Why The Benefit Of Sustainability Reporting Goes Beyond The Company’s?

Discussion

Why The Benefit of Sustainability Reporting Goes beyond the Company’s?

The benefit of sustainability reporting goes beyond the company’s fiscal risk and opportunity to carry out performance within the dimensions of ESG and establishing authorization for work. It is noteworthy to denote sustainability reporting acts in the form of differentiator within the competitive industries and encourages certainty in the trust of investors and employee faithfulness. According to the opinion of analyst, they have regularly stressed on the disclosure of sustainability reporting of an organisation at the time of evaluating the quality of management and competence because sustainability reporting facilitates organisations with better access to capital.  Numerous scholars have pointed out that sustainability reporting assists the analyst in ascertaining the value of the organisation. Sustainability reporting requires an organisation to collect information concerning the procedure and effects, which is yet to be measured. Sustainability reporting provides organisations with data that is necessary to reduce the usage of natural resources towards better organisation performance.

The guidelines set down by GRI often helps in stressing towards stressing those firms to take into the considerations the environmental and social aspects, which acts as a significant factor to shareholders and creates noteworthy impact on business. In addition to this, sustainability reporting provides an organisation with the facility to avoid and lessen the environmental and community risk having materiality or financial impact on the trade. Sustainability reporting helps in providing improved business, communal, environmental and financial value towards development of virtual circle.

There have been growing concerns due to climatic change, pollution, problems relating to human rights and economic rights have surfaced organisations towards continuous community disclosure associated with the role of business in the society. As stated by Bebbington, Unerman and O’Dwyer (2014), sustainability reporting helps companies to regulate, understand and converse their financial, environmental and social performance. Including sustainability reporting in the annual report provides the organisations with the opportunity to set goals and observe changes more competently.

As per Ioannou and Serafeim (2016), it is vital for organisations to establish and uphold trust so that it can attain sustainability throughout the economy and world. Regular business creates an impact on the stakeholders. This consists of financial institutions, labour establishments, civil community and citizens regarding the level of faith, which organisations have with them. Such kinds of judgements not regularly acts as a part of financial information since they are based on the assessment of risk and opportunity by using data to gain information on wider aspects of instant and future problems.            

Conclusion

As stated by Junior, Best and Cotter (2014), numerous companies have adopted sustainability practices without issuing reports. Companies that prepares sustainability reporting in their annual report are ranked higher than those firms that does not report. It is understood that including sustainability report helps in enhancing the business reputation although it is not the prime reason behind the inclusion of sustainability report by the companies in their annual report.

A large number of internal and external influences organisations to make inclusion of sustainability report. By including sustainability report in their annual report it provides assurance to the executives, shareholders and investors that the risk relating to sustainability are monitored. Growth in investment of community responsibility acts as the compelling reason for numerous organisations to engage in sustainability reporting (Hahn and Lülfs 2014). The market for accountable investment is not limited to public or shareholders since majority of analyst have voiced their craving for sustainability reporting. Sustainability reporting is regarded as vital in numerous nations as stock exchanges from more than twenty countries have encouraged companies to make sustainability report or similar kind of disclosure in their annual report.

GRI has asserts that making sustainability report enables firms with variety of intangible advantages towards promoting employee loyalty and customer benefits. As argued by Buhr, Gray and Milne (2014), the worth of sustainability disclosure have prolonged the balance sheet of an organisation. Independent studies have inspected the association of corporate social and environmental performance and have stated that organisations have gained benefits from improved communication of their good deeds.

According to Cheng et al. (2014), sustainability, reporting forms the basis of innovations and use of less costly sources of capital. Organisations with sustainability initiatives are able to convince the probable sources of equity towards more competitive and lower risk investment. Studies suggest that investors have voiced their interest of investing in preferably transparent companies because of better trust between the stakeholders and managers. Del Mar et al. (2015), states that sustainability reporting firms provides organisation with better information than the government regulated organisations. Therefore, sustainability disclosure is positively associated with the return on asset and cash flow from operations.

The international integrated reporting council have directed their methodology for companies to produce fiscal, environmental and governance report in order to create value over the period to time. IIRC plays a vital role in creating new tools and special focus is paid in sustainability accounting standards board so that it can create an appeal in the financial market. The IIRC plays a vital role in understanding the fiscal and corporate metrics to benchmark their performance. The framework of IIRC provides firms with time through special societal effects by developing pertinent Key performance indicators. According to reports, sustainability helps in influencing the behaviour of stakeholders. According to Flower (2015), IIRC plays an important role in providing detail description of the performance than the traditional reporting. IIRC provides guidance to organisation on communicating wider range of data needed by the shareholders and stakeholders for long-term access to their prospects. The framework of IIRC provides firms, shareholders and others with an opportunity to make both long and short-term decisions.

Conclusion:

Organisations that provide sustainability reporting will be able to display their stewardship both in the financial as well as human capital. Sustainability reporting helps in aligning the social and natural capital according to the interest of the society and other interested groups. As noticed integrated reporting focuses on stakeholder involvement which results in enhanced consultation with community. With large number of companies are adopting sustainability report it is expected that both public and investors demand for external assurance of sustainability will increase in future. Therefore, sustainability reporting helps encouraging seriousness and reliability for firms.

Reference list:                     

Bebbington, J., Unerman, J. and O’Dwyer, B., 2014. Sustainability accounting and accountability. Routledge.

Buhr, N., Gray, R. and Milne, M.J., 2014. Histories, rationales, voluntary standards and future prospects for sustainability reporting. Sustainability accounting and accountability, pp.51-71.

Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international integrated reporting framework: key issues and future research opportunities. Journal of International Financial Management & Accounting, 25(1), pp.90-119.

del Mar Alonso-Almeida, M., Marimon, F., Casani, F. and Rodriguez-Pomeda, J., 2015. Diffusion of sustainability reporting in universities: current situation and future perspectives. Journal of cleaner production, 106, pp.144-154.

Flower, J., 2015. The international integrated reporting council: a story of failure. Critical Perspectives on Accounting, 27, pp.1-17.

Hahn, R. and Lülfs, R., 2014. Legitimizing negative aspects in GRI-oriented sustainability reporting: A qualitative analysis of corporate disclosure strategies. Journal of Business Ethics, 123(3), pp.401-420.

Ioannou, I. and Serafeim, G., 2016. The consequences of mandatory corporate sustainability reporting: evidence from four countries.

Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon. Journal of Business Ethics, 120(1), pp.1-11

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order