupy the new fields, but the problem is their lack of tradition in sustainability matters and competition in occupying the new fields. In the debate regarding the standardisation of non-financial and sustainability reporting, an unwritten and concealed fight between a regional (and sometimes domestic) and global approach is emerging. If standard setters were able to use their ability to categorise and their rhetoric ability to issue reporting standards, they could have a chance to enlarge their field and promote a new reproduction of intangible knowledge about these matters.
found a way to address sustainability through a directive, issued in 2016, directed towards the states in the union; and
is currently planning to rethink the same directive to update the requirements to be one of the more advanced territories in promoting sustainability reporting.
Seemingly, enforcement and regulatory authorities are seeking new spaces in which to exert their activity and controls, even if they still do not have the relevant expertise to enter and play a role in these new domains.
6.2 Additional insights from the special issue papers
In respect to the organisational and professional challenges associated with the more recent evolution of corporate reporting – which testifies an increasing and more integrated space for sustainability – the articles accepted in the special issue demonstrate a commitment towards sustainability as a general and irreversible direction to be followed by many kinds of organisations in diverse settings (such as private companies in numerous sectors, listed companies, SOEs, NGOs and local governments in developing countries and Arab Middle East countries). Sustainability gets its role in current emerging culture of these times ( Bebbington et al. , 2014 ). This path is much more effective when it is pushed by a real willingness of the involved organisations to engage with sustainability, rather than by a mandatory constraint ruled by the law, as this willingness generates the possibility to drive organisations towards sustainability reporting and to redesign related organisational fields.
Further, given the time that their research was developed, the special papers developed rely on organisational settings, where the main concern seems to be “enhancing sustainability” in corporate reporting and communications, rather than “integrating sustainability” in a more holistic manner (refer to our corporate reporting evolution for these phases), with the exception of a few works in the special issue. At the same time, the special issue papers do not engage with historical analysis of the sustainability reporting evolution in the phases where sustainability was neglected or developed only at niche level.
As mainly developed in the “enhancing sustainability” phase, the papers show how the path engaged requires new organisational spaces, where people can offer their support to solve technical questions and move towards sustainability reporting. Many papers demonstrate how these spaces have been found and have been rapidly populated by new expertise. We recognise that these spaces were called and claimed for different and sometimes opposing reasons: a real attention to new coming themes; a curiosity towards new emerging subjects; a desire to improve the conditions of the earth and human beings; a way to help improve business ( Adams, 2017 ) with new generations (such as millennials); a way to satisfy needs encouraged by an active role of schools ( Adams et al. , 2011 ); and a means to legitimise behaviours ( Lai et al. , 2016 ; O’Dwyer, 2002 ) and business choices not yet aligned with the new times, owing to a late perception of their relevance or to the conviction sustainability is just a fad.
Moreover, the papers show how the new required expertise is strictly intertwined with a traditional culture in accounting and reporting, especially when already known (and traditional) problems arise, such as (see those considered in the articles of the special issue) IM, the use of KPIs as a reporting instrument, the link with ERM and related procedures, the relation between reporting and social media, the link between traditional accounting and integrated reporting, ways to disclose sustainability issues, and how sustainability performance can be disclosed alongside traditional corporate performance. This is relevant to consider the link between the boundaries and the jurisdiction of accounting professions when sustainability reporting is involved, as well as the role of traditional accountants and managers in shepherding the new professional requirements.
As discussed in some articles of the special issue, the relationship between sustainability and integrated reporting is increasing in both practice and research settings ( de Villiers and Maroun, 2017 ). Whether it has been adopted as a new way to tell a story about the organisation or as a narrative source of a socialising form of accountability ( Lai et al. , 2018 ), we can imagine its active role in proposing an innovative form of reporting that offers the opportunity to greater legitimation of a broad vision of each organisation. However, in the special issue papers, the way professional jurisdiction and boundaries can be changed and the capability of (re-)producing knowledge coherently with the sustainability shift is present in the background. The lack of investigation about these “professional” aspects is, to some extent, a limitation of our analysis, yet offers the opportunity to suggest new paths of research that can be very fruitful. Based on this research gap, the next section develops an agenda for future research.
7. Conclusion and research agenda
To what extent is an integration of sustainability and financial matters possible and useful for a wide range of stakeholders?
Is there any possibility that some matters may enter or exit the current “umbrella” of sustainability/ESG matters (e.g. a more substantial inclusion of intangibles)?
What is the role for integrated reports in the near future? Will it be institutionalised by an increasing number of companies or “substituted” by new reporting outlets?
What is the future of “traditional” accounting departments?
What is the space for accountants in the political debates on sustainability (reporting)?
To what extent financial standard setters can enter the field of sustainability reporting?
What is the role of financial and non-financial stakeholders in driving the future evolution of sustainability reports?
Is there any possibility for greater gender balance in professional settings, especially where sustainability is concerned?
Is there a standard setter that can get the better of others? Does it already exist or is it yet to be born? What will be the role of standard setters in niche/fragmented aspects of sustainability?
What will be the role of regulators in driving changes in the field of sustainability reporting?
What are the boundaries that practitioners will have to overcome to favour a genuine corporate engagement with sustainability (reporting)?
What are the main obstacles to the reproduction and diffusion of sustainability expertise within organisations?
How can accountant departments acquire the sustainability expertise increasingly required in the corporate reporting field?
What are the more appropriate mechanisms to allow traditional accountants to cooperate with sustainability experts?
What was the role of professions in shaping the organisational field of reporting at different times?
Why have some organisations started to engage with sustainability at different times?
Is this diachronic engagement with sustainability somehow related to a differentiated development of accounting or non-accounting professions?
How did sustainability expertise emerge and hybridise financial reporting preparers during the first experiments of social and environmental reports during the 1980s to 1990s?
In line with our research frame, we invite future research to develop these research avenues by unveiling the often-invisible interconnections between organisational and professional dynamics in the expanding and lively field of sustainability reporting. However, we hope that accounting scholars will refer to a broad spectrum of theories or develop new theories to enrich our understanding of the inevitable evolutionary process to which corporate (sustainability) reporting is exposed. To conclude, while a number of accounting scholars have already demonstrated a competent and passionate involvement in researching sustainability reporting, the above-mentioned research avenues demonstrate that the research opportunities are far from being exhausted. We sincerely hope to make our own small contribution.
Organisational and professional challenges amid the evolution of corporate reporting
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The authors thank all authors and referees who contributed to this special issue. The authors are also very grateful to prof. Charl de Villiers for his helpful guidance during the special issue and for his insightful comments on earlier drafts of the paper. Moreover, the authors thank the reviewers of this paper.
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Sustainability assurance practices: a systematic review and future research agenda
- Review Article
- Open access
- Published: 17 November 2021
- volume 29 , pages 4843–4864 ( 2022 )
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- Saddam A. Hazaea ORCID: orcid.org/0000-0002-9440-0798 1 ,
- Jinyu Zhu 1 ,
- Saleh F. A. Khatib ORCID: orcid.org/0000-0001-7652-4191 2 ,
- Ayman Hassan Bazhair ORCID: orcid.org/0000-0003-2552-6335 3 &
- Ahmed A. Elamer ORCID: orcid.org/0000-0002-9241-9081 4 , 5
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Although firms increasingly publish sustainability reports, assuring such reports is relatively new. This study reviews the literature of sustainability assurance to evaluate the intellectual development of the field and provide recommendations for future studies. It also demonstrates the role of assurance to enhance the credibility of sustainability reports and corporate reputation. This paper systematically reviews 94 papers obtained from the Scopus database between 1993 and August 2021. Our study shows that there is an increase in the number of studies published in recent years. We also found that some countries have received limited attention, such as the USA. The scant literature examining sustainability assurance in private institutions and non-profit organisations should be reinforced. Likewise, the sustainability research also provides limited evidence on the governance debate. The vast majority of research is not based on theoretical grounds. The need for assurance of sustainability reports not only enhances the reputation but also adds more value to the organisation’s planning, monitoring, and accountability. We highlight several new research suggestions that may enhance the understanding of sustainability assurance practices.
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Sustainability is a topic of growing importance worldwide (Alshbili et al. 2021 ; Liu et al. 2021 ; Orazalin & Mahmood 2019 ). The effort of the UN Intergovernmental Panel on Climate Change (IPCC) on global warming and environmental laws and regulations has evolved rapidly in the last few years. The pace of change continues to increase to pursue a sustainable model of capitalism. Pressures from the community for better corporate behaviour has also increased due to highly publicised corporate environmental disasters (Kamran et al. 2021 ; Liu et al. 2021 ; Roberts et al. 2021a , 2021b ; Shad et al. 2020 ). This trend has increased the demand for more environmental information and activities. Likewise, concerns related to the environmental and social effects of business have led to increased demand and desire to apply transparency on the entirety of issues related to corporate behaviour (Kamran et al. 2021 ; Khan et al. 2021 ). Some researchers confirmed that organisations participating in sustainability activities and disclosure would enhance transparency, reputation, and branding, encouraging employees and increasing competitiveness (Agyemang et al. 2020 ; Alshbili et al. 2021 ; Elmagrhi et al. 2019 ; Hassan et al. 2020 ; X. Chen et al. 2020 ; Song et al. 2021 ). Yet, a nascent, but growing stream of research has criticised the transparency and suitability of these practices.
The importance of sustainability engagement on its three dimensions is widely presented in the literature (social, environmental, and economic). Environmentally, increased human and industrial impact on the surrounding ecosystems has resulted in environmental changes, which have developed into one of the most significant issues in this era. Hence, sustainability has emerged as a critical factor in achieving environmental balance (Yadav et al. 2021 ). The importance of sustainability is demonstrated via efforts to maintain the environment and conserve natural resources, all of which contribute to a better quality of life. All companies try to embrace sustainability because of its importance in preserving resources and creating value in use (James 2014 ). Burhan and Rahmanti ( 2012 ) claimed that sustainability benefits investment returns and financial performance by producing value and thus ensuring the stability of earnings. Socially and economically, sustainability practices lead to a reduction in spending by providing savings, which leads to the use of these savings in supporting economic activities and local addition to investments. Moreover, communities that have good development plans are more attractive to investment and investors. Besides, good sustainability strategies reduce costs associated with the personal aspects of the consumer’s health. In addition, sound strategies for sustainability contribute to increasing productivity by employees and the surrounding environment becomes more encouraging for production and research aspects.
A key component of developing and implementing a sustainability plan in a corporation would require a periodic review of that plan and its implementation. An extensive body of research has demonstrated the role of audit that reviews sustainability from the side of environmental management and performance, and the relation of the environment to other ethical, labour, and social aspects. The importance of assurance in emphasising sustainability has been commonly highlighted as the most important mean of mitigating the risk of environmental violations and ensuring sustainability engagement of corporations (Coyne 2006 ; Desimone et al. 2020 ). According to the Institute of Internal Auditors (IIA 2021 ), audit functions add value to enterprises by strengthening risk management and improving the understanding of new emergent issues such as sustainability (Abdelfattah et al. 2020 ; El-Dyasty & Elamer 2020 ; Owusu et al. 2020 ). Additionally, Chiang and Torng ( 2015 ) argued that the audit component is the key point in the complete infrastructure under which the organisation’s interaction with changes in the environment can be managed. Ridley et al. ( 2011 ) argued that there is a growing recognition of the importance and necessity for organisations to report on issues related to sustainability, but the importance and value of such reports, which are acted upon impartially and independently, appear to be underappreciated by stakeholders. Hence, organisations have a rapid increase in sustainability assurance activities due to the need to monitor sustainability risk and activities (Fraser et al. 2020 ). Sustainability assurance includes three main characteristics: assessing the environment by using measurable standards and linking them to performance, relying on an audit team with sufficient accounting and financial experience and issuing reports of both types, internal to shareholders and external to the public (Nitkin & Brooks 1998 ). Sustainability assurance measures the value of organisations from three aspects: economic, social, and environmental (Coyne 2006 ). Trotman and Trotman ( 2015 ) reported that assurance is associated with sustainability in achieving accountability towards stakeholders.
A substantial number of prior research has documented that the interest of organisations in all countries has increased in sustainable development, which required an increase in the need for sustainability auditors and the application of assurance standards (Coyne 2006 ; Handoko et al. 2020 ; Silvola & Vinnari 2021 ). While there are some specific mandatory sustainability reporting instruments across the world, there are few regulations around sustainability reporting and none regarding sustainability assurance practices (Desimone et al. 2020 ). The assurance providers’ professionalism, independence, and quality of assurance statements have all been called into question in terms of their content analysis of sustainability reports and assurance statements. Furthermore, as sustainability assurance is costly, assurance statements mostly consist of theoretical reflections rather than field investigations. Sustainability assurance has, therefore, received growing attention from academics in recent years. Despite this trend, to date, relatively few review studies exist discussing the role of assurance in achieving and assuring sustainability practices (Csutora & Harangozo 2017 ; Qingliang Tang 2019 ). Our study, therefore, aims mainly to evaluate the prior studies that discussed assurance and sustainability topics to answer three main research questions.
RQ.1 . How was the research related to sustainability assurance developed and investigated?
RQ.2 . What is the current evaluation of previous studies (focus and criticisms)?
RQ.3 . How do future research on the role of assurance in sustainability can be identified?
In order to address these questions, a systematic literature review (SLR) method was followed to collect relevant studies from the Scopus database in the sustainability assurance area. Following Khatib et al. ( 2021b ), a search string was developed with limited keywords identified after reviewing studies that discussed assurance or accounting with sustainability (i.e. Ridley et al. 2011 ). A final sample of 94 studies was included in the current study, which explicitly discusses assurance and sustainability.
A nascent, but growing research stream has focused on assurance and sustainability in recent times due to the desire of institutions to use assurance functions in assessing sustainability risks. However, a dearth of research on certain developed and developing countries was found. For instance, only one study in the USA has been found in the sample literature despite the large impact of assurance and sustainability on its economy. This indicates that there is a need for more research investigating sustainability assurance in both developed and developing countries. The review also reveals that the need for assurance of sustainability report does not only enhance the reputation of institutions but also can add more value to the organisation’s planning, monitoring, structure, and accountability. Furthermore, a significant number of practical works relied severely on archival data, pointing to the need for more reliable and valid hand-collected research, although some constructs that influence sustainability assurance cannot be easily observed using archival databases (e.g. psychology, culture, and preference of auditor). This study provides several other recommendations for future research directions.
Our paper contributes to this field as the first study, to our knowledge, that relied on SLR to provide a comprehensive and up-to-date review of the sustainability assurance literature. This research is useful for many stakeholders such as management, auditors, regulators, and researchers as it provides insights into the intellectual development of the sustainability assurance fields. Also, it shows the great importance of assurance and its contribution in enhancing the practice of sustainability to the extent of the stakeholders’ desire and confirms that there is a major role for assurance in emphasising sustainability as the most important means contributing to mitigate the risk related to environmental violations. Lastly, based on our SLR and the synthesis of research, this study outlines several avenues to be addressed in investigating sustainability assurance in future. In doing so, we build possible future research queries for the interactions of internal and external assurance, audit committees, and other types of assurance. The resulting future research avenues tie the study of assurance and sustainability to avoid perpetuating the divide and parallel examination endeavours.
The rest of this article is prepared as follows. The “ Methodology ” section summarises the methodology applied in this research including journal selection and content analysis. In the “ Results and discussion ” section, we present and discuss the results of the sample literature evaluation. The “ Future research avenues ” section highlights several suggestions for future work. We end with a conclusion in the “ Conclusions and recommendations ” section.
The systematic literature review approach is popular in management, finance, and economic fields (Hedin et al. 2019 ). Systematic literature review (SLR) can provide significantly unbiased results compared to traditional narrative review (Hazaea et al. 2021b ; Kotb et al. 2020 ). Subjective and biased results can be reduced, and the investigation status is improved in the topic being discussed using SLRs (Massaro et al. 2015 ) as it limits scholars’ preference during the identification of the sample literature. Studies based on the SLR can confirm the transparency of the analysis with the possibility of replication (Easterby-Smith et al. 2015 ), and it differs from traditional reviews in that it follows strict and explicit rules in the way it is prepared (Massaro et al. 2016 ).
According to Kotb et al. ( 2020 ), Zhao et al. ( 2021 ), and Massaro et al. ( 2016 ), studies based on SLRs required the following steps: determine the protocol to be used for the review and identify the databases from which the research sample can be obtained (e.g. Scopus, Web of Science, Google Scholar, and ProQuest), determine the research questions to be answered using previous studies under investigation, determine the type of studies to be investigated and specify the time period, measure the impact of the article based on predefined rules (e.g. use the Google Scholar or Scopus citation to determine the high article impact among the readers), define the analytical framework for the studies, and use the developed framework to critically analyse prior literature to show the intellectual development of the field and highlight gaps by analysing previous steps to provide some avenues for future research. This approach was also used in several recent SLR studies (i.e. Hazaea et al. 2021a , b ; Zamil et al. 2021 ; Zhao et al. 2021 ).
To avoid errors in implementing SLR, we followed some studies that discussed topics similar to the current study (e.g. Ascani et al. 2021 ; Khatib et al. 2021b ; Nerantzidis et al. 2020 ; Widmann et al. 2021 ). The data collection was conducted in August 2021. We relied on the Scopus database to obtain the sample literature as it is the largest indexed abstract database compared to the others (Nerantzidis et al. 2020 ; Yahaya et al. 2020 ). As shown in Fig. 1 , two keywords were utilised to search for studies related to the topic under study, namely “Audit*” and “Sustainab*”. It should be noted that the use of asterisk helped us to look for other similar terms such as auditor, auditing, audits, sustainability, sustainable. These keywords were used to search in the title, keywords, and abstract of the literature. The initial sample of studies hit the number of 3683 studies. Then, this sample was limited to studies that were published in the English language (result in 3577 studies) and in journal or conference proceedings (result in 3102 studies). Since all research included in the sample literature are carefully evaluated, publications in non-English languages were excluded due to our lack of language skills. Given that assurance and sustainability are the main focus of the study, we limited the search to studies that were published under the “ Environment Science” OR “Business” OR “Management” OR “Finance” OR “Economic ” subjects which significantly reduce the sample literature to 716 studies. Finally, we screened the titles and abstracts of the final number of documents, and articles that are irrelevant to assurance and sustainability were excluded, resulting in 150 articles. After a thorough analysis of all publications that directly addressed sustainability assurance, a final sample of 94 research was included in this study.
The flow chart of the sample collection
Our questions are based on three basic criteria: (i) knowing the current status of the studies under investigation, description, and objective, (ii) direct criticism of current studies, evaluating and identifying gaps, and (iii) guide future research to cover the gaps. According to extant research (i.e. Kotb et al. 2020 ; Nerantzidis et al. 2020 ), for studies based on SLR, three questions should be included. In this study, the first question provides an investigation of how the studies that discussed assurance and sustainability have evolved. According to Dumay and Garanina ( 2013 ) and Tsalavoutas et al. ( 2020 ), this question can be addressed through several points such as assessment of the most influential paper, regional distribution, quality of journals, the affiliation of authors, research setting, and research instrument. The second question can be answered by analysing the main research topics, the theoretical basis, and evaluating the previous literature results (see, Khatib et al. 2021a ; Kotb et al. 2020 ; Massaro et al. 2016 ). The third question is addressed by highlighting the avenues for future work during the process of addressing the first and second questions.
Results and discussion
Descriptive analysis, yearly trends.
In Fig. 2 , it seems clear that the number of studies that discussed assurance and sustainability during the period 2015 to 2021 has increased significantly, especially in 2020, where the number of published studies was 15 articles. The increase in studies that discussed assurance and sustainability in the recent period may be due to the desire of institutions to use audit functions in assessing sustainability risks. Besides, the financial crises added momentum to the demand for stricter rules and regulations, more transparent disclosure, and greater management accountability. Fraser et al. ( 2020 ) emphasised that there is an increase in the trend of sustainability assurance by institutions and organisations due to the need to use assurance functions in monitoring sustainability risks and their activities. Similarly, Ahmed ( 2016a , b ) emphasised that as a result of the increase in social responsibility in all aspects, including the economy, the interest of auditors in the social responsibility of companies increased. Therefore, the increased orientation by the auditors led to the necessity of conducting research related to this activity.
The yearly trend of the published documents
In general, the interest of stakeholders has increased in the implementation of sustainability activities in addition to the interest of regulators and their encouragement for institutions in developing sustainable activities because of their importance to various economic aspects (Mensah 2019 ). For instance, Ridley et al. ( 2011 ) argued that sustainability assurances contribute to governance, risk management, and control of organisations in emerging markets. Consequently, we argue that increasing stakeholder interest in sustainability activities leads to increased consideration of the importance of assurance in improving sustainability activities, which requires further research to better understand the complex nature of the relationship between sustainability and assurance aspects, especially post COVID-19 crisis.
In this section, we evaluated the geographical distribution of the sample literature. The investigation showed that the studies were distributed among 24 countries only, while 15 studies were cross country, and 23 were non-regional studies (Table 1 ). Due to the limited studies that belong to every country, we followed Ascani et al. ( 2021 ) and utilised the continental classification. Table 2 shows that China is the most investigated country in our sample with five articles [5.32%]. This could be attributed to the recent sustainable development policies taking place in China (Ascani et al. 2021 ). For example, a study by Tang ( 2019 ) showed that the most important factors that increased the practice of carbon assurance in China are the rapid expansion and development of carbon enterprises and the government’s encouragement of these enterprises. Canada came second with 4 studies, 4.26%, such as Nitkin and Brooks ( 1998 ), which discussed the experiences of Canadian companies in public and private sectors in integrating sustainable development management with preparing reports as an essential part of their business. The study indicated that the majority of companies operating in Canada do not review their environmental sustainability as the reports and practice of sustainable development auditing are not mandatory. In addition, the study results indicated that the practice of sustainability audit is based on many factors, the most important of which are legal responsibility before the state, corporate commitment, transparency associated with the audit process, and general awareness of environmental issues.
The results highlighted that some countries were investigated only three times in prior research, namely Malaysia, Romania, The UK, Taiwan, Australia, Indonesia, and Spain, while the rest of the countries were subject to less than two studies. Moreover, some researchers were interested in evaluating the role of economic and cultural differences by conducting cross-country research (15 studies). For example, a study by Guidara et al. ( 2021 ) aimed to assess the relationship between the effectiveness of assurance standards and sustainability by using a sample from 125 countries. Al-Matari and Mgammal ( 2019 ) reported that multi-country studies can provide basic and important insights that enable researchers to understand the subject under investigation from various cultural, social, and political aspects.
Furthermore, we grouped the sample literature into several categories based on the content distribution of the studies. We found that Asia ranked first in the number of studies with 23 articles (e.g. Charumathi & Krishnan 2011 ; Chiang & Torng 2015 ; Tang 2019 ), followed by Europe with 21 articles (Serbănică et al. 2015 ; Watson and Emery 2003 ), then South and North America with six articles (i.e. Oliveira et al. 2011 ; Rubenstein 2001 ), and Oceania with four articles, and Africa with 2 articles. Interestingly, there is only one study from the USA despite its large socio-economic impact. This indicates that there is a need for more research investigating sustainability assurance in both developed and developing countries that received less attention in the literature.
Table 2 presents the most influential research studies that have an impact among sustainability assurance scholars based on the citation matrix provided by the Scopus database. The result revealed that the study conducted by Simnett et al. ( 2009 ) is the most influential research with 567 citations. The study determined the factors related to the voluntary purchase decision, selection, and confirmation of the assurance provider. It also revealed the importance of assurance in supporting the need for companies to enhance credibility and selection of the assurance provider. The study used a sample of 2113 companies in 31 countries, and the results showed that companies that aim to enhance their credibility with regard to stakeholders and aim to develop and build their corporate reputation often get confirmed reports of their sustainability. In addition, the study results indicated that the assurance provider might not be definitively linked to the audit profession. Likewise, a study by Rennings et al. ( 2006 ) also has another influential research with 315 citations. This study investigated the interrelationship between economic performance, technical environmental innovations, and environmental management and assurance scheme. It found that environmental process innovations are positively affected by the environmental management systems (Rennings et al. 2006 ). The reason may be that this paper was published long ago and it has been suggested that old studies may get more chances to be cited (Ascani et al. 2021 ; Kotb et al. 2020 ). The study conducted by Casterella et al. ( 2004 ) ranked third with 169 citations. This study analysed competition strategies that can create a sustainable environment in Big-6 audit firms and the impact of non-specialist auditors on that. The reason behind its impact among researchers may be because it was conducted in the world’s largest economies, in addition to the fact that this study was published a long time ago. In this context, we believe that studies published in high-impact journals and implemented in a strong economic region may have a significant impact among researchers as a result of the prevailing belief that research results are strong.
Distribution of the sample publication upon journals
Table 3 describes the sample of the studies under investigation based on the sources of journals in which the sample studies were published. We focused on studies that discussed assurance and sustainability and obtained 94 studies that were analysed. Following Chen et al. ( 2018 ) and Hristov et al. ( 2021 ), journals were divided into three categories. The first category is the journals categorised in the environment and sustainability; the second category is the journals categorised in accounting, operations management, and performance; and the third category is the journals categorised in general management. Table 3 shows that the second type included the largest number of 39 research articles, where this type was classified into five categories. Managerial Auditing Journal ranked first with 6 research papers, followed by International Journal of Auditing: A Journal of Practice and Theory and Accounting Auditing and Accountability Journal , 2 research papers for each journal. This confirms the extent to which audit functions are related to sustainability, especially that the research published in the first three journals, the majority of them after 2010 which indicates the interest of researchers in this field. In the second place came research published in the journals of environment and sustainability, where Business Strategy and the Environment has published six research papers, which ranks first in publishing research related to sustainability and topics related to management such as accounting. This indicates that this journal is a pioneer in publishing research related to management and the environment. Followed by the Journal of Cleaner Production with five research papers, then the Journal of Business Ethics that includes five research papers, and sustainability 4 research papers. These journals emphasise the important role that assurance plays in ensuring sustainability. Remarkably, most of the journals indicated in the table are among the best journals in assurance and sustainability, which confirm the importance of this research. Another interesting thing that confirms the growing interest in sustainability assurance is the presence of research published in the post-2017 period in journals with high impact among readers and pioneers in the disciplines of assurance and sustainability.
The analytical framework
Theories applied in the literature.
Through the general analysis of the 94 studies included in the investigation, the investigation shows that there are only 44 studies that relied on theories and were distributed as follows: agency theory (3 articles), stakeholder theory (2 articles), legitimacy theory (2 articles), institutional theory (2 articles), other single theory (11 articles), and mixed theory (24 articles). Table 4 (A) shows the theories that were used in the studies under investigation, either individually or with other theories. Agency theory was used in 15 studies (see, Annuar & Abdul Rashid 2015 ; Wang et al. 2020 ). The analysis also shows that stakeholder theory has been used in 13 studies either individually or with other theories. Wang ( 2017 ) applied stakeholder theory to investigate the association between the characteristics of firms including the characteristics of the audit committee (AC) and disclosure of sustainability reports. The result showed that there is a positive association between characteristics of AC and disclosure of sustainability reports. Legitimacy theory was used in eight studies (e.g. Fernandez-Feijoo et al. 2018 ). The results showed that ensuring sustainability can be achieved to a large degree and a high level when the financial auditors belong to the Big4 audit firms. The institutional theory was used in 4 studies (e.g. Silvola & Vinnari 2021 ) where this theory was used as a basis for verifying the role of the agency and the management style in achieving sustainability assurance and the role of auditors in achieving this. The results showed that the refusal of the institutional work of other agents by the auditors might help in ensuring the achievement of sustainability.
Resource dependency theory was also used in four studies. It should be noted that 24 studies used mixed theories (i.e. Rika 2009 ) where the aim was to investigate the incentives that call for the use of environmental assurance in the Fiji public institutions. The results showed that external and internal factors necessitated the use of environmental assurance, including the request of international organisations and the United Nations, in addition to the new laws in the country. The study results indicated that this could be explained by using the institutional and legitimacy theories.
It should be noted that the theories have been directed from three aspects: economic (critical political economy theory), social (ethical and corporate cultural theory and social-political theory), and psychological (theory of planned behavioural) and this reinforces the necessity of building research based on theories, which contributes to the development of research work. Thus, expanding the adoption of the theoretical basis in assurance research by using new theories based on economic, social, and psychological aspects enhances the audit functions towards sustainability assurance.
Interestingly, 50 research articles did not apply a theoretical framework in evaluating the topic (Kaziliünas 2008 ; Oliveira et al. 2011 ; Serbănică et al. 2015 ). It is worth noting that it might be difficult to understand the outcomes of any study that is not based on a theoretical basis (Nerantzidis et al. 2020 ). According to Beck and Stolterman ( 2016 ), studies which are not based on theories may be insufficient in providing insight into the topic in question. This is one of the limitations of previous studies under investigation and we, therefore, encourage future studies to consider this issue.
The theory of stakeholders is one of the most important theories used as a major research approach related to sustainability management (Wang 2017 ). Numerous studies have established that stakeholder theory is a critical component in explaining sustainability and preparing financial reports (Belal & Roberts 2010 ; Reynolds & Yuthas 2008 ). The stakeholder theory assumes that corporations should take into account all the different expectations surrounding their business. Additionally, it emphasised the need for the management to identify the nature of the environment surrounding the performance of their institutions, including the regulation of the association between internal and external stakeholders. According to Hermawan and Gunardi ( 2019 ), stakeholders may affect the performance of companies through the impact of social ownership, profitability, financial leverage, and the independence of those authorised in the management of these institutions from the disclosure of social responsibility. This is consistent with what is supported by the stakeholder theory. In the sustainability assurance literature, this theory is used in different studies with a different framework such as the risk of CSR and auditors (Brooks et al. 2019 ), carbon auditing (Qingliang Tang 2019 ), sustainability development and corporate governance (Suttipun & Saelee 2015 ), and corporate sustainability and social assurance (Gao & Zhang 2004 ). The significance of stakeholder theory is that it guides stakeholders in general to commercial firms’ proper thinking. However, it does not incorporate the ethical concepts essential for managers to deal with some issues, such as those relating to the natural environment that do not clearly and directly involve individuals within commercial institutions (Orts & Strudler 2002 ). Despite the extensive application of this theory in research, there is still a dearth of literature on the subject.
It was applied in 15 studies. The agency theory is related to the conflict of interest resulting from the separation of ownership (Fama & Jensen 1983 ; Hazaea et al. 2020 ; Hazaea et al. 2021a ; Khatib & Nour,). Agency theory is concerned with investigating problems that arise for one party in terms of decision-making and implementation of activities (Al Amosh and Khatib 2021 ; Eisenhardt 1989 ). The literature under investigation used agency theory to explore many areas such as auditor gender and crash risk (Wang et al. 2020 ), sustainable development and the type of gender of the member of the audit committee (Bravo and Reguera-Alvarado 2019 ), the impact of corporate governance on sustainability (Cancela et al. 2020 ; Suttipun and Saelee 2015 ), and the impact of audit committees (ACs) on corporate sustainability (Buallay and Al-Ajmi 2020 ). Although this theory is frequently used in the sample research articles, the interpretations are deemed inadequate. Especially with new and modern topics, given that the basics of this theory are old (Bendickson et al. 2016 ), some studies consider that the agency theory ignored many human motives while focusing only on the aspect of self-interest and human behaviour (Alshbili et al. 2019 ; Chariri 2008 ; Elamer et al. 2019 , 2021 ).
According to Rika ( 2009 ) and Zamil et al. ( 2021 ), the theory of legitimacy is one of the most used theories in research related to environmental accounting. However, there are many problems to apply and follow this theory, such as the necessity of economic work under conditions of competition, continuous and great pressure from stakeholders, in addition to fragmented social values (Neu et al. 1998 ). Tilling ( 2004 ) argued that the legitimacy theory could contribute significantly to providing a strong and systematic mechanism for the non-standard social and environmental accounting disclosures provided by companies. According to Zyznarska-Dworczak ( 2018 ), the legitimacy theory explains the behaviour of institutions in developing, implementing, and communicating corporate social responsibility programs and policies. This requires achieving the corporate social contract through the adoption of CSR that affects various activities, including assurance and sustainability activities.
In our sample, eight studies have applied this theory. Buallay and Al-Ajmi ( 2020 ) discussed the extent to which the features enjoyed by the audit committees have an impact on the sustainability reports of banks in the Arab Gulf countries based on four theories, including the theory of legitimacy. The study results showed a non-positive correlation between the financial experience of members of the audit committees and sustainability reports. Moreover, it indicated the importance of the positive role of the independence of audit committees members and the frequency of their meetings in determining the level of disclosure. The results also revealed the positive impact of the quality of auditors, and the size and the age of the bank on sustainability reports. Other seven studies have applied this theory (Boiral et al. 2019 ; Fernandez-feijoo et al. 2017 ; Hermawan & Gunardi 2019 ; Suttipun & Saelee 2015 ; Qingliang Tang 2019 ; Velte 2018 ).
One of the limitations of the theory of legitimacy is its consistency and vision that the processes associated with reporting and confirmation are formed through the pursuit of social legitimacy, while the processes related to the principle of achieving transparency and the application of the issue with stakeholders are neglected (Boiral et al. 2017 ). Thus, the legitimacy theory may be limited in its ability to explain how assurance-related service providers can confer and explain legality in scientific terms compared to specific ethical issues and behaviour associated with their audit activities (Boiral et al. 2019 ).
The use of institutional theory includes the benefit of social and environmental accounting research from the point of view of different approaches and lenses (Bebbington et al. 2008 ). The institutional theory provides stronger results and interpretations than the theory of legitimacy, as it considers all the practical and internal factors of the subject under discussion. Moreover, it helps researchers to benefit from the theoretical interpretation that includes abundant information (Adams and Larrinaga-González 2007 ). Four studies from the sample discussed in this study used the institution theory. Rika ( 2009 ) used institutional theory to discuss the motivations for using environmental assurance in public sector organisations. Silvola and Vinnari ( 2021 ) discussed and clarified the role auditors play in promoting and ensuring sustainability among society. Despite the relevance of this theory, several studies have demonstrated that it is ineffective when multiple operations exist due to the external and internal environments of multinational corporations and large companies (Krajnovic 2018 ).
Methods applied in prior studies
The research methods that were followed in the previous studies were divided into five methods, including questionnaires and other empirical, annual reports, interviews and case studies, review and non-empirical research, and mixed-method studies. As shown in Table 4 (B), the review and non-empirical research is widely applied in the literature with 32 articles. These studies have discussed the sustainability assurance reports in public sectors (Handoko et al. 2020 ), corporate social responsibility assurance (Morimoto et al. 2004 ), application of environmental assurance (Westlake & Diamantis 1998 ), and internal audit and sustainability (Victoria Stanciu 2014 ). According to previous studies, the demand for sustainability report audits enhances the image of an institution and adds value to organisations’ planning, structure, monitoring, and accountability.
In our sample, 32 studies used archival data indicating that there is a great interest in conducting research based on realistic data from the reports of institutions or companies listed under the stock exchange markets. Ghani et al. ( 2018 ) reported that the samples that are used from firms reports have strong and accurate characteristics. Although many constructs (philosophy, culture, and preference of auditor) cannot be easily observed from an archival database, a significant number of practical works relied severely on archival data pointing to the need for more reliable and valid hand-collected research. Similarly, qualitative research has also received less attention from scholars where seven studies only have applied this method; out of these six articles, five studies have utilised interviews (Annuar & Abdul Rashid 2015 ; Boiral et al. 2020 ; Rennings et al. 2006 ; Silvola & Vinnari 2021 ), while the other two studies were case study research (Coetzee et al. 2019 ; Watson & Emery 2004 ). The investigation highlighted the lack of studies based on primary data (interviews and questionnaires) compared to secondary data. Future studies may use this method as one of the most important ways to obtain data in the social philosophy, culture, preference, and economic aspects (Roopa & Rani 2012 ).
Concerning the unit of analysis, the literature was classified based on the sector under investigation as it might be useful in highlighting the parties interested in achieving effective sustainability assurance. This classification was applied in several previous studies (e.g. Guthrie et al. 2012 ; Kotb et al. 2020 ) as it helps to identify the institutions in which the assurance and sustainability research was conducted. Table 4 (C) shows that the (general/other) classification is obtained in most prior research with 54 articles where the study did not specify the type of institution that was investigated. Moreover, other studies focused on the public sector institutions (18 studies) and listed firms (13 studies). Some factors may help in obtaining data from the public sector due to the desire of the government sector to encourage researchers and accessibility to the information of listed corporations. Surprisingly, one study discussed the role of assurance in promoting sustainability in the private sector and this warrants future investigation. Furthermore, future studies may examine the role of assurance in promoting sustainability, relying on data from non-profit companies.
The extensive and various literature on sustainability suffers from missing common agreement on accurate definition of sustainability as highlighted by several scholars (i.e. Chancé et al. 2018 ; Elkington 1998 ; Kuhlman & Farrington 2010 ; Munier 2005 ). Sustainability consists of three dimensions: the environmental dimension, the social dimension, and the economic dimension. Likewise, Ackers ( 2011 ) stated that sustainability assurance depends on three principles: the social principle, the environmental principle, and the economic principle, which require measuring them using specific indicators or criteria in accordance with the particular sustainability guidelines. Yet, some studies have proven that sustainability can be defined through two dimensions: the environmental dimension and the welfare dimension. Others, Kuhlman and Farrington ( 2010 ), argued that the separation between the economic and social dimensions is not logical because they are one concept that aims to achieve the welfare of the community. Thus, we categorised the research as follows; (i) environmental, social, and economic, (ii) environment and economic, (iii) environmental and social, and (v) environmental.
Results in Table 4 (D) show that the most comprehensive definition of sustainability received the largest number of research, which reached 52 papers (e.g. Guidara et al. 2021 ; Paterson et al. 2019 ; Slobodyanik & Chyzhevska 2019 ), followed by environment and economic with 23 studies. Moreover, some studies discussed sustainability from an environmental and social aspect with 16 studies, while three studies focused on the environmental aspects only. For example, Tang ( 2019 ) focused on the Chinese carbon audit institutions and showed that the most important factors that increased the practice of carbon assurance in China are the rapid expansion and development of carbon enterprises and the government’s encouragement of these enterprises.
Thematic and content analysis of sustainability assurance research
The investigation showed that previous studies had examined a wide range of aspects related to sustainability assurance. These studies have focused on internal audits (7 articles) such as the role of internal audit functions (Desimone et al. 2020 ; Soh and Martinov-Bennie 2015 ), perceptions of internal auditors towards sustainability development (Desimone et al. 2020 ; Gray et al. 2014 ; Shih et al. 2006 ), external audit which discussed in one article (Ahmed 2016b ), ACs (13 articles) such as characteristics of ACs (Al-Shaer and Zaman 2018 ; Buallay and Al-Ajmi 2020 ; Zaman et al. 2021 ), the experience of the member of ACs (Velte 2018 ), environmental assurance (10 articles) such as (He et al. 2015 ; Rennings et al. 2006 ; Nacanieli Rika 2009 ), and other specialist assurance (14 articles) such as financial audit (Canning et al. 2019 ), social audit (Gao and Zhang 2004 ; Zenad and Hasaballah 2020 ), carbon audit (Csutora and Harangozo 2017 ; Y. Zhang et al. 2019 ), government audit (Slobodyanik and Chyzhevska 2019 ), and audit in general (54 articles). However, these themes have been less examined in the literature, and more work addressing them is needed.
Internal and external audit and sustainability
The investigation indicates that seven articles have examined the relationship between internal audit functions and their role in achieving sustainability, while only one study investigated the role of external audits and their role in promoting sustainability. Table 5 summarises the objectives and results of studies in this area. The literature primarily from the accounting field has reported that the internal audit functions have worked to enhance and ensure sustainability and to provide some services such as assurance and consulting, which is consistent with international sustainability programs (Ridley et al. 2011 ). Internal audit functions help achieve sustainability by investigating data, investigating the validity and consistency of reports, and building trust with management, investors, employees, and stakeholders (Anagement et al. 2015 ). This is in line with the guidance provided by the Institute of Internal Auditors to enable internal auditors to ensure and facilitate consulting services for all aspects of sustainability (Ridley et al. 2011 ). Soh and Martinov-Bennie ( 2018 ) reported that management support and external reporting of sustainability information are key factors associated with internal audit’s involvement in sustainability assurance and consulting activities.
However, dealing with environmental management to guarantee effective CSR practices is still the most vital challenge that faces internal auditors (Deloitte 2018 ), as they need to support the management by providing the necessary recommendations to improve activities and implement the plans set by the institutions. Hence, organisations should promote and practice rigorous assurance by experts who have sufficient experience to carry out their work (Victoria Stanciu 2014 ). The sample literature revealed that the presence of risk assessment by internal auditors, industry, and internal audit function age are important factors in the sustainability audits involvement (Desimone et al. 2020 ). However, auditors believe that they should be more involved in green information technology activities, as their current involvement is limited to the traditional role as assurance provider, not as facilitators or consultants (Gray et al. 2014 ). Future studies may discuss the role of internal audit and external assurance in ensuring sustainability from several aspects, including the characteristics of internal, external assurance members, their independence, financial and accounting expertise, and salaries, as well as their relationship with the top management team and AC. For example, it has been highlighted that the interrelationships between internal auditors, external auditors, the board of directors, and audit committees have a crucial role to play in sustainability assurance (Buallay & Al-Ajmi 2020 ). Furthermore, it has been found that the transparency of the adjustment to auditing policy as a response to COVID-19 is incomplete at best (Auld & Renckens 2021 ). The question that remained unanswered is how will economic conditions impact private sustainability assurance post-COVID-19 crisis?
Audit committees (ACs) and sustainability
The investigation suggested that a major research area has been the ACs as part of corporate governance with 13 studies. Table 6 presents sample studies on the role and effectiveness of the characteristics of members of ACs in ensuring sustainability. The literature highlighted that the characteristics of the ACs such as independence and the size of the committee, in addition to the financial and accounting experience, are closely related to ensuring sustainability. It can be said that the ACs contribute to improving sustainability reports through the extent to which members of the committees enjoy the required qualities (Bravo & Reguera-Alvarado 2019 ). However, the results of a study by Buallay and Al-Ajmi ( 2020 ) concluded that some characteristics of ACs are negatively related to achieving sustainability such as financial experiences of the members of the ACs which negatively correlated with the sustainability practices and disclosure, while the independence of members of the ACs, and frequent meetings are positively associated with ensuring sustainability. Also, the size of the committee is found to have an inverse impact on sustainability disclosure (Adegboye et al. 2020 ). The independence of AC members and gender diversity among auditors is positively related to ensuring sustainability, while there is a negative correlation with the size of ACs (Adegboye et al. 2020 ). The research was taken a step further by Pucheta-Martínez et al. ( 2021 ), who evaluated the moderating role of gender diversity on the impact of ACs, which appeared to be statically significant. Due to the inconclusive findings of the prior studies on the role of AC attributes in sustainability assurance, future investigation is highly warranted in this area. Table 6 summarises the objectives and results of some studies in this area.
Other types of assurance and sustainability
Table 7 shows the studies that discussed other types of sustainability assurance such as carbon disclosure assurance (Kumar et al. 2021 ; Qingliang Tang 2019 ), shariah audit (Sulaiman & Alhaji Zakari 2019 ), social assurance (Gao & Zhang 2004 ), environmental assurance (Watson and Emery 2003 ), and auditing firm (Bostan et al. 2021 ; Coetzee et al. 2019 ; Ghani et al. 2018 ).
The concept of social assurance is one of the types of audits that are concerned with monitoring, evaluating, and measuring general social (Carroll & Beiler 1975 ). Social assurance is defined as a set of organisational procedures that undertake the tasks of evaluating the social performance according to the expectations of firms and stakeholders (Elkington 1997 ). In general, social assurance can also be viewed as a function of examining the dynamic processes that organisations follow to enhance and improve the social performance from planning, inclusion, reporting, and stakeholder involvement (Zhang et al. 2003 ). According to Gao and Zhang ( 2006 ), the role of social accounting in ensuring and promoting sustainability lies in the extent of consolidation and complexity of relationships with stakeholders, which enables the establishment of the competitive advantage of the company based on sustainability. Several social issues involved in the assurance and/or consulting activities of corporations include customer privacy, product responsibility, donations and sponsorships, community impacts and relations, human rights, supply chain issues, training and education, employee retention and turnover, and occupational health and safety. Researchers argued that governance and environmental issues are the greatest current and future importance of assurance activities, while social issues appeared to be overlooked (Soh & Martinov-Bennie 2015 ).
- Environmental assurance
It could be argued that environmental assurance is one of the voluntary activities of companies (Radu et al. 2012 ). According to Dhariwal ( 2013 ), environmental assurance is one of the management tools that enhance the overall environmental performance of corporations. A study by Khodjaeva ( 2019 ) demonstrated the importance of environmental assurance as a tool that contributes to increasing and improving investment attraction and working to reduce the destructive resources of the economy.
Similarly, Watson and Emery ( 2003 ) suggested that environmental assurance is a set of sub-reports (corporate responsibility reports) that express many activities of organisations. With regard to environmental assurance, it has been found that there is a strong correlation between environmental assurance and CSR (Watson and Emery 2003 ). Thus, environmental assurance may contribute to the achievement of sustainable development goals when viewed through the lens of a policy orientation that emphasises the importance of preserving the environment while balancing economic development needs. Thereby, it contributes to the development and planning processes’ non-negative impact on society via the environment. Additional research is needed in this area.
Carbon assurance is one of the new jobs that have been practiced in many developed countries such as China ( Zhang et al. 2019 ). Chen and Mei ( 2012 ) pointed out that carbon assurance is one of the branches of environmental assurance and it shows how countries can adapt to shifts in economic development, which contributes to strengthening and improving national auditing. Similary, Tang ( 2019 ) referred to carbon assurance as an extension of the comprehensive and general idea of sustainability or environmental assurance. Likewise, his study showed that there is an increase in the application of carbon auditing due to the economic development in some countries. This necessitated the application of this carbon auditing to work towards achieving a balance between growth in domestic products and the protection of the ecosystem, considering that carbon auditing is a tool through which innovation governance can be managed, transformations management and sustainable technical, social, and organisational transformation.
It should be noted that the carbon assurance differs from the traditional audit assurance, which depends on processes that cover revenues and expenses, review of laws, financial expenditures, internal management and reports, while carbon audit covers the audit of carbon derivatives and what is related to it. In the sample that discussed the carbon audit, studies were limited to China and India. Therefore, the economic development and industrial transformations in these two countries are among the most important factors that necessitated the application of this type of guarantee. Interestingly, there are no studies on the application of carbon insurance in countries such as the USA and Eastern countries of Asia, which are also experiencing industrial transformations, which may require the application of this type of assurance.
Sharia assurance is one of the most important aspects practiced in Islamic institutions including Waqf institutions. It is the most important way to measure the level of commitment and compliance with Islamic law principles. According to Khalil et al. ( 2014 ), the Islamic Waqf institutions contributed positively to achieving economic and social development in some Islamic countries such as Egypt, Kuwait, and Malaysia. Furthermore, only one study observed that the practice of Sharia assurance contributes to adopting advanced governance and Sharia assurance mechanisms, which contributes to facilitating and promoting sustainable development and economic growth (Mohammed et al. 2020 ). In Table 7 , we presented the objectives, results, methods, and type of audits of some of these studies.
Future research avenues
Several topics were identified for future research based on the SLR of sustainability assurance literature that may be explored via novel theoretical approaches or empirical methods. The investigation revealed that sustainability assurance is a recent topic and there has been growth in the number of published studies addressing this topic in the last few years. In terms of the geographical distribution of studies, the review showed that China is the most investigated market regarding the role and importance of assurance and the extent of the need for sustainability assurance in institutions. However, due to the lack of research on some markets, there is a need for more research investigating sustainability assurance in both developed and developing countries that received less attention in the literature. Guidara et al. ( 2021 ) called for further work on emerging economies with significant challenges facing auditing practices. It may be instructive to conduct in-depth investigative studies in European and Arab countries, in which available studies were few. It would also be interesting to conduct analytical studies on the Chinese and American cases, which have not been adequately studied according to the results of our study. Researchers could also discuss environmental assurance and carbon assurance, especially in countries that enjoy great economic development. Comparative research utilising data from different legal jurisdictions would be useful in helping the intellectual understanding of institutional and legal environment influence sustainability assurance (Al-Shaer & Zaman 2018 ).
Surprisingly, only one study has discussed the role of auditing in promoting sustainability in the private sector, which warrants future investigation. Also, future studies may discuss the role of auditing in promoting sustainability, relying on data from non-profit companies or waqf institutions (Sulaiman & Alhaji Zakari 2019 ).
Moreover, it has been found that empirical studies based on questionnaires and interview tools are very limited, pointing to the need for more research using these approaches. Future studies may use the survey method as one of the most important ways to obtain data in the social philosophy, culture, preference, and economic aspects (Ghani et al. 2018 ; Roopa & Rani 2012 ). Al-Shaer and Zaman ( 2018 ) argued that utilising interview techniques would provide in-depth insights into the role of auditing relating to sustainability in certain organisational settings. It is necessary that academics continue to employ suitable techniques to attenuate endogeneities issues, though we are inspired by the growing attention paid to methodological concerns of endogeneities.
From our SLR, another area with negligible prior research is the development of a theoretical framework (e.g. Ruiz-Barbadillo & Martínez-Ferrero 2020 ). Studies that are based on theories may provide results and insights with strong contributions to the understanding and development of the topic. To expand theoretical perspectives to explore the relationship between audit and sustainability and to show the important role of sustainability audit towards stakeholders, we encourage future research to consider applying theoretical grounds in further exploration of the sustainability audit topic. In light of the current conditions and as a result of the environmental changes that occurred during the COVID-19 crisis, studies can be expanded to discuss the importance of sustainability assurance in such crises.
Furthermore, our review showed that the absence of studies devoted to investigating the impact of internal and external auditing. It seems that there is an expansion in the studies that discussed the characteristics of members of the ACs on sustainability. Future studies may discuss the interactive role of internal and external audits in ensuring sustainability (Al-Shaer & Zaman 2018 ), in addition to the possibility of discussing the characteristics of audit members. For example, Wang et al. ( 2020 ) highlighted the need for more work on the role of auditor gender preferences toward sustainability practices. Also, it has been reported that the growing call for assurance and the expanded risk of auditor’s litigation during the COVID-19 epidemic would increase the’s effort and working time of auditors. How will the growth in demand influence sustainability auditing post-COVID-19 crisis in terms of fees and assurance quality?
On the other hand, and in light of the great need to monitor sustainability activities, assurance activities may be one of the basic tools for this, which requires the development of assurance standards in line with the needs of stakeholders in achieving sustainability. Few studies discussed this topic, perhaps the most recent of which was published in a Sustainability Journal by Fraser et al. ( 2020 ). The question that wants to be answered is whether the common standards can achieve the stakeholders’ goals in achieving sustainability in light of the increasing need to implement sustainability activities and in light of changing environmental conditions such as a COVID-19 crisis or there is a need to issue other standards that go along with these environmental changes. Future studies may look into this area with a focus on the possibility of conducting investigations with regulators, audit and sustainability institutions, and stakeholders.
In considering context and process, researchers can unravel different dimensions of auditor attributes, such as auditor tenure (assurance providers), opinion, market competition of assurance, assurance qualification, audit rotation and unpack how they affect sustainability activities and disclosure (Chiang & Torng 2015 ; Ruiz-barbadillo & Martínez-ferrero 2020 ; Tahinakis & Samarinas 2017 ).
In addition, there is a need to better account for audit sustainability systems as a result of environmental changes that stop the practice of audit systems in their natural form such as the COVID-19 crisis which has affected all economic sectors (Castka et al. 2020 ; Johnsson et al. 2020 ; Khatib & Nour 2021 ). For instance, is resilience operational linked to changing audit methods and procedures, or should some solutions complement the work between traditional audit systems and new systems implemented in light of environmental changes in a way that ensures the achievement of sustainability? Hence, this is another area that needs more studies to consider for the impact of auditor resilience on audit quality.
Conclusions and recommendations
Sustainability is a rapidly growing topic among firms, society, and academics. Nonetheless, there is a dearth of empirical and review studies discussing the role of assurance in achieving and assuring the sustainability of institutions. This study, therefore, followed a systematic literature review to provide a comprehensive view of the role of audit in achieving sustainability by using a final sample of 94 studies.
The study revealed that the need for audits for sustainability reports does not only enhance the reputation of institutions but also adds more value to the organisation’s planning, structure, monitoring, and accountability. This paper adds to the existing literature on the audit and sustainability of corporations by offering a comprehensive review of the existing literature. It highlights the role of auditing in enhancing the practice of sustainability to the extent of the stakeholders’ desire and confirms that there is a significant role for auditing in emphasising sustainability as the most important means contributing to mitigating the risk related to environmental violations. In general, the results showed that the role of audit in promoting and ensuring sustainability is crucial, especially if the audit characteristics are different. The findings may help strengthen the understanding of parties such as regulators, practitioners, and potential investors on the intellectual development of the sustainability audit field and allow the development of new and remarkable empirics in future research.
The current sustainability assurance standards need to be revised to enhance the professionalism of assurance practices. As a result of different aspects/research subjects of sustainability assurance, auditors should clarify the criteria used and systematically refer to established standards that enhance the credibility of their verification and the readability of assurance statements, as without such standards would there be great variability in the wording used within the conclusions and assurance statements. Furthermore, the revision of assurance standards should involve stakeholders who are deeply concerned with improving the quality and reliability of sustainability assurance, irrespective of the commercial and procedural aspects of these standards.
Similar to other studies, this research is not without limitations. We utilised several keywords to identify the sample literature in the Scopus database as it is the wide abstract indexing source of peer-reviewed articles. Future research, however, could consider other databases such as Web of Science, ABS, and ABDC. Moreover, the search method applied in this study was restricted; therefore, the results of the search string used in this paper may not cover all documents in this area. Hence, similar studies in future could add other related keywords to the search string such as environmental performance or disclosure.
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Saddam A. Hazaea & Jinyu Zhu
Azman Hashim International Business School, Universiti Teknologi Malaysia, 81310, Johor Bahru, Malaysia
Saleh F. A. Khatib
Faculty of Business Administration College, Department of Economic and Finance, Taif University, Taif, Saudi Arabia
Ayman Hassan Bazhair
Brunel Business School, Brunel University London, Kingston Lane, Uxbridge, UB8 3PH, London, UK
Ahmed A. Elamer
Department of Accounting, Faculty of Commerce, Mansoura University, Mansoura, Egypt
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Saddam A. Hazaea: methodology, data collection and processing, writing—original draft, writing—review and editing. Jinyu Zhu: data collection and processing, visualisation, writing—review and editing. Saleh F. A. Khatib: data collection and processing, visualisation. Ayman Hassan Bazhair: writing—review and editing. Ahmed A. Elamer: supervision, writing—review and editing. All authors read and approved the final manuscript.
Correspondence to Ahmed A. Elamer .
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1. Details of the majority of the 94 studies selected are included in this investigation. The rest of the articles are available from the first and corresponding authors or other authors upon request.
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Hazaea, S.A., Zhu, J., Khatib, S.F.A. et al. Sustainability assurance practices: a systematic review and future research agenda. Environ Sci Pollut Res 29 , 4843–4864 (2022). https://doi.org/10.1007/s11356-021-17359-9
Received : 12 July 2021
Accepted : 31 October 2021
Published : 17 November 2021
Issue Date : January 2022
DOI : https://doi.org/10.1007/s11356-021-17359-9
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Overselling Sustainability Reporting
- Kenneth P. Pucker
For two decades progressive thinkers have argued that a more sustainable form of capitalism would arise if companies regularly measured and reported on their environmental, social, and governance (ESG) performance. But although such reporting has become widespread, and some firms are deriving benefits from it, environmental damage and social inequality are still growing.
This article, by Timberland’s former COO, outlines the problems with both sustainability reporting and sustainable investing. The author discusses nonstandard metrics, insufficient auditing, unreliable ESG ratings, and more. But real progress, he says, requires not just better measurement and reporting practices but also changes in regulations, investment incentives, and mindsets.
We’re confusing output with impact.
Idea in Brief
Over the past two decades, many people bought into the idea that if corporations committed to measuring and reporting on their sustainability performance, the payoffs would be profound. Companies would do less harm to the planet and more good for society. Investors and consumers would reward strong performers. Rigorous metrics would become the norm. Over time, the result would be a more sustainable form of capitalism.
It hasn’t worked. Reporting is riddled with problems, and sustainable investing is overhyped. Meanwhile, environmental threats continue to mount, and inequality continues to grow.
A Better Approach
Metrics can and should be improved, and stakeholder pressure will incrementally advance sustainability. However, we also need stronger civic engagement, sharper regulation, different incentives for investment, and a rethinking of what makes a company or society successful.
Over the past 20 years many forward-thinking academics, consultants, executives, and NGO leaders have promoted a theory outlining how businesses can prosper while pursuing a greener and more socially responsible agenda. These people, whom I refer to collectively as “Sustainability Inc.,” believed that if companies committed to measuring and reporting publicly on their sustainability performance, four things would happen:
- Kenneth P. Pucker is a professor of practice at the Fletcher School . He is an advisory director at Berkshire Partners and was formerly the chief operating officer of Timberland. kpucker31
Best sustainability reports of 2021/22
I recently realised that it’s been a while since I updated my list of best sustainability reports – and there’ve been quite a few heavy-hitters over the past few months.
For those who didn’t read last year’s list: welcome! This is where I earmark some of the most thought-provoking papers that have crossed my path as of late. I hope you’ll find them as challenging and inspiring as I have.
My must-read sustainability reports:
The tnfd nature-related risk & opportunity management and disclosure framework.
It’s a mouthful, but the Taskforce on Nature-related Financial Disclosures (TNFD)’s pioneering framework could not have come at a better time. This initial report lays the groundwork for corporations and financial institutions to begin disclosing their nature-related risks and opportunities. Why is this important? Well, it’s an important acknowledgement of how much we rely on our natural environment for, well, everything. The report states that over half of the world’s economic output – priced at 44 trillion USD – depends on our planet’s biodiversity . The hope is that once we’ve gained a more sophisticated understanding of our dependencies on nature, we’ll start taking better care of it.
If you've learnt something, click the card below to track your action on the Pawprint app.
I'm educating myself on climate change, world economic forum’s global risks report.
This one really made me sit up. The 2022 Global Risks Report highlights ‘climate action failure’ as their top risk for this decade (surprise, surprise), but goes further to argue that we must ‘embrace the disorderly net-zero transition’ if we’re going to decarbonise in time to avert the worst effects of climate change. A ‘disorderly’ transition will cause disruptions in the short-term, like energy supply constraints and price fluctuations, but the report argues that the pace of an ‘orderly’ transition would now be ‘too little, too late’. Instead, we should look to the opportunities that can be – and have been – seized during periods of disorder for hope. A bold, thought-provoking read that’s not at all what you’d expect.
The IPCC’s Sixth Assessment Report – Mitigation of Climate Change
An obvious addition to the list, but how could I not include it? The last report in the IPCC’s current scientific cycle is an analysis of current mitigation processes and the impact of long-term climate pledges. Okay, bad news first: current trajectories have us at 3.2 °C of warming before the end of this century. But there is good news in here too: the report looks at how the cost of solar and wind energy has fallen steeply, as have lithium ion batteries, making the green transition more feasible than ever. The hope of 1.5 °C is still alive, and the IPCC’s ‘Mitigation’ report lays out exactly what is required from us to make it happen – governments, businesses and individuals alike.
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International Energy Agency’s Carbon Capture, Utilisation and Storage Report
The IPCC’s ‘Mitigation’ report has found that all pathways that keep warming to 1.5 °C will depend on carbon removal – whether these are nature-based solutions, or technologies like carbon capture and storage (CCS) and greenhouse gas removal (GGR). However, these technologies remain somewhat controversial, so it seems like now’s a good time to deep-dive into the topic. The IEA’s report on CCUS is an excellent place to start, as it provides a factual overview of how CCS and GGR work and where they’re currently being implemented.
Project Drawdown’s Climate–Poverty Connections Report
COP26 and the sixth IPCC report has put climate justice in the spotlight, and rightly so. It’s an important subject that everyone – especially those of us in positions of privilege – need to educate ourselves on, and so I’m excited to dive further into Project Drawdown’s Climate–Poverty Connections Report. The executive summary is clear-eyed about the deeply entrenched inequalities that link the climate crisis and poverty in the Global South. At the same time, its authors strike a powerfully optimistic tone in detailing the co-benefits of economic empowerment, health and development that climate mitigation solutions can bring to vulnerable frontline communities – if we do it right.
UNEP’s Beat Plastic Pollution
Not a report in the strictest sense, but this striking visual feature by the UNEP provides a moving and effective map of how our oceans and waterways – even our bodies – have become choked with plastics and microplastics , creating a new microbial habitat ominously dubbed the ‘plastisphere’. With a historic global treaty to end plastic pollution currently in the works, let’s hope we’ll soon be rid of plastic’s stranglehold.
I'll update this blog as more excellent reports come my way, so do check back in from time to time. In order for us to overcome the challenges and grasp the opportunities of climate change, we need to keep our minds open, and to keep learning. I hope you've found something on this list that intrigues and excites you to accelerate your company's journey to net zero.
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What is sustainability reporting.
Through sustainability reporting, companies communicate their performance and impacts on a wide range of sustainability topics, spanning environmental, social and governance parameters. It enables companies to be more transparent about the risks and opportunities they face, giving stakeholders greater insight into performance beyond the bottom line.
Building and maintaining trust in businesses and governments is fundamental to creating a sustainable global economy and a thriving world. Every day, decisions are made by businesses and governments that have direct impacts on their stakeholders, such as decisions relating to financial institutions, labor organizations, civil society, citizens and the level of trust they have with them. These decisions are rarely based on financial information alone and often consider risks and opportunities related to a variety of short and long-term factors. Sustainability topics are increasingly integrated into these decision-making processes.
As companies across the world increasingly embrace sustainability reporting, a number of standards have emerged that enable a wide range of stakeholders to more effectively assess and compare sustainability reports. The most widely adopted framework is the Global Reporting Initiative Standards. It is related to other forms of non-financial reporting, including triple bottom line reporting, and corporate social responsibility (CSR) reporting.
Stakeholders play a crucial role in identifying non-financial risks and opportunities for organizations. The transparency gained by involving a range of stakeholders in decision-making processes not only leads to better decisions but also builds trust in businesses.
Better reputation: A 2011 survey on corporate reputation found that expanding transparency and reporting positive deeds were the two most important ways to build public trust in businesses. The 2013 Boston College Center for Corporate Citizenship and EY survey revealed that more than 50% of respondents issuing sustainability reports stated that these reports helped enhance their company’s reputation.
Meeting the expectations of employees: Employees are a vital audience for sustainability reporting on sustainability. They are the primary audience for the presentation of the reporting, as it contributes to an increase in employee retention and loyalty. This, in turn, positively impacts the workforce as a whole, which ultimately can improve company performance.
Improved access to capital: Reporting firms rank highly for sustainability, and have Kaplan-Zingales Index scores that are 0.6 lower – indicating fewer capital constraints – than the scores for low-sustainability companies.
Increased efficiency and waste reduction: Sustainability reporting helps make organizations’ decision-making processes more efficient and, in turn, enables them to reduce risk across their supply chain. This process reduces waste, yielding significant cost savings.
Benefits of Sustainability Reporting:
- Increases understanding of risks and opportunities;
- Emphasizes the link between financial and non-financial performance;
- Influences long-term management strategy, policy and business plans;
- Streamlines processes, reducing costs and improving efficiency;
- Benchmarks and assesses sustainability performance with respect to laws, norms, codes, performance standards and voluntary initiatives;
- Helps companies avoid publicized environmental, social and governance failures;
- Enables the comparison of performance internally and between organizations and sectors.
External Benefits Can Include:
- Mitigating negative environmental, social and governance impacts, improving reputation and brand loyalty;
- Enabling external stakeholders to understand the organization’s true value, along with tangible and intangible assets;
- Demonstrating how the organization influences and is influenced by expectations about sustainable development.
Examples of Sustainability Reports
Here is a collection of sustainability reports of different companies and organizations across various sectors and industries:
- Heathrow Airport
- Network Rail
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How to write a sustainability report? 6 steps to get started!
A sustainability report allows you to make the sustainability performance of your university or college transparent. Below you can learn how you can go about writing one.
What is a sustainability report and why does reporting matter?
A sustainability report presents information about the environmental, social, and economic performance of your university or college.
Writing a sustainability report offers you multiple benefits:
- Create transparency around your organisation’s sustainability impacts,
- Start a conversation with key stakeholders,
- Set a baseline to measure changes in the future,
- And identify actions to improve your organisation’s sustainability performance.
Let’s have a look at six steps you can take to develop your sustainability report:
1. Set your goals before you start
Before you dive into the hard work, you should think about what you want to accomplish.
If you’re just getting started, you could just do a simple assessment. In this case, you could just:
- Create an inventory of all sustainability courses ,
- Map existing sustainability initiatives ,
- Or calculate a first carbon footprint for your university .
If on the other hand, you want to create a comprehensive assessment , you will have to think bigger. Then you will need to assess the environmental, social and economic impacts of your organisation regarding its education, research, operations, governance and community engagement .
Set your goals before you get started
2. Identify issues and choose indicators
Sustainability is a broad topic. In your report, you should focus on the most important sustainability issues of your particular university. For example:
- A research-intensive university should look at the impacts of its laboratories ,
- An international university should look at the impact of student and staff travel ,
- A university in a dry area should look at its water footprint .
If you are not sure what the most important sustainability issues of your university are, you should talk to people to find out what they think.
For example, you could organise a workshop with staff and students to identify what sustainability issues are most relevant.
Once you’ve identified what issues are important, you can choose indicators to measure them. For example:
- Electricity consumption of laboratories,
- CO 2 emissions from student and staff travel,
- Water consumption per building or person.
Tip: Browse the indicator list of the University Sustainability Assessment Framework for inspiration.
3. Expect trouble in data collection
Once you’ve chosen your indicators, you need to go out and collect data on them. Depending on the indicators you use, you may have to get information from:
- Facility and energy managers,
- Department heads,
- The university website,
- A sustainability manager,
- Student representatives or groups,
- Or the procurement or finance departments.
This allows you to talk to and meet many different people at your university.
While this can be fun, you might also run into trouble:
- You will need to chase people to give you the information,
- You may get numbers in different formats,
- And you have to watch out for calculation mistakes which you and others might make.
Don’t get frustrated! Encountering these barriers is normal and part of the process.
Tip: Store the data and make your calculations in a structured database, for example using the database template of the University Sustainability Assessment Framework .
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4. Analyse the data critically
Unfortunately, many sustainability reports end up as nice brochures with a lot of smiling people and flashy projects. They are missing a critical analysis of how well the organisation is actually doing regarding sustainability.
Of course, your position within the university – whether you are a student, staff member or external consultant – influences how critical you can be. But, you should be careful not to produce a marketing brochure.
As a first step, you should make sure that you have quantitative data to present. Don’t only list the exciting sustainability projects the university is doing. Include numbers like:
- Electricity and gas usage,
- Waste production,
- Water consumption,
- CO 2 e emissions,
- Number of sustainability courses,
- Students enrolled in these courses.
You can analyse the data that you collect, by:
- Presenting totals,
- Calculating ratios to put numbers into perspective,
- Identifying and explaining trends,
- Stating limitations in your data and methodology.
If you do this, then your report will already be much more insightful than most sustainability reports.
5. State key observations
Next, you should draw conclusions and make recommendations to make your insights actionable. Ask yourself:
- Where is the organisation doing well?
- What are critical areas of improvement?
- What interesting or surprising facts did you learn?
- How do you recommend the organisation moves forward?
These conclusions and recommendations allow stakeholders to act upon the main lessons from your report.
You should share these insights:
- In the conclusion, summary or recommendation section of the report,
- As well as any presentations or social media posts you make.
Include specific recommendations in your report, like introducing waste separation
6. Communicate in a way that people will listen
When was the last time that you actually read a long sustainability report in detail?
Most reports don’t reach their audience, they end up as long PDF documents in the downloads section of a website.
To reach your audience, you could share your findings in the following formats:
- An interactive website,
- A policy brief,
- A well-designed infographic,
- Or a presentation or a video.
Use these formats as an addition or alternative to a PDF document.
You should also actively share and spread the insights through:
- Presentations in front of the university council or management teams,
- One-on-one meetings with decision-makers,
- Newsletters and mailing-lists,
- Social media posts,
- Or lunch or keynote presentations.
Don’t expect people to actually take the time to read the report you send them via email. You actually need to go to them and tell them in person what you learned.
Examples of university sustainability reports
1. university of gloucestershire.
This is a standard sustainability report, covering multiple areas and written by the university’s sustainability team. You can access the English language report here .
- A great example of a concise report, covering the main elements of sustainability.
- Includes beautiful and informative infographics.
- Regarding campus operations, the document provides a good overview based on specific indicators.
- Does not go into detail on education and research.
- Missing a deeper analysis and specific recommendations.
2. Maastricht University
The sustainability progress report of Maastricht University was drafted by the student-led Green Office of the university. The reporting of the Green Office was also further developed into the University Sustainability Assessment Framework . You can access the English language report here .
- Very critical.
- Strong analysis of long-term trends.
- Covers governance, research, education, community and operations .
- No clear overview of actionable recommendations.
Maastricht University’s sustainability progress report was written by the student-led Green Office
3. University of Hamburg
Similarly to Maastricht University, the report of the University of Hamburg was written by students. In cooperation with the university administration, the local oikos chapter drafted the report. It is based on GRI indicators and supplemented with indicators which the authors determined themselves. You can access the report here (only in German) .
- Very extensive – covering social, environmental and economic issues, as well as education, research and knowledge transfer.
- Fully indicator and evidence-based.
- Specific recommendations for improvements.
- No overall conclusions.
4. University of Ghent
The sustainability report of the University of Ghent was drafted by the student and staff-led Green Office of the university, as a supplement to the university’s sustainability policy. The report is based on the GRI framework . You can access the English language report here .
- Every section is closely linked to the university’s sustainability goals.
- Additionally to covering indicators, the report rates how much progress was made towards each of the goals.
- Good overview of actions taken by the university.
- No deeper analysis of long-term trends.
Students and staff are discussing the future of sustainability at Ghent University
5. University of London
The sustainability report of the University of London takes the form of an online presentation. It was created by the university’s sustainability manager. You can access the English language report here .
- Interactive online report that is easy to share.
- Concise, but covering the most important indicators for operations.
- No coverage of education and research.
Do you now feel ready and inspired to get started with sustainability reporting? Then go ahead and take your first steps. If a comprehensive report is too large of a project, you can start small, with an infograph or poster. To help identify important indicators and track your data, you can use our University Sustainability Assessment Framework .
- Get started with sustainability reporting, using the University Sustainability Assessment Framework
- Calculate the carbon footprint of your university or college
- What is a sustainable university?
Photos by the student-led Green Office at Ghent University and Maastricht University , and by Dave Goodman .
Best sustainability report design: 6 ideas and examples
Inspiration for your next sustainability report.
Today’s most reputable and responsible companies share sustainability reports with their stakeholders, investors, employees, and consumers. The benefits of sustainability reporting may bolster a brand’s credibility and highlight lucrative economic opportunities through the transparency of its environmental impact.
No matter what reason compels you to create a sustainability report for your organization, odds are you’d like to build something impressive — which might inspire the question, what is the best sustainability report design?
This concise guide shares expert tips for making an impactful, value-driven corporate sustainability report , alongside successful examples to inspire you.
1. Choose between standalone reports or integrated reporting
Your reporting efforts cannot be successful in a vacuum. They need to be tailored to their readership—whether that’s a mixed audience of stakeholders or a dedicated group of investors and capital markets.
Put simply, when it comes to sustainability reporting, context matters.
If you aim to reach a mixed group of stakeholders, you’ll want to choose a standalone sustainability report . Businesses that elect to publish a standalone sustainability report should prioritize ongoing and future initiatives, key metrics that demonstrate progress, and the general impact on stakeholders. This is a business’ opportunity to share its story with customers, employees, consumers, and investors.
Alternatively, the context changes if your audience is investors and capital markets. Here, integrated reporting is preferred, as the business will focus more on financial materiality and financial impact.
To highlight simple differences between the two—integrated reporting will carry a more institutional tone, with an emphasis on facts and figures. On the other hand, standalone sustainability reports will likely be written in the company’s voice or brand identity, and it’s more likely to include photos or images to convey emotion.
2. Tailor each design to the right audience
While integrated reporting provides a clear line of sight for reporting metrics, standalone sustainability reports vary widely in context. Stakeholders from various backgrounds may be inclined to view your report, each with different intentions. To create an effective report, you’ll need to understand which stakeholders you expect to read the report.
For example, audiences who may engage with a sustainability report include:
- Current or potential investors
- Key business partners
- Media relations personnel
- Non-governmental organizations (NGOs)
- Consumers or the general public
- Your executive team or employees
Once you’ve formulated your audience, address the points they’re most interested in. If your audience spans multiple categories, highlight sections that speak directly to each audience segment.
The importance of integrated reporting
It’s important to note that there is increasing pressure to integrate sustainability reporting with financial reporting for investors and capital markets. This allows the audience to understand the material impact of sustainability programs and performance against financials.
Many jurisdictions have proposed and adopted laws requiring integrated reporting, for example:
- The U.S. SEC has proposed a rule requiring public companies to disclose GHG emissions and climate-related risks in public financial filings like annual 10Ks.
- The EU’s newly adopted CSRD requires integrated sustainability reporting alongside financial information in a specific digital format (iXBRL), which entails applying digital tags against individual data points for easier data search and identification. This is critical for businesses covered by the CSRD, which includes U.S. entities with European operations.
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The goal of a standalone sustainability report is to provide additional context to your stakeholders on your sustainability efforts. This is the place to include graphs, charts, historical data, goals, and roadmaps—all of the additional context that informs the more literal figures reported in the integrated report.
In this way, these two reporting methods can be blended to create a more effective approach.
3. Use a framework and standard from a credible organization
To produce the most trustworthy sustainability report possible, align with the framework and reporting standards of a credible environmental organization.
A framework guides what topics to showcase and how to showcase them. A standard is a more specific instruction on metrics and data points to include.
There are at least seven recognized organizations that provide frameworks and standards for sustainability reports, including:
- Sustainability Accounting Standards Board (SASB)
- Carbon Disclosure Project (CDP)
- Climate Disclosure Standards Board (CDSB)
- Global Reporting Initiative (GRI)
- International Financial Reporting Standards (IFRS)
- Taskforce on Climate-Related Financial Disclosures (TCFD)
- World Economic Forum International Business Council (WEF IBC)
4. Include your sustainability rating
A sustainability rating is a metric that shows an organization’s performance in environmental, social, and governance (ESG) sectors. On a sustainability report packed with information, a sustainability rating can inform the audience at a glance.
Sustainability ratings vary depending on two distinct factors: ESG rating providers and ESG indices.
- ESG rating providers – These providers are firms that consist of analysis and investment professionals that assess the ESG performance of publicly traded companies. From there, they assign each organization a score or grade comparable to industry peers. Each provider has different criteria and standards that typically cover environmental sustainability, social sustainability, and governance practices, alongside investment risk and financial stability. Common ESG raters include Sustainalytics (purchased by Morningstar), MSCI, Bloomberg, and Institutional Shareholders Services (ISS).
- ESG indices – These are tradable indices comprised of companies with ESG scores (often given by the ESG rating providers above, or by the index manager themselves). These represent an opportunity for investors (institutional and consumer) to purchase equity in businesses with an ESG focus. Examples of these include Dow Jones Sustainability Index (DJSI), S&P 500 ESG, Nasdaq-100 ESG, and FTSE4Good.
To receive a rating from any of these organizations, you must submit your sustainability report . This means a company’s first report won’t contain an ESG rating, however, subsequent reports can and should.
5. Communicate through visuals
Sustainability reports, no matter how small the company, tend to contain a lot of information, including emissions reporting, corporate social responsibility initiatives, and charitable efforts.
To investors or policymakers, these topics might be abstract and hard to grasp. As such, distill the information in your report into visuals to help communicate your points clearly and effectively. This can include elements like:
- Graphs and charts to showcase growth (or opportunity for improvement)
- Photographs to showcase organizational or charitable initiatives
- Icons or symbols to illustrate scale, like numbers of trees or a carbon footprint
6. Spell out opportunities
Your sustainability report can be designed with all the bells, whistles, and infographics, but if it doesn’t provide valuable insights that stakeholders can make decisions from, the report hasn’t done its job.
Revolve the design of your report around solutions . Where there is a number or a chart, carve space out to disclose the strategy (or proposed strategy) the organization can use to improve that metric. Better yet, if you can prove it with numbers, showcase how much money the company can save by adopting the proposed strategy.
For example, if the report data shows that the company’s recyclable waste has increased by 38% over the last five years, highlight a section alongside it illustrating your proposed waste reduction strategy or recycling initiative.
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Sustainability report design examples .
The bottom line is the best sustainability report designs are ones that communicate credibly, transparently, and concisely. Design your sustainability report in alignment with your company’s brand guidelines, but for added inspiration, here are a few examples to draw from:
- Autodesk Inc – The 3D design and engineering software platform’s report is easy to navigate and easy to understand. The first page provides a table of contents, allowing the individual to focus on the information most relevant to their involvement.
- Cisco Systems Inc – This report is highly visual and personable to invoke Cisco Systems’ mission. They’ve taken a human-centric approach, starting with their company’s high-level mission, then moving into personal statements made by the CEO and executive vice president.
- Cadence Design Systems Inc – The Cadence Design Systems report opted for a more experiential slideshow. As the slides move like pages in a book, the reader is taken through the high-level information about the company’s initiatives and their previous year’s highlights. From there, they move into specific initiatives to guide their company’s progress.
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1. Harvard Business Review. Designing Your Company’s Sustainability Report. https://hbr.org/2022/01/designing-your-companys-sustainability-report Accessed February 28, 2023
2. SASB. SASB Standards & Other ESG Frameworks. https://www.sasb.org/about/sasb-and-other-esg-frameworks/ Accessed February 28, 2023
3. ESG The Report. What is a Sustainability Rating? https://www.esgthereport.com/what-is-a-sustainability-rating/ Accessed February 28, 2023
4. Autodesk FY22 Impact Report https://damassets.autodesk.net/content/dam/autodesk/www/sustainability/docs/pdf/autodesk-fy2022-impact-report.pdf Accessed February 28, 2023
5. 2021 Cisco Purpose Report https://www.cisco.com/c/dam/m/en_us/about/csr/esg-hub/_pdf/purpose-report-2021.pdf Accessed February 28, 2023
6. Cadence Sustainability Report 2021 https://issuu.com/cdns/docs/cadence_2021_sustainability_report?fr=sZDY3YjMyMzM4MTY Accessed February 28, 2023
– Integrated reporting will carry a more institutional tone, with an emphasis on facts and figures, while standalone sustainability reports will likely be written in the company’s voice or brand identity, with photos or images to convey emotion.
– A framework guides what topics to showcase and how to showcase them. A standard is a more specific instruction on metrics and data points to include.