Research supporting submission to IFRS from Professors of Accounting researching Sustainability Accounting and Reporting

The signatories to the Open Letter to the Chair of the IFRS Foundation Trustees here provide references to independent peer reviewed academic research supporting their summary of research findings.

The Open Letter was submitted by Professors of Accounting researching sustainability accounting and reporting regarding in response to the IFRS Trustees’ Consultation Paper on Sustainability Reporting The full citation to each article is provided after the summary.

If you wish to suggest additional references please add a comment to this post and the list will be updated. The list was compiled by Professor Charles Cho.

Findings of independent academic research

Independent academic research finds that:

  • Traditional corporate reporting, through what it counts and what it leaves as invisible, has led to significant environmental and human rights abuses and greater inequality between developed and lesser developed countries (Adams and Harte, 1998; 2000; Adams and McPhail, 2004; Antonini et al., 2020; Bebbington et al., 2014; Burchell et al., 1985; Gray et al., 1996; 2014; Gray, 2006; 2010; Hopwood, 2009; McPhail and Adams, 2016; Milne, 1996; Russell and Thomson, 2009; Schaltegger and Burritt, 2000; Sinkovics, et al., 2016; Williams and Adams, 2013).
  • Sustainability accounting and reporting practices have either a significant positive or significant detrimental impact on the future well-being of the planet and its people, depending on their purpose and design (Adams, 2004; 2017; Adams et al., 2016; Bebbington and Larrinaga, 2014; Bebbington et al., 2020; Contrafatto and Burns, 2013; Gray, 2006; 2010; Narayanana and Adams, 2017; Qian and Schaltegger, 2017).
  • A significant number of investors ignore climate change and other sustainable development risks that have an impact on long term value creation (Campbell and Slack, 2011; Pellegrino and Lodhia, 2012; Slack and Tsalavoutas, 2018; Solomon et al., 2013).
  • Corporate and investor know-how being under-developed and resourcing of their responses to sustainable development issues being insufficient to meet the complexity of the challenge (Adams, 2017; Adams and McNicholas, 2017; Bebbington, et al., 2020; Slack and Campbell, 2016).
  • A profit and financial materiality focus leads sustainability reporting to make a negative impact on or reduced contribution to sustainable development (Adams, 2015; 2017; Michelon et al., 2020a; 2020b; O’Dwyer and Unerman, 2020; Schaltegger and Burritt, 2018; Schneider et al., 2017; Unerman et al., 2018).
  • Significant impediments to high quality, transparent sustainability reporting include:
    • Its largely voluntary nature (Adams, 2002; 2004; Adams and Kuasirikun, 2000; Cho et al., 2010; 2015a; 2018; Michelon et al., 2015);
    • Where mandatory, being mostly unenforced (Adams et al., 1995; Bebbington et al., 2012; Chauvey et al., 2015; Peters and Romi, 2013; Senn and Giordano-Spring 2020);
    • Lack of disclosures on management approach, strategy (including long term targets), governance oversight and governing body accountability that facilitate the integration of sustainable development issues into decision making (Adams et al., 2020; O’Dwyer and Humphrey, 2020);
    • Approaches to materiality that significantly narrow the identification of sustainable development issues that come under corporate purview (Adams, 2004; Antonini et al., 2020; O’Dwyer and Humphrey, 2020; Rodrigue, 2014; Rodrigue et al. 2015);
    • External assurance engagements tending to be limited in scope to quantified indicators due to cost concerns and assurance provider conservatism (particularly by the Big 4) (Adams and Evans, 2004; Michelon et al., 2019; O’Dwyer et al., 2005; 2011);
    • Lesser developed countries lacking the skills and resources to comply with and enforce disclosure requirements (Abayo et al., 1993; Albu et al., forthcoming; Belal and Cooper, 2011; Lodhia, 2003; Dissanayake et al., forthcoming; Tilt et al., forthcoming);
    • National governments being slow to respond to the scientific evidence concerning impact of organisations on sustainable development issues and hence slow to implement regulation of the private sector (Albu et al., forthcoming; Bebbington et al., 2012; Chauvey et al., 2012; Cho et al., 2013; Lodhia, 2012).
  • Different regions/ countries facing differing social and environmental sustainability issues and hence having different priorities (Adams, 2017; Larrinaga, et al., 2020; Luque-Vílchez and Larrinaga, 2016).
  • Key drivers of sustainability reporting are a desire to minimise short term profit variations, gain stakeholder approval and enhance corporate reputation (particularly after reputation damaging incidents) (Adams and Whelan, 2009; Bebbington et al., 2008; Birkey et al., 2016; Blanc et al., 2019; Cho, 2009; Cho et al. 2012; 2014; 2015b; Patten; 1992, Arora and Lodhia, 2017).
  • The longest standing sustainability reporting standard setter, the Global Reporting Initiative, has by far the greatest number of users.  Multi-stakeholder input to the GRI Standards, and hence reputation amongst stakeholders, is a key reason for corporate take-up of the GRI Standards (KPMG, 2020).

References

Abayo A.G., Adams, C.A. and Roberts, C.B. (1993). Measuring the quality of corporate disclosure in less developed countries with particular reference to Tanzania. Journal of International Accounting, Auditing and Taxation, 2(2), 145–158.

Adams, C.A. (2002). Internal organisational factors influencing corporate social and ethical reporting: Beyond current theorising. Accounting, Auditing and Accountability Journal 15(2), 223–250.

Adams, C.A. (2004). The ethical, social and environmental reporting-performance portrayal gap. Accounting, Auditing and Accountability Journal, 17(5), 731–757.  

Adams, C.A. (2015). The International Integrated Reporting Council: A call to action. Critical Perspectives on Accounting, 27, 23-28.

Adams, C.A. (2017) Conceptualising the contemporary corporate value creation process. Accounting Auditing and Accountability Journal, 30(4), 906-931.

Adams, C.A., Coutts A. and Harte G.F. (1995). Corporate equal opportunities (non) disclosure. British Accounting Review, 27(2), 87–108.

Adams, C.A., Druckman, P.B and Picot, R.C. (2020). Sustainable Development Goal Disclosure (SDGD) Recommendations. Published by ACCA, Chartered Accountants ANZ, ICAS, IFAC, IIRC and WBA.

Adams, C.A. and Evans, R. (2004). Accountability, completeness, credibility and the audit expectations gap. Journal of Corporate Citizenship, 14, 97–115.

Adams, C.A. and Harte, G.F. (1998). The changing portrayal of the employment of women in British banks’ and retail companies’ corporate annual reports. Accounting, Organizations and Society, 23(8), 781–812.

Adams, C.A. and Harte, G.F. (2000). Making discrimination visible: The potential for social accounting, Accounting Forum, 24(1), 56–79.

Adams, C.A. and Kuasirikun N. (2000). A comparative analysis of corporate reporting on ethical issues by UK and German chemical and pharmaceutical companies. European Accounting Review, 9(1), 53–80.

Adams, C.A. and McNicholas, P. (2007). Making a difference: Sustainability reporting, accountability and organisational change. Accounting, Auditing and Accountability Journal 20(3), 382–402.

Adams, C.A. and McPhail, K. (2004). Reporting and the politics of difference: (non)disclosure on ethnic minorities. Abacus 40(3), 405–435.

Adams, C.A., Potter, B., Singh, P.J. and York, J. (2016). Exploring the implications of integrated reporting for social investment (disclosures). British Accounting Review, 48, 283-296.

Adams, C.A. and Whelan, G. (2009). Conceptualising future change in corporate sustainability reporting. Accounting Auditing and Accountability Journal, 22(1), 118–143. 

Albu, N., Albu, C., Apostol, O. and Cho, C.H. (forthcoming). The past is never dead: The role of imprints in shaping social and environmental business responsibilities in a post-socialist context. Accounting, Auditing and Accountability Journal.

Antonini, C., Beck, C. and Larrinaga, C. (2020). Subpolitics and sustainability reporting boundaries. The case of working conditions in global supply chains. Accounting, Auditing & Accountability Journal, 33(7), 1535-67.

Arora, M. and Lodhia, S. (2017). The BP Gulf of Mexico oil spill: Exploring the link between social and environmental disclosures and reputation risk management. Journal of Cleaner Production, 140(3), 1287-1297.

Bebbington, J., Kirk, E.A. and Larrinaga, C. (2012). The production of normativity: A comparison of reporting regimes in Spain and the UK. Accounting, Organizations and Society, 37(2), 78-94.

Bebbington, J. and Larrinaga, C. (2014). Accounting and sustainable development: An exploration. Accounting, Organizations and Society, 39(6), 395-413.

Bebbington, J., Larrinaga, C. and Moneva, J.M. (2008). Corporate social reporting and reputation risk management. Accounting, Auditing & Accountability Journal, 21(3), 337-61.

Bebbington, J., Österblom, H., Crona, B., Jouffray, J.-B., Larrinaga, C., Russell, S. and Scholtens, B. (2020). Accounting and accountability in the Anthropocene. Accounting, Auditing & Accountability Journal, 33(1), 152-77.

Bebbington. J., Unerman, J. and O’Dwyer. (2014). Sustainability Accounting and Accountability. Routledge.

Belal, A.R. and Cooper, S. (2011). The absence of corporate social responsibility reporting in Bangladesh. Critical Perspectives on Accounting, 22(7), 654-667.

Birkey, R., Michelon, G., Patten, D.M. and Sankara, J. (2016). Does assurance on CSR reporting enhance environmental reputation? An examination in the U.S. Context. Accounting Forum, 40(3), 143-152.

Blanc, R., Branco, M.C., Cho, C.H. and Sopt, J. (2019). Disclosure responses to a corruption scandal: The case of Siemens AG. Journal of Business Ethics, 156(2), 545-561.

Burchell, S., Clubb, C. and Hopwood, A.G. (1985). Accounting in its social context: Towards a history of value added in the United Kingdom. Accounting, Organizations and Society, 10(4), 381–413.

Campbell, D. and Slack, R. (2011). Environmental disclosure and environmental risk: Sceptical attitudes of UK bank analysts. British Accounting Review, 43(1), 54-64. 

Chauvey, J-N., Giordano-Spring, S., Cho, C.H. and Patten, D.M. (2015). The Normativity and Legitimacy of CSR Disclosure: Evidence from France. Journal of Business Ethics. 130(4), 789-803.

Cho, C.H. (2009). Legitimation strategies used in response to environmental disaster: A French case study of Total S.A.’s Erika and AZF incidents. European Accounting Review, 18(1), 33-62.

Cho, C.H., Choi, J.S., Kwak, Y.M. and Patten, D.M. (2013). An empirical investigation of the extensiveness of standalone environmental reporting in South Korea. Social and Environmental Accountability Journal, 33(2), 91-103.

Cho, C.H., Guidry, R.P., Hageman, A.M. and Patten, D.M. (2012). Do actions speak louder than words? An empirical investigation of corporate environmental reputation. Accounting, Organizations and Society, 37(1), 14-25.

Cho, C.H., Laine, M., Roberts, R.W. and Rodrigue, M. (2015a). Organized hypocrisy, organizational façades, and sustainability reporting. Accounting, Organizations and Society, 40, 78-94.

Cho, C.H., Laine, M., Roberts, R.W. and Rodrigue, M. (2018). The frontstage and backstage of corporate sustainability reporting: Evidence from the Arctic National Wildlife Refuge Bill. Journal of Business Ethics, 152(3), 865-886.

Cho, C.H., Michelon G., Patten, D.M. and Roberts, R.W. (2014). CSR report assurance in the United States: an empirical investigation of determinants and effects. Sustainability Accounting Management and Policy Journal, 5(2), 130-148.

Cho, C.H., Michelon, G., Patten, D.M. and Roberts, R.W. (2015b). CSR disclosure: The more things change…? Accounting, Auditing & Accountability Journal, 28(1), 14-35.

Cho, C.H., Roberts, R.W. and Patten, D.M. (2010). The Language of U.S. corporate environmental disclosure. Accounting, Organizations and Society, 35(4), 431-443.

Contrafatto, M. and Burns, J. (2013). Social and environmental accounting, organisational change and management accounting: A processual view. Management Accounting Research, 24(4), 349-365.

Dissanayake, D., Kuruppu, S., Qian, W. and Tilt, C. (forthcoming). Barriers for sustainability reporting: Evidence from the Indo-Pacific. Meditari Accountancy Research.

Gray, R. (2006). Social, environmental and sustainability reporting and organisational value creation? Whose value? Whose creation? Accounting, Auditing & Accountability Journal, 19(6), 793-819.

Gray, R. (2010). Is accounting for sustainability actually accounting for sustainability…and how would we know? An exploration of narratives of organisations and the planet. Accounting, Organizations and Society, 35(1), 47-62.

Gray, R., Owen, D. and Adams, C. (1996) Accounting & Accountability: Changes and Challenges in Corporate Social and Environmental Reporting. Prentice Hall.

Gray, R., Owen, D. and Adams, C.A. (2014). Accountability, Social Responsibility and Sustainability: Accounting for Society and the Environment. Pearson.

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McPhail, K.J. and Adams C.A. (2016). Corporate respect for human rights: Meaning, scope, and the shifting order of discourse Accounting Auditing and Accountability Journal, 29(4), 650-678.

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