The climate change‐related disclosures and accountability practices of NGOs: Evidence from Australia

• Author: Helen Irvine,Shamima Haque
• Date: 01 February 2018
• Published date: 01 February 2018
• DOI: http://doi.org/10.1111/faam.12145

Received: 14 October 2014 Revised: 25 February2016 Accepted: 4 May 2016

DOI: 10.1111/faam.12145

ORIGINAL ARTICLE

The climate change-related disclosures and

accountability practices of NGOs: Evidence

from Australia

Shamima Haque Helen Irvine

Schoolof Accountancy, Queensland University of

Technology,Brisbane, Australia

Correspondence

ShamimaHaque, Senior Lecturer, School of

Accounting,Finance and Real Estate, University

ofAberdeen, UK.

Email:shamima.haque@abdn.ac.uk

Abstract

This paper focusses on non-governmental organisations’ (NGOs)

broader social accountability, investigating their public disclosures

on climate change commitment and performance. Using a synthe-

sised disclosure index, we analyse the annual reports of 30 NGOs,

all signatories to the Australian Council for International Develop-

ment's Code of Conduct. Overalldisclosure rates from 2008 to 2013

were higher for commitment than performance, but were very low

overall. However,the number of NGOs disclosing information r ose

markedly over the period. Although it is not directly possible to

attribute the change in disclosure levelsto the implementation of the

Code, the enactment of the new Code could be one of the motivating

factors for NGOs’ disclosure practices and their demonstrations of

greater social accountability.

KEYWORDS

accountability, climate change, climate change-related disclosure,

NGOs, stakeholders

1INTRODUCTION

In recent years, climate change1has been identif‌ied by the international scientif‌ic community and policymakersas the

21st century's most important global environmental issue (IPCC, 2013; Rankin, Windsor,& Wahyuni, 2011), stimulat-

ing debate and increasing pressure to reduce greenhouse gas (GHG) emissions2worldwide (Cowan & Deegan, 2011;

Haque & Deegan, 2010). Previous accounting research has investigated how companies demonstrate stakeholder

accountability by examining their climate change-related performance and disclosure practices (Haque & Deegan,

2010; Rankin et al., 2011). However,despite its relevance for the not-for-prof‌it (NFP) sector (Diesendorf, 2010; Hall &

Taplin,2008), NFP organisations’ accountability for climate change-related performance has yet to receive attention.

We address this lacuna, contributing to the literature on NFP accountability broadly,and non-governmental organisa-

tions’ (NGO) accountability specif‌ically.

Globally,the NFP sector is economically important, with NFP stakeholders demanding high levels of accountability

(O'Dwyer& Unerman, 2010; Ryan & Irvine, 2012). NGOs, part of the broader NFP sector, have multiple accountabilities

Financial Acc & Man. 2018;34:45–63. wileyonlinelibrary.com/journal/faam c

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46 HAQUE ANDIRVINE

to many stakeholders for their performance regarding human rights, environment, humanitarian assistance, develop-

ment and education (Edwards & Hulme, 2002; Ebrahim, 2003; Hyndman & McDonnell, 2009; McDowell, Li, & Smith,

2013; Najam, 1996; O'Dwyer & Unerman, 2010; Valentinov,2011). However,despite some NGOs’ stated commitment

to combat climate change, there is a lack of research on how they demonstrate accountability to stakeholdersfor their

commitment and progress on the issue. This research therefore examines Australian NGOs’ accountability through

their climate change-related disclosures within annual reports.

Australia is one of the highest GHG emitting countries,3and its government has invested intensively in climate

change mitigation projects, allocating AU$328.2million over f‌ive years (2008–2013) through its International Climate

Change Adaptation Initiative to address high priority adaptation needs in vulnerable countries4(AusAid and Depart-

ment of Climate Change and Energy Eff‌iciency,2011). Accompanying the allocation of public funds to these programs

is a need for demonstrations of accountability for their use that should be evident in NGOs’ reporting. The process

of reporting ref‌lects increasing public demand for greater NGO accountability, provides stakeholders with informa-

tion to assess organisations’ policies, programs and effectiveness and to identify the economic, social and environ-

mental impacts of their activities (ICAA, 2011), including commitments to strengthening climate change mitigation

initiatives (GRI, 2011). We examinethe accountability of Australian NGOs, as evident in their climate change-related

disclosures, analysing the annual reports of NGO members of the Australian Council for International Development

(ACFID).

ACFID supports a network of Australian NGOs with a shared commitment to global povertyreduction, the promo-

tion of human rights and dignity,and environmental sustainability (ACFID, 2012a). Membership of ACFID is voluntary,

but once an NGO is a member, it is expected to comply with ACFID'sCode of Conduct, and submit its annual report

to ACFID for a compliance review. ACFID's Code of Conduct was comprehensively revisedin 2010, effective from 1

January 2012 (ACFID, 2012a). The revised Code provides new guidance for Australian NGOs to ensure the aid and

developmentactivity of member5organisations is informed by and implemented with an understanding of the environ-

mental impact (absent in the original Code), if any,of their activities (ACFID, 2012a). These Code revisions represent an

important opportunity to demonstrate the sector as value driven, raising expectationsabout the quality of work that

NGOs will undertakein compliance with the ACFID Code (ACFID, 2012b). They also provide a research opportunity to

investigate potential changes in NGOs’ reporting on environmentalissues.

In undertaking this research, we developed a disclosure index for assessing the rationale for and disclosure of

NGOs’climate change-related performance information. We applied the index to the top 30 (by revenue) ACFID NGOs,

examining their annual reports oversix years (2008–2013). The f‌indings highlight an increase in disclosures about cli-

mate change-related policies and practices by the Australian NGOs over the period of the study. Theyindicate the

possibility that the revised Code, with its recommendations for disclosures about the environmental impact of NGO

activities, may be one of the motivating factors for Australian NGOs to discharge accountability for climate change-

related performance by demonstrating publicly that their operations are consistent with the values they advocate.

This makes an important contribution to NGO literature, indicating a measurable increase in climate change-related

disclosures. It suggests that mandatory codes of conduct may be effective in capturing societal concerns about cli-

mate change issues, which may lead to increased demonstrations of NGO accountability for climate change-related

performance.

The paper is structured as follows. Section 2 brief‌ly presents a background discussion on NGOs’ activities, and

criticisms in relation to climate change. Section 3 outlines the theoretical accountability perspective underlying the

research. Section 4 describes and justif‌ies the use of content analysis to examine annual reports disclosures. Section 5

presents the results of the analysis, with concluding comments in Section 6.

2NGOS AND CLIMATE CHANGE

NGOs, by nature values-driven, work to enhance society's wellbeing, but also to achieve this sustainably (Unerman &

O'Dwyer, 2006; O'Dwyer & Unerman, 2007; 2008). From the beginning of the climate change debate, many NGOs