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Integrated Reporting. Towards a Framework for a Sustainable International Corporate Reporting

Masterarbeit 2011 80 Seiten


Table of Contents

Table of figures

List of abbreviations

1. Introduction

2. The Scope of Corporate Sustainability Reporting
2.1 Brief History of Sustainability Development
2.2 Understanding Sustainability

3. A Framework for Integrated Reporting
3.1 Definition of Integrated Reporting
3.2 Shortcomings of current Corporate Reporting and the Requirement for Integrated Reporting
3.3 Preliminary Thoughts on a Framework
3.3.1 Aim of Integrated Reporting
3.3.2 Benefits and Challenges
3.3.3 Reporting Principles
3.3.4 Linkage between financial and non-financial performance
3.4 Role of IFRS
3.5 Summary

4. Research Design
4.1 Overview of the chosen Research Strategy
4.2 Research Philosophy
4.3 Research Approach
4.3.1 Inductive vs. Deductive
4.3.2 Research Strategy
4.4 Limitations and Ethical Considerations

5. BASF Group
5.1 Company Profile
5.2 Strategy and Values
5.3 Elements of the Report
5.3.1 Overview
5.3.2 Materiality of the Report’s Content
5.3.3 Quality of the Report’s Content
5.4 Financial and Non-Financial Performance
5.5 Role of IFRS
5.6 Discussion

6. Anglo American Platinum (Amplat)
6.1 Company Profile
6.2 Vision and Strategy
6.3 Elements of the Report
6.3.1 Overview
6.3.2 Materiality of the Report’s Content
6.3.3 Quality of the Report’s Content
6.4 Financial and Non-Financial Performance
6.5 Role of IFRS
6.6 Discussion

7. Conclusions

Reference List

Table of figures

Appendix 1: Interconnections of Organisational Decisions

Appendix 2: Principles of Sustainability Performance

Appendix 3: IIRC Framework

Appendix 4: Benefits to an Organisation

Appendix 5: BASF's Strategic Guidelines

Appendix 6: Materiality Matrix 2007

Appendix 7: Materiality Matrix 2010

Appendix 8: BASF's Goals

Appendix 9: AP’s Internal, External Factors and Material Issues

Appendix 10: Sustainability Issues

Appendix 11: Performance Highlights 2010

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten


This library-based dissertation examines the topic “Integrated Reporting”, which is aimed to integrate financial and non-financial information in one report. Doing this appropriately would result in a more accurate reflection of the company’s business and further would lead to a sustainable development of the company. However, sustainability itself has been a developing issue, therefore, the idea of integrated reporting still is considered as work in progress. The aim of this dissertation is to bring more light into this issue. Insofar, it has been investigated in the requirements, which ensure the communication to all stakeholders and not merely the financial community. In this context the linkage between the report’s financial and non-financial information plays a significant role. Given that, IFRS are standards of global level, and integrated reporting is aimed to be a global standard, the role of IFRS in an integrated report will be assessed. The literature review has indicated the current state of knowledge in terms of integrated reporting. This knowledge will be applied conducting two case studies of companies (BASF and Anglo Platinum), which already are reporting in an integrated manner. The research in this piece of work has shown that integrating is a step into the right direction. The main criticism on sustainability reporting has been, that companies arrange the content of their reports in a manner that lets them look attractively to their stakeholders. In this context materiality investigations are conducted in order to identify important issues the company is facing. However, there are uncertainties regarding the external assurance of the report, as there is still no mandatory audit standard for non-financial information. Furthermore, showing the interconnections between financial and non-financial performance still remains a not adequately solved issue, as it is a big challenge to quantify non-financial performance. Moreover it was investigated in the role of IFRS in the report. Here the research has shown that it can play a supportive role, yet, there still is no appropriate explanation how to integrate IFRS in the report appropriately, and therefore, it remains an attached report. As integrated reporting is an issue of global concern, it requires global involvement.

“The assets that really count are the ones

accountants can’t count”.

(Stewart, 1995)

1. Introduction

The Corporations in the 20th century were small and relatively controllable. Corporate directors could act fairly free and without being responsible for the effects of their company on the society under the assumption of absence of a specific law in the country that prohibits environmental pollution. Therefore during the 20th century directors have been expected to maximise profits of the company to meet the expectations of the company’s shareholders. However the United Nations (UN) became aware of the fact that businesses were affecting the quality of life of many people (Kelly, 2011). The development of AGENDA 21 was a product of the United Nations Conference on Environment and Development (UNCED) in 1992. It is a comprehensive plan of actions to be taken globally by organisations in each area in which human activity affects the environment. This afforded a change in what the world believes about the environment and has increased sustainability-oriented thinking in the business community. Kolk (2004) presented the results of a survey in 11 industrialised countries. In that respect there was a clear increase in sustainability reporting companies from 12% in 1993, to 17% in 1996, to 24% in 1999 and 28 % 2002.

Initially, there was just sustainability reporting, which originated in the 1970s when financial statements were firstly extended to social aspects. A decade later environmental reporting emerged aiming to inform stakeholders about the ecological effectiveness of firms. In particular the chemical sector started to report its ecological implications in order to avoid reputational risks (Herzig and Schaltegger, 2006).

In the light of the financial crisis that faced the world over the last few years it became important that managers consider the long-term implications of their decisions. Therefore the question occurred to which extent current reporting highlights systematic risks to business such as market risk or market segment risk. Reporting standards such as International Financial Reporting Standards or US GAAP require firms to disclose reasonable information about their businesses, however those kinds of reports neglect the consideration of environmental and social aspects. Moreover, there is a reasonable number of firms that have already started to disclose additional sustainability reports, including environmental and social aspects. Yet, there still existed a lack of linking of the risks and opportunities of environmental and social aspects with the business strategy and showing the mutual impacts (IIRC, 2011a; Eccles and Krzus, 2010a).

Accordingly, integrated reporting has emerged and aims to provide financial and non-financial information, such as environmental or social information in one report, in which the mutual impact of company’s business on environment and community is shown. In August 2010 the International Integrated Reporting Committee (IIRC), composed of the Prince’s Accounting for Sustainability Project (A4S), the General Reporting Initiative (GRI) and others, was established. The aim was to publish a global framework for integrated reporting in 2011 that will integrate both financial and non-financial information in one report. This could lead to an easier and more reliable comparison of organisations worldwide as long as all organisations adopt those reporting recommendations (Kelly, 2011). Similarly, companies on the Johannesburg Stock Exchange (JSE) are required to produce integrated reports for the financial year beginning on 1st March 2010. South Africa is one of the first countries, which has taken this step, and so is taking a pioneer role (Ramalho, 2010).

Eccles, et al. (2010:iv) describes integrated reporting as a “work in progress”, although the IIRC is working on a first draft. Moreover, he indicates that although much work has been done by GRI, there is no global set of standards for measuring and reporting on non-financial performance. This issue has also been confirmed by the IIRC. Stevenson (2011:12), a member of the IIRC, stated “considering that integrated reporting is still in an embryonic phase, it should come as no surprise that a clear formulation of what of exactly it constitutes is still being debated”. Hereby the definitions range from current financial reporting standards such as IFRS and US GAAP to a comprehensive change in the fundamentals of accounting and reporting systems. Furthermore Stevenson (2011) agrees that there is a need for a concise and comprehensive integrated reporting framework, which is influenced by the organisation’s strategic objectives, its governance and business model and integrating financial and non-financial information. Due to the fact that there is no consensus in this area the main aim of this dissertation is to investigate the goals and beliefs of integrated reporting in the literature in order to deliver recommendations for an appropriate global integrated reporting framework. In addition a critical analysis of two integrated reports will be conducted. Both German BASF and South African Anglo Platinum are pioneers in doing integrated reporting.

Furthermore to ensure this aim is achieved the dissertation will need to address the following additional research questions:

What elements need to be addressed in an integrated report in order to ensure communication to relevant stakeholders and not just the financial community?

How can a clear linkage between the report’s non-financial and financial information be established?

What is the role of International Financial Reporting Standards in integrated reports?

Chapter 2 provides a brief history on sustainable development and attempts to bring more light into the issue of understanding sustainability in the business context, since this term has become a very fashionable expression but nobody really knows what it is all about. Based on this understanding chapter 3 considers the subject of integrated reporting and critically discusses the fundamental aspects. This is fulfilled with a brief summary at the end of that chapter. This Dissertation includes two case studies conducted dealing with German BASF and South African Anglo Platinum. Both case studies handle the integrated reports of the companies and are aimed to reflect the reality regarding integrated reports. At the end of the 5th and 6th chapter a discussion will be hold. Finally the findings of this dissertation will be summarised in the conclusion.

2. The Scope of Corporate Sustainability Reporting

2.1 Brief History of Sustainability Development

Sustainability can be traced back to the year 1713 when Hans Carl von Carlowitz from Freiberg, Germany, introduced the idea that the number of trees felled should be not higher than the amount of trees that is used to reforest the land. Thus a cutting down of the forests would be avoided (Zens, 2008) although this way of thinking did not remain for a long time. The UN Stockholm Conference in 1972 was the first international meeting to discuss environmental issues. The outcomes of this conference consisted of recommendations for actions to be taken internationally such as an international environmental assessment and the introduction of an environmental management (UNEP, 1972). Rainey (2006) describes a dramatic increase of environmental laws and regulations since the mid-1970s that have led to a significant development of environmental management. However, most companies in those times accepted the new environmental laws reluctantly, and used them to focus merely on market and financial conditions and disregarded social and environmental issues. The World Conservation Strategy in 1980 brought to life by the IUCN, UNEP and WWF had the aim to reinforce worldwide sustainable development and maintained the view that to survive over the long term humans need to realise the limits of their actions (IUCN et al., 1980). Rainey (2006:21) named the 1980s as a “period of growth and learning” regarding sustainable development as environmental requirements were becoming more demanding and especially developed countries slowly started changing their views. Moreover, the report “Our Common Future” released by the Brundtland Commission in 1987 refined the view that economic development has to adjust its progression to the limited resources of our planet. However, world attention on sustainability firstly really emerged in 1992 when the UN Conference on Environment and Development, in Rio de Janeiro, happened. Agenda 21 on worldwide sustainable development was the result of that conference (Sustainability Reporting Program, 2000). Buhr (2007) is holding the view that sustainability is going through a maturity process, which started not much than a hundred years ago. In that respect it commenced with employee reporting, changed to environmental reporting and consequently appeared as the concept of the triple bottom line reporting, which is the next step in the journey through the history of sustainable development. In 1998 John Elkington proposed the view that a company needs to measure its performance not only by the traditional financial bottom line, but also by their impact on the environment and the society. Thus, a sustainable business would report a positive ROI after the consideration of all three bottom lines. (Savitz and Weber, 2006). Concurrently, during the 1990s, due to the more and more challenging demands in terms of environmental issues the International Organization for Standardization (ISO) developed the ISO 14000 family of standards for an environmental management system. Although many companies adopted the ISO standard, numerous difficulties appeared when they tried to integrate the environmental strategy into their general business strategy and corporate reporting. Therefore the balanced solution with a balanced scorecard also became more accepted (Rainey, 2006). Though Norton and Kaplan’s (1996) balanced scorecard is focusing on long-term strategic objectives linking them with short-term actions, the concept was frequently criticised, as its implementation resulted in an unbalanced manner. The reason for this is that often one or two perspectives of it dominated the others due to the emphasis set by the management (Mooraj et al., 1999). Furthermore one major criticism on the balanced scorecard is that it encourages internal focus, however, this issue is not due to the relevant principle. The problem is that companies tend to start with the internal view when the put the balanced scorecard approach into practice (Smith, 2006).

2.2 Understanding Sustainability

Hoffman and Bazerman (2007) addressed the confusion about sustainability and argued that it brings an abundance of definitions. In this respect the majority starts with the definition from the Brundtland report meeting “the needs of present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, 1987:54) and goes further to the triple bottom line. This increasing complexity due to the constant development leads to continuous alteration in our thinking and beliefs about sustainability. Hence, Hoffman and Bazerman (2007) consider the definition of sustainable development as still being in a development process.

Accordingly initially it is important to understand what sustainability in terms of business really is, as there exist various meanings in the literature although mostly it is associated with environmental issues. Epstein and Roy (2003) have maintained the view that companies struggle to transfer the richness of sustainability principles into actions due to a lack of understanding in what sustainability is all about. Therefore managers are required to take specific actions in order to implement sustainability such as identifying the spheres of sustainability they are involved in and using appropriate metrics to measure its performance. Thus, to ensure positive developments of sustainability an organisation is required to consider nine principles of sustainability performance, as listed in appendix 2. Mainly, those principles help to make the definition of sustainability more precise; and they can be adopted in a company’s strategic and operational decision-making processes. Moreover, they can be expressed in terms of money (Epstein, 2008).

Hopwood, et al. (2010) indicate in their book that a society that is economically, environmentally and socially sustainable is an essential condition for organisations to survive in long term. To ensure sustainability these three spheres need to develop in a balanced manner. In this respect benefits of economical development should be balanced with their implications on environmental and social aspects and vice versa. This can be argued through the close relationship and direct and indirect mutual impacts among the three spheres. Accordingly, economic sustainability ensures future cash flows and required resources; environmental sustainability provides a well-balanced place to live; and social sustainability provides foresighted societies that ensure agreeable being of life on earth. Please see in this context appendix 1.

Furthermore Hopwood, et al. (2010) argue that since the industrial revolution, the economic development of our society performed well, yet, the negative consequences of that development have been realised only now. Therefore it can be said that this over the last decades emerged condition of environment replies with an indirect feedback to the company. For instance nowadays companies are required to care about environmental issues as can be seen by the recently established Emission Trading Scheme in the European Union, and also by the increase of sustainability reports of companies. Furthermore, there are second order impacts among the three spheres of sustainability, as an insufficient balanced ecosphere caused through negative environmental impacts of companies’ actions could lead to significant negative social impacts such as hunger, inadequate housing, poor education, increased number of human conflicts etc. Consequently, appendix 1 demonstrates the high degree of which companies are now involved in the development of sustainability and it further presents the scope of sustainability and its interior relationships.

3. A Framework for Integrated Reporting

3.1 Definition of Integrated Reporting

Hutton (2004) outlined an integrated approach as the requirement of reports to accurately reflect the economic reality of a company’s businesses. Thus, all elements of a company’s disclosure policy including financial reports, supplemental disclosure, interactions with investors and intermediaries should be consistent and mutually reinforcing on the basis of an integrated disclosure approach. Simply explained this means “creating a whole that is greater than a sum of its parts” (Hutton, 2004:9). Consequently, Hutton (2004) claimed that supplemental disclosures in financial statements should shape and revise investor’s expectations and refine the financial information. Although, the author emphasised the importance of non-financial data she neglected the specific reflection of environmental and social aspects in annual reports. Eccles and Krzus (2010b:10) refer to integrated reporting with the synonym “one report” and define it as “a single report that combines the financial and narrative information found in a company’s annual report with the non-financial (such as on environmental, social, and governance issues) and narrative information found in a company’s ‘Corporate Social Responsibility’ or ‘Sustainability’ report.” Moreover, Eccles (2011) indicates that in particular websites play a significant role in terms of integrated reporting as they simplify the integration of financial and non- financial data in one place. He recommends the use of a website to companies to ensure a consequent dialogue with its shareholders and stakeholders. A positive example in this context is the corporate website of BASF providing an interactive version of their corporate annual report.

3.2 Shortcomings of current Corporate Reporting and the Requirement for Integrated Reporting

The definition of the term corporate report differs in the accounting literature. As noted in the Oxford dictionary of accounting (2010:113) it can be defined as “a comprehensive package of information that describes the economic activities of an organization”. That is a very general definition of a corporate report. PWC (2011) associates the term corporate reporting with the presentation and disclosure of aspects in areas such as: financial reporting, corporate governance, executive remuneration, corporate responsibility (i.e. social and environmental impacts) and narrative reporting.

Ballou et al. (2006) refers to the increased pressure from internal and external stakeholders as a reason why steadily more corporations are measuring and reporting on their social and environmental performance. Moreover, the authors argue that while maximizing shareholder value, companies may be successful in short-term, to succeed in long-term companies are required to meet the expectations of all other stakeholders. KPMG’s (2010) publication about integrated reporting emphasises this opinion arguing that nowadays companies have a significant influence on the future of the society. Also a company’s current performance and future ability to continue their operations relies on a number of factors that influence businesses. Thus companies are required to include environmental and social factors in their reporting, as the company’s business has an impact on the quality of life of its stakeholders. Hutton (2004) states that the complex business models which have partially emerged from the increasing significance of intangible assets such as R&D and brands in corporate reports have led to the rising complexity of how to report such items, and maybe justification for supplemental corporate disclosures. Likewise, this issue is confirmed by the IRC of SA (2011) arguing that organisations and communities are going to be concerned with a rising level of confusion and uncertainty in terms of their business reports. Ligteringen and Arbex (2010) argue that sustainability reporting has become extremely important during the last decades. Nevertheless, financial reporting and sustainability performance should not be assessed and reported separately. Hence, they claim a fundamental change of reporting and management practices. This means that managers need to recognise that sustainability will be increasingly essential for the growth and stability of companies, as social and environmental capital will become critical factors for economic success. Therefore the transformation of a corporate strategy is required to ensure sustainable development. Also the (IRC of SA 2011) places emphasis on the lack of a connection between the organisation’s strategy, its financial and non-financial performance. Moreover, Dawkins and Ngunjiri (2008) argue that although financial reporting is coming along with social and environmental reporting and has become routine practice, there exists a significant international regulation for financial reporting, whereas the creation social and environmental reports are left to the judgment of the company. Therefore various forms of sustainability emerged during the last years. In this context a lot of criticism evolved, indicating that companies’ CSR reports are predominantly misused in order to form a suitable image for the company to soothe the critics (Hamann and Kapelus, 2004). Hence, previous development in sustainability reporting can be seen as an essential step for integrated reporting. Yet, now the time has come for an extended concept providing a more holistic assessment of performance (Ligteringen and Arbex, 2010).

3.3 Preliminary Thoughts on a Framework

3.3.1 Aim of Integrated Reporting

To investigate the elements, which need to be addressed in an integrated report, initially, the aims of an integrated report need to be considered. In this respect the IIRC (2011b) recently provided a general overview of the aims. As we can see in appendix 3 the IIRC emphasises the long-term performance of the company. Thus, their framework requires companies to support long term investors with information needs. Yet, the companies also have to publish the long-term implications of their own decisions. Those latter two aspects can be fostered by the harmonisation of their internal information and reported information. Furthermore, to ensure a future oriented and sustainable direction of the company’s business, new relevant performance indicators, aligned to the company’s strategy, need to be considered. The overall purpose of an integrated report is to highlight the connections between the sustainable value and the economic value. This means to establish the link to strategy and decision-making.

According to White’s (2010) article in the book “The Landscape of Integrated Reporting” the definition of a firm can originate from a view that can be either a financial or a sustainable view. Thus from a financial view White (2010:29) defines a firm as a “nexus of contracts among boards, managers, employees, suppliers” etc. In contrast, the sustainability reporting view of a firm describes it as “a community of interdependent stakeholders who come together to create value as a collectivity” (White, 2010:29). The author claims the harmonisation of those two different reporting areas, as this would emphasise the integration of environmental, social and financial information into one report and further concludes that it can be referred to three main issues shared by financial and sustainability reporting: complexity, diverse beneficiaries, and materiality. Realizing and analysing these commonalities of traditional financial reporting and sustainability reporting could be the first step in the right direction and allow the creation of an appropriate architecture of an integrated report (White, 2011).

3.3.2 Benefits and Challenges

There exist a wide assortment of benefits to a company implementing integrated reporting. It ranges from an in depth understanding of the company’s strategy that results in a more effective corporate governance; a more holistic view of the company; an increase in trust and confidence of internal and external stakeholders; but it also provides a communication platform to react to stakeholders’ decisions at an early stage. Those benefits are summarised by the IRC of SA (2011) and presented in appendix 4. KPMG (2010) consider same points as benefits adding, that from each advantage further advantages arise. For instance a more holistic view on the company’s operations enhances the ability to identify risks and opportunities and so leads to a more effective risk management. Similarly, Krzus (2011) highlights the greater clarity, emerging through the implementing process of the links between financial and non-financial performance as a major benefit. Moreover, he refers to an increased focus on risk and thereby a come up of an integrated risk management.

The Tomorrow’s Company Report (2011), an investigation of current corporate sustainability reports, addressed two major challenges of implementing a veritable sustainability reporting system. Insofar they state that “information is the life blood of the capital markets, of politics and of society” (Tomorrow’s Company, 2011:29) therefore the scope and quality of reports need to be constantly aligned to the “changing dynamics of business and value creation”. They point out the information needs of new generations and particularly refer to the rehabilitation of trust in companies. Moreover, they criticised that companies arrange the choice of measures in order to just look attractive for their stakeholders. Therefore they underline the choice of appropriate indicators to measure non-financial performance regarding material issues. Similarly, British American Tobacco (2011) confirmed this point saying that indicators should present and measure the company’s most significant impacts. Hence, this should underlie the same scrutiny as financial data.

3.3.3 Reporting Principles

Recently, there has been much discussion in the international accounting world whether a principle-based accounting and accordingly reporting would be more efficient than former rules-based approaches as scandals, such as ENRON and WorldCom, have entailed lot of criticism on the consistency of business reports. Although the rules-based accounting is the more popular choice of accountants, as they cannot get punishment due to a lack of rules, it can raise complexity during the construction phase of annual business reports. On account of this, principles based reporting can ensure accuracy when a set of key principles is considered during the report preparation (Investopedia, 2011). Hubbard (2009) conducted a study of 30 large global companies in order to investigate the quality of sustainability reports. The author addressed the absence of principles in terms of sustainability reporting as a cause for many criticisms, which have been made on non-financial reporting. Insofar the major criticisms include that information is not a balanced reflection of the company’s performance, the presented non-financial information is not reliable due to a lack of assurance; and a missing focus on material issues. Consequently, the latter point leads to too long reports and an increased confusion. Therefore Hubbard (2009) explicitly underlines the importance of principles that entails a determination of material issues, comparable and assured reports.

Insofar the rising complexity of business processes underlines the requirement of clearly stated reporting principles. Therefore, the South African discussion paper on integrated reporting includes three categories of principles (IRC of SA, 2011:8): “Principles informing the report scope and boundary”; “Principles informing the selection of the report content”; and “Principles informing the quality of the reported information”.

Within this context the decision on the scope and boundary includes the identification of entities and associated issues, which need to be considered in the report, and further the manner of influence and control over each entity but also the impact of the entity on the company (IRC of SA, 2011).

Regarding the selection of the report content in particular, materiality plays a significant role. In an integrated report the term materiality has to be newly defined compared to the traditional view on materiality as the focus becomes wider. Insofar, not only managers and investors but also a wide range of stakeholders needs to be supplied with reliable information. Due to the abundance of possible information, which can be considered in the report the GRI (2006:8) defines materiality stating that “the information in a report should cover topics and Indicators that reflect the organisation’s significant economic, environmental, and social impacts, or that would substantively influence the assessment and decisions of stakeholders.”

Consequently material issues need to be concerned with a high priority as they are critical to the success of the business strategy and furthermore the investigation of business risks (Accountability, 2006; IRC of SA, 2011).

Even a very good and effective selection of information being included in the report is not very useful when it is not presented after taking into account appropriate quality criteria. Therefore the South African discussion paper on integrated reporting suggests four substantial principles (IRC of SA, 2011):


Supplying the readers of an annual report with meaningful information requires information that can be compared with analogous information from a different period by the same company or information provided by equal companies. Moreover, this also is a pre-condition for the evaluation of performance (GRI, 2006).


Information verified by a third stand-alone party occurs more valuable to its readers as it gives them the needed assurance for their decision-making process.


Information must be delivered in time to stakeholders in order to affect readers’ assessments and decisions. The older information is the less useful it is. This is why it also should be presented regularly for instance quarterly or annually. It may be mentioned that important issues should not be reserved for the next reporting period and rather be directly communicated to the stakeholder through a platform such as a website.


Information needs to be delivered in an understandable not complex language. This requires not just a clear structure but also the prevention of too much technical language if procurable. An additional glossary of terms can help to foreclose a lack of understanding. Adams (2004) refers to the issue of understandability as a significant shortcoming in the quality of reporting. He argues that in order to understand the context of the report there is a necessity that the reader understands the company’s business. Though understanding technical terms makes a contribution to understandability, gaining of knowledge about the scope and boundary’s of a company’s operations, its risks and opportunities most likely results in an in-depth understanding.

3.3.4 Linkage between financial and non-financial performance

Cohen et al. (1997) studied the relation between environmental and financial performance. The authors found that investors who include the environmental leaders in an industry-balanced portfolio are doing as well as investors who include companies not interested in environmental aspects. Therefore Cohen et al. (1997) found no direct relationship between financial and non-financial performance. However, he also recognised that global concern for the environment is a young and fast changing issue and assumed that future research will find a clearer answer to that issue. Consequently Konar and Cohen (2001) found a significantly positive effect of a good environmental performance as poor environmental performance had a considerable negative effect on firm’s intangible asset value. Hence this over time emerged positive effect of good non-financial performance represents the fast changing beliefs about company’s performance in both the business community and stakeholder groups. Earnhart and Lizal (2011) investigated the link between corporate environmental performance to financial performance. Conducting an empirical study in the Czech Republic they found that a positive environmental performance in terms of lower carbon emissions leads to an improvement of profitability by strongly lowering the costs. Nevertheless, latter presented works mainly focused on environmental performance and neglected social and governance aspects and so a holistic view on corporate performance.

In this context it can be referred to an issue presented in the Tomorrow’s Company Report (2011). Firstly, the at a later point in time evolved positive effect of good environmental performance found by Konar and Cohen (2001) most likely occurred since it was the right point of time. However, nowadays the information needs of current generations changed again therefore social and governance aspects have become considerable in corporate reports.



ISBN (eBook)
ISBN (Buch)
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Institution / Hochschule
Manchester Metropolitan University Business School
Sustainability Reporting Integrated Reporting Nachhaltigkeit Unternehmensberichterstattung Framework IFRS GRI Accounting



Titel: Integrated Reporting. Towards a Framework for a Sustainable International Corporate Reporting