Page 169 - Sustainability Communication Interdisciplinary Perspectives and Theoritical Foundations

152 C. Herzig and S. Schaltegger

associations, government institutions, consulting firms, non-governmental organisations
and research institutions. At both national and international levels this can be seen in
the increasing number of general and sector-specific frameworks and guidance doc-
uments, regulatory disclosure and reporting requirements and the interest of a variety
of institutions in analysing and observing developments in sustainability reporting.

Goals and Benefits of Sustainability Reporting

There are many typologies of rationales that have been created to explain the exis-
tence of sustainability reporting. Explanations as to what motivates sustainability
reporting include variants of accountability, legitimacy, stakeholder and political
economic theories (Deegan 2002; Gray et al. 1995; Roberts 1992; Ullmann 1985;
Tinker et al. 1991). As Buhr (2007) notes, these rationales can be closely interlinked
and employed together as a way for a company to understand its reporting situation.
Spence and Gray (2007) explored the motivations underlying social and environ-
mental reporting in the UK. Perceived benefits and pressures, as observed by Spence
and Gray, range from business efficiency, market drivers, reputation and risk man-
agement, stakeholder management, internal champions and mimetic motivations –
each can be seen as expressions of ideas in the legitimate mores of the business and
forming part of some overall business case.
Defining strategies to disclose sustainability information can be a way to gain,
maintain and repair legitimacy (Deegan 2002). This applies to the public acceptance
of the company generally, as well as to the acceptance of particular management
decisions and activities by the company’s key stakeholders.
Another explanatory motive underlying sustainability reporting can be the enhance-
ment of a company’s reputation and risk management (Bebbington et al. 2008).
Outstanding corporate reputation is often related to higher brand value and may
contribute to increasing business success (e.g. Fombrun 1996). In particular, reputa-
tion may be enhanced by reporting about successful engagement in non-market
matters, i.e. in social and environmental projects that are not considered to be part
of core business activities.
Reporting non-financial corporate activities signals a willingness to communi-
cate about and deal with societal issues, and may serve to secure a continuing good
relationship with the company’s stakeholders. Companies that are perceived as
being simultaneously high performers both in the market and for society may face
less friction and problems in their business relationships with suppliers, traders,
public authorities and other stakeholders. As a result companies can try to gain a
competitive advantage in comparison to other companies that do not engage in sus-
tainability activities or that do not communicate their achievements effectively
enough. Besides external benchmarking with competitors or reporting leaders, com-
panies may use company-internal benchmarking processes and systems to compare
business units, production sites, etc. In this context, sustainability reporting can play
a key role in creating transparency about responsibilities and accountability for
activities and performance benchmarking.