Accounting and Sustainability: an introduction

by Carol A Adams
Main points:

  • introduces the field of accounting and sustainability;
  • accountants have been the enemy of sustainability – how can that change?;
  • outlines the main insights of chapter authors in the Handbook of Accounting and Sustainability;

One convergent theme in [academic] critique [of sustainability accounting] has been a challenge that much of the realist and procedural baggage associated with conventional accounting is no longer apposite when seeking to account for sustainability.” [emphasis added] 

Rob Gray (Gray 2010, p 47)

Accounting has been the enemy of sustainability. There is no indication that will change as the accounting profession moves to define sustainability reporting from a financial materiality perspective (see IFRS Foundation 2020). Accountants and their professional bodies have, through time, equated the term ‘sustainability’ with the sustainability of business and, more recently ‘enterprise value’. Rob Gray asked with respect to sustainability reporting and organisational value creation:

“Whose value? Whose creation?”

Rob Gray (Gray, 2006, p 793)

and argued that a business-as-(almost)-usual approach

“is just about the worse thing we could do” .

Rob Gray (Gray, 2006, p 860)

While some policy makers and policy influencers have attempted to address these questions with reference to evidence, others have not (see Adams and Abhayawansa, 2022). Some policy influencers, perhaps unaware of much of this work, have sought to minimise, misrepresent, or even ridicule academic input to the accounting and sustainability debate (see, for example, McBrien, 2021; Eccles, 2021).

Accounting academics in this field are largely unheard pioneers, in part because we speak an inconvenient truth. Collectively, and through a vast volume of research, we have been calling for change, and offering solutions, since the 1980s.

Concerns were expressed by the majority of accounting academics responding to the IFRS Foundation (2020) consultation paper on sustainability reporting, including all of those with research track records concerning the relationship between accounting, organisations, society and the environment. They appear to have fallen on deaf ears (Adams and Mueller, 2022). Some of these academic responses to the IFRS Foundation argued that in order to protect investor interests, accountants must first protect economies (and not just developed ones), society and the environment.

Calls by academics for mandatory social and environmental reporting started coming last century – long before the accounting profession, and bodies that represent investor interests, added their voices. Unerman and O’Dwyer (2007) set out a convincing argument that mandatory accountability to corporate stakeholders for corporate social responsibility will deliver more enhanced long term shareholder value than the current self-regulatory system.

The chapters in the Handbook of Accounting and Sustainability provide further evidence to support these concerns. Each has been co-authored by at least one internationally renowned author in the field, some working alongside the next generation of academic pioneers. Their work takes many different styles, is all evidence based and a pleasure to read. I commend these contributions to regulators, policy influencers, accounting bodies, accountants who make decisions or provide information to decision makers, accounting students and anyone in business concerned about the future of modern society and today’s youth and their descendants. Just as Gray (2006) and Unerman and O’Dwyer (2007) (and many others before and since) foresaw problems and pointed to solutions , so too do these authors.

The chapters are arranged in themes. The first cluster of chapters are setting the scene for the theme of accounting and sustainability. The chapters consider how research and practice concerning accounting and “sustainability” developed and the key influences in that development. The second cluster considers accounting, power, social (in)justice and (un)sustainability. The chapters in this theme cover the power and politics of sustainability reporting and its outcomes. A third cluster critiques the role of integrated reporting, a key reporting development in the early part of this century, in relation to sustainable development. The fourth looks at contemporary issues in accounting and sustainability and the final cluster of papers are devoted to a particular contemporary issue that is dominating practice and policy discussions – that of climate change-related disclosures, accounting for greenhouse gases and emissions trading schemes.

The remainder of this introduction highlights some key concerns raised by contributors to the Handbook about practice and policy developments and highlights some of the alternative futures they propose. But first I want to pay tribute to Professors Rob Gray (1952-2020) and Jefferey Unerman (1960-2020) who died after short illnesses during the course of the development of this Handbook. Both made a significant contribution to the field of research and practice. Rob had generously agreed to write a chapter. Much of their work remains relevant today.

Cite as Adams, C A (2022) Accounting and Sustainability: An introduction, in Adams, C A (editor) Handbook of Accounting and Sustainability, Edward Elgar Publishing Ltd

Setting the scene: Accounting and Sustainability

The chapters in this section provide some sense of the history and key issues in practice and policy development at the nexus of accounting and sustainability where accountability matters to the transition we need to survive and thrive. The first two chapters address key initiatives that have been instrumental in raising awareness of the sustainable development imperative and driving accountability and action – the Global Reporting Initiative (GRI) and Accounting for Sustainability (A4S).

GRI was established in 1997 and the GRI Standards now have more than 10,000 users world-wide. Initially focussing on reporting on metrics, the principles-based Standards now also cover disclosures on management approach, governance oversight and integration of sustainable development into strategy. This drives change – if properly applied. Their voluntary nature however, means that many companies do not. The chapter, which I co-wrote with current and now completed PhD students at Durham University Business School, Abdullah Alhamood, Xinwu He, Jie Tian, Le Wang, Yi Wang, charts the development of GRI, reviews the recent literature on the implementation of GRI Standards and identifies key themes of recent research. The literature points to the need for making GRI Standards mandatory and increasing the scope and uptake of external assurance.

A4S was established by His Royal Highness the Prince of Wales in 2004, recognising the critical role that finance and financial professionals could play in driving change. Helen Slinger, Executive Director of A4S, explains how they can instead be a barrier for change and their importance in the transformation required. She particularly notes the need for accountants to be able to balance and present different types of information to stakeholders. She discusses the extensive work and networks of A4S to remove the barriers and drive action. She suggests further research around various aspects of the change dynamic – examining how change occurs and advancing practical tools to facilitate that change.

How material issues are determined is critical to accountability and action as Stuart Cooper and Giovanna Michelon note in their chapter on conceptions of materiality. They consider it problematic to seek simple solutions given the interconnectedness and long-term nature of sustainable development challenges. They review the approach to materiality in key frameworks and standards and call for increased rigour in materiality determination from a stakeholder accountability rather than a valuation perspective.

Richard Slack also reflects on the need for an understanding of sustainability beyond its financial impact. His chapter provides a thorough and evidence-based account of research on sustainability reporting that has engaged with providers of finance. He notes the need for greater investor pressure to improve sustainability reporting quality speculating that this may also drive a realisation that sustainability issues cannot be simplified to a few metrics and that longer term measures and links to governance, strategy, business model and risk are needed. Future qualitative research, he suggests, can examine whether future corporate sustainability reporting is overshadowed by shorter term financial metrics.

The issue of how organisations have responded to calls for accountability and sustainability reporting frameworks/standards to date is taken up by Hannele Mäkelä and Charles Cho. They first set out calls for action on climate change (by Greta Thunberg), equity, diversity and inclusion (by the Black Lives Matter movement) and the integration of sustainability into professional accounting body curriculum. They categorise corporate responses as reactive, integrated or holistic. Like other contributors to this Handbook, they draw on prior research to note the danger of translating sustainability issues into financial language and largely continuing with business as usual. Like Slinger, commenting on the role of A4S, they note the critical role of accounting and accountability in the sustainability transition.

Accounting, power, social (in)justice and (un)sustainability

The chapters in this section focus on the relationship between accounting, power, social (in)justice and (un)sustainability. They challenge the status quo and consider how accounting practices and policy with respect to sustainable development issues are developed and maintained.

Massimo Contrafatto demonstrates how the institutional logics perspective can help us find a way through the complexity referred to by the authors of chapters in the previous section. The institutional logics perspective considers how values, beliefs and assumptions influence how individuals and organisations behave. Contrafatto uses it to consider: how and why accounting practices for sustainability activities and impacts emerge; the nexus between accounting for sustainability and sustainable change; and, the connection between accounting for sustainability and governance. In the harmonisation frenzy of the pandemic period, it is apparent that policy influencers and policy makers are largely unaware of the body of qualitative research that examines how reporting frameworks and their link (or lack thereof) with governance oversight influence, intentionally or unintentionally, the nature and speed of change.

Further insights can be provided through a feminist lens as Christine Cooper, Andrea Romi and Daniela Senkl demonstrate. The chapter is essentially a conversation between a mother (an accounting academic) and her daughter (who is studying accounting) about the initiative of the IFRS Foundation to establish the International Sustainability Standards Board. The high school student comes home from school excited about the prospect of accounting saving the planet. The mother provides a thought-provoking critique and evidence-informed alternative approach.

Alternative portrayals of organisations and shadow accounts are the focus of Michelle Rodrigue and Matias Laine. Their chapter discusses the body of research that challenges the accounts of sustainability performance produced by companies and its level of success in bringing visibility to unjust situations, environmental degradation and driving change. There is no doubt this line of research will continue to be much needed and Rodrigue and Laine share some ideas on the form this might take. They warn that increased sustainability disclosures and the increased sustainability talk we have witnessed recently might create the illusion that markets, governments and societies have everything under control.

The success of any organisation is dependent on its employees, a point that must not be forgotten in the push by the developed world to increase climate-related disclosures. Andrea Coulson picks this up and links it to research on the living wage. She demonstrates how much is still missing in accounting for employees limiting the ability of companies to make a positive impact on the achievement of SDG 8 particularly with respect to Full Employment and Decent Work with Equal Pay. She argues that the research to date on accounting for employees considered together with the research on the living wage can help us in the quest to ‘build back better’.

Danture Wickramasinghe, Chandana Alawattage, Lee Parker and Alvise Favotto explain how the SDGs are being used in Sri Lanka to inform public sector planning and control systems. Institutional logics (see discussion of Contrafatto’s chapter above) have played a role – the authors note that: “SDGs are now providing administrators and civil servants with a ‘legitimate’ basis for them to ‘counter’ undue politicisation in the public service”. They also note the need to consider the influence of local factors including political-cultural and institutional processes, nepotism, competition for different political ideologies and established religious institutions. This is relevant to policy makers in designing systems and researchers in assessing them.

Critiquing the role of integrated reporting in sustainable development

The International Framework first published in 2013 (IIRC, 2013) marked a significant new direction in corporate non-financial reporting and resulted in a steady stream of academic papers many examining its potential (or lack of it) to address sustainable development issues. The International Integrated Reporting Council ceased to exist in 2021 becoming part of the Value Reporting Foundation, and an announcement made at COP 26 that it would be absorbed by the IFRS Foundation in June 2022. The ideas in the framework were only partially incorporated into the IASB’s Exposure Draft on the revised Management Commentary Practice Statement released in 2021 (IASB, 2021). It remains to be seen whether this will be changed following the formation of the International Sustainability Standards Board. It is timely to review the literature on the contribution, or lack thereof, of integrated reporting to sustainable development. While some reporters have implemented integrated reporting with a broader audience than providers of financial capital in mind, the 2021 revision (IIRC, 2021) kept the enterprise value focus. Research is demonstrating that integrated thinking is not enough. We need sustainable development thinking, where sustainable development is central to the questions “Whose value? Whose creation?” (Gray, 2006, p 793).

Charl de Villiers and Ruth Dimes discuss the development of integrated reporting and provide their own critique the contribution or lack thereof of integrated reporting to the sustainability agenda to date and its potential future contribution. As the authors note, much of its potential seems to rest on a move away from a focus on shareholder value to a broader accountability. This follows from their definitions of a sustainable organisations as one that considers “the needs of a broad range of stakeholders (including the needs of future generations) and embed these into its operations, taking responsibility for its decisions”.

In the push for global harmonisation of corporate reporting little consideration has been given to regional priorities and perspectives let alone indigenous cultural values. Russell Craig, Rawiri Taonui, Lúcia Lima Rodrigues and Susan Wild address this by examining areas of difference between integrated reporting concepts and principles and Māori cultural values. Particularly relevant is that Māori do not favour one stakeholder and consider future generations and the natural world as stakeholders. In contrast, providers of financial capital (such as equity investors) are strongly favoured in integrated reporting investors are strongly favoured. Also noteworthy is that “Māori emphasize collective leadership through consultation, acting ethically and with integrity, and protecting people, Nature and culture for future generations. Co-operation is preferred to competition.” These are values that are important to achieving the SDGs.

Contemporary issues in accounting and sustainability

Chapters in this section consider key contemporary issues at the nexus of accounting and sustainability: sustainability assurance, environmental management accounting, water accounting, use of databases and ESG investing.

Roger Simnett, Shan Zhou and Hien Hoang consider the importance of sustainability assurance to enhance the credibility of sustainability reporting, its development to date and ideas for its further development. There is an urgent need for sustainability assurance engagements to cover systems and processes, such as the approach to determining the material impacts of an organisation on sustainable development. One of the suggestions they make for further research in this field, examining user demand and perception of these assurance services, is particularly important to developing this practice. The chapter benefits from Simnett’s insights from roles with the Australian and International Auditing and Assurance Standards Boards.

World leading researchers in environmental management accounting, Stefan Schaltegger, Roger Burritt and Katherine Christ, discuss the research to date and environmental management accounting tools and their relevance to practitioners and policy makers. The authors argue that management accounting is a key information tool used by managers but that it must evolve to meet society’s expectations that organisations’ contribute to the sustainability transformation required. This is also critically important to those teaching accounting and for professional body syllabi. Whether or not we agree on accountants being able to save the planet, we can surely agree that environmental management accounting would have to be a critical component.

Mathew Egan and Gloria Agyemang critically analyse available water accounting techniques and consider what is missing and where improvements can be made. A key question they raise is: “Could organisations be drawing on their accountants more effectively, to improve the reliability of related outputs?”. A key concern they have, given the acuteness of global water challenges, is the under-development of techniques to account for an organisation’s water impact in its supply chains.

As the use of central database regimes as means for activities governments and NGOs to monitor corporate grows, James Hazelton, Shame Leong and John Dumay, examine their potential use in research. They describe how central database regimes work, set out their strengths and weaknesses before exploring their potential use in research. They argue that such research could improve the information in these databases and how it is prioritised, how they are integrated and hence decision making by corporates, governments, consumers and civil society. This would seem critical to the ability of national governments to achieve the commitments they have made to the UN SDGs.

Environmental, Social and Governance (ESG) investing has grown significantly in recent years. Subhash Abhayawansa and Oren Mooneeapen examine the recent research (between 2009 and 2021) identifying four themes: investor behaviour, investing strategy, characteristics of ESG funds and ESG ratings. They found that the most dominant type of study were those concerned with investor behaviour – how investors respond to ESG factors and information and how they influence the ESG focus of the companies they invest in. This is a welcome (in my view) and recent change as early literature reviews focussed on the performance of ESG funds and portfolios.

Climate change-related disclosures, accounting for greenhouse gases and emissions trading schemes

Climate change accounting and reporting has dominated discussions about mandatory reporting in the developed world. The IFRS Foundation (2020) proposed a climate-first approach to standards development and regulators such as the UK Financial Reporting Council, the US Securities and Exchange Commission and the XRB in New Zealand have developed proposals and begun consultations.
Kathleen Herbohn, Peter Clarkson and Mark Wallis set out how climate-related disclosures can drive stakeholder engagement, increase investment in firms with lower climate change risk and improve emissions performance. They note that mandatory emissions disclosures have been found to incentivise firms to reduce emissions particularly as they can benchmark (as can others) their performance. They present a case for disclosures to a wide range of stakeholders on, for example, firms’ strategies for clean technology investment and low-carbon products and services. Further, disclosure of climate-related risk and mitigation and adaptation strategies will redirect capital investment to firms with less physical and transition risks.

Carbon Emissions Trading Schemes provide another mechanism for reducing firms’ impacts on climate change. Hongtao Shen and Nan Huang explain the basic elements of these, how they work and review the research into their nature and efficacy. They note the wide diversity of carbon trading systems and accounting treatments across the globe and offer some views on what accounting might look like and how further research can help. There are some mixed research results to date as to whether Emissions Trading Schemes improve information disclosed.

Carbon disclosure information is not just a matter for companies. Parvez Mia, James Hazelton and James Guthrie tackle the need for disclosures by cities, home to the majority of people in many nations. Some cities are recognising this by setting emissions reduction targets. But unlike companies, cities are disclosing climate-related information through their websites and social media often in preference to annual reports. The reliability of these emissions disclosures will become increasingly important and hence also verification by third parties.

Jonathon Jona and Naomi Soderstrom first consider policy developments on climate-change related and broader sustainability disclosures. They identify three types of organisational disclosure; matters related to the financial statements, impacts on the organisation’s ability to create value and impacts of the organisation on sustainable development. While they note that disclosures on impacts of the organisation’s ability to create value typically includes forward looking information this is also a component of disclosures on matters that impact on sustainable development. In fact the GRI Universal Standards require disclosure of approach to integrating sustainable development matters into strategy (see the chapter by Adams et al). Jona and Soderstrom then consider how climate risk is determined at the firm level and offer some interesting suggestions for further research.

Closing word

The chapters in this Handbook: explain key drivers of developments at the nexus of accounting and sustainability; critique those developments; summarise the findings of research on key themes; suggest areas for further research; and, offer evidence-based practice and policy solutions. Solutions can only be found through such evidence-based critique and research. “Negotiation and interpretation” (McBrien, 2021) must be informed by evidence (see Eccles, 2021 for an apparently contradictory view). Only then can we have any hope that:

“Accountants will save the world”

(Bakker, 2013)

Cite as Adams, C A (2022) Accounting and Sustainability: An introduction, in Adams, C A (editor) Handbook of Accounting and Sustainability, Edward Elgar Publishing Ltd


Adams, C. A. and Abhayawansa, S. (2022), “Connecting the COVID-19 pandemic, environmental, social and governance (ESG) investing and calls for ‘harmonisation’ of sustainability reporting.”, Critical Perspectives on Accounting.

Adams, C.A. and Mueller, F., (2022, in press) Academics and policy makers at odds: the case of the IFRS Foundation Trustees’ Consultation Paper on Sustainability Reporting, Sustainability Accounting Policy and Management Journal.

Bakker, P. (2013), “Accountants will save the world”, Harvard Business Review, 5th March. Available at (accessed 10th December, 2021).

Eccles, R.G. (2021) “The International Sustainability Standards Board As An Ideological Rorschach Test”, Forbes, 13th July. Available at (accessed 10th December, 2021).

Gray, R. (2006), “Social, environmental and sustainability reporting and organisational value creation?”, Accounting, Auditing and Accountability Journal, Vol. 19 No. 6, pp. 793-819.

IASB (2021) Exposure Draft: Management Commentary Practice Statement. Available at (accessed 10th December, 2021).

IFRS Foundation, (2020). Consultation paper and comment letters: Sustainability reporting. London: The International Financial Reporting Standards Foundation. Available at (accessed 10th December, 2021).

McBrien, M. (2021) “A response to Carol Adams from CDSB’s Mardi McBrien”, Responsible Investor, 20th January. Available at (accessed 10th December, 2021).

Unerman, J. and O’Dwyer, B. (2007), “The business case for regulation of corporate social responsibility and accountability”, Accounting Forum, Vol. 31, pp. 332-353.

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  1. Thank you for the summary.
    I look forward to reading as to how to deal with errors and inaccuracies in accounting of sustainability issues and indicators.

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