Integrated reporting: On the need for broadening out and opening up

Abstract

EXTENDED ABSTRACT (ENG) In a context of growing social and environmental concerns, the role of large enterprises towards sustainability is increasingly put into the spotlight. Both academic conversations and public-opinion debates more and more frequently question the extended responsibilities of firms in the frame of contemporary and inter-connected societies. In studying issues associated with the greatest challenges mankind is currently facing - from climate change to social exclusion - the scientific community today is fully aware of the necessity to account for actions and agendas of companies, especially large ones (Crane & Matten, 2016). Large firms are rising to global political actors, but with great power comes greater responsibility. Many authors agree that the historically prevailing thesis that the first and only responsibility of a firm is to maximise value for shareholders only (cf. Friedman, 1970) is becoming progressively untenable (cf. Freeman, 1984). Enterprises themselves are increasingly willing, for the more different reasons, to show their commitment towards the needs and expectations of their stakeholders (not only shareholders), their aspiration to create shared value (not only shareholders value) and to make every part of their business sustainable. Statements on this commitment, although varying case by case from being genuine to be completely rhetoric, are nowadays commonly found in sustainability reports or integrated annual reports of companies operating in various sectors, even and especially in the most impactful ones, like mining and oil and gas. Given the evolving expectations of consumers and investors, corporations nowadays face the need of communicating to internal and external stakeholders how their business model is integrated with sustainability aspects. Over the last 40 years, companies have paid growing interest towards environmental and social issues (Bagnoli, 2004); at the same time, there has been substantial growth in the research attention being devoted to social and environmental accounting topics (Deegan, 2002). This growing interest raised new questions on the real objectives of large corporations and the best ways to account for and report on the degree of achievement of these objectives. The development of social and environmental accounting and reporting over the last decades has resulted in a wide range of actual and potential accounts of organisational extended interactions with society and the natural environment: such accounts can be understood as narratives of events articulating, with varying degrees of thoroughness and misdirection, the relationships of the organisation with its stakeholders and the environment (Gray, 2010). With that in mind, we believe today is more important than ever that large enterprises can, on the one hand, take into account the opinion of their stakeholder while defining their strategies and, on the other hand, disclose material and relevant information on their ability to contribute to sustainability while delivering value for all of their stakeholders. An increasing consensus is being reached on the responsibility of large enterprises to report not only on their financial performances, but also on their social and environmental outcomes. Consequently, in practical terms, it is important to understand which are the elements organisations need to report on to provide stakeholders with relevant and comprehensive sustainability reports. In the last two decades, stakeholder dialogue and engagement have been playing an increasingly important role in defining the contents of integrated and sustainability reporting (Manetti, 2011), in accordance with the principle of materiality and relevance of information disclosed (Global Reporting Initiative, 2013c; Unerman & Bennett, 2004). According to the materiality principle, material aspects are those that reflect the organization’s significant economic, environmental and social impacts or that substantively influence the assessments and decisions of stakeholders (Global Reporting Initiative, 2013c). Stakeholder engagement can represent a powerful tool of dialogic communication and accounting (Bebbington, Brown, Frame, & Thomson, 2007; Brown & Dillard, 2014) and a channel for interactive mutual learning, capable of promoting transformative action and social change (Bebbington, Brown, Frame, et al., 2007). Moreover, stakeholder engagement is a milestone policy in social and environmental accounting because it allows the organisation to interact with its stakeholders in a two-way dialogue in which the engager and the engaged mutually learn from such cooperation, potentially revising their expectations, strategies and behaviors (Manetti & Bellucci, 2016; Manetti, Bellucci, & Bagnoli, 2016; Owen, Swift, & Hunt, 2001). Against this background, the aim of this dissertation is to contribute to the social and environmental accounting literature with a study on the role and features of stakeholder engagement in sustainability reporting. The present original contribution is structured as follows. The first chapter introduces and discusses the extended responsibilities of corporations in the frame of contemporary societies and through the opposition between shareholder and stakeholder theories. Alongside the evolution of the objectives of enterprises lies the evolution of reporting and the need to account for an integrated and broader set of information. Consequently, the concept of sustainability and the role of enterprises and accounting towards sustainability is framed in light of social and environmental accounting. The second chapter provides a literature review on sustainability reporting, materiality assessment and stakeholder engagement. There is now a variety of local and global factors that advocate social and environmental reporting: the increasing relevance of beneficial relations with stakeholders, the growing concern about business ethics and corporate...