Sustainability Accounting & Reporting, Environmental Performance and Green Investment

Dear Colleagues,

Currently, the implementation of sustainability accounting and reporting (SAR) is fragmented. Yet, if the world is to tackle the climate and pollution crises, it needs to urgently transition away from fossil fuel and plastic configurations to more sustainable ones. This transformative journey will involve accounting reforms to enrich stakeholder information with regard to the environmental impact of an organisation’s activities. This Special Issue hosts papers that bridge environmental and accounting disciplines that analyse and reflect on entity sustainability performance reporting.  There are opposing views on SAR reform pathways. Experts dispute the notion of ‘materiality’ or significant reporting impacts. Anglo-Saxon accounting bodies tend to be traditional and investor-minded. They advocate for a single financial materiality focus and prudent, incremental reporting system reform. Global and European institutions (UN, EU, GRI) seek to broaden materiality beyond financial impacts. Their alternative ‘double materiality’ preference considers a broader spectrum of stakeholders compared to traditional accounting and reporting systems. Both the traditional single and broader double accounting reform perspectives have theoretical as well as pragmatic advantages and disadvantages. Although the standard setting landscape is evolving, division, paradox and contention remain. Notwithstanding sustainability accounting and reporting contention, climatic and ecological challenges impel urgent resolution.

Anthropogenic and industrial pressures accelerate emission-intensive construction activity, responsible for 38% of energy-related CO₂ emissions globally. Within a few decades, climate change could dent global GDP by 11–14%. In the next seventy years, sea levels are likely to rise by 1m. In the worst-case scenario, if all of Greenland’s ice sheet were to melt or other tipping points were reached, the rise could be as much as 7m. Worryingly, the seemingly inexorable increase in greenhouse gas (GHG) concentrations intimates that we are drifting towards such a doomsday scenario. Whilst in the 1970s the annual increase in GHG was 1 ppm, it now exceeds 2.4 ppm per year. Conventional economic and accounting performance metrics, because they tend to ignore either environmental or social considerations, may be necessary but are insufficient entity or project performance indicators. They simply ignore the external costs of many construction, industrial or agricultural activities. Notable external costs include ecosystem depletion or habitat loss, plastic contamination, and air and water pollution. Since the 1950s, the annual world output of plastic has increased almost 200 times from 2 to over 380 million tonnes, of which 8-12 million tonnes is washed into the sea (2-3%). The mismanaged disposal of plastic waste, mainly from lower-income countries with weak disposal infrastructures (notably India, Bangladesh and the Philippines), causes marine plastic pollution that threatens the safety of global fish stocks. The climate crisis, contamination and pollution impel the urgent reform of accounting systems to supplement other measures.

This Special Issue critically assesses the state of sustainability accounting and reporting today across a range of sectors. It disseminates research that influences policy and practice for a green economic transition. We particularly welcome international, cross-disciplinary articles on business sustainability that integrate financial and environmental considerations, involving:

• Green investment evaluation
• Measuring climate change mitigation impacts
• Integrated variance analysis for environmental improvement
• Reporting on performance improvement in, for example, energy mix, air pollution, toxic chemicals and hazardous wastes
• Assessing ecosystems impacts (e.g., water pollution, biodiversity)
• Evaluating land use impacts
• Assessing community health-related impacts of firm practices or outputs
• Evaluation of unsustainable production or consumption

Suggest themes:

• Multi-criteria project evaluations
• Sustainable performance management
• Sustainable cost and full-cost accounting
• Triple bottom line (TBL) accounting
• Natural capital inventory accounting
• Global Reporting Initiative (GRI)
• Materiality and precautionary principle
• Risk assessment, green investment due diligence and assessment

In this Special Issue, original research articles and reviews are welcome. Research areas may include (but are not limited to) the following:

• International, cross-disciplinary articles on sustainability that integrate financial and environmental considerations;
• Integrated performance management and reporting (triple bottom line, balanced scorecard, etc.);
• Assessment of firm green credentials and environmental reporting;
• Project multi-criteria evaluation;
• Sustainability accounting standards and reforms to accounting standards.

We look forward to receiving your contributions.

Selected bibliography

Bebbington, J., & Unerman, J. (2018). Achieving the United Nations sustainable development goals. Accounting, Auditing & Accountability Journal, 31(1), 2–24. https://doi.org/10.1108/AAAJ-05-2017-2929

Becerra, M. R. (2021). Forests and climate change mitigation. Race2Imagine October 22nd 2021.

Busch, T., Bauer, R., & Orlitzky, M. (2015). Sustainable development and financial markets: Old paths and new avenues. Business & Society, 55(3), 303–329. https://doi.org/10.1177/0007650315570701

Church, J. (2021). Climate change scientific update for 2021 CARE conference. Centre for Accounting Research Education Conference 2021: Accounting for Sustainability and Responsible Investing. https://events.climateaction.org/care-conference/dashboard/1/care-conference-1/

Cohen, R. (2020). Impact: Reshaping capitalism to drive real change. Ebury Press. https://www.sbs.ox.ac.uk/oxford-answers/reshaping-capitalism-drive-real-change

Coyle, D. (2020). Green recovery must end the reign of GDP, argue Cambridge and UN economists. Bennett Institute for Public Policy. https://www.cam.ac.uk/stories/UNnaturalcapital

Dasgupta, P. (2021). Nature: Our most precious asset. https://www.youtube.com/watch?v=JvPJALCZOeo

European Commission. (2021). Corporate sustainability reporting. https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en#standards

Feix, A., & Philippe, D. (2018). Unpacking the narrative decontestation of CSR: Aspiration for change or defense of the status quo? Business & Society, 59(1), 129–174. https://doi.org/10.1177/0007650318816434

Financial Conduct Authority. (2021). Sustainability Disclosure Requirements (SDR) and investment labels: Discussion Paper DP21/4.

Financial Reporting Council. (2020b). FRC climate thematic. Reporting - How are companies developing their reporting on climate-related challenges? (Issue November). https://www.frc.org.uk/getattachment/6d8c6574-e07f-41a9-b5bb-d3fea57a3ab9/Reporting-FINAL.pdf

Guo, J., Kubli, D., & Saner, P. (2021). The economics of climate change: no action not an option. In Swiss Re Institute (Issue April). https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe-risk/expertise-publication-economics-of-climate-change.html

Hamilton, I., & Rapf, O. (2020). Executive summary of the 2020 global status report for

Ivory, S. B., & Brooks, S. B. (2018). Managing corporate sustainability with a paradoxical lens: Lessons from strategic agility. Journal of Business Ethics, 148(2), 347–361. https://doi.org/10.1007/s10551-017-3583-6

Jill, A., & Warren, M. (2020). The Naturalist’s Journals of Gilbert White: exploring the roots of accounting for biodiversity and extinction accounting. Accounting, Auditing & Accountability Journal, 33(8), 1835–1870. https://doi.org/10.1108/AAAJ-03-2016-2450

Kaplan, R. S. (2021). Accounting for climate change: The first rigorous approach to ESG reporting. Egyptian Online Seminars in Business , Accounting and Economics 21/10/2021.

Laine, M., Tregidga, H., & Unerman, J. (2021). Sustainability Accounting and Accountability. Routledge. https://doi.org/10.4324/9781003185611

Liikanen, E. (2021). A financial system for net zero. COP26.

Opinion Lex. (2021, November 3). COP26: Carney’s $130tn climate pledge is too big to be credible. Financial Times. https://www.ft.com/content/87690ee9-c9b1-44b6-881b-368139560295

Pitt-Watson, J. (2021). Can ESG reporting be consistent with basic accounting principles? Centre for Accounting Research Education Conference 2021: Accounting for Sustainability and Responsible Investing.

Ritchie, H. and Roser, M. (2018) - 'Plastic Pollution'. Published online at OurWorldInData.org. Retrieved from: 'https://ourworldindata.org/plastic-pollution'

Saïd Business School, & Oxford, U. of. (2018). SBS responsible business debate: Should corporate sustainability reporting be mandated? https://www.youtube.com/watch?v=IyzkKFgp6NU

SASB, & CDSB. (2019). Converging on climate risk. https://www.sasb.org/knowledge-hub/converging-on-climate-risk/

Tiwari, K., & Khan, M. S. (2020). Sustainability accounting and reporting in the industry 4.0. Journal of Cleaner Production, 258, 120783. https://doi.org/10.1016/j.jclepro.2020.120783

United Nations Environment Programme. (2021). Production Gap Report 2021. https://productiongap.org/2021report/

United Nations et al. (2021). System of environmental economic accounting - Ecosystem accounting. https://seea.un.org/ecosystem-accounting

United Nations Conference on Trade and Development (2022). 5 global actions needed to build a sustainable ocean economy, accessible at: https://unctad.org/news/5-global-actions-needed-build-sustainable-ocean-economy

H. M. Governement. (2021). Greening finance: A roadmap to sustainable investing. https://www.gov.uk/government/publications/uk-government-green-financing

Murphy, R. (2021). The U.K. government-approach to sustainability reporting is pure greenwash. Tax Research Insttitute Blog. https://www.taxresearch.org.uk/Blog/2021/10/19/the-uk-government-approach-to-sustainability-reporting-is-pure-greenwash/

Dr. Simon Huston
Dr. Jaliyyah Bello
Dr. Obinna Ugwu
Dr. Lincoln C. Wood
Guest Editors

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• sustainability accounting and reporting
• green investment appraisal
• integrated reporting
• performance measurement
• multi-criteria project evaluation