Sustainability KPIs for integrated reporting

Archival research on integrated reporting: a systematic review of main drivers and the impact of integrated reporting on firm value

Integrated reporting (IR) represents an innovative approach to business reporting especially by Public Interest Entities (PIEs). In addition to financial capital, the integrated report includes material information about manufactured, intellectual, human, social and relational, and natural capitals. Although there has been a steady growth in empirical IR research, there is—as yet—no literature review on the business case for IR. Thus, the purpose of this study is to convey a detailed understanding of the governance-, (non) financial performance-, and reporting-related determinants of IR and its contribution to firm value in line with the business case argument. To do so, we selected 85 quantitative peer-reviewed archival studies on that topic. We have then differentiated said studies between those that focus on IR adoption versus those that focus on IR quality, with a legitimacy- and stakeholder-theory-based framework. This differentiation is crucial, to stress the challenges of greenwashing policies and information overload. Here, in contrast to former literature reviews on IR, we provide new insights into this emerging research topic and concentrate on archival IR research. We are also interested in recent moderator- and mediator analysis in archival IR research since the business case argument for IR may require a specific environment, in addition to the main variables we have included. We likewise give a detailed overview of included variables and proxies and compare their main statistical effects. Our literature review demonstrates that (1) board composition and (2) stakeholder pressure positively influence IR quality; whereas (3) (non) financial performance leads to increased IR adoption and quality. We also find that both IR adoption and IR quality are linked with positive consequences on firm valuation, as they lead to higher total performance measures. Last but not least, this analysis includes useful recommendations for future IR research.

Integrated management systems as a driver of sustainability performance: exploring evidence from multiple-case studies

Purpose

The purpose of this paper is to analyze the impact of integrated management systems (IMSs) on sustainability (based on the triple bottom line (TBL) concept). To accomplish this objective, this paper seeks to answer the following research questions: How can IMS impact organizational sustainability performance? And, how the key challenges of IMS can influence companies in practice?

Design/methodology/approach

A case-based approach is used based on the following four cases from different sectors: an electric power distributor; an environmental consulting firm; a public transport firm; and a firm with a broad portfolio of equipment, products and provisions for industrial services in different markets.

Findings

The results show that the integration of management systems was driven by the companies' strategies toward sustainability. The stakeholders' perception is that a firm's image as a sustainable company also enhances environmental and social performance. The economic performance was not emphasized. Companies noted that the main challenge was motivating and engaging human resources.

Originality/value

This paper shows that sustainability was not a motivation for implementing an IMS. But, implementing an IMS was a driver of sustainability performance. Also, the relationship between IMS and organizational performance can be presented based on TBL perspectives, and implementing an IMS can be challenging in practice.

Inequality of health stock and the relation to national wealth

BACKGROUND

The decline in global and between-country health inequality is a major challenge to overcome. However, few studies have systematically investigated the relationship between inequality of health stock and national wealth. From an economic perspective, health can be viewed as a durable capital stock that produces an output of healthy time. Therefore, in this paper, we focused on health capital to investigate the relationship between inequalities of national health and national wealth.

METHODS

Based on health stock data from 1990 to 2015 for 140 countries, we estimated Gini coefficients of health stock to investigate associations with a well-known economic flow indicator, Gross Domestic Product (GDP), stock-based national wealth indicator, Inclusive Wealth Index (IWI), and firm-level net income.

RESULTS

The estimated Gini coefficient of global health stock shows that health stock has experienced a global decline. The Gini coefficient for low-income countries (LICs) showed the fastest decline in health stock, dropping from 0.69 to 0.66 in 25 years. Next, rapid population growth and the rise in the youth share of the working-age population in LICs were most likely contributing factors to the decline in inequality. Most countries that experienced positive health stock growth also indicated a strong positive relationship with GDP and IWI. However, some countries showed a negative relationship with natural capital, which is a part of IWI. In addition, firm-level net income showed no obvious associations with health stock, GDP and IWI.

CONCLUSIONS

We argue that a negative relationship between health stock and natural capital is a sign of unstable development because sustainable development involves maintaining not only GDP but also IWI, as it is a collective set of assets or wealth comprising human, produced and natural capital. Moreover, in our analysis of firm-level income data, we also discuss that income will be influenced by other factors, such as innovations, human resources, organization culture and strategy. Therefore, the paper concludes that health stock is a vital component in measuring health inequality and health-related Sustainable Development Goals (SDGs). Thus, IWI is more comprehensive in measuring national wealth and can complement GDP in measuring progress toward sustainable development.

Do CEO incentives and characteristics influence corporate social responsibility (CSR) and vice versa? A literature review

Purpose

This paper aims to analyze whether chief executive officer (CEO) incentives and characteristics (e.g. CEO power, CEO tenure) are linked with corporate social responsibility (CSR) and vice versa.

Design/methodology/approach

Based on upper echelons theory, the author conducts a structured literature review and evaluates 84 empirical-quantitative studies on CEO and CSR variables.

Findings

While the majority of the included studies analyzed the CEO-CSR link, there are indicators for a bidirectional relationship. Moreover, prior research has focused on CEO incentives, especially compensation contracts, and on the US capital market. A major research gap relates to CEO characteristics, e.g. CEO values, education and experience.

Research limitations/implications

Heterogeneous CEO and CSR variables and endogeneity concerns lower the validity of recent studies. Future research is encouraged to implement dynamic regression models, increase CSR and CEO proxies and focus on international samples with country-specific effects.

Practical implications

As CEO activities can have a major impact on CSR activities, the author recommends firms to search for opportunities to make their CSR strategy more comprehensive by their stakeholder communication, thus providing deeper insights into their CSR performance in line with stakeholders’ interests.

Originality/value

The paper is the first literature review on the interaction between CEO and CSR so far. The author explains the main CEO and CSR variables that have been included in research, stresses the limitations of the studies and gives useful recommendations for future research, practice and regulators.

Sustainable investment evaluation by means of life cycle assessment

Purpose

Sustainability investors are in need of updated standards, indexes and in general better tools and instruments to facilitate company information on its impacts on people, planet and profit. Such instruments to reveal reliable, independent metrics and indicators to evaluate companies’ performances on sustainability exist, however, in research fields that previously have not been used extensively, for instance, life cycle assessments (LCAs). ISO 14001:2015 has implemented life cycle perspective, however, without being explicitly clear on which methodology is preferred. This paper aims to investigate LCA as to improve companies’ transparency towards sustainability investors through a literature review on sustainable investment evaluation.

Design/methodology/approach

The literature review is conducted through the search engine Google Scholar, which to date hosts the most comprehensive academic database across other databases such as Scopus, ISI Web of Knowledge, Science Direct, etc. Search words such as “Sustainable finance”, “Sustainable Investments”, “Performance metrics”, “Life cycle assessment”, “LCA”, “Environmental Management Systems”, “EMS” and “Environmental Profit and Loss Account” were used. Special journals that publish research on LCA such as International Journal of Life Cycle Assessment, Journal of Cleaner Production and Journal of Industrial Ecology were also investigated in-depth.

Findings

The combination of using LCA in, for instance, environmental profit and loss accounts studied in this paper shows a comprehensive and reliable tool for sustainability investors, as well as for social responsibility standards such as ISO 14001, ISO 26000, UN Global Compact, GIIN, IRIS and GRI to incorporate. With a LCA-based hybrid input-output account, both upstream and downstream’s impact on the environment and society can be assessed by companies to attract more funding from sustainability investors such as shareholders, governments and intergovernmental bodies.

Research limitations/implications

The literature review is based on publicly disclosed academic papers as well as five displayed company Environmental Profit and Loss accounts from the Kering Group, PUMA, Stella McCartney company, Novo Nordisk and Arla Group. Other company experiences with integration of LCA as a reporting tool have not been found, yet it is not to conclude that these five companies are the only ones to work extensively with LCA.

Practical implications

The paper may contribute to the clarification of LCA-thinking and perspective implementation in both ISO 14001 and ISO 26000, as well as in other social responsibility standards such as the UN Global Compact, the Global Impact Investing Networks, IRIS performance metrics, the Global Reporting Initiative and others.

Originality/value

The paper is one of the first that evaluates LCA and environmental profit and loss accounts for sustainability investors, as well as for consideration of implementation in social responsibility standards such as the ISO 14001 and ISO 26000, as well as in other social responsibility standards such as the UN Global Compact, the Global Impact Investing Networks, IRIS performance metrics and the Global Reporting Initiative.