Academic journal article Journal of Legal, Ethical and Regulatory Issues

The Benefits of Sustainability and Integrated Reporting: An Investigation of Accounting Majors' Perceptions

Academic journal article Journal of Legal, Ethical and Regulatory Issues

The Benefits of Sustainability and Integrated Reporting: An Investigation of Accounting Majors' Perceptions

Article excerpt


During the past decade, a continually increasing number of entities have started formal reporting of their sustainability-related activities. These reports commonly are referred to as sustainability, sustainable development, corporate social responsibility (CSR), or environmental, social, and governance (ESG) reports. While some reports focus primarily on a company's environmental impact (sometimes referred to as "green reporting"), most sustainability reports also focus on social and corporate governance issues. Stakeholder demand for sustainability-related information, not regulatory requirements, appears to motivate this reporting trend.

The majority of companies that currently issue sustainability reports follow the guidelines provided by the Global Reporting Initiative (GRI), which allows for a choice among three reporting levels that differ with respect to the types of issues and the number of parameters referred to as performance indicators--that must be reported. The GRI guidelines continue to evolve and the 4th generation of the guidelines was recently released (GRI, 2013). Although GRI guidelines can be applied globally across many different industries, other guidelines, some applicable to specific nations/regions or industries, exist as well. This makes inter-company comparability difficult.

Currently, most companies that formally report their sustainability activities issue standalone reports that are not integrated with their annual financial or 10-K statements. However, a movement toward combining sustainability reporting with companies' financial results is gaining momentum; this is referred to as "Integrated Reporting" (IR). Some companies, such as Nova Nordisk, Sony, and Hyundai Engineering, already issue integrated report. This movement is supported by the International Integrated Reporting Council's (IIRC) efforts to develop a globally applicable IR framework.

Sustainability and especially integrated reporting can be very useful to external stakeholders such as investors and customers, but it can also be extremely beneficial to internal users by enhancing the company's ability to effectively and efficiently achieve long-run goals. Relevant, reliable, comparable, and thus useful sustainability and integrated reporting require commitment by an organization's key personnel and by those responsible for the reporting process. While companies tend to rely on accounting professionals to support their sustainability reporting function, IR requires even stronger support from accounting professionals. Accounting professionals are more likely to be supportive if they understand the long-term benefits of high-quality and comparable sustainability and integrated reporting and believe that reporting sustainability information is important. In addition, consensus is necessary regarding the scope, type, and comprehensiveness of the information that will be beneficial to stakeholders to enable them to assess a company's comprehensive impact on the environment and on people and not just profit.

Accounting majors represent the future accounting professionals. Many of the current accounting majors have grown up in an environment that strongly values ecologically, ethically, and socially responsible corporate behavior. Their support is necessary to help continue to motivate the trend toward sustainability and integrated reporting and lead to a future in which organizations routinely report their comprehensive performance and their impact on profit, people and planet, also referred to as the "Triple Bottom Line."

This study investigates accounting majors' perceptions regarding sustainability and integrated reporting. The study focuses on the perceived benefits to multiple stakeholders, the expected scope and type of issues reported, the reporting time frame, and the need for high-quality global sustainability and integrated reporting standards.

The study finds that overall students majoring in accounting tend to support both sustainability and integrated reporting. …

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