Multinationals’ Accountability on Sustainability: The Evolution of Third-party Assurance of Sustainability Reports

In this article we explore how multinational corporations (MNCs) adopt assurance practices to develop and sustain organizational accountability for sustainability. Using a panel of Fortune Global 250 firms over a period of 10 years, we document the diffusion patterns of third-party assurance of sustainability reports. We specifically investigate how evolving auditing practices, namely diversity of assurance standards and type of assurance providers, shape the quality of sustainability assurance statements. The results illustrate great variability in the adoption of assurance practices in the formative stages of this novel market. Our descriptive analysis indicates the relevance of external institutional pressures as well as internal resources and capabilities as underlying factors driving the adoption of assurance. Our evidence also suggests that several MNCs project a decoupled or symbolic image of accountability through assurance, thereby undermining the credibility of these verification practices. The paper contributes to the emerging literature on international accountability standards and emphasizes the need to enhance theory-based, cross-disciplinary knowledge related to auditing and accountability processes for sustainability

Sustainability assurance on the biggest cooperatives of the world: an analysis of their adoption and quality

© 2015 The Authors Annals of Public and Cooperative Economics © 2015 CIRIECSustainability Assurance (SA) is increasing worldwide. Cooperatives are highly susceptible to CSR but there is an interesting research gap regarding SA in them. We use mixed research methods (statistical and content analysis) to study SA practices of the top 300 cooperatives worldwide. Paradoxically, our results show scarce or late SA adoption, and country-level and sector sensibility do not affect SA adoption significantly. Conversely, country-level and sector sensibility influence the choice of the assurance provider. Finally, findings reveal that country-level and industry factors, and also the assurance provider, do affect assurance statements’ quality.Seguí Mas, E.; Bollas Araya, HM.; Polo Garrido, F. (2015). Sustainability assurance on the biggest cooperatives of the world: an analysis of their adoption and quality. 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A decade of sustainability reporting: developments and significance. International Journal of Environment and Sustainable Development, 3(1), 51. doi:10.1504/ijesd.2004.004688Kolk, A. (2007). Sustainability, accountability and corporate governance: exploring multinationals’ reporting practices. Business Strategy and the Environment, 17(1), 1-15. doi:10.1002/bse.511Manetti, G., & Becatti, L. (2008). Assurance Services for Sustainability Reports: Standards and Empirical Evidence. Journal of Business Ethics, 87(S1), 289-298. doi:10.1007/s10551-008-9809-xManetti, G., & Toccafondi, S. (2011). The Role of Stakeholders in Sustainability Reporting Assurance. Journal of Business Ethics, 107(3), 363-377. doi:10.1007/s10551-011-1044-1MOCK, T. J., STROHM, C., & SWARTZ, K. M. (2007). An Examination of Worldwide Assured Sustainability Reporting. Australian Accounting Review, 17(41), 67-77. doi:10.1111/j.1835-2561.2007.tb00455.xMoroney, R., Windsor, C., & Aw, Y. T. (2011). 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The Case of Sustainability Assurance:Constructing a New Assurance Service

This paper presents an in-depth longitudinal case study examining the processes through which practitioners in two Big 4 professional services firms have attempted to construct sustainability assurance (independent assurance on sustainability reports). Power’s (1996, 1997, 1999, 2003) theorization of the way in which new subject areas are made auditable is used to frame the findings. The case analysis reveals the fragile nature of efforts to innovate with sustainability assurance and render sustainability reporting auditable. It suggests that innovation in new assurance practices may be constrained by an over-reliance on traditional financial audit training and techniques and certain internal professional services firm control procedures. Practitioners are shown to have experienced considerable discomfort in their attempts to construct a stable and legitimate knowledge base for assurance practice. Tacit knowledge embedded in highly subjective assessments of evidence has been frequently enrolled to make assurance possible in the presence of vague guidance from assurance standards. In light of ongoing practitioner struggles, both firms have publicly acknowledged the limitations of traditional financial audit practice operating alone in the conduct of sustainability assurance. In order to offset these limitations, they have proposed a coupling of ‘‘expert’’ stakeholder assessments of reporting completeness with traditional audit assessments of data reliability. This assigns part of the responsibility for delivering on a key assurance objective (reporting completeness) to what many practitioners perceive as questionable stakeholder expertise. The findings extend prior research highlighting the trial and error nature of the processes through which accountants seek to develop their presence in new markets for their expertise. They also question the extent to which the core aims being espoused for sustainability assurance can be substantively aligned with the operational capabilities available within Big 4 professional services firms