CORPORATE SUSTAINABILITY

Corporate Sustainability

Corporate Sustainability

Introduction

Corporate sustainability reporting began in the 1880s to the 1950s with the reporting of social performance. In the mid-1990s, the reporting of corporate social performance became popular. In the 1960s and 1970s, companies began to report on both their social performance and environmental performance (Buhr, 2008, pp.163). From the 1990s, companies began to report on their economic performance, social performance and environmental performance. Elkington (2004) termed this as “triple bottom line reporting.” Triple bottom line reporting is linked to the concept of sustainable development. The most common definition of sustainable development is the one provided by the World Commission on Environment and Development (2007) that defines it as “development that meets the needs of the present world without compromising the ability of future generations to meet their own needs.” (p. 8).

Therefore, another term related to triple bottom line reporting is sustainability reporting. Hence, sustainability reporting enables report users to examine whether the company is sustainable or not. Although there are climate change sceptics, the predominant view of the world's scientific community is that climate change is definitive and that it is affecting the sustainability of the earth - the primary reason for climate change is the negative impact of human and company activities on the earth.

According to the KPMG (2008) triennial international survey of corporate responsibility reporting, 79 percent of the top 250 companies on the Fortune Global 500 list (G250) prepared corporate sustainability reports compared to 52 percent in 2005. Moreover, 45 percent of the 100 largest companies by revenue from 22 countries1 (N100) prepared corporate sustainability reports compared to 33 percent in 2005. Although these trends are encouraging, there is still much room for improvement: according to the United Nations Conference on Trade and Development (UNCTAD), there are currently more than 63,000 multinationals; together, they generate about 25 percent of the world's output.

Therefore, the number of corporate sustainability reporters when compared against the number of multinationals worldwide is small. Before 2000, as there were no corporate sustainability reporting guidelines that companies can use to prepare their sustainability reports, they decide what to disclose based on their perceptions of what their stakeholders' information needs are. In 2000, the Global Reporting Initiative (GRI) issued their sustainability reporting guidelines. These guidelines were revised in 2002 and the latest version commonly referred to as the “G3” - was issued in 2006. The guidelines are voluntary. According to GRI (2006), the main strength of the sustainability reporting guidelines is that the guidelines were developed through a multi-stakeholder process. According to the GRI website, the GRI works with over 30,000 stakeholders from over 80 countries to advance sustainability reporting.

Discussion

Corporate sustainability reporting originated in the early 1990s, when some companies, mainly large multinationals in many countries, began to disclose, in their annual reports, the environmental and social impacts of their operations. In the mid-1990s, it became common for companies to report on their social performance. The contents disclosed by companies on the environmental and social aspects of their performance ...