Accounting Essay Sustainability

Compulsory Question

Social and Environmental reporting, also known as sustainability reporting, is defined by Gray, Owen and Maunders as “the process of communicating the social and environmental effects of organisations actions within society and to society at large” (1987, p76). It is now more understood that long term survival of business rely on sustainability and lengthening time horizon is relevant as well as costs involved. Establishing SE reporting can be viewed as part of risk management. A number of theoretical lenses have been used to explain SE reporting. These include legitimacy theory, stakeholder theory, and institutional theory. Stakeholders have applied increasing pressure for continued accountability and transparency in relation to a firm’s activities and its decisions involving environmental and social issues for different needs and purposes.

The GRI was brought in as guidelines for organisations to report on sustainability performance as it helps manage their impact on sustainable development. As well as helping organisations manage their impacts, sustainability reporting promotes transparency and accountability. Triple bottom line reporting is the provision of information that allows stakeholders to determine not only the economic value added by the firm, but also the environmental and social value. The deficiency of the GRI is that it is only a guideline for sustainability reporting and is not part of the general purpose financial reports which are regulated by the conceptual framework. Thus could be deceptive as the reports that are formulated might be misleading in order to gain a favourable image of the firm.

Summary “Guthrie 2008”: The chosen industry is the Australian Food and Beverage Industry (AFBI) because it is highly significant to Australia’s economy and environment, and is under increasing pressure to manage a number of contemporary SE issues such as obesity, food safety, alcohol abuse, and packaging management issues. These issues are increasing in Australia. The paper attempts to customise SE disclosure – for industry specific issues – compare levels of disclosures – between reporting media, guidelines and SE items.

The deficiency of the GRI is that it is only a guideline for sustainability reporting and is not part of the general purpose financial reports which are regulated by the conceptual framework.

* The argument arises as to whether SE disclosure should be industry specific and what guidelines should be used against the reporting standards!.

Link to GRI & reporting: “Recently was the use of GRI, which is a ‘one size fits all approach’ has its problems: too broad and general across all industries. Some sectors require specialised needs”. The extent of the disclosure is influenced by various corporate characteristics such as industry and size. The paper examines quality and quantity of voluntary SE disclosure, as the findings show “were that the reporting approaches differed significantly between companies and the disclosures were predominantly declarative in nature”. (Guthrie 2008)
How is this to be measured? The researchers used word count, and then more appropriately, sentence (line) count. -“These findings illustrate the need for policy setters to establish generally accepted guidelines for disclosure of SE information in order to improve measurability, creditability and comparability between reporting periods and between companies.. and allow for transparency and comparability across industry-level indicators”.
It was shown in the results that the sample companies are using both annual reports and corporate websites for reporting on their SE reporting. In fact, it was shown that corporate websites had a higher frequency of disclosure than annual reports. This finding also supports the growing body of evidence that indicates the demise of the annual report as the most important medium for the disclosure of extended performance information. (Guthrie

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