The Assurance of Sustainability Reporting:
An Extra Fee or a Guarantee
Noha Abd El-Rahman
Abstract
Despite the significant importance of sustainability
reporting as an objective measurement of sustainable
performance, nowadays there is a consensus on the poor
quality of sustainability reporting among academics and
practitioners. This research aims at evaluating the impact
of the assurance of the sustainability report on its quality
level and that could be the reason behind a poor-quality
level. Based on the relevant literature, the research
applied Ordinal, Logistic Regression analysis to test the
impact of the external assurance of the report on the
quality of sustainability reporting. This relationship has
been tested on a sample of 500 sustainability reports that
represent the Global Fortune 100 (G100) companies for a
period of 2011–2015. The empirical study concluded that
there is an extremely significant, positive relationship
between the assurances of the sustainability report on the
quality of sustainability reporting.
Keywords
Corporate governance (CG) Á Quality of sustainability
reporting (QSR) Á Assurance of report (ASR) Á
Global reporting initiative (GRI)
JEL Classification
M410 Á O16 Á M14 Á M42
1 Introduction
In the last few years, companies are increasingly seeking to
provide social and environmental disclosures to their stakeholders, driving by Corporate Governance Practices/ theory,
who became demanding the corporate performance in regards
to these sustainability aspects, upon which they take their
decisions. And since stakeholders are at the core of the corporate strategy, their demands must be satisfied. Consequently, social and environmental aspects became important
indicators for the corporate performance, together with the
economic factor, that all should be disclosed. This increased
interest in sustainable development has led them to the
adoption of sustainability reporting on its three dimensions,
instead of mere “social and/or environmental” reporting.
Thus, a robust report should be a reflection of the corporate
performance in regard to those three market factors. More
specifically, these requirements of corporate reporting should
be disclosed to stakeholders in the form of performance
indicators. The performance indicators should be readily
understandable and measurable so that they support the
decision-making process. This format of corporate reporting
denotes the so-called “Sustainability Reporting” (Junior et al.
2017; Farneti and Guthrie 2009).
Sustainability Reporting (SR) requires that an entity reports
meaningfully on its economic, environmental, and social
performance to its internal and external stakeholders,
regardless of their impact on its economic position. SR is a
way to hold an organization accountable for its activities and
improve its sustainable development performance. In other
words, it could be said that SR helps the organization in
strategically managing the three components of sustainability (Comyns et al. 2013; Baumgartner and Rauter 2017).
That is why sustainability disclosures are usually provided
voluntarily by corporate managers, who justified this
behavior with its considerable role in increasing the attention
and the positive attitude toward the company. These benefits
N. A. El-Rahman (&)
London Doctoral Academy & Division of Accounting, Finance &
Economics, School of Business, London South Bank University
(LSBU), London, England
e-mail: Noha.abdelrahman@bue.edu.eg; Abdelrn3@lsbu.ac.uk
Faculty of Business Administration, Economics and Political
Science, The British University in Egypt (BUE), Cairo, Egypt
© Springer Nature Switzerland AG 2020
M. Mateev and J. Nightingale (eds.), Sustainable Development and Social Responsibility—Volume 1,
Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-030-32922-8_19
187
An Extra Fee or a Guarantee
Noha Abd El-Rahman
Abstract
Despite the significant importance of sustainability
reporting as an objective measurement of sustainable
performance, nowadays there is a consensus on the poor
quality of sustainability reporting among academics and
practitioners. This research aims at evaluating the impact
of the assurance of the sustainability report on its quality
level and that could be the reason behind a poor-quality
level. Based on the relevant literature, the research
applied Ordinal, Logistic Regression analysis to test the
impact of the external assurance of the report on the
quality of sustainability reporting. This relationship has
been tested on a sample of 500 sustainability reports that
represent the Global Fortune 100 (G100) companies for a
period of 2011–2015. The empirical study concluded that
there is an extremely significant, positive relationship
between the assurances of the sustainability report on the
quality of sustainability reporting.
Keywords
Corporate governance (CG) Á Quality of sustainability
reporting (QSR) Á Assurance of report (ASR) Á
Global reporting initiative (GRI)
JEL Classification
M410 Á O16 Á M14 Á M42
1 Introduction
In the last few years, companies are increasingly seeking to
provide social and environmental disclosures to their stakeholders, driving by Corporate Governance Practices/ theory,
who became demanding the corporate performance in regards
to these sustainability aspects, upon which they take their
decisions. And since stakeholders are at the core of the corporate strategy, their demands must be satisfied. Consequently, social and environmental aspects became important
indicators for the corporate performance, together with the
economic factor, that all should be disclosed. This increased
interest in sustainable development has led them to the
adoption of sustainability reporting on its three dimensions,
instead of mere “social and/or environmental” reporting.
Thus, a robust report should be a reflection of the corporate
performance in regard to those three market factors. More
specifically, these requirements of corporate reporting should
be disclosed to stakeholders in the form of performance
indicators. The performance indicators should be readily
understandable and measurable so that they support the
decision-making process. This format of corporate reporting
denotes the so-called “Sustainability Reporting” (Junior et al.
2017; Farneti and Guthrie 2009).
Sustainability Reporting (SR) requires that an entity reports
meaningfully on its economic, environmental, and social
performance to its internal and external stakeholders,
regardless of their impact on its economic position. SR is a
way to hold an organization accountable for its activities and
improve its sustainable development performance. In other
words, it could be said that SR helps the organization in
strategically managing the three components of sustainability (Comyns et al. 2013; Baumgartner and Rauter 2017).
That is why sustainability disclosures are usually provided
voluntarily by corporate managers, who justified this
behavior with its considerable role in increasing the attention
and the positive attitude toward the company. These benefits
N. A. El-Rahman (&)
London Doctoral Academy & Division of Accounting, Finance &
Economics, School of Business, London South Bank University
(LSBU), London, England
e-mail: Noha.abdelrahman@bue.edu.eg; Abdelrn3@lsbu.ac.uk
Faculty of Business Administration, Economics and Political
Science, The British University in Egypt (BUE), Cairo, Egypt
© Springer Nature Switzerland AG 2020
M. Mateev and J. Nightingale (eds.), Sustainable Development and Social Responsibility—Volume 1,
Advances in Science, Technology & Innovation, https://doi.org/10.1007/978-3-030-32922-8_19
187