Academic journal article Journal of Economic and Social Development

Sustainability Reporting: Possible Ways of Rethninking Hospitality Accounting

Academic journal article Journal of Economic and Social Development

Sustainability Reporting: Possible Ways of Rethninking Hospitality Accounting

Article excerpt

1. Introduction

Accountability is the duty to provide information to stakeholders who have a right to it and an essential component of sustainability strategies. It is the information related to responsibility and is as much about what has not been done as it is about what has been done. The new challenge of hospitality business is how to be more accountable towards stakeholders.

The hospitality industry is a significant consumer of resources with a considerable impact on natural environments, economies, cultures and societies. Hotel companies are under the pressure from stakeholders and competitors to enhance their sustainability in "every day" business. Therefore, hotel companies that apply sustainable business must provide products and services that people want in order to generate profit, growth and new jobs, while taking into account their social and environmental impact, as a part of ensuring that they generate added value for an organization and its stakeholders (IFAC, 2011, p. 8).

In accordance with that, the triple bottom line (TBL) approach was developed to measure the financial performance, as well as the achieved level of social and environmental responsibility. Of particular interest is also the new EU Directive (No. 2014/95 & 2013/34) which requires obligatory disclosure of non-financial and diversity information by certain large companies.

In a business environment that expects social responsibility of companies and respect for the principles of sustainable development, hotel companies have to find a way to achieve balance between social, environmental and financial performance, and in that process sustainability reporting is of a great importance.

2. Framework for sustainability reporting

Sustainability reporting describes new formalized means of communication, which provides information about corporate sustainability (Schaltegger, Bennett & Burritt, 2006, p. 15). The goal of sustainability reporting is "to inform development of an integrated business strategy for corporate management and assess sustainability risks and opportunities inherent to investment decisions" (SASB, 2013, p. 3). The demands from various stakeholders for increased levels of transparency and disclosure, and also the need for companies to appropriately respond to issues of sustainable development, are the main factors of development of sustainability reporting. Sustainability reporting is a vital step to achieving smart, sustainable and inclusive growth (EUROPE 2020, 2010) that combines long-term profitability with social justice and environmental care (GRI, 2013).

From its origins until today, there were considerable changes and advancements in sustainability reporting, going from standalone environmental and social reports, to triple bottom line (TBL) reports and at the end to sustainability reports. It is important to emphasize the distinction between TBL reports and sustainability reports. Since TBL reports in its essence display company's results in economic, environmental and social dimensions without showing any connections between the dimensions (Schaltegger, & Burritt, 2010), sustainability reporting presents also the correlations among the three dimensions and interpretation of how it affects their business.

In the interest of delivering sustainability reports that communicate improved performance in the process of defining report content some accounting principles should be followed. According to Lamberton (2005), main sustainability accounting principles are definition, accounting period, scope, materiality, capital maintenance, units of measurement and precautionary principle. In addition to this, content should be transparent, stakeholder inclusive, provide sustainability context and allow auditing (GRI, 2002).

During the last decade number of companies producing sustainability reports has largely increased. According to the 2013 KPMG survey corporate responsibility reporting (that is regarded as sustainability reporting) "is undeniably a mainstream business practice worldwide, undertaken by 71% of the 4. …

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