Linda Kannenberg

Title of Dissertation:
Does Integrated Reporting Advance Sustainability Management? - Exploring the Link between the Level of Integration in Carbon Reporting and Management Performance

Supervisor: Prof. Dr. Philipp Schreck
University: Martin-Luther-University Halle-Wittenberg
Scholarship: KSG Scholarship
Cohort: 2. Cohort, 2015-2018

• Short Abstract

  Sustainability reporting supports the effective management of social and environmental issues as it not only provides information for external stakeholders, but also for internal decision-making. Despite the fact that it includes longer-term considerations and corporate (ir)responsibilities against the backdrop of global concerns, they are mainly voluntary and provide a plethora of non-financial information without deriving strategic financial implications for the business (Eccles and Serafeim 2015). This led to the emergence of Integrated Reporting (IR) (Rowbottom and Locke 2014). Rather than treating financial and sustainability reporting separately, IR intends to connect financial and ESG information in a single business narrative (IIRC 2013; GRI 2015). It thereby offers a solution to the above-mentioned issues with conventional sustainability reporting.

  Whether this new reporting strategy is able to live up to its promises, is widely debated. Proponents argue that the establishment of linkages between strategy, financial performance and the economic, social and environmental contexts comes along with distinct advantages: it fosters the development of advanced measurement methodologies, promotes internal collaboration and supports external engagement (Eccles and Krzus 2010). The resulting clarity about reciprocal effects between different performance indicators could improve internal management processes, decision-making and societal relations, thus leading to process efficiencies, improved risk management, and other advantages (e.g., Adams 2015; Eccles and Armbrester 2011).

  Such connections between different types of information and increasing collaboration at the procedural level have been argued to drive morphogenetic organizational change by re-conceptionalizing the interpretive scheme of managers (e.g., Adams 2016; Eccles and Krzus 2010; Simnett and Huggins 2015; Stubbs and Higgins 2014). This in turn, might foster more ethical management (e.g., Maniora 2015) as it enables them to develop a holistic view of the company (Mio et al. 2016). The underlying study builds on exactly these assumptions: Under certain circumstances, integrated reporting could foster ‘integrated thinking’ which, in turn, might improve the sustainability performance of companies given the heightened awareness of managers of the social and environmental impacts of their companies. It attempts to shed light on this presumption by asking: Does the extent and quality of carbon-related integrated reporting, have an effect on the carbon mitigation performance of a company?

  Studies on the direct link between the adoption of IR and a firm’s financial and social, environmental and governance (ESG) performance are scarce. Most of them examine changes in financial performance and reveal a positive association. Only one study analysed the impact of the level of integration in integrated reports on ESG performance (Maniora 2015). The author detected that IR is negatively associated with economic as well as ESG performance. Her results suggest that the reporting approach prioritizes financial over non-financial information and does not necessarily drive a more holistic understanding and decision-making within the company. In its current form, integrated reporting seems to only provide market-related benefits, while its ethical implications do not go further than those of other ESG disclosure approaches. The significance of non-financial information could even be dampened in connection with financial information. Given the fact that only one study investigated this relationship so far, despite the often-noted argument that integrated reporting shall foster a more holistic understanding of the organization, more research is needed on this topic.

  References

  • Adams, C. A. 2016. Environmental, Social and Governance (ESG) risk, strategy, corporate reporting and board oversight: interviews with Board Directors. In EMAN (Ed.), Proceedings of the 20th Conference of the Environmental and Sustainability Management Accounting Network (EMAN), Lüneburg, 2016: 9-16.
  • Adams, C. A. 2015. The International Integrated Reporting Council: A call to action. Critical Perspectives on Accounting, 27: 23-28.Churet, C., & Eccles, R. G. 2014. Integrated Reporting, Quality of Management, and Financial Performance. Journal of Applied Corporate Finance, 26(1): 56-64.
  • Eccles, R. G., & Armbrester, K. 2011. Integrated Reporting in the Cloud. IESE Insight, 8: 13-20.
  • Eccles, R. G., & Krzus, M. P. 2010. One report: Integrated reporting for a sustainable strategy / Robert G. Eccles, Michael P. Krzus. Hoboken, N.J.: Wiley.
  • Eccles, R. G., & Serafeim, G. 2015. Corporate and integrated reporting: A Functional Perspective. In S. A. Mohrman (Ed.), Corporate stewardship. Achieving sustainable effectiveness: 156-171. Sheffield: Greenleaf Publ.
  • GRI 2015. G4 Sustainability Reporting Guidelines. Global Reporting Initiative.
  • IIRC 2013. The International <IR> Framework. International Integrated Reporting Council.
  • Maniora, J. 2015. Is Integrated Reporting Really the Superior Mechanism for the Integration of Ethics into the Core Business Model?: An Empirical Analysis. Journal of Business Ethics: 1-32.
  • Mio, C., Marco, F., & Pauluzzo, R. 2016. Internal application of IR principles: Generali's Internal Integrated Reporting. Journal of Cleaner Production, 139: 204-218.
  • Rowbottom, N., & Locke, J. 2013. The emergence of <IR>. Accounting and Business Research, 46(1): 83-115.
  • Simnett, R., & Huggins, A. L. 2015. Integrated reporting and assurance: Where can research add value? Sustainability Accounting, Management and Policy Journal, 6(1): 29-53.
  • Stubbs, W., & Higgins, C. 2014. Integrated Reporting and internal mechanisms of change. Accounting, Auditing & Accountability Journal, 27(7): 1068-1089.

• PhD Related Publications

  N/A