The Influence of Stakeholder Engagement on Sustainability Reporting

 The Influence of Stakeholder Engagement on Sustainability Reporting

             Title of Research Project

            The title of the project is “investigating the influence of stakeholder engagement on sustainability reporting.”

Abstract

Sustainability reporting has been useful in the sense that it helps the organizations to consider their effects of different sustainability issues. It helps them become more transparent about the risks and opportunities that they face. A sustainability report is described as a report that is published by an organization. The report is mainly based on the social, environmental, and even economic impacts that are caused by daily activities. A sustainability report also presents the values and governance model that the organization has. Asides from that, it also demonstrates the link between its commitment and strategy, and this leads to sustenance in the global economy. Nonetheless, sustainability has also assisted companies in measuring, communicating, and even understanding the social, environmental, and even economic governance. They then set goals and manage change effectively.  Notwithstanding, a sustainable report is often thought to be an excellent platform where the sustainability performance of an organization is communicated. The performance may be either negative or positive. Often, sustainability reports are synonymous with terms such as non- financial reporting, CSR (corporate social responsibility), and even triple bottom line reporting.

Importance of Research

Sustainability reports are crucial since they try to illustrate and communicate the outcomes of measuring, being accountable, and even disclosing to the external and internal stakeholders. The stakeholders help ensure that the organization achieves the goals and objectives of sustainable development. Therefore, further reports should be developed as far as accounting opinions are concerned. Accounting ideas play an important role in organizations. The most critical aspect of these theories is that they are useful in the corporate world. It means that financial statements should be available and should include relevant information that can be used in making informed business decisions.

With the existence of accounting theories, the entire accounting information should portray relevance and consistency. The information must be comparable, and it must have reliable and precise financial statements. Asides from that, the accounting information must adhere to the accepted accounting standards.  In the same way, sustainability reports are believed to be of high quality. This has disclosed the company’s most relevant issues to the most material stakeholders. Due to this reason, the report has demanded that stakeholder engagement must be concentrated. Thus, it permits the company to communicate and present information based on its long- term viability. Stakeholder engagement in long- term discussions gives the organization vital input. This is important in making informed decisions, further ensuring that there are improvements that facilitate growth and make progress; it maintains the long- term sustainability goals.

The Research Questions

The research has three main research questions. They include,

1. What are the two primary principles that govern the quality of sustainability reports within a company?
2. What does the term ‘stakeholder inclusiveness’ mean?
3. What is the meaning of the word materiality in business?
4. What are the different types of stakeholders that can be found in a company?
5. Are there any benefits of stakeholder engagement?
6. Who is described as the internal stakeholders in a firm?

• Who is termed as the external stakeholders in a company?

3. What are the accounting theories that are considered in this research?

The sub-question in this research is,

4. What is the best source of data that could be used in facilitating this research?

Literature Review

Rasche & Esser (2006) provide some incredible as well as credible data on the topic that is under research. The two have suggested that when companies are confronted by extreme pressure to guarantee the customers, citizens, and even beneficiaries with accountability, the leaders in the company should decide on the procedures they should follow in selecting and also executing the accountability standards. While looking for the most suitable measures, they should always base the decisions they make on the cost-benefit calculations. It means that they should neglect the other spheres that may broadly influence the stakeholders’ interests. The article also argues on the fact that a strategic decision for a   certain standard must be made, and management must identify as well as act in accordance with the needs of all the company’s stakeholders. Notably, deliberate understanding must be created among the stakeholders, and the outcome must be based on accountability and an improvement in the sustainability standards. The article is essential in the research since it looks at the influence that stakeholder engagement exhibits on sustainability reporting. It also shows the framework that should be used in engaging the stakeholders in several aspects of the company.

O’Dochartaigh, A. (2017) states that sustainability as a concept was formed as a way of responding to the stakeholders.  The article also says that a significant approach to involve and engage the stakeholders in matters appertaining to the company is sustainability disclosure. It should always be done in the form of a   report.  Correspondingly, resource dependence and the stakeholder theories make it possible to assess how the organizations within the same industry address the different dependencies that they have on the stakeholders for social, natural economic, and even environmental resources. Therefore, the stakeholders have to be involved in matters concerning the company, and this assists in the development of excellent stakeholder relationships.  The sustainability report has been considered critical in organizations, especially in the implementation of engagement strategies that are based on informing the stakeholders, responding to them, and even involving them in decision-making. Thus, the article has been proven vital since it has generated insight into how the choices made by the company can affect the stakeholders.  It has also explained more on the five features of sustainability reporting that have been associated with stakeholder engagement. These features include identity, direct communication, the broadness of the engagement, deliberate gathering of feedback, using stakeholder engagement as a way of learning, and even ensuring that the stakeholder identity is apparent. Thus it gives detailed, and information data on how engaging the stakeholders in a   company can generally affect it.

Greco, Sciulli & D’Onza (2013) sheds more light on the motivations that exist in management that provide a sustainability report. The legitimacy, public administration, and interconnecting legitimacy theories are employed to assist in the development of an analysis explaining the behavioral patterns within a firm.  The research in the article looks at the rate of influence that stakeholder engagement has on the decision- making process through sustainability reporting. From the study, it is clear that sustainability reporting has been introduced for accountability as well as legitimacy reasons. Generally, this article has been relevant to the research since it provides a framework on the influence that sustainability reporting and stakeholder inclusivity has on the business.

Samusenko (2017) describes the nature of positive and accounting theories. It also looks at the influence they have in the formation as well as the development of the management accounting theories. Nonetheless, it also evaluates the difference between rigorous managerial accounting concepts and theories. It takes into account both the constructive and empirical approaches towards how the managerial accounting concepts have developed. It suggests that the stakeholder theories, as well as legitimacy, provide detailed data on the impact that stakeholder engagement has on sustainability reporting, and this makes the article useful in this study.

Ray and Miller (2017) explain various aspects of stakeholder engagement within corporations in their article. This article is essential in the study since it looks at vital concepts of stakeholder-engagement research and accelerates developmental objectives, including planning, revaluation, and reporting of stakeholder engagement within an organization. Furthermore, it also looks at the importance of stakeholder engagement and communication management.

Hummel & Schlick (2016) re-look at the theoretical reasoning of the disclosure and legitimacy theories. Hence, it provides empirical proof based on change if attention from inquiry to the quantity of sustainability disclosure to quality. The article tends to conceal the fact that influential sustainability performers have the power to decide on high- quality sustainability disclosure. The primary aim for this is for these performers to display the power that they have in the market. Contrarily, the legitimacy theory supports that the low sustainability performers prefer low- quality disclosure as a way of disguising the real performance. It is also a way of concurrently protecting the firm’s legitimacy. The article is crucial in my study since it looks at the influence that stakeholder engagement has on a company and how it affects sustainability reporting. Thus, it shows how theories can be used in explaining stakeholder engagement.

Accounting Theories

In my study, accounting theories will be given special consideration. They are essential in facilitating and even enhancing the accounting practices, contributing to the development of an improved accounting approach, and also resolving the multifaceted accounting issues. The theories I will consider include

• Institutional theory- The theory is standard in the research area since it focuses on the relationship between the company and its stakeholders. The theory primarily looks at the external pressures exerted on an organization that influences the company’s behavior, especially in adopting some practices. The theory could apply in the way sustainability reports are formed after the stakeholders influence the changes that are made.
• Legitimacy theory- It provides an emphasis on society in general and explains that an organization must consider the rights of the external stakeholders such as the local public and society as a whole. Legitimacy theory provides social perceptions in support of the social contract while considering relationships between companies and an individual member of society.
• Stakeholder theory- The theory is mainly used in looking at the complexities of society and nature. This type of theory entails corporate social responsibility. CSR is part of sustainable reporting and can be viewed as uncontrolled exposure (Ray & Miller 2017). A company can achieve social resilience by viewing CSR as one of its management strategies while managing stakeholder relationships. Including participatory governance is a supportive perspective that jointly controls stakeholder relationships with the organization. This study will include an emphasis on the importance of stakeholder engagement and management in corporate governance as a critical milestone in achieving total business success.

These three theories have been considered since they are all associated with the stakeholders and management of the companies. They are also referred to as system-oriented theories for the aspects that they believe in a  company, further affecting its operations.

Methodology

The chosen method involves a deductive approach. This approach entails the use of valid reasons where it is impossible to accept the premises and reject the conclusion. A deductive approach could be critical in developing an accounting theory beginning with specifying the objective. After this, the definitions and assumptions have to be clarified after this is when I can come out with a logic structure that entails the assumptions and descriptions as a way of reaching the objective.  The method has always been moving from being general to particular since I want to come up with a logic structure aimed at attaining the goals based on these definitions and assumptions. Thus, the validity of any theory used is dependent on how able I am in the identification of different conceits of the process of accounting and the logical interrelations. A hypothesis must be present, and the logical reasoning structure should be formal to help in attaining a consensus in deductive reasoning.

Interview Questions

Different questions will be developed as a way of gathering data from the field. Some of these questions include,

1. What is the meaning of engagement?
2. Does the business play the purpose of only generating wealth for investors?

• What is sustainability reporting?

1. Can you explain the main principles that govern the quality sustainability in a company?
2. What is the meaning of materiality in sustainability reporting?
3. Can you explain the different system-oriented accounting theories?   Can you further clarify if you are worthy or unworthy subjects to be explored?

• Can stakeholders lead to the creation of a more substantial stakeholder group, or is time wastage?
• Do you believe that it is wasteful to spend more money on sustainability reporting?

1. Should research consider mixed methods in supporting research?
2. Can research be ethically approved before it is adopted?

Ethics Approval

Several steps should be adopted for the research to gain ethical approval.

1. submitting an application based on what is required

This initial step begins with full applications. If the research is low risk,   a complete application must be assessed by the committee. Complete applications must be received by the data that the reports are submitted for evaluation purposes before the commencement of the next meeting. It means that applications have to be accepted after the submission date. Nonetheless, a prior approval application is also present. It is developed only in the case that the project is approved by NHMRC, and it is registered under the HREC, an Australian organization. It means that the form must be submitted together with approved documents like approval letters and questionnaires. A consent form and a localized data sheet must also be present. Moreover, the low-risk application is because it can be reviewed by the chair who is working on behalf of HREC and the organization determines whether the project is low risk to the participants or a full application is necessary.

2. Review of applications submitted by researchers

The Tasmania Social Sciences HREC will play a massive role in this step.  It will review the whole research involving human participants that are not categorized under the Tasmania Health and Medical HREC scope.

3. HREC approval

HREC is the only body that can approve my research, and it can inform me if further changes are required.

Recommendations

The research findings and results will provide the researcher with an opportunity to provide potential recommendations for developing a framework for accessing the organization’s stakeholder engagement. The research project will also focus on various ways to determine the importance of the participants in achieving the short-term goals of the company that will help the company maximize profits. In addition, new strategies for stakeholder engagement have been recommended and will encourage how to engage stakeholders in various organizational activities through their organization and their influence. It will also help managers resolve conflicts between stakeholders and staff in sustainability reports.

Expectations of the Findings

The findings based on this research proposal will reflect on the importance of evidence-based practice and consistency in making sure that organizations face the set guidelines to promote stakeholder engagement. The research outcomes will assist in identifying the aspects, contexts, and processes to consider in planning for management and stakeholder engagement in the company. Transparency must be present when creating sustainability reports, and there must be a perfect relationship between the stakeholders and the administration. Companies must learn to value stakeholder engagement, and they must make decisions after consulting with them as a way of achieving long- term sustainability.

References

O’Dochartaigh, A. (2017). Stakeholder Relationships, Engagement, and Sustainability Reporting. Social And Environmental Accountability Journal, 1-2. http://dx.doi.org/10.1080/0969160x.2017.1376909

Greco, G., Sciulli, N., & D’Onza, G. (2013). The Influence of Stakeholder Engagement on Sustainability Reporting: Evidence from Italian local councils. Public Management Review, 17(4), 465-488. http://dx.doi.org/10.1080/14719037.2013.798024

Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure – Reconciling voluntary disclosure theory and legitimacy theory. Journal Of Accounting And Public Policy, 35(5), 455-476. http://dx.doi.org/10.1016/j.jaccpubpol.2016.06.001

Rasche, A., & Esser, D. (2006). From Stakeholder Management to Stakeholder Accountability. Journal Of Business Ethics, 65(3), 251-267. http://dx.doi.org/10.1007/s10551-005-5355-y

Ray, K.N., and Miller, E., 2017. Strengthening stakeholder-engaged research and research on stakeholder engagement. Journal of comparative effectiveness research, 6(4), pp.375-389.

Samusenko, S. (2017). Modern managerial accounting theories in works by foreign authors. International Accounting, 20(12), 705-720. http://dx.doi.org/10.24891/ia.20.12.705