Disclosure of Non-financial Material Sustainability Information: Evidence from Australian Listed Companies in the Materials Sector
DOI:
https://doi.org/10.18034/abr.v9i3.337Keywords:
Non-financial disclosure, material sustainability information, sustainability reporting, GRI guidelines,, materialityAbstract
The broad objective of this paper is to measure the extent of disclosure of non-financial material sustainability information by Australian companies in the materials sector based on the GRI G4 guidelines. GRI G4 guidelines on economic, environmental, and social performance indicators are used based on 2014 and 2015 data to establish what constitutes non-financial material sustainability information by ASX listed Australian companies in the materials sector. The aggregate non-financial material sustainability disclosure is low for all companies in the materials sector. The findings show that a great degree of variation in sustainability disclosures exists among the listed Australian companies in the materials sector based on GRI G4 guidelines. The pattern of disclosure is similar for small-cap and medium-cap companies and they disclose less non-financial material sustainability information than large-cap companies. The sustainability score increased slightly in 2015 compared to 2014 for all companies and subgroup of companies based on market capitalization in aggregate as well as in economic, environmental, and social categories.
JEL Classification Code: Q56
Funding Acknowledgement: This study is funded by the “Australian Government Research Training Program (RTP) Scholarship”.
Downloads
References
Abbott, W. F., and Monsen, R. J. (1979). On the measurement of corporate social responsibility: Self-reported disclosures as a method of measuring corporate social involvement. Academy of Management Journal, 22(3), 501-515.
Al-Tuwaijri, S. A., Christensen, T. E., and Hughes, K. E. (2004). The relations among environmental disclosure, environmental performance, and economic performance: a simultaneous equations approach. Accounting, Organizations and Society, 29(5), 447-471.
Amel-Zadeh, A. (2016). The Materiality of Non-financial Information: A Review of Theory and Empirical Evidence on Sustainability Disclosures, Corporate Social Responsibility, and Responsible Investing. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2664547
Andrew, N. L., & Wickham, M. (2010). The voluntary CSR disclosure in corporate annual reports: Evidence from Australia. Corporate Ownership & Control, 8(1), 49-55.
ASX Corporate Governance Council. (2014). Corporate Governance Principles and Recommendations, Third edition. Available at: http://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-3rd-edn.pdf
Australian Bureau of Statistics (ABS). (2015). Australian National Accounts: National Income, Expenditure and Product, 5206.0. Available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5206.0Dec%202015?OpenDocument
Bachoo, K., Tan, R., and Wilson, M. (2013). Firm value and the quality of sustainability reporting in Australia. Australian Accounting Review, 23(1), 67-87.
Balatbat, M., Siew, R., and Carmichael, D. (2012). ESG scores and its influence on firm performance: Australian evidence. In the Australian School of Business School of Accounting, School of Accounting Seminar Series Semester (Vol. 2).
Ball, A., Broadbent, J. and Jarvis, T. (2006), Waste management, the challenges of the PFI and sustainability reporting. Business Strategy and the Environment, 15, 4, pp. 258–274.
Berelson, B. (1952). Content analysis in communications research. Glencoe, Illinois. The Free Press. Pp. 220.
Bowerman, B. L. O’Connel, R. T., & Murphree, E. S. (2017). Business Statistics in Practice: Using Data, Modeling, and Analysis. 8th edition. McGraw-Hill Higher Education.
Brown, H., de Jong, M., and Levy, D. (2009). Building institutions based on information disclosure: Lessons from GRI’s sustainability reporting. Journal of Cleaner Production, 17(6), 571–580.
Campbell, D., Craven, B., & Shrives, P. (2003). Voluntary social reporting in three FTSE sectors: a comment on perception and legitimacy. Accounting, Auditing & Accountability Journal, 16(4), 558-581.
Chen, K. H., and Metcalf, R. W. (1980). The relationship between pollution control record and financial indicators revisited. The Accounting Review, 55(1), 168-177.
Chen, S., & Bouvain, P. (2009). Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany. Journal of Business Ethics, 87(1), 299-317.
Cho, C., Michelon, G., Patten, D. & Roberts, R. (2015). CSR disclosure: The more things change. Accounting, Auditing & Accountability Journal, 28(1), 14-35.
Choi, H., and Moon, D. (2016). Perceptions of Corporate Social Responsibility in the Capital Market. Journal of Applied Business Research (JABR), 32(5), 1507-1518.
Christofi, A., Christofi, P., & Sisaye, S. (2012). Corporate sustainability: historical development and reporting practices. Management Research Review, 35(2), 157-172.
Cochran, P. L., and Wood, R. A. (1984). Corporate social responsibility and financial performance. Academy of Management Journal, 27(1), 42-56.
Deegan, C. and Gordon, B. (1996). A study of the environmental disclosure practices of Australian corporations. Accounting and Business Research, 26(3), 187-199.
Deegan, C. and Rankin, M. (1996). Do Australian companies report environmental news objectively? An analysis of environmental disclosures by firms prosecuted successfully by the Environmental Protection Authority. Accounting, Auditing & Accountability Journal, 9(2), 50-67.
Dhaliwal, D. S., Radhakrishnan, S., Tsang, A., and Yang, Y. G. (2012). Non-financial disclosure and analyst forecast accuracy: International evidence on corporate social responsibility disclosure. The Accounting Review, 87(3), 723-759.
Dissanayake, D., Tilt, C., & Xydias-Lobo, M. (2016). Sustainability reporting by publicly listed companies in Sri Lanka. Journal of Cleaner Production, 129, 169-182.
Dowling, J. and Pfeffer, J. (1975). Organizational legitimacy: Social values and organizational behavior. Pacific Sociological Review, 18(1), 122-136.
Eccles, R. G., and Krzus, M. P. (2014). Chapter 6, The Sustainable Value Matrix. The integrated reporting movement: Meaning, momentum, motives, and materiality. John Wiley & Sons.
Eccles, R. G., Krzus, M. P., Rogers, J., and Serafeim, G. (2012). The Need for Sector‐Specific Materiality and Sustainability Reporting Standards. Journal of Applied Corporate Finance, 24(2), 65-71.
Edgley, C., Jones, M. J., and Atkins, J. (2015). The adoption of the materiality concept in social and environmental reporting assurance: A field study approach. The British Accounting Review, 47(1), 1-18.
Eilbert, H. & Parket, I. R. (1973). The Current Status of Corporate Social Responsibility, Business Horizons, pp. 5-14.
Ernst and Young. (2014, p.2). Disclosure effectiveness - What companies can do now. Ernst and Young Global Limited. Available at: http://www.ey.com/publication/vwluassets/ey-disclosure-effectiveness-what-companies-can-do-now/$file/ey-disclosure-effectiveness-what-companies-can-do-now.pdf
Faisal, F., Tower, G., & Rusmin, R. (2012). Legitimizing corporate sustainability reporting throughout the world. Australasian Accounting Business & Finance Journal, 6(2), 19.
Flammer, C. (2013). Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), 758-781.
Font, X., Guix, M., and Bonilla-Priego, M. J. (2016). Corporate social responsibility in cruising: Using materiality analysis to create shared value. Tourism Management, 53, 175-186.
Frost, G., Jones, S., Loftus, J. and Laan, S. (2005). A survey of sustainability reporting practices of Australian reporting entities. Australian Accounting Review, 15(1), 89-96.
Galbreath, J. (2013). ESG in focus: The Australian evidence. Journal of Business Ethics, 118(3), 529-541.
Global Reporting Initiative. (2013a). GRI G4 reporting principles and standard disclosures. Available at: https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.pdf
Global Reporting Initiative. (2013b). GRI G4 implementation manual. Available at: https://www.globalreporting.org/resourcelibrary/GRIG4-Part2-Implementation-Manual.pdf
Gray, R. H.; Adams, C. A. & Owen, D. (2014) Accountability, Social Responsibility, and Sustainability. Accounting for Society and the Environment. United Kingdom: Pearson Education Limited.
Griffin, J. J., and Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business & Society, 36(1), 5-31.
Guthrie, J. and Parker, L. (1990). Corporate social disclosure practice: A comparative international analysis. Advances in Public Interest Accounting, 3, 159-175.
Guthrie, J., and Farneti, F. (2008). GRI sustainability reporting by Australian public sector organizations. Public Money and Management, 28(6), 361-366.
Guthrie, J., and Parker, L. D. (1989). Corporate social reporting: a rebuttal of legitimacy theory. Accounting and Business Research, 19(76), 343-352.
Higgins, C., Milne, M. J., and van Gramberg, B. (2015). The uptake of sustainability reporting in Australia. Journal of Business Ethics, 129(2), 445-468.
Hillman, A.J., and Keim, G.D. (2001). Shareholder value, stakeholder management, and social issues: what's the bottom line? Strategic Management Journal, 22(2), 125-139.
IIRC, 2013, p. 2, available at. http://www.theiirc.org/wp-content/uploads/2013/03/IR-Background-Paper-Materiality.pdf).
Inoue, Y., and S. Lee. (2011). Effects of different dimensions of corporate social responsibility on corporate financial performance in tourism-related industries. Tourism Management 32 (4): 790-804.
International Integrated Reporting Council. (2013). Materiality Background Paper For . Available at: http://www.theiirc.org/wp-content/uploads/2013/03/IR-Background-Paper-Materiality.pdf
Jones, P., Comfort, D., & Hillier, D. (2016). Materiality in corporate sustainability reporting within UK retailing. Journal of Public Affairs, 16(1), 81-90.
Jones, S., Frost, G., Loftus, J., and Laan, S. (2007). An empirical examination of the market returns and financial performance of entities engaged in sustainability reporting. Australian Accounting Review, 17(41), 78-87.
Kang, C., Germann, F., & Grewal, R. (2016). Washing Away Your Sins? Corporate Social Responsibility, Corporate Social Irresponsibility, and Firm Performance. Journal of Marketing, 80(2), 59-79.
Khan, M., Serafeim, G., and Yoon, A. (2016). Corporate sustainability: First evidence on materiality. The Accounting Review, 91(6), 1697-1724.
KPMG and Sustainability (2008). Count me in: the reader's take on sustainability reporting. Available at https://www.globalreporting.org/resourcelibrary/Count-Me-In-The-Readers-take-on-Sustainability-Reporting.pdf
KPMG International Cooperative (2016). ASX Corporate governance council. Adoption of third edition corporate governance principles and recommendations, analysis of disclosures for financial years ended between 1 January 2015 and 31 December 2015. Available at: http://www.asx.com.au/documents/asx-compliance/asx-corp-governance-kpmg-report.pdf
KPMG International Cooperative. (2015). Currents of change: The KPMG survey of corporate responsibility reporting 2015.
Kyte, R. (2007). Balancing rights with responsibilities: looking for the global drivers of materiality in corporate social responsibility and the voluntary initiatives that develop and support them. American University International Law Review, 23, 559.
Lin, C. H., Yang, H. L., and Liou, D. Y. (2009). The impact of corporate social responsibility on financial performance: Evidence from business in Taiwan. Technology in Society, 31(1), 56-63.
Lins, K. V., Servaes, H., and Tamayo, A. (2016). Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis. The Journal of Finance.
Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating environmental, social and governance (ESG) disclosure for sustainable development: an Australian study. Business Strategy and the Environment, 26(4), 438-450.
Lu, W., & Taylor, M. E. (2015). Which Factors Moderate the Relationship between Sustainability Performance and Financial Performance? A Meta-Analysis Study. Journal of International Accounting Research, 15(1), 1-15.
Lydenberg, S. (2012). On materiality and sustainability: The value of disclosure in the capital markets. Cambridge, MA: Initiative for Responsible Investment. Available at: http://www.sasb.org/wp-content/uploads/2012/10/On-Materiality-and-Sustainability.pdf
Mamun, A. A. (2018). Materiality of Non-financial Sustainability Disclosures: Implications for the Business Enterprises in Bangladesh. Asian Business Review, 8(3), Art. #20, pp. 143-152. https://doi.org/10.18034/abr.v8i3.166
McHugh, L. Mary. (2012). Interrater reliability: the kappa statistic. CaliforniaBiochemia medica, Vol. 22 (3). 276-282. Department of Nursing, National University, Aero Court, San Diego.
McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance. Strategic Management Journal, 21(5), 603-609.
Milne, M. J., & Gray, R. (2013). W(h)ither ecology? The triple bottom line, the global reporting initiative, and corporate sustainability reporting. Journal of business ethics, 118(1), 13-29.
Moskowitz, M. (1972). Choosing socially responsible stocks. Business and Society Review, 1(1), 71-75.
Nolan, J. (2007). Corporate Accountability and Triple Bottom Line Reporting: Determining the Material Issues for Disclosure. UNSW Law Research Paper No. 2007-15. Enhancing Corporate Accountability: Prospects and Challenges Conference Proceedings, pp.181-210. Available at https://ssrn.com/abstract=975414.
O'Donovan, G. (2002). Environmental disclosures in the annual report: Extending the applicability and predictive power of legitimacy theory. Accounting, Auditing & Accountability Journal, 15(3), 344-371.
Ong, T., Trireksani, T., and Djajadikerta, H. G. (2016). Hard and soft sustainability disclosures: Australia’s resources industry. Accounting Research Journal, 29(2), 198–217.
Overland, J. (2007). Corporate social responsibility in context: the case for compulsory sustainability disclosure for listed public companies in Australia? Macquarie Journal of International and Comparative Environmental Law, Vol. 4 No. 2, pp. 1-22.
Parket, I. R., & Eilbirt, H. (1975). The practice of business social responsibility: the underlying factors. Business Horizons, 18(4), 5-10.
Patten, D. & Zhao, N. (2014). Standalone CSR reporting by U.S. retail companies. Accounting Forum, 38(2), 132-144.
Perez, F., and Sanchez, L. E. (2009). Assessing the evolution of sustainability reporting in the mining sector. Environmental Management, 43(6).
Porter, M. E., & Kramer, M. R. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.
Qiu, Y., Shaukat, A., and Tharyan, R. (2016). Environmental and social disclosures: Link with corporate financial performance. The British Accounting Review, 48(1), 102-116.
Rao, K., & Tilt, C. A. (2016). Board diversity and CSR reporting: an Australian study. Meditari Accountancy Research, 24(2), 182-210.
Spicer, B. H. (1978). Investors, corporate social performance and information disclosure: An empirical study. Accounting Review, 94-111.
Steurer, R., Langer, M. E., Konrad, A., and Martinuzzi, A. (2005). Corporations, stakeholders and sustainable development I: a theoretical exploration of business-society relations. Journal of Business Ethics, 61(3), 263-281.
Sturdivant, F. D., and Ginter, J. L. (1977). Corporate social responsiveness: Management attitudes and economic performance. California Management Review, 19(3), 30-39.
Sustainability Accounting Standards Board (SASB). (2016). Conceptual framework of the Sustainability Accounting Standards Board. Available at: Available at http://www.sasb.org/wp-content/uploads/2016/04/SASB-Conceptual-Framework-04.04.2016.pdf
Thirarungrueang, K. (2013). Rethinking CSR in Australia: time for binding regulation?. International Journal of Law and Management, 55(3), 173-200.
Tilling, M. V. (2004). Refinements in Legitimacy Theory in Social and Environmental Accounting. Commerce Research Paper Series No. 04-6. School of Commerce, Flinders University.
Tilling, M. V., & Tilt, C. A. (2010). The edge of legitimacy: Voluntary social and environmental reporting in Rothmans' 1956-1999 annual reports. Accounting, Auditing & Accountability Journal, 23(1), 55-81.
Tilt, C. A. (2001). The content and disclosure of Australian corporate environmental policies. Accounting, Auditing & Accountability Journal, 14(2), 190-212.
Tilt, C. A. (2008). Environmental disclosure outside the annual report. International Journal of Management and Decision Making, 9(3), 288-309.
Tînjală, D. M. (2015). 2010-2014: A Comparative Evolution of Sustainability Reporting in Europe and the USA. Timisoara Journal of Economics and Business, 8(1s), 47-69.
Tiong, P. N., and Anantharaman, R. N. (2011). An examination of the sustainability disclosures of ANZ, NAB, and Westpac. JASSA, (3), 12.
Trotman, K. T., & Bradley, G. W. (1981). Associations between social responsibility disclosure and characteristics of companies. Accounting, organizations and society, 6(4), 355-362.
Tschopp, D., & Huefner, R. J. (2015). Comparing the Evolution of CSR Reporting to that of Financial Reporting. Journal of Business Ethics, 127(3), 565-577.
Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of Management Review, 10(3), 540-557.
Unerman, J., and Zappettini, F. (2014). Incorporating materiality considerations into analyses of absence from sustainability reporting. Social and Environmental Accountability Journal, 34(3), 172-186.
Vance, S. C. (1975). Are socially responsible corporations’ good investment risks? Management review, 64(8), 19-24.
Waddock, S. A., and Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 303-319.
Watts, R. L. & Zimmerman, J. L. (1978). Towards a Positive Theory of the Determination of Accounting Standards. The Accounting Review. pp. 112-134.
--0--
Published
How to Cite
Issue
Section
License
Asian Business Review is an Open Access journal. Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal the right of first publication with the work simultaneously licensed under a CC BY-NC 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of their work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal. We require authors to inform us of any instances of re-publication.
