Sustainability Development and the Quality of Assurance Reports: Empirical Evidence

There is a rising trend among companies to publish their sustainability or corporate social responsibility (CSR) reports. Assurance of these reports is a valuable voluntary tool to provide them with higher credibility. Nonetheless, the quality of assurance reports differs in practice and the objective of this paper is to provide evidence in this new area of research. Indeed, we are pioneers in developing an index to measure the quality of assurance reports. We choose the Spanish setting because it is the worldwide leading country as regards CSR reporting (KPMG, 2011; Sierra et al., 2012). We have found evidence on the determinants for CSR reporting posited by existing literature that have an impact on (a) the decision of companies to publish their CSR reports, (b) the decision to assure the CSR report or not and (c) the decision to hire the assurance services from an auditor or a consultant and the subsequent quality of the assurance report. Last but not least, our results from a sample of 161 CSR assurance reports evidence that assurance reports are of fairly acceptable quality, according to the index proposed. Furthermore, the value of the quality index is significantly higher if the assurance services are provided by an auditor (as opposed to a consultant) and if the CSR reporting company is larger. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

中国物流行业企业社会责任报告体系研究

通过对中国物流行业较有代表性的两家企业的CSR报告内容分析,提出中国物流行业企业社会责任报告体系编写方法,其内容主要包括报告背景、公司治理、责任管理、责任绩效披露、第三方审验说明等。     

Voluntary Assurance of Voluntary CSR Disclosure

We study a firm's decisions to engage in socially responsible activities, voluntarily report on them, and purchase external assurance of the report. In our signaling model, neither firm type nor the level of activity is observed. We show that if voluntary assurance is not too expensive, the firm that engages in more socially responsible activities purchases external assurance and thus “selects” a separating equilibrium. As a result, CSR reports can be used to infer the level of activity and this causes all firms to engage in more socially responsible activity. Further, when voluntary assurance is required to support a separating equilibrium, greater monitoring by social activists increases the chosen quality of voluntary assurance—voluntary assurance and monitoring by social activists are complements, not substitutes.     

Research on extended external reporting assurance: Trends,themes, and opportunities

The assurance of non‐financial information (NFI) included in extended external reports (EERs) is a global activity that has far‐reaching consequences for business, investors, other stakeholders, and society. EERs remain largely unregulated with few standards. Along with our companion paper (Krasodomska, Simnett, & Street, 2021, Journal of International Financial Management and Accounting, 25, 209), we contribute to the current discussion on EER assurance by providing an overview of the academic literature to inform the standard setting initiatives of the International Auditing and Assurance Standard Setting Board (IAASB), as well as the practice of assurance of EERs. We identify 121 articles on extended external reporting (EER) assurance published between 2009 and 2020 across 35 journals ranked A*, A, and B on the Australian Business Deans Council (ABDC) 2019 Journal Quality List. These articles cover archival, experimental, interviews, case studies, surveys, and content analysis research methods and serve as a possible input for standard setting activities. We document a rapid increase in this literature with almost half of the articles published in the last 3 years, 2018 to 2020. Finally, we offer ideas for future research directly linked to the proposed Guidance of the IAASB on EER assurance. We encourage researchers to engage in these and other issues of the IAASB’s Guidance to assist them with valuable input for their standard setting activities.     

Determinants of the adoption of sustainability assurance statements: an international investigation

This paper explores the factors associated with voluntary decisions to assure social, environmental and sustainability reports. Since the market for assurance services in this area is in its formative stages, there is a limited understanding of the demand for this emergent non‐financial auditing practice, which is evolving rapidly across different countries. Drawing from extant literature in international auditing and environmental accounting, we focus on a set of country‐level institutional factors to explain the adoption of sustainability assurance statements among an international panel of 212 Fortune Global 250 companies for the years 1999, 2002 and 2005. Consistent with our expectations, our results provide evidence that companies operating in countries that are more stakeholder oriented and have a weaker governance enforcement regime are more likely to adopt a sustainability assurance statement. Further, the demand for assurance is higher in countries where sustainable corporate practices are better enabled by market and institutional mechanisms. Our exploratory findings also indicate that the likelihood of choosing a large accounting firm as assurance provider increases for companies domiciled in countries that are shareholder oriented and have a lower level of litigation. We conclude the paper by suggesting three directions of research in the area of sustainability assurance that have relevant academic and practical implications. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Examining the extent of and determinants for sustainability assurance quality: The role of audit committees

This study examines the extent of and determinants for sustainability assurance quality. Data comprise sustainability assurance statements published by the top 100 listed companies in Australia and New Zealand from 2017 to 2019. The findings indicate that Australian companies lead their New Zealand counterparts in sustainability assurance. Although sustainability reporting has risen, assurance rates remain significantly low. Accountants dominate the market, and companies prefer to use their own auditors for sustainability assurance work. Sustainability assurance quality is poor and does not vary significantly among Australian and New Zealand companies. Low-quality sustainability assurance plays a limited role in mitigating potential stakeholder–agency conflicts. The regression analysis indicates that audit committee characteristics such as members' independence, industry/market expertise, and attending meetings enhance sustainability assurance quality, whereas audit committee size has no affect. These findings suggest that audit committee characteristics such as independence, industry expertise, and regular meeting attendance have the potential to reduce stakeholder–agency conflicts by improving the quality of sustainability statement assurance. Our findings build on the sustainability assurance literature by exploring current trends in sustainability assurance practices in Australia and New Zealand where corporate governance codes have been recently revised. Further, these findings are timely given recent changes in standards (International Standard on Assurance Engagements [ISAE] 3000 and Global Reporting Initiative [GRI]). Our study contributes to the audit committee literature and sheds light on the role played by audit committee characteristics on sustainability assurance statement quality. The study findings potentially offer useful insights for practitioners, standard setters, and regulators.     

董事网络与企业社会责任鉴证的示范效应——基于模仿压力理论的实证检验

在中国企业社会责任（CSR）快速发展的时代背景下，研究CSR鉴证在董事网络中的示范效应。利用A股上市公司数据进行回归分析，发现董事连锁企业的CSR鉴证对CSR披露质量具有显著正向影响。引入强制披露压力作为调节变量，发现外部压力强化了CSR鉴证的示范效应，从而为模仿压力理论提供了新的经验证据。     

Can sustainability report assurance be a collaborative process and practice beyond the ritual of verification?

This study examines the role of assurance for sustainability reporting whether it has the role beyond a verification mechanism for corporate sustainability reporting. This paper looks beyond the discourse about managerial and professional capture in sustainability report assurance practice. Drawing on the in-depth interviews with assurance practitioners for sustainability reporting in the United Kingdom from different professional backgrounds, it provides an evidence-based illustration on how sustainability report assurance service can contribute to more corporate sustainable actions. The findings also highlight the potential influences of the assurance providers on the assurance process and corporate decision-making. The conceptualization of the assurance from the service perspective and of the assurance providers as transformational leaders enables this paper to challenge the current framing of the assurance services as a verification ritual that constraint its impacts and contributions to sustainable development.     

Climate change mitigation: Carbon assurance and reporting integrity

Concern about climate change has increased the pressure on firms to be accountable for social impact and to report on environmental, social and governance (ESG) performance. Focusing on the view that sustainability-oriented firms are likely to consider wider stakeholder interests and pursue high financial reporting integrity, this paper examines the association between carbon assurance and earnings management. Using a sample of firms listed on the New York Stock Exchange, we find voluntary adoption of carbon assurance (level), carbon disclosure and gender diverse boards are negatively associated with earnings management. Additional tests using different components of carbon assurance (percent and verification) confirm our main results. Our results suggest that firms that voluntarily invest in carbon assurance, carbon disclosure and gender diverse boards are less likely to engage in earnings management and thus have higher reporting integrity. This aligns with the view that firms' ethical concerns translate into higher quality reporting.     

Identifying Worldviews on Corporate Sustainability: A Content Analysis of Corporate Sustainability Reports

Companies commonly issue sustainability or corporate social responsibility (CSR) reports. This study seeks to understand worldviews of corporate sustainability, or the corporate message conveyed regarding what sustainability or CSR is and how to enact it. Content analysis of corporate sustainability reports is used to position each company report within stages of corporate sustainability. Results reveal that there are multiple coexisting worldviews of corporate sustainability, but the most dominant worldview is focused on the business case for sustainability, a position anchored in the weak sustainability paradigm. We contend that the business case and weak sustainability advanced in corporate sustainability reports and by the Global Reporting Initiative are poor representations of sustainability. Ecological embeddedness, or a locally responsive strategy that is sensitive to local ecosystems, may hold the key to improved ecological sensemaking, which in turn could lead to more mature levels of corporate sustainability worldviews that support strong sustainability and are rooted in environmental science. This must be supported by government regulation. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Conformance and Deviance: Company Responses to Institutional Pressures for Corporate Social Responsibility Reporting

This paper analyses how large Danish companies are responding to new governmental regulation which requires them to report on corporate social responsibility (CSR). The paper is based on an analysis of 142 company annual reports required by the new Danish regulation regarding CSR reporting, plus 10 interviews with first‐time reporting companies and six interviews with companies that failed to comply with the new law. It is concluded that coercive pressures from government have an impact on CSR reporting practices. Further, the analysis finds traces of mimetic isomorphism which inspires a homogenisation in CSR reporting practices. Finally, it is argued that non‐conformance with the new regulatory requirements is not solely about conscious resistance but may also be caused by, for example, lack of awareness, resource limitations, misinterpretations, and practical difficulties. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Corporate environmentalism: tracing the links between policies and performance using corporate reports and public registers

Within this paper, we consider whether it is possible to trace the links between the procedural and the substantive dimensions of corporate environmentalism using information that is in the public domain – most notably in corporate reports and in pollutant releases and transfer registers (PRTRs) such as the US Toxics Release Inventory (TRI) and the EU Polluting Emissions Register (EPER). Based on an analysis of firms in the oil and gas sector, and specifically of the environmental performance of oil refineries, we find that corporate reports are of very limited value when seeking to compare and contrast levels of environmental performance at the site level, but that a significant body of useful information is provided by public registers such as the US TRI and the EU EPER. Drawing upon these data, we find significant variations in corporate environmental performance across the US and the EU, and we note the existence of significant correlations between higher levels of emissions and lower levels of employment and income in the areas where industrial facilities are located. We then discuss the relevance of our findings to broader debates on corporate environmentalism and corporate social responsibility. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

社会责任报告鉴证、审计风险与审计费用——基于A股上市公司的经验数据

以2011—2016年间发布社会责任报告的A股上市公司为样本，研究社会责任报告鉴证对审计风险与审计费用的影响。研究发现：企业社会责任表现越好，审计风险与审计费用越低；社会责任报告鉴证总体上未能降低审计风险和审计费用，但由会计师事务所实施的社会责任报告鉴证、依据规范的鉴证以及连续开展的鉴证可以显著降低审计风险和审计费用；国有企业与敏感性行业的企业开展社会责任报告鉴证可以显著降低审计风险和审计费用，但目前对于强制发布社会责任报告的企业，鉴证的这一效用并不明显。     

The Impact of Board Structure on Corporate Social Responsibility: A Temporal View

Time plays an important role in corporate social responsibility (CSR) decisions. In the context of time and the boardroom, the consideration of CSR can be affected by board structure. For example, because of considerable short‐term pressures, this study posits that insiders on the board are less likely to prioritize the longer‐term time horizons needed to affect CSR. Following this perspective, a hypothesis is put forth that insiders generally have temporal orientations that are more short term in nature and that they therefore have a negative effect on CSR. A study of 300 of Australia's largest firms confirmed this hypothesis. However, when inside director compensation linked to environmental and social metrics and inside director CSR training are introduced as moderating variables, their interactive effects lead to positive results: both positively moderate the negative insider–CSR relationship in environmental and social dimensions. The study contributes to a temporal view of boards of directors, as well as to corporate governance and CSR. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Mapping Corporate Responsibility and Sustainable Supply Chains: an Exploratory Perspective

Corporate responsibility (CR) in general, and sustainable supply chain management in particular, have been a growing concern for companies and researchers over the past decade. However, in scholarly work, sustainability has often been dealt with in a generic fashion or from an anecdotal point of view. Further, research works examining CR on the one hand and sustainable supply chains on the other have been conducted separately. We undertake the multiple factor analysis of a CR rating database (Innovest) which reports longitudinal scores for both the social and environmental performance of 1198 companies in different countries and distinct industries, to demonstrate a strong relationship between CR and a sustainable supply chain. Our findings from exploratory analysis also illustrate the role of country of origin and industry in shaping CR behaviour, highlighting isomorphic as well as allomorphic trends for CR trough time. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

Social and environmental reporting and the corporate ego

This paper reports on the results of a qualitative exploration into the target audiences for social and environmental reporting (SER). In spite of the wealth of literature on SER motivations, relatively few studies have sought to ascertain who the key target or actual audiences are for SER. The results of this study, based on interviews with UK SER managers, suggest that investors and employees are overwhelmingly the most important audiences targeted by SER managers. The paper draws on auto‐communication theory to question the extent to which SER serves as a means of engaging in dialogue with stakeholders. It is argued that, beyond sending risk management signals to the financial markets, SER primarily serves as a vehicle whereby organizations can communicate with themselves. Moreover, broader stakeholders might be targeted with SER only insofar as doing so serves as a perceived endorsement of organizational communications, thereby embellishing the corporate ego's fantasy of how it would like to be perceived. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.     

Mind the Gap: A Journey to Sustainable Supply Chains

Many companies still view Corporate Social Responsibility (CSR) as solely philanthropy rather than addressing their material issues. A few companies that have began to see the strategic advantages of being socially responsible and addressing their social, environmental and economic challenges. Developing an effective strategy can reward companies with reputation enhancement, license to operate, avoiding litigation, recruitment and retention of employees and developing process, product and strategic innovations. One company who has realized the value of investing and integrating CSR into the business model is the apparel retailer Gap Inc. This article will examine the evolution of Gap Inc. and its work developing an effective labor standards assurance program and stakeholder engagement strategy transformed historically adversarial relationships with key stakeholders into collaborative multi-stakeholder partnerships. Particular attention is put towards Gap Inc.’s learnings in the process and how these new insights innovated the company’s CSR strategy over time. An erratum to this article can be found at     

The Financial Effects of Uniform and Mixed Corporate Social Performance

Firms typically present a mixed picture of corporate social performance (CSP), with positive and negative indicators exhibited by the same firm. Thus, stakeholders' judgments of corporate social responsibility (CSR) typically evaluate positives in the context of negatives, and vice versa. Building on social judgment theory, we present two alternative accounts of how stakeholders respond to such complexity, which provide differing implications for the financial effects of CSP: reciprocal dampening and rewarding uniformity. Echoing notable findings on strategic consistency, our US panel study finds that firms that exhibit uniformly positive or uniformly negative indicators in particular dimensions of CSP outperform firms that exhibit a mixed picture of positives and negatives, which supports the notion that stakeholders' judgments of CSR reward uniformity.     

Exploring factors relating to extinction disclosures: What motivates companies to report on biodiversity and species protection?

This paper seeks to contribute to the existing business strategy and the environment literature by investigating the disclosure practices of biodiversity/extinction (B/E) and threatened species. We use greenwashing theory to understand global companies' motivation to report on B/E information. Data are collected from 200 Fortune Global companies for 3 years. We develop our comprehensive 53 disclosure index and create and test OLS regression model to measure the relationships between B/E disclosures and its determinants factors including environmental performance, industry sector, country, assurance, environmental awards, presence of biodiversity partners, and the number of species' related disclosure. Our results reveal that there are positive significant relationships between B/E disclosure and assurance provided by the Big 4: gaining an environmental award, companies from high biodiversity risk sectors, developing countries, presence of biodiversity partners, and how many specific biodiversity words are published in companies' reports. On the other hand, there are positive insignificant relationships between B/E disclosure and assurance: poor performers and the number of species disclosed in companies' reports. Our findings have important implications for regulators and policymakers. Our evidence appears to be robust when controlling for possible endogeneities.     

The Effect of Country‐Level Investor Protection on the Voluntary Assurance of Sustainability Reports

Over the last several years, sustainable (or socially responsible) investing has experienced rapid growth around the world reflecting an increasing awareness by investors of social, environmental, ethical, and corporate governance issues. This heightened awareness among investors has resulted in a demand for sustainability reporting and a corresponding increase in demand for assurance of sustainability information to enhance its credibility. Using an investor‐based view, we examine the impact of country‐level investor protection on reporting companies’ voluntary sustainability assurance decisions. We find that both the decision to obtain voluntary sustainability report assurance and the decision to obtain higher quality assurance are more likely for firms domiciled in countries that have weaker investor protection. Our results indicate that managers in low investor protection countries use voluntary sustainability assurance as a substitute monitoring mechanism.