Sustainability Reporting in Stakeholder Value Creation: A Framework

Abstract

Business organizations enter into a mutual social contract when operating in the business environment, since they consume the resources on behalf of the society. Hence, the manner in which the businesses interact with its environment and society has come under the scrutiny. As a result, organizations have become obliged to behave in a socially and environmentally responsible manner. Following the notions of Stakeholder theory, this study argues that any organization has a diverse set of parties who holds legitimate interest on the business and its operations and thus they are required to fulfil the information needs of the diverse stakeholders. In order to fulfil the largest aspects of information requirements of the users, organizations tend to report on the broader economic, social and environmental aspects related to the organizations, i.e. “Sustainability Reporting”. This study aims to examine the factors influencing sustainability reporting practices and develops a framework to explain the ways in which sustainability reporting contributes to generate value to the stakeholders in an organization. The proposed framework reflects the findings of the research, which has been developed in reference to the empirical research conducted in the field of Sustainability Reporting for the period of year 2001-2011. The proposed theoretical framework is viewed as a contribution to the literature relating to Sustainability reporting. Moreover, further research could be conducted based on this framework to identify the practical implication.