Reasons for Omitting Sustainability Reporting
Anneke Zwart, Student (University), Netherlands, Moderator
Higgins et al. (2012) have researched Sustainability Reporting (SR) in organizations. The authors elaborate on five reasons why companies do not report on their sustainability (social/environmental performance). The following reasons are mentioned:
1. External Stakeholder Pressure is missing; Although most of the companies included in the research were operating in industries in which social/environmental concerns have appeared, there is no pressure from stakeholders to report on sustainability. The value of reporting on sustainability may be increased if investors require the reports so as to assess the risk of investing.
2. Lack of Perceived Benefits: Although sustainability nowadays can create a competitive advantage, there are only few who see the value-added in voluntarily reporting on their sustainability. Rather it is more often seen as a waste of time and as an obstruction for making money.
3. Sustainability Reports are not Obligatory: There is no obligation to provide information on social/environmental performance, as a result that managers are the ones who consider SR. Besides, companies often don’t have resources to voluntarily report on sustainability.
4. Compliance Culture: Many companies see SR as being unnecessary. Indeed they see it as extremely extensive; it supports a compliance culture that leads a weak understanding of the relationship between on the one hand strategies and decision making and on the other operational sustainability.
5. Organizational Culture/structure: The decision of reporting on social/environmental performance depends on the culture and structure of organizations. For example, some non-reporters have incorporated sustainability in their business strategy but have simply not extended it to reporting.
Source: Stubbs, W. Higgins, C. And M. Milne (2012) “Why Do Companies Not Produce Sustainability Reports?” Business Strategy and the Environment 22 pp 456-470