Sustainability reporting of small and medium-sized businesses in the electricity distribution industry in Australia.

• Author: Wong, Shirley
• Position: Report

1. INTRODUCTION

   As stated in the Sustainability Reporting guidelines, the goal of sustainable development is to 'meet the needs of the present without compromising the ability of future generations to meet their own needs.' This would mean improvement in the lives of many people with the assurance that the quality of life can still be maintained for the next generation.

   The threats to sustainability make transparency on economic, environmental and social impacts from stakeholders' decisions imminent. A globally shared framework of reporting on sustainability, the Global Reporting Initiative (GRI), is developed to aid organizations to comply with this reporting requirement.

   Sustainability reports based on the Reporting Framework are used for benchmarking sustainability performance, demonstrating how the organization influences and is influenced by expectations about sustainable development and comparing performance within and between organizations.

   According to the research on the State of Sustainability Reporting in Australia 2005 conducted by the Department of the Environment and Heritage, there was a small increase in the number of sustainability reports prepared in Australia compared with the year before. However, the percentage of companies producing sustainability reports in Australia is still low compared with other countries, indicating the need for more assistance and encouragement to these companies in reporting.

2. LITERATURE REVIEW

   There has been an increase in the awareness of sustainability reporting by companies and research into such reporting in countries all over the world. Idowu conducted a research on a comparative study of the contents of corporate social responsibility (CSR) reports of companies across different industries in the UK in 2004. He found that there were two distinct practices adopted when reporting on CSR matters. Some companies issued separate reports for their CSR activities whilst others devoted a section in their annual reports for providing information on these activities. The study further showed that UK CSR reports disclosed information about the contributions an entity has made during the year that has just focussed on four main perspectives, which are environment, community, marketplace and workplace.

   Gill conducted a web content analysis of North American, Asian and European firms on communicating sustainability in 2008. She found that organisations in the three regions focused more on environmental indicators, followed by economic and then social indicators. She further found that the greatest amount of information on sustainability was disclosed by North American firms. Firms from Europe tended to focus more on social indicators. Asian firms' reports reflected the most positive bias in their contents with insufficient reporting.

   Kolk (2005) carried out a research on the developments in sustainability reporting. She found the number of sustainability reports published has significantly increased, especially by large multinational companies. Europe and US are in a more advanced stage than Japan in reporting on social issues whereas they are behind Japan in environmental accounting. Among the European countries, Scandinavian companies were the first that adopted reporting while UK companies have consistently been leading in reporting. US companies were very active in the beginning but lagged behind others later. Sustainability reporting in the financial sector has increased rapidly recently, particularly in Europe. Climate change, microcredits, project financing, sustainable asset management are the current considerations in reporting by banks and insurance companies.

   Hooks studied the annual reports of New Zealand electricity companies to assess the quality of information disclosed in 1999. She found that there were inadequate disclosure concerning performance measures, segmental information, asset valuation and the cost of electricity generated.

3. THEORETICAL FRAMEWORK

   Corporate social disclosure is based on Legitimacy Theory which posits that businesses are bound by the social contract in which the firms...