Rethinking Sustainability Reporting with Reference to the Inflation Reduction Act

Published date01 November 2023
AuthorSunita S. Rao
Date01 November 2023
Subject MatterPerspectives
Administration & Society
2023, Vol. 55(10) 1911 –1931
© The Author(s) 2023
Article reuse guidelines:
DOI: 10.1177/00953997231198843
Rethinking Sustainability
Reporting with
Reference to the
Inflation Reduction Act
Sunita S. Rao1
This article explores the possible effects of the Inflation Reduction Act
(IRA) on stand-alone corporate sustainability reporting and assurance on
such reports. To this end, we use stakeholder theory to examine the
potential impact of the IRA on sustainability reporting, which includes
environmental, social, and governance indicators. It also explores
the various ways of implementing measures to achieve high-quality
sustainability reporting and guidelines for assurance of such reports. This
article provides one of the first frameworks for organizations to initiate
action on climate change.
Inflation Reduction Act, sustainability reporting, assurance on sustainability
Sustainability reporting is a common practice among companies (Mahmood &
Uddin, 2021) and crucial for policymakers (Peters, 2021). With the passing of
the comprehensive climate, healthcare, and tax bill on August 17, 2022, called
1Washburn University, Topeka, KS, USA
Corresponding Author:
Sunita S. Rao, Henderson Learning Resources Center, Washburn University, Room 309 B,
1700 SW College Avenue, Topeka, KS 66621, USA.
1198843AAS0010.1177/00953997231198843Administration & SocietyRao
1912 Administration & Society 55(10)
the Inflation Reduction Act (IRA), sustainability reporting takes on a whole
new significance due to its focus on the environment and society. Notably, the
IRA places the US on course with the UN Sustainable Development Goals.
This study presents ways to improve sustainability reporting in an agency rule-
making process, so as to be in harmony with the IRA.
The IRA comes on the heels of the Securities and Exchange Commissions
(SEC) acknowledgment in March 2022 that “climate change poses an urgent
risk for investors, companies, capital markets, and the economy.” The SEC
clearly states that its climate “proposal would require these disclosures to be
filed with the Commission, phase reporting requirements over time based on
a company’s size, and importantly, includes a phased-in requirement for veri-
fication or ‘reasonable assurance’ of GHG Scopes 1 and 2 for larger filers to
help ensure the reliability of these disclosures” (SEC, 2022). Both initiatives
point toward a concerted proactive effort to mitigate climate change and
bring systematic change within society and its institutions. Many government
leaders, political figures, and business executives welcome this (Greer et al.,
The US government seeks to bring about systematic organizational change
to combat climate change, for which the IRA aims to a forceful and effective
instrument. Stakeholder Theory suggests why corporations publish sustain-
ability reports, why the IRA will change sustainability reporting guidelines,
and why corporations will be part of the process of this change and will adopt
such change.
The normative approach to stakeholder theory “identifies moral or philo-
sophical guidelines for the operation and management of corporations.”
(Donaldson & Preston, 1995, p. 71). Since “businesses have long promoted
themselves to their shareholders and the world as moral, socially conscious
entities engaged in the community, social activists naturally try to engage
corporations in their causes” (Lin, 2018, p. 1567). Due to this, the normative
approach of stakeholder theory may very well compel businesses to align
with IRA goals (Valentinov et al., 2019).
Industry leaders realize that they need to take immediate action to mini-
mize the adverse effects of climate change (Sayce et al., 2022). Moreover,
other developed countries worldwide have taken significant strides in
adopting rules similar to the IRA (e.g., the UK, Germany, and Spain;
Galvin & Healy, 2020), and such actions will motivate the US to take an
analogous path.
The economic downturn experienced during the COVID-19 pandemic dif-
fers from the ones experienced in the past and has been particularly devastat-
ing. “Rebuilding G20 economies after the COVID-19 pandemic requires
rethinking what type of economy we need and want in the future. Reviving

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