Triple bottom line reporting: a study of diversity and application by Australian companies

Corporate social reporting has been undertaken in various degrees since the 1970s, and these communications between companies and users are being recognised as an important addition to the creation of a more complete picture of the impacts of a company on its environment. As a result of growing societal pressure on organisations to behave as responsible corporate citizens, corporate social reports provide the vehicle whereby the social and environmental undertakings of the company may be chronicled and assessed. The process of measurement, evaluation and reporting of social and environmental matters is an area where the accounting profession has a clear role to play, but which it has thus far effectively ignored. It has been left to others outside the normal accounting sphere to develop frameworks to assist in social reporting. These concepts, ideas and frameworks, have come together under the globally accepted term, Triple Bottom Line (TBL) reporting. TBL reporting provides information about the economic, environmental and social performance of an organisation. In a departure from the traditional focus solely on financial performance, TBL reporting is centred on the notion that an organisation's environmental and social performance is directly tied to the concept of sustainable development. This thesis investigates the emergence and level of voluntary social reporting (TBL reports) by the top 100 companies in Australia. To ascertain the level of corporate commitment to TBL reporting, the reporting framework developed by Global Reporting Initiative (the GRI Sustainability Reporting Guidelines 2002) is used as a benchmark for the disclosures and as the model upon which to make this assessment of the content of the disclosures. Whilst there have been other studies considering the Australian context conducted prior to or in parallel with this work (for example Jones et al., 2005; Kent and Chan, 2003), these studies have simply focussed on whether corporations have attempted to report their environmental and social performance against the GRI (or similar) indicators or counted lines of text devoted to particular issues as a measure of the quality of reporting. This work is ground-breaking in that it is the first study within the Australian context to consider the information presented to determine quality of the corporate disclosures. It is also unique in that all publicly-available disclosures were considered, so that the study did not solely focus on hard-copy corporate reports but also assessed materials available on and through company websites. The corporate TBL reports for the years 2002 and 2003 were analysed using content analysis to assess corporate reports for their content in the three TBL areas of disclosure, economic, environmental and the social components of the reports. The content of the reports was compared and evaluated against the reporting requirements of the 2002 GRI Guidelines and then scored using a Likert scale of 1 to 5 for their observance with the disclosures outlined in GRI document. The results of the study paint a picture of current voluntary social reporting by Australian companies. The major findings in this study are that: 1. There is reasonable similarity amongst the disclosures in the reports along with the common inclusion of verification statements. The inclusion of verification statements also tended to be more prevalent in the energy and material sectors. 2. The level and quality of disclosures in the TBL reports increased over the survey period. 3. The spread of disclosures was skewed towards environmental disclosures, yet social disclosures were also apparent and increased over the period assessed. 4. Companies in those industry sectors with a relatively high environmental or social impact were leaders in the TBL disclosures. The findings of this thesis indicate that TBL reporting, although still in its infancy, is likely to lead to significant changes in reporting of results and performance and how the company has discharged its accountability to the various stakeholders. It is recommended that the accounting profession look at adopting the GRI Guidelines as a 'standard' for TBL reporting, something that would be presently viable as the Guidelines have progressed to version three, with the G3 reporting framework due for release in late 2006. This field of study is ripe for further investigation and, whilst this study was significant in developing a preliminary picture of the TBL reporting landscape in Australia, it has also brought to the fore the need for further research: 1. To determine whether the potential changes likely to emerge from the IASB/FASB resurgence of interest in the conceptual framework will have any effect on social and environmental reporting; and 2. To extend the picture of TBL reporting by Australian companies.