Showing papers on "Corporate sustainability published in 2013"
TL;DR: In this paper, the authors identify and isolate the concept of the "triple bottom line" (TBL) as a core and dominant idea that continues to pervade business reporting, and business engagement with sustainability.
Abstract: This paper offers a critique of sustainability reporting and, in particular, a critique of the modern disconnect between the practice of sustainability reporting and what we consider to be the urgent issue of our era: sustaining the life-supporting ecological systems on which humanity and other species depend. Tracing the history of such reporting developments, we identify and isolate the concept of the ‘triple bottom line’ (TBL) as a core and dominant idea that continues to pervade business reporting, and business engagement with sustainability. Incorporating an entity’s economic, environmental and social performance indicators into its management and reporting processes, we argue, has become synonymous with corporate sustainability; in the process, concern for ecology has become sidelined. Moreover, this process has become reinforced and institutionalised through SustainAbility’s biennial benchmarking reports, KPMG’s triennial surveys of practice, initiatives by the accountancy profession and, particularly, the Global Reporting Initiative (GRI)’s sustainability reporting guidelines. We argue that the TBL and the GRI are insufficient conditions for organizations contributing to the sustaining of the Earth’s ecology. Paradoxically, they may reinforce business-as-usual and greater levels of un-sustainability.
765 citations
TL;DR: In this paper, the authors introduce a new development in the natural sciences, the delineation of nine "planetary boundaries" which govern life as we know it, and call for more systemic research that measures the impact of companies on boundary processes that are at, or possibly beyond, three threshold points.
Abstract: Management studies on corporate sustainability practices have grown considerably. The field now has significant knowledge of sustainability issues that are firm and industry focused. However, complex ecological problems are increasing, not decreasing. In this paper, we argue that it is time for corporate sustainability scholars to reconsider the ecological and systemic foundations for sustainability, and to integrate our work more closely with the natural sciences. To address this, our paper introduces a new development in the natural sciences � the delineation of nine �Planetary Boundaries� which govern life as we know it. We call for more systemic research that measures the impact of companies on boundary processes that are at, or possibly beyond, three threshold points � climate change, the global nitrogen cycle, and rate of biodiversity loss � and closing in on others. We also discuss practical implications of the Planetary Boundaries framework for corporate sustainability, including governance and institutional challenges.
592 citations
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TL;DR: In this paper, the authors analyze the communicative legitimation strategies companies use to report negative aspects, i.e., negative ecological and social impact caused by corporate activity, and propose a concise characterization of negative aspects and develop a GRI-compliant schema of reporting about them.
Abstract: Corporate sustainability reports are supposed to provide a complete and balanced picture of corporate sustainability performance. They are, however, usually voluntary and thus prone to interpretation and even greenwashing tendencies. To overcome this problem, the Global Reporting Initiative (GRI) provides standardized reporting guidelines challenging companies to report positive and negative aspects of an organization’s sustainability performance. However, the reporting of “negative aspects” in particular can endanger corporate legitimacy if perceived by the stakeholders as not being in line with societal norms and values. Starting from the theoretical lenses of economics-based disclosure theories and socio-political theories of disclosure the focus of this study therefore was to analyze the communicative legitimation strategies companies use to report “negative aspects,” i.e., negative ecological and social impact caused by corporate activity.Using qualitative content analysis of GRI-oriented sustainability reports from companies listed on the US Dow Jones Industrial Average Index and on the German DAX Index, we identified six legitimation strategies. We discuss these strategies regarding to symbolic and substantial management of legitimacy. We show that symbolic legitimation strategies aiming at modifying the perception of legitimizing stakeholders dominate in the reports at hand. Such persuasion, however, does not meet the requirement of impartiality as postulated by the GRI guidelines. Building upon this conclusion we propose a concise characterization of “negative aspects” and develop a GRI-compliant schema of reporting about them. In doing so, we offer a way to improve the overall “balance” of sustainability reporting contributing to a true and fair view in sustainability disclosure.
305 citations
TL;DR: A taxonomy of available literature on the relation of sustainability performance and firm performance, and to provide a path for future research for this field of study is presented in this paper. But the focus of this paper is not on sustainability performance assessment.
Abstract: Purpose – The aim of this paper is to present a taxonomy of available literature on the relation of sustainability performance and firm performance, and to provide a path for future research for this field of study.Design/methodology/approach – Research papers were collected on sustainability performance assessment from various journals available at different online databases. The unit of evaluation was a full paper published in one of the relevant journals. Papers were classified in different categories and tabulated under various classes. A total of 101 research paper sources were studied and assessed in terms of nature of research, level of analysis, and application.Findings – The review reveals that most of the research in the field of sustainability performance and firm performance association, analyzed this relationship in developed countries. The result differs in various cultural and economic contexts and there is no universally accepted direction of this relationship. Contribution of research has...
295 citations
TL;DR: In this paper, the authors examine the influence of one of the most important institutional factors, the legal system, on the development of integrated reports and propose two policy recommendations: first, it may be necessary to establish national laws and protection mechanisms to promote and ensure holistic transparency.
284 citations
TL;DR: In this article, the authors explore the extent to which corporate sustainability principles are integrated into supply chain management (SCM) in corporations and highlight the need for research that reflects the interconnected nature of the economic, environmental, and social dimensions of sustainability.
Abstract: There is a growing body of research on the theory and practice of sustainable supply chain management (SSCM). However, relatively little research has been conducted on the extent to which corporations have integrated sustainability principles into the management of their supply chain and the evaluation of supplier performance. The purpose of this article is to explore the extent to which corporate sustainability principles are integrated into supply chain management (SCM) in corporations. Canada is used as a case study in this article. The study included a content analysis of one hundred Canadian corporate sustainable development reports and in-depth interviews with 18 Canadian experts on SSCM. The article highlights the wide array of ways in which Canadian corporations address SSCM issues. Amongst other topics, issues associated with supply chain governance, standards for SSCM, collaboration with suppliers, performance measurement, and accountability within the supply chain are explored. The findings reveal that there are many challenges in integrating sustainability into SCM. These challenges shed light on possible future directions for research in SSCM. This article underlines the need for research that reflects the interconnected nature of the economic, environmental, and social dimensions of sustainability, particularly as it relates to measuring supplier performance on sustainability initiatives.
242 citations
TL;DR: In this paper, the influence of green manufacturing and eco-innovation on corporate sustainability performance (economic, environmental, and social) was investigated through a questionnaire-based survey across 53 companies from automotive, chemistry and electronic sectors in Turkey.
238 citations
TL;DR: In this article, the presence and characteristics of environmental committees on the board of directors and a Chief Sustainability Officer (CSO) among the management team were examined to provide evidence on whether sustainability-oriented corporate governance mechanisms impact the voluntary assurance of corporate sustainability reports.
Abstract: The following study seeks to provide evidence on whether sustainability-oriented corporate governance mechanisms impact the voluntary assurance of corporate sustainability reports. Specifically, we consider the presence and characteristics of environmental committees on the board of directors and a Chief Sustainability Officer (CSO) among the management team. When examining the assurance services, we make a distinction between those services performed by external assurance providers and the company’s internal auditors. We find that the presence of an environmental committee and a CSO are positively associated with corporate sustainability report assurance services. However, presently, environmental committees appear to prefer the services of consultants and internal auditors. Additional analysis suggests the associations are conditional upon the committee’s expertise and overlap with the audit committee. Similarly, sustainability assurance appears to increase in relation to CSO expertise. Our results are particularly important to those with interests in understanding the evolution and demand for sustainability assurance, as well as the impact of environmental governance mechanisms that are increasingly part of the corporate mosaic. Overall our results suggest that there remain large opportunities for both external and internal audit standard setters to establish stronger guidelines increasing the value and demand for sustainability assurance services.
233 citations
TL;DR: In this paper, the authors analyzed the organizational change efforts for corporate sustainability (CS) of three case studies and found that CS drivers catalyse change from the unsustainable status quo (SQ) towards more sustainable activities.
Abstract: Corporations and their leaders are increasingly recognising their role in making societies more sustainable. This has fostered the development of voluntary tools and initiatives (mainly based on ‘hard’ technocentric solutions) to help them address sustainability. However, discussions on ‘soft’ issues have been limited. This paper analyses the organisational change efforts for corporate sustainability (CS) of three case studies. It was found that CS drivers catalyse change from the unsustainable status quo (SQ) towards more sustainable activities. Barriers to change usually block these efforts; identifying them can help to apply appropriate strategies to overcome them, thus helping to better incorporate and institutionalise CS. This would bring the system to a more sustainability oriented state (MSOS). In time, the MSOS becomes the SQ novo, and the process starts again. Planning such organisational changes could help companies better overcome resistance to change and integrate their efforts for was sustainability more holistically, including technological and human changes. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.
210 citations
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TL;DR: In this article, the authors argue that the majority of the current approaches in research on corporate sustainability are inconsistent with the notion of sustainable development and propose an inclusive notion of profitability that reflects the return on all forms of environmental, social, and economic capital used by a firm.
Abstract: We argue that the majority of the current approaches in research on corporate sustainability are inconsistent with the notion of sustainable development. By defining the notion of instrumentality in the context of corporate sustainability through three conceptual principles we show that current approaches are rooted in a bounded notion of instrumentality which establishes a systematic a priori predominance of economic organizational outcomes over environmental and social aspects. We propose an inclusive notion of profitability that reflects the return on all forms of environmental, social, and economic capital used by a firm. This inclusive notion of corporate profitability helps to redefine corporate profitability as if sustainability matters in that it overcomes the bounded instrumentality that impairs current research on corporate sustainability. We apply this notion to different car manufacturers and develop conceptual implications for future research on corporate sustainability.
189 citations
TL;DR: In this article, the authors contribute to the ongoing shift in the sustainability debate from its historical focus on definitional (what) and motivational (why) questions to the understanding of why.
Abstract: In this article, we strive to contribute to the ongoing shift in the sustainability debate from its historical focus on definitional (“what”) and motivational (“why”) questions to the understanding...
TL;DR: In this article, the authors examine the contribution of ISO 26000 to the strategic management processes of different types of companies and show that the standard is especially helpful for internal and external analyses and in providing starting points for implementing sustainability strategies.
Abstract: The standard ISO 26000 aims to provide guidance on social responsibility and help all types of organizations contribute to sustainable development. Such guidance is important since there is still no consistent understanding of what corporate sustainability and social responsibility (CSSR) encompass. Many companies lack a strategic approach to CSSR and instead follow unsystematic procedures; thus, formal strategic planning could improve operational efficiency.
Against this background, this article critically examines the contribution of ISO 26000 to the strategic management processes of different types of companies. This allows the potential of ISO 26000 for guiding companies on their path to sustainability to be identified. The analysis shows that the standard is most useful for beginners in CSSR. However, ISO 26000 does not cover the entire range of strategic management processes. Instead, the standard is especially helpful for internal and external analyses and in providing starting points for implementing sustainability strategies. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.
TL;DR: In this paper, the authors discuss transdisciplinarity as a novel approach in three steps and propose a framework for mapping existing research approaches in terms of their transdisciplinary qualities.
Abstract: Sustainability challenges are complex. So are the challenges that business firms encounter in their corresponding quest for corporate sustainability. Given this complexity, there is a need for new approaches to corporate sustainability management research. We discuss transdisciplinarity as such a novel approach in three steps. After showing that specialization is the primary conventional response to increasing complexity, we first briefly compare how inter-, multi- and transdisciplinarity reintegrate decentralized, specialized knowledge. The second step describes how the emerging sustainability science has recently advanced the transdisciplinary methodology. Based on the two dimensions of interdisciplinarity and academia–practice collaboration, we third generate a framework for mapping existing research approaches in terms of their transdisciplinary qualities. We use this framework to identify room for novel methodologies in sustainability management research. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.
TL;DR: In this paper, a systematic review of the corporate sustainability field in form of a bibliometric analysis based on citation data acquired from the Social Sciences Citation Index is presented, which shows that, over the last 50 years, the field of corporate sustainability has emerged from a few primary nodes of research and developed into four distinct conceptual genealogies: Corporate social performance theory, stakeholder theory, a corporate social performance versus economic performance debate and a greening of management debate.
Abstract: Business research has repeatedly been criticized for its lack of engagement with pressing issues such as climate change, despite a surge of publications on corporate sustainability topics in recent years. We are therefore interested in identifying the knowledge development and knowledge gaps in business scholarship on the relationship between firms, environment and society. This paper provides a systematic review of the corporate sustainability field in form of a bibliometric analysis based on citation data acquired from the Social Sciences Citation Index. The final dataset contained 3117 records published between 1953 and 2011. Our analysis shows that, over the last 50 years, the field of corporate sustainability has emerged from a few primary nodes of research and developed into four distinct conceptual genealogies: corporate social performance theory, stakeholder theory, a corporate social performance versus economic performance debate, and a greening of management debate. The results of our analysis suggest four key findings. First, the four genealogies only comprise a relatively narrowly focused research scope. Second, there is very little integration and citation of work in other disciplinary areas such as ecology or environmental science. Third, the existing literature has a strong focus on empirically examining the relationship between a firm's environmental and/or social performance and its financial performance. Finally, there is little consideration of managerial implications and consequences of climate change in the corporate sustainability literature to date. We suggest that while this may be a reflection of an insular field, it may also be a role played by the management literature turning away from problem based issues in favor of empirical results, theory building, and the identification of variables that influence firm profitability and can be subjected to direct managerial control. We conclude by outlining pathways for future research.
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TL;DR: In this article, the authors compare the suitability of the green business case with an opportunity cost based approach for assessing the environmental performance of firms, and argue that corporate environmental strategies need to aim at the creation of environmental value alongside economic value rather than creating economic value through environmental management.
Abstract: Businesses are more and more confronted with demands to play an active role to reduce environmental burdens effectively and to help to achieve environmental sustainability. We question the suitability of the green business case and argue that corporate environmental strategies need to aim at the creation of environmental value alongside economic value rather than the creation of economic value through environmental management. Three shortcomings of the green business case limit its usefulness to develop suitable corporate sustainability strategies. We contrast the green business case with an opportunity cost based approach for assessing the environmental performance of firms. Our argument is then applied to an integrated analysis of the financial, carbon and VOC-performance of 16 major car manufacturers worldwide to illustrate how companies respond to the twofold scarcity of economic capital and natural resources as well as the role of proactive technology choices in this context. Our analysis shows how firms can go beyond the standard green business case that ultimately limits environmental strategies to increasing capital efficiency. We argue that by applying the well established notion of opportunity costs to the assessment of environmental resources besides economic capital, companies can identify strategies that create economic and environmental value and help to maximize the contribution to sustainability rather than to economic capital efficiency alone.
TL;DR: In this article, the authors investigated the factors that drive high levels of corporate sustainability performance in an emerging country, Brazil, by using a framework combining stakeholder theory and a resource-based perspective.
TL;DR: In this article, a content analysis of the practices reported by eight Brazilian retailers was carried out to identify the reported practices and management approach employed by Brazilian retailers to make the shift towards sustainability, which revealed some important findings: a primary focus on internal practices mainly social issues regarding their relationship with employees and community; few internal eco-efficiency activities implemented mainly in new or green stores that focus on impacts' remediation rather than on the elimination of their causes; an incipient approach on sustainable supply chain management and consumer awareness; and that sustainability practices are not integrated into a management system.
TL;DR: In this paper, the authors focus on assessing sustainability interlinkages in corporate sustainability reporting and find that, although not explicitly demanded by the guidelines, the coverage of the interlinking issues ranged from medium to high, whilst performance ranged from low to high.
TL;DR: In this paper, an exploratory study based on grounded theory analyzes interviews with the entrepreneurial team and top and middle management of a small to medium-size enterprise in Campania (Italy) integrated sustainability into its corporate strategy, and how its sustainable corporate strategies reflect on intangible assets.
Abstract: Purpose – The purpose of this paper is to study how a small to medium‐size enterprise (SME) in Campania (Italy) integrated sustainability into its corporate strategy, and how its sustainable corporate strategies reflect on intangible assets.Design/methodology/approach – The paper, an exploratory study based on grounded theory, analyzes are interviews with the entrepreneurial team and top and middle management. Findings are integrated with documentary analysis, internal process data and archival material.Findings – Ethics and value systems play a significant role in devising sustainable corporate strategy. Competitive strategies, innovation, quality and responsibility are reflected in management procedures and the supply network system involving partners in sustainable innovation processes.Research limitations/implications – A single case study obviously limits the generalizing of the findings.Practical implications – Entrepreneurs and managers can benefit from the study to build a relational network for s...
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01 Mar 2013
TL;DR: For example, Dauvergne and Lister as mentioned in this paper show that the ecoefficiencies achieved by big-brand companies limit the potential for finding deeper solutions to pressing environmental problems and reinforce runaway consumption.
Abstract: Two experts explain the consequences for the planet when corporations use sustainability as a business tool. McDonald's promises to use only beef, coffee, fish, chicken, and cooking oil obtained from sustainable sources. Coca-Cola promises to achieve water neutrality. Unilever seeks to achieve 100 percent sustainable agricultural sourcing by 2020. Walmart has pledged to become carbon neutral. Big-brand companies seem to be making commitments that go beyond the usual "greenwashing" efforts undertaken largely for public-relations purposes. In Eco-Business, Peter Dauvergne and Jane Lister examine this new corporate embrace of sustainability, its actual accomplishments, and the consequences for the environment. For many leading-brand companies, these corporate sustainability efforts go deep, reorienting central operations and extending through global supply chains. Yet, as Dauvergne and Lister point out, these companies are doing this not for the good of the planet but for their own profits and market share in a volatile, globalized economy. They are using sustainability as a business tool. Dauvergne and Lister show that the eco-efficiencies achieved by big-brand companies limit the potential for finding deeper solutions to pressing environmental problems and reinforce runaway consumption. Eco-business promotes the sustainability of big business, not the sustainability of life on Earth.
TL;DR: In this article, a new balanced scorecard scoring framework using Global Reporting Initiative (GRI) indicators and scoring-benchmarking techniques is proposed to measure the corporate sustainability performance by drawing data from corporate sustainability reports.
TL;DR: The United Nations (UN) Global Compact (GC) as discussed by the authors is a global corporate responsibility movement, whose journey over the last 12 years can be summarized as building and integrating UN issues into the global corporate concern movement.
Abstract: The United Nations (UN) Global Compact’s journey over the last 12 years can be summarized as building and integrating UN issues into the global corporate responsibility movement. This summary begs ...
TL;DR: In this article, the authors assess the economic relationship between two types of sustainability activities (lower-and higher-order) derived from the sustainability value framework of Hart and Milstein (2003) and find that both types of activities are similarly associated with firms' financial performance in terms of direction and trend.
Abstract: While many company managers and academic researchers have argued that businesses that develop a sustainability focus also may improve their financial performance, little information is known about whether firms' different types of sustainability activities are related to varying degrees of financial gain. This paper assesses the economic relationship between two types of sustainability activities – lower- and higher-order – derived from the sustainability value framework of Hart and Milstein (2003). Our analysis reveals that both types of sustainability activities are similarly associated with firms' financial performance in terms of direction and trend. However, the average level of financial benefits related to firms' higher-order sustainability activities (which develop new products and processes) is greater than the average level of financial benefits related to firms' lower-order sustainability activities (which modify existing products and processes). These findings offer initial evidence that companies that reach further by developing higher-order sustainability activities may reap greater financial benefits, while improving the natural environment to a greater degree. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.
TL;DR: In this article, the performance of the Dow Jones Sustainability Asia Pacific index (DJSI-AP) was analyzed and the results indicated that the social and environmental screening process neither represents a burden of cost generation for companies, nor an additional burden on their SRI financial performance.
TL;DR: In this article, a content analysis of Dutch sustainability reports was conducted, and the authors found that the contents of Dutch corporate sustainability reports vary widely, such as the use of crosscutting indicators, linking sustainability initiatives with broader public policy, future reporting directions, systematic presentation of data, and discussion of non-conformances.
Abstract: There is increasing pressure on corporations for sustainability reporting. However, current patterns in corporate sustainability reporting are not well understood. Additional research is needed to identify the contents of current reports and to provide a basis for improvement. The aim of this research is to analyze the sustainable development reporting patterns of Dutch companies. A content analysis of Dutch sustainability reports was conducted. The findings show that the contents of Dutch sustainability reports vary widely. While some areas in these reports are well developed, others – such as the use of cross-cutting indicators, linking sustainability initiatives with broader public policy, future reporting directions, systematic presentation of data, and discussion of non-conformances – require significant improvement. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.
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TL;DR: In this article, the authors explore corporate environmental strategy over time, investigating the patterns of evolving environmental investment decisions and provide evidence that environmental strategy evolves through a feedback process, wherein outcomes of earlier decisions have an impact on subsequent decisions.
Abstract: We explore corporate environmental strategy over time, investigating the patterns of evolving environmental investment decisions Longitudinal case studies provide evidence that environmental strategy evolves through a feedback process, wherein outcomes of earlier decisions have an impact on subsequent decisions Specifically, positive feedback from outcomes like innovation triggers higher goals, enhancing the undertaking of advanced investments, whereas negative feedback from outcomes, such as increased costs, decelerates the adoption of further investments The study points to an emergent view of environmental strategy, where capabilities that are gradually developed in concomitance with environmental outcomes lead to an upgrading of environmental goals, thus triggering the feedback process The process eventually culminates in higher levels of environmental conduct, being more and more integrated with business strategy and competitive advantage Managers’ values and environmental attitudes influence environmental decisions and actions, affecting the acceleration of the feedback process and the magnitude of responses Managerial implications are discussed
TL;DR: In this article, an interpretive structural modeling (ISM) technique has been used to develop a structural model to obtain proper hierarchy and interrelationship among the barriers in reverse logistics.
Abstract: Sustainability is an important concept for twenty first century organizations and one approach for managing corporate sustainability is through the introduction of reverse logistics (RL). But there are many barriers to the implementation of RL in developing countries like India. This paper identifies sixteen barriers to RL from the literature survey. An interpretive structural modeling (ISM) technique has been used to develop a structural model to obtain proper hierarchy and interrelationship among the barriers. The model will help the decision makers in government and industry to prioritize the focus on the barriers for implementation of RL.
TL;DR: In this article, the authors propose a theoretical model linking human resource development (HRD), corporate social responsibility (CSR), corporate sustainability (CS), and business ethics, which suggests that CSR, CS, and ethics are parts of the same organizational subsystem, shaped by a complex interaction between human capital, individual moral development, habitus, organizational practices and culture, and external situational factors.
Abstract: This article proposes a theoretical model linking human resource development (HRD), corporate social responsibility (CSR), corporate sustainability (CS), and business ethics. The model development was informed by Pierre Bourdieu’s relational theory of power and practice, and by Norbert Elias’ and Michel Foucault’s theories of power and knowledge. The model suggests that CSR, CS, and ethics are parts of the same organizational subsystem, shaped by a complex interaction between human capital, individual moral development, habitus (mindsets, dispositions), organizational practices and culture, and external situational factors. The generative mechanism, or motor, driving the development and change of organizational culture, consists of power relationships that are shaped by specific figurations of various types of human capital (social, cultural, economic, and symbolic). HRD can influence this system by engaging in culture change efforts, ethics and CS-/CSR-related education and training on all levels of the ...
11 Jan 2013
TL;DR: In this article, the authors define a definition of Governance for Sustainability: Networks, Shared Values and New Knowledge, and propose a new role for the law to support sustainable governance.
Abstract: Part A: Introduction: Governance and Sustainability Challenges 1. New Forms of Governance: Changing Relationships between Corporates, Government and Community 2. Understanding Corporate Sustainability: Recognizing the Impact of Different Governance Systems Part B: Limitations of Existing Models of Corporate Governance 3. Why Corporate Governance Rankings do not Predict Future Value: Evidence from Toronto Stock Exchange Listings 2002-2005 4. Synthesizing Governance Themes from Political and Management Theory 5. Towards a Definition of Governance for Sustainability: Networks, Shared Values and New Knowledge 6. Financing Environmental Sustainability: A New Role for the Law Part C: Redesigning Governance for Sustainability 7. Sustainability in Paradigms and Practices at Board-Level in Anglo American Plc 8. Codes of Conducts as a Tool for Sustainable Governance in MNCs 9. The Case of Governance for Sustainability at IAG 10. The Civil Regulation of Corporations: Towards Stakeholder Democracy 11. The Materiality of Sustainability: Corporate Social and Environmental Responsibility as Instruments of Strategic Change?
TL;DR: In this paper, the authors investigated whether relative corporate sustainability as measured by the SAM sustainability rating and sustainability reporting in terms of Global Reporting Initiative (GRI) application levels are associated with a higher market valuation.
Abstract: This paper investigates whether relative corporate sustainability as measured by the Sustainable Asset Management (SAM) sustainability rating and sustainability reporting in terms of Global Reporting Initiative (GRI) application levels are associated with a higher market valuation. We conduct a value relevance study for the 600 largest European companies with the Feltham and Ohlson (1995) valuation model as a reference point. Our results indicate that for the observation period 2001 to 2011, the association between corporate sustainability and market value is positive. The empirical evidence of a positive relationship between GRI reporting and market value is statistically significant in some but not all of the model specifications. We find no evidence of interaction between the value relevance of corporate sustainability and sustainability reporting, nor do we find any positive effect of external assurance on the capital market perception of GRI application levels. Our results support the notion that conducting business in accordance with ethical norms is also a shareholder value-increasing business strategy. However, it is not possible to verify the information given in sustainability reports through external assurance.