Panayis Pitrakkos and Warren Maroun
This paper aims to examine the differences in quality and quantity of disclosures dealing with greenhouse gas emissions among companies with a relatively large or small carbon…
Abstract
Purpose
This paper aims to examine the differences in quality and quantity of disclosures dealing with greenhouse gas emissions among companies with a relatively large or small carbon footprint. It also considers whether disclosures are being included in the primary report to stakeholders (an integrated report) or in a secondary source (a sustainability report).
Design/methodology/approach
A comprehensive carbon disclosure checklist was constructed based on professional and academic literature to identify and categorise carbon disclosures. Quality is gauged according to a multi-dimensional assessment derived from prior research based on density of reporting, disclosure attributes, management orientation, integration of information, ease of analysis, reporting on strategy, use of independent assurance and repetition. A content analysis is used to gauge the quantity and quality of carbon disclosures of 50 companies listed on the Johannesburg Stock Exchange. Differences in the quantity and quality scores of high- and low-carbon companies are tested using a Mann–Whitney U test.
Findings
Carbon disclosures are used as part of a legitimacy management exercise. This involves not just the use of additional environmental disclosure to placate stakeholders as environmental impact grows. The quality of reporting and location of disclosures are, perhaps, more important for understanding how companies are responding to stakeholder expectations for reporting on carbon emissions and climate change.
Practical implications
Despite mounting scientific evidence on the risks posed by climate changes, companies remain reluctant to commit to high-quality reporting on specific steps being taken to reduce carbon emissions. Even when disclosures are being targeted at key stakeholders, the possibility of impression management remains. It may, therefore, be necessary to have carbon reporting regulated and independently assured. More guidance on how companies should be managing and reporting on carbon emissions and climate change may also be required.
Social implications
Despite mounting scientific evidence on the risks posed by climate changes, companies remain reluctant to commit to high-quality reporting on specific steps being taken to reduce carbon emissions. Even when disclosures are being targeted at key stakeholders, the possibility of impression management remains. It may, therefore, be necessary to have carbon reporting regulated and independently assured. More guidance on how companies should be managing and reporting on carbon emissions and climate change may also be required.
Originality/value
The study merges the traditional approach of focusing on the quantity of disclosures to illustrate the application of legitimacy theory in a sustainability/integrated reporting setting with less-seldom-studied quality and location of reporting. This result provides a more nuanced perspective of how carbon disclosures are being used to manage stakeholders’ reporting expectations.
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The value added statement has been voluntarily reported by South African companies for many years despite reservations about its usefulness. This article examines current…
Abstract
The value added statement has been voluntarily reported by South African companies for many years despite reservations about its usefulness. This article examines current literature on value added statements in two areas: the usefulness of the value added statement in South Africa and the relevance of social accounting theories in explaining its continued disclosure in South African listed companies’ annual reports. It also reports the results of a questionnaire survey addressed to preparers of value added statements.The research studies examined in the literature review indicate that legitimacy theory is more likely to provide an explanation for the disclosure of value added statements in annual reports in South Africa. The results of the empirical survey indicate that the majority of the respondents are of the opinion that it is desirable to prepare a value added statement, but that it is not used in the majority of companies. Furthermore, the reasons advanced by the preparers for the desirability of the value added statement provide some evidence that legitimacy theory may be behind the propensity of companies to publish a value added statement. The article recommends that the preparation of the value added statement should be standardised. However, the disclosure of an independently prepared value added report may be more useful to all users.
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Abdifatah Ahmed Haji and Mutalib Anifowose
The purpose of this paper is to examine the trend of integrated reporting (IR) practice following the introduction of an “apply or explain” IR requirement in South Africa. In…
Abstract
Purpose
The purpose of this paper is to examine the trend of integrated reporting (IR) practice following the introduction of an “apply or explain” IR requirement in South Africa. In particular, the authors examine whether the IR practice is ceremonial or substantive in the context of a soft regulatory environment.
Design/methodology/approach
By way of content analyses, the authors examine the extent and quality of IR practice using an IR checklist developed based on normative understanding of existing IR guidelines. The evidence is drawn from 246 integrated reports of large South African companies over a three-year period (2011-2013), following the introduction of IR requirement in South Africa.
Findings
The results show a significant increase in the extent and quality of IR practice. The findings also reveal significant improvements in individual IR categories such as connectivity of information, materiality determination process and reliability and completeness of the integrated reports. However, despite the increasing trend and evidence of both symbolic and substantive IR practice, the authors conclude that the current IR practice is largely ceremonial in nature, produced to acquire organisational legitimacy.
Practical implications
For academics, the authors argue that there is a need to move away from the “what” and “why” aspects of the IR agenda to “how” IR should work inside organisations. In particular, academics should engage with firms through interventionist research to help firms implement integrated thinking and substantive reporting practices. For organisations, the findings draw attention to specific aspects of IR that require improvement. For policymakers, the study provides evidence based on the developmental stage of IR practice and draws attention to certain areas that need clarification. In particular, the International Integrated Reporting Council and Integrated Reporting Committee of South Africa should provide detailed guidelines on connectivity of information, material issues and disclosure of multiple capitals and their trade-offs. Finally, for educators, in line with the ACCA’s embedment of IR in its accounting courses, there is a need to incorporate IR in the curriculum; in particular, the authors argue that the best way to advance IR is in a “ubiquitous” spread in accounting and management courses.
Originality/value
This study provides empirical account of IR practice over time in the context of a regulatory IR environment. The construction of an IR checklist developed based on normative understanding of local and international IR guidelines is another novel approach of this study.
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Valentina Beretta, Maria Chiara Demartini and Sara Trucco
Voluntary non-financial reporting aims at fairly reporting a firm’s non-financial performance. In particular, integrated reporting (IR) displays in a single report the…
Abstract
Voluntary non-financial reporting aims at fairly reporting a firm’s non-financial performance. In particular, integrated reporting (IR) displays in a single report the contribution of different forms of capital to the firm’s value creation. Drawing on both legitimacy and voluntary disclosure theory, the main purpose of this study is to examine the extent to which a company’s environmental, social, and governance (ESG) performance affects the content and semantic properties of intellectual capital disclosure (ICD) found in IRs.
To test theoretical hypotheses, content and tone analysis is used to assess the disclosure strategy associated with ICD, whereas a regression analysis tests the variation in semantic properties of ICD according to firms’ ESG performance. A total of 79 reports by European listed firms from 2011 to 2016 were downloaded via the Integrated Reporting Emerging Practice Examples Database and analyzed.
Results show that ESG performance contributing more to optimistic ICD tone is governance, although in mixed ways. Integrating vision and strategy positively contributes to ICD tone, whereas information on poor treatment of shareholders’ rights tends to be manipulated and associated with an optimistic tone of the ICD. Moreover, eco-efficient product innovation and healthy and safe job conditions play a positive role in enhancing optimistic ICD tone.
This chapter contributes to the current literature on voluntary disclosure by introducing new evidence on the disclosure strategy in IR. By analyzing the effect of the single dimensions of ESG performance on ICD tone, this study extends respectively ESG literature.
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The purpose of this study is to examine how social disclosures by one of the world’s largest producers of Platinum Group Metals are used to maintain and repair legitimacy in the…
Abstract
Purpose
The purpose of this study is to examine how social disclosures by one of the world’s largest producers of Platinum Group Metals are used to maintain and repair legitimacy in the context of South Africa’s prevailing socio-economic conditions and in response to the immediate challenge to legitimacy posed by violent worker demonstrations taking place at its operations in Marikana during August 2012. This is done to highlight how legitimacy strategies take account of the temporal characteristics of a threat to legitimacy and how these, in turn, may constrain the need for far-reaching organisational change.
Design/methodology/approach
Suchman’s (1995) outline of legitimacy theory and Laughlin’s (1991) model of organisational change provide a frame of reference for a detailed thematic content analysis which identifies the use of different strategies by an organization to respond to threats to its credibility and how these impact, resulting changes to business philosophies, policies and systems.
Findings
The study highlights the temporal dimension of legitimisation strategies. Social-related disclosures provided by the case entity in response to labour unrest are aimed at addressing both the episodic and continual threat to legitimacy resulting from the unfavourable event. These also have the effect of limiting the extent of internal changes to select business policies and sub-systems. Carefully managing legitimacy allows the case entity to avoid the need to reformulate its business ethos.
Research limitations/implications
The study deals only with a single case organisation. Although the emphasis is on highlighting themes and principles, results are not necessarily applicable in different contexts. Related to this, although the study deals with a major South African mining company, it does not prove the relevance of local cultural differences to the legitimisation process.
Originality/value
The study dispenses with the use of proxies, such as frequencies of disclosures, to demonstrate how organisations use non-financial reporting to secure legitimacy. Instead, it offers a detailed account of how different sub-sets of legitimacy are being mobilised in corporate reports response to long-term and episodic legitimacy considerations. In addition, the study offers one of the first interpretive accounts of how strategies used to manage legitimacy may constrain the potential of a material external shock resulting in internal organisational change. Finally, the study offers one of the first examples of the operation of legitimacy and organisational change theory from the African Continent.
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This chapter investigates how integrated reporting (IR) can contribute to a better corporate social responsibility (CSR) implementation through diffusion and adoption of CSR…
Abstract
This chapter investigates how integrated reporting (IR) can contribute to a better corporate social responsibility (CSR) implementation through diffusion and adoption of CSR practices and actually applying the CSR discourse. Based on innovation diffusion theory, we intend to analyse the diffusion and adoption of CSR on the grounds of IR. The purpose of this study is to demonstrate that IR does indeed represent a mean of reducing the gaps between CSR discourse and its implementation. In order to select the most relevant papers in the area of CSR and IR, we applied the method of positive research. Therefore, the review of literature was made by analysing various theoretical and empirical studies. Setting the main coordinates for CSR and IR through theoretical background, we continue with an empirical analysis on 23 companies that voluntarily publish integrated reports. We intend to demonstrate that IR encourages a diffusion of CSR practices, as companies become more interested in their CSR behaviour.
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Habib Muhammad Shahib, Eko Ganis Sukoharsono, M. Achsin and Yeney Widya Prihatiningtias
This chapter develops a new reference for local government accountability in socioenvironmental issues based on the views of leading socioenvironmental nongovernmental…
Abstract
This chapter develops a new reference for local government accountability in socioenvironmental issues based on the views of leading socioenvironmental nongovernmental Organisations (NGOs) in Indonesia. This study introduces an alternative view related to the government accountability model by focussing more on the socioenvironmental issues, which tend to be marginalised due to the dominance of [neo]liberal economic development and New Public Management paradigm in the praxis of government. A Fairclough's critical discourse analysis method has been applied to annual reports from three main socioenvironmental NGOs in Indonesia ranging from 2015 to 2018. This study found that there are three important notes for the local government's regulation, practice and accountability's activities to be in a line with the sustainable paradigm and the views of these NGOs. First and the foremost, the government's policy should give attention to public needs and ecological standards. Secondly, the rights and obligations related to the environmental issues should be transparent and accountable. Lastly, the government should release the accountability reports in full disclosure document and make the reports publicly available for various stakeholders. In particular, the accountability reports play a role as a tool for people to monitor the government's activities in socioenvironmental issues. This research implies an alternative view in the context of socioenvironmental accounting literature enrichment. It also provides valuable input to other governments, especially in developing countries and countries with economic growth that are highly reliant on the natural resources sector, in order to manage and account for their natural wealth in a more responsible and sustainable manner. Likewise, this research offers an alternative discourse of socioenvironmental accountability from the view of socioenvironmental NGOs in Indonesia.
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Waris Ali, J. George Frynas and Jeffrey Wilson
This research investigates the influence of corporate–NGO collaborations on corporate social responsibility (CSR) disclosure measured in three different ways (i.e. extent, level…
Abstract
Purpose
This research investigates the influence of corporate–NGO collaborations on corporate social responsibility (CSR) disclosure measured in three different ways (i.e. extent, level and quality) in low-income developing economies. Additionally, it examines the moderating effect of corporate profitability in the relationship between corporate–NGO collaborations and CSR disclosure.
Design/methodology/approach
This research uses multivariate regression analysis based on data collected from 201 non-financial firms listed on the Pakistan Stock Exchange (PSE).
Findings
The findings reveal that corporations with NGO partnerships are more likely to disclose CSR information and provide high-quality information regarding workers, the environment and community-related issues. Further, corporate profitability positively moderates the corporate–NGO collaborations and CSR disclosure relationship.
Research limitations/implications
Research limitations are presented in the conclusion section.
Practical implications
The findings underline the crucial significance of NGOs and their associated normative isomorphism logics for CSR disclosure in low-income countries with weak law enforcement and relatively ineffective state institutions, which were previously believed to lack such institutions.
Originality/value
While some research has suggested that companies in developing countries perceive significant pressure from NGOs to adopt social disclosure, no study has specifically explored how internally driven corporate–NGO collaboration (as opposed to external NGO activist pressures) promotes CSR disclosure specifically in developing economies.
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Shakoor Ahmed, Larelle (Ellie) Chapple, Katherine Christ and Sarah Osborne
This research develops a set of specific modern slavery disclosure principles for organisations. It critically evaluates seven legislative Acts from five different countries and…
Abstract
This research develops a set of specific modern slavery disclosure principles for organisations. It critically evaluates seven legislative Acts from five different countries and 16 guidelines and directives from international organisations. By undertaking an in-depth content analysis, the research derives an index comprising nine principles and 49 disclosure items to promote best-practice disclosure in tackling modern slavery. We promote nine active principles for organisations to implement and disclose: recognising modern slavery practices, identifying risks, publishing a modern slavery risk prevention policy, proactive in assessing and addressing risks, assessing efficacy of actions, garnering internal and external oversight, externally communicating modern slavery risk mitigation, implementing a suppliers' assessment and code of conduct to ensure transparency and specifying consequences for non-compliance. The research is motivated by the United Nations Sustainable Development Goal 8, which focusses on economic growth, full and productive employment and decent work. The research findings will assist practitioners seeking to discover and disclose evidence of modern slavery practices and their mitigation to minimise and encourage the elimination of this unethical and illegal practice in domestic and global supply chains and operations.
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Muhammad Bilal Farooq, Rashid Zaman and Muhammad Nadeem
This study aims to evaluate corporate sustainability integration by evaluating corporate practices against the sustainability principles of inclusivity, materiality…
Abstract
Purpose
This study aims to evaluate corporate sustainability integration by evaluating corporate practices against the sustainability principles of inclusivity, materiality, responsiveness and impact outlined in AccountAbility’s AA1000 Accountability Principles (AA1000AP) standard.
Design/methodology/approach
Data comprise 12 semi-structured interviews with senior managers of listed New Zealand companies. Findings are evaluated against AccountAbility’s principles of inclusivity, materiality, responsiveness and impact, which are based on a normative view of stakeholder theory.
Findings
In terms of inclusivity, stakeholder engagement is primarily monologic and is directed more towards traditional stakeholder groups. However, social media, which is gaining popularity, has the potential to facilitate greater dialogic stakeholder engagement. While most companies undertake a materiality assessment (with varying degrees of rigour) to support sustainability reporting, only some use it to drive planning and decision-making. Companies demonstrate responsiveness to stakeholder concerns through corporate governance and sustainability initiatives. Companies are monitoring and measuring their impact on stakeholders using sustainability key performance indicators (KPIs). However, measuring traditional metrics is easier than measuring areas such as the community. In rare instances, the executive’s remuneration is linked to these sustainability KPIs.
Practical implications
The study findings offer useful examples of the integration of sustainability into corporate processes and systems. Practitioners may find the insights useful in understanding how sustainability is currently being integrated into corporate practices by best practice New Zealand companies. Regulators may consider incorporating AA1000AP into their corporate governance guidelines. Finally, academics may find the study useful for teaching business and accounting courses and to guide the next generation of business managers.
Originality/value
First, the study brings together four streams of research on how sustainability reports are prepared (inclusivity, materiality, responsiveness and impact) in a single study. Second, the findings offer novel insights by evaluating corporate sustainability against the requirements of a standard that has received little academic attention.