Word limit: 2500 words (excluding abstracts and references) Required: 1. Provide a summary of the purpose of Corporate Sustainability Reporting by referring to the Global Reporting Initiative’s...

Corporate Sustainability Reporting
Q1. Provide a summary of the purpose of Corporate Sustainability Reporting by referring to
the Global Reporting Initiative’s Sustainability Reporting Framework.
Answer: Corporate Sustainability Reporting refers to the presentation of true picture of the
company to the public in regard to the performance of the organization in sectors of
environment, economy, etc. It is believed that since there are a number of people
(shareholders, consumers, suppliers, government & others) directly involved with the
organization in different degrees, the company needs to shoulder the responsibility of
making these parties aware about the kind of influence it is making on the existing society,
industry and environment. All the concerned parties associated with the company desire
sustainable development i.e. a slow but assured development which should not come at the
cost of environment or at the cost of general welfare. Therefore, the Company is expected
to make complete revelations regarding its policies and movements that have had or can
have an impact on these fields. On the moral ground as well, the organization holds a
degree of accountability towards people who have invested their time, money and
resources towards it and whose lives will be directly or indirectly affected by the
organization’s performances, goals and policies.
Therefore, the chief purpose of Corporate Sustainability Reporting is to provide a clear and
unbiased picture of how and where the company stands. It includes presentation of facts
without diverting from the truth and it involves disclosure of both positive and negative
contributions made by the organization in the reporting period. Among other purposes, the
reporting can be used for the following 3 reasons:
i. To make an assessment and evaluation of the Company’s performance and to set
a benchmark for the future keeping in mind the existing laws, regulations, norms,
voluntary initiatives and performance standards.
ii. To make a demonstration of how the policies taken with a view of sustainable
development can have an impact on the organization or how can it influence the
society, economy, market, environment and public welfare.
iii. To make a comparison between the varying performances existing within the
organization and to compare the performances of different organizations during
the reporting period or in the long run.
2. Critique Stakeholder Theory and Legitimacy Theory in explaining the motivators for
corporate voluntary sustainability reporting practice!
Answer: Corporate Sustainability Reporting or revelation of performance-related facts to
the concerned parties has become instrumental in shaping the policies and in governing
the performance of an organization. On ethical grounds, a Company is expected to
voluntarily report of matters of corporate social responsibility. However in the wake of
unethical corporate policies, the concept of ‘Solicited Disclosure’ is gaining prominence
rapidly. Two theories have been devised to motivate the corporate houses for engaging
in the voluntary form of corporate sustainability reporting practice. These are the
Stakeholder Theory and the Legitimacy Theory. A brief critique about the theories has
been endeavored below:
i. Stakeholder Theory: This theory tries to establish the significance of the
relationship shared between an organization and its shareholders. It can be
surmised that a Company’s revelations and disclosures have the power to
influence the decision of a stakeholder. The positive contributions made by the
organization can reiterate or magnify the belief & confidence that an average
shareholder has over the company. On the other hand, the negative
contributions made by the organization can give birth to a sense of protest,
opposition or disapproval in the mind of the stakeholder. The theory holds the
fact that stakeholders not only form an integral part of the organization but they
also hold special interest in the financial results of the company at the end of the
period. Therefore, the Company should bear some accountability towards these
parties and, on its part, must voluntarily present reports on Corporate
Sustainability. The relationship that an organization shares with its stakeholders
is a very complex and delicate one. A Company will always endeavor to plant the
image of a rosy picture in the mind of the shareholders so as to keep them
contented and interested in the financial affairs of the business. The
management is averse to making statements or revelations that may antagonize
a section of the stakeholder or which may be detrimental to the organization-
stakeholder relationship. The theory maintains that instead of making strategic
revelations, it is the moral duty of the Company to make a voluntary disclosure of
its policies & performances so that it can fulfill its accountability and can
empower the stakeholders (and potential stakeholders) with the knowledge that
shall be required for future decision-making.
ii. Legitimacy Theory: Legitimacy Theory propagates that the organization’s
activities be in sync with the general welfare of the society and that they do not
deflect from any rules, regulations and laws that have been deemed to be
beneficial or appropriate to the society or environment. In simple...