Economic sustainability: a comparative analysis of sustainability reports in Austrian companies / submitted by Flavia-Maria Rybacki, BSc

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ECONOMIC

SUSTAINABILITY -

A comparative analysis

of sustainability

reports in Austrian

companies

Institute for Environmental Management in companies and regions

Supervisor

a. Univ.-Prof. Dr. Heinz Karl Prammer

Co-Supervisor

Univ.-Ass. Mag. Dr. Daniela Schrack

September 2016

Master Thesis

to obtain the academic degree of

Master of Science

in the Master’s Program

General Management

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I hereby confirm that my thesis entitled “Economic Sustainability - A comparative analysis of Sustainability Reports in Austrian companies” is the result of my own work. I did not receive any help or support from commercial consultants. All sources and materials applied are listed and specified in the thesis.

Furthermore, I confirm that this thesis has not yet been submitted as part of another examination process neither in identical nor in similar form. This printed thesis is identical with the electronic version submitted.

__________________________ _____________________________

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This master thesis inheres a considerable time dedication and was enabled and supported by Univ.-Ass. Mag. Dr. Daniela Schrack and Co-Supervisor a. Univ.-Prof. Dr. Heinz Karl Prammer, who both deserve my truthful consideration. I would first like to express my appreciation to my first supervisor Univ.-Ass. Mag. Dr. Daniela Schrack, who guided me through the writing process by offering helpful expertise, remarks, recommendations, and continuous engagement.

Moreover, I am especially thankful to Karina Wagner, BSc who devoted her time and awareness in giving constructive criticism and sharing her honest perspectives with me. I am furthermore grateful to my dear colleagues, friends and family for their incessant support, patience and friendly advice provided during the course of this research.

With sincere thanks, Flavia-Maria Rybacki

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This master thesis brings more clarity in what contents Austrian companies focus on when reporting about their economic sustainability. The main area of concentration within this paper is therefore the economic characteristic of sustainability. While little connection is made in sustainability literature between the economic pillar and the traditional business finance, the analysis of selected sustainability reports give an insight in how far companies include classical aspects of finance, such as liquidity rations for instance, as well or if they mainly rely on recommendations of the GRI guidelines, as one of the most widespread and implemented international frameworks. Furthermore, conclusions are drawn about which contents are additionally helpful in order to combine the two different approaches of economic sustainability and give a more holistic insight. Consequently, awareness is enabled about how the stipulated economic influencers relate and connect to each other to offer a holistic and integrated picture of what economic sustainability consists of according to the elaborations of this master thesis. For fulfilling the aim of the study, theoretical input of the traditional view of reporting and the economic aspect within sustainability reports are regarded before engaging in finding appropriate recommendations for combining these perspectives and applying the analysis on existing reports. In the end of the study the contents of selected Austrian sustainability reports have been gathered and analysed according to the GRI and the additional information given for a better understanding of the economic sustainability. The results reveal that although the already existing standards are a good starter for companies to organise and present economic data relevant for the long-term survival, there is still a long way to go till reporting consistency will be spread over the current Austrian business environment.

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3.1 Emergence and Development ... 15

3.2 Aim and Purpose ... 20

3.3 Reporting Standards and their Contents ... 23

3.3.1 Internal reporting ... 24

3.3.2 Global reporting initiative ... 25

3.3.3 International Organization for Standardization ... 31

3.3.4 Eco-Management and Audit Scheme ... 32

3.3.5 Social Accountability International ... 34

3.4 Sustainability Reporting in Austria - Status Quo ... 36

4 CO R P O R A T E EC O N O M I C SU S T A I N A B I L I T Y ... 37

4.1 Definition, Aim and Determinants ... 38

4.2 Traditional view and reporting ... 45

4.2.1 Ratios of the Financial Balance ... 47

4.2.2 International Financial Reporting Standards (IFRS) ... 54

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4.3 Economic aspects within sustainability reports (GRI) ... 59

4.4 Critical review of economic sustainability reporting and recommendations ... 68

5 AN A L Y S I S ... 74

5.1 Research Method - Analytical descriptive method ... 76

5.2 Analysis Findings Overview ... 79

5.3 Sector comparison ... 81

5.3.1 Financial Services ... 82

5.3.2 Machinery production/engineering ... 90

5.3.3 Public services ... 97

5.4 Concluding Analysis Review ... 104

6 CO N C L U S I O N ... 105

LI S T O F RE F E R E N C E S ... 108

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Figure 1: Requirements for global sustainability ... 13

Figure 2: Timeline of sustainability reporting cornerstones (own depiction) ... 19

Figure 3: Variety of technical sectors and subjects within ISO standards at the end of 2015 ... 31

Figure 4: Companies registered within GRI's Sustainability Disclosure Database, 2001-2015 ... 36

Figure 5: Three levels of IFRS/IAS guidelines ... 56

Figure 6: Integrated perspective of economic sustainability - The economic sustainability pyramid ... 73

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Table 1: Examples of Internal and External Aspects of Sustainability ... 9

Table 2: Types of capital within the concept of weak and strong sustainability. ... 10

Table 3: Benefits of sustainability reporting and their driving motivators ... 22

Table 4: Categories and Aspects of G4 Guidelines ... 30

Table 5: Percentage proportion of reporting companies in relation to the total number of corporations in 2012 ... 37

Table 6: Components of the financial balance and their functions ... 45

Table 7: Structure and content of a free cash flow calculation ... 49

Table 8: Example of the structure and basic content of a balance sheet ... 58

Table 9: Example of the structure and basic content of a profit and loss statement ... 59

Table 10: Specific Economic Standard Disclosures - Aspects and Indicators ... 62

Table 11: Critical review of GRI fulfillment of determinants of the economic sustainability ... 72

Table 12: Analysis criteria for specific economic indicators according to G4 and where they can be found ... 75

Table 13: Analysis criteria for traditional economic indicators and where they can be found ... 76

Table 14: Analysis criteria for additional disclosures according to outcomes of chapter 4.4 ... 76

Table 15: Overview of the companies for the sector comparison according to branches and reporting mode .... 81

Table 16: RZB AG - Analysis criteria for specific economic indicators according to G4 and where they can be found ... 85

Table 17: RZB AG - Analysis criteria for traditional economic indicators and where they can be found ... 86

Table 18: RZB AG- Analysis criteria for additional disclosures according to outcomes of chapter 4.4 ... 87

Table 19: Erste Group Bank AG - Analysis criteria for specific economic indicators according to G4 and where they can be found ... 88

Table 20: Erste Group Bank AG - Analysis criteria for traditional economic indicators and where they can be found ... 89

Table 21: Erste Group Bank AG - Analysis criteria for additional disclosures according to outcomes of chapter 4.4 ... 90

Table 22: EVVA Sicherheitstechnologie GmbH - Analysis criteria for specific economic indicators according to G4 and where they can be found ... 92

Table 23: EVVA Sicherheitstechnologie GmbH - Analysis criteria for traditional economic indicators and where they can be found ... 93

Table 24: EVVA Sicherheitstechnnologie GmbH - Analysis criteria for additional disclosures according to outcomes of chapter 4.4 ... 94

Table 25: Palfinger AG - Analysis criteria for specific economic indicators according to G4 and where they can be found ... 95

Table 26: Palfinger AG - Analysis criteria for traditional economic indicators and where they can be found ... 96

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Table 28: Austria Glas Recycling GmbH - Analysis criteria for specific economic indicators according to G4 and where they can be found ... 99 Table 29: Austria Glas Recycling GmbH - Analysis criteria for traditional economic indicators and where they can be found ... 100 Table 30: Austria Glas Recycling GmbH - Analysis criteria for additional disclosures according to outcomes of chapter 4.4 ... 101 Table 31: Holding Graz - Kommunale Dienstleistungen GmbH - Analysis criteria for specific economic indicators according to G4 and where they can be found ... 102 Table 32: Holding Graz - Kommunale Dienstleisungen GmbH - Analysis criteria for traditional economic

indicators and where they can be found ... 103 Table 33: Holding Graz - Kommunale Dienstleistungen GmbH - Analysis criteria for additional disclosures according to outcomes of chapter 4.4... 104

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Appendix 1: IFRS - Standards as of April 2016 ... XIII Appendix 2: Structure and content of an indirect cash flow calculation ... XIV Appendix 3: Analysis selection criteria ... XXII Appendix 4: Analysis selection criteria - Companies registered on the GRI Sustainability Database for the year 2015 ... XXIII

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CE ... Capital Employed

CERES ... Environmental Responsible Economies

CSR ... Corporate Social Responsibility EMAS ... Eco-Management and Audit Scheme EPS ... Earnings per share

EU ... European Union

EVG&D ... Economic value generated and distributed GAAP ... General accepted accounting principles

GRI ... Global Reporting Initiative ILO ... International Labor Organization IMF ... International Monetary Fund IR ... Integrated Reporting

IAS ... International Accounting Standards IASB ... International Accounting Standards Board IASC ... International Accounting Standards Committee

IFRIC ... International Financial Reporting Interpretations Committee IFRS ... International Financial Reporting Standards

IIRC ... International Integrated Reporting Council ISO ... International Organization for Standardization KPI ... Key Performance Indicators

M&A ... Mergers and Acquisitions

MDG ... Millennium Development Goals NGO ... Non-governmental Organization NOPAT ... Net Operating Profit after Taxes NRE ... Nouvelles Regulations Economiques P/E ratio ... Price/Earnings ratio

ROCE ... Return on Capital Employed R&D ... Research and Development ROA ... Return on total Assets ROS ... Return on Sales

RZB ... Raiffeisen Zentralbank Österreich AG SIC ... Standing Interpretations Committee SME ... Small and Medium Enterprises TBL ... Triple Bottom Line

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UNWCED ... United Nations Conference on Environment and Development WTO ... World Trade Organization

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Sustainability as an umbrella term has been excessively present in the past and seems to not have come to saturation yet.1 _{Generally speaking, sustainability is "a process of change} in which the exploitation of resources, the direction of investments, the orientation of technological development; and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations."2 _{Within the concept of} sustainability, the idea of the Triple Bottom Line (TBL) has emerged in 1997. Briton John Elkington derived the term from financial accounting and held that sustainability is about people, planet, and profits3 _{or put in another way about managing the social, environmental,} and economic aspect of the company at the same time in order to prosper on a long-term basis.4 _{His idea has been also adopted and implemented by the Global Reporting Initiative,} an association of NGO's, investors, businesses and other institutions with the aim of standardizing sustainability reporting internationally. The Sustainability Reporting Guidelines that are currently available in their fourth version consider all three aspects of the TBL.5 The topics of social and environmental sustainability,6 _{as well as their implementation}7 _have been amply discussed in the literature. By the same token, while the economic aspect is considered as one part of sustainability, it has only triggered minor attention in this field as its share of dedication demonstrates not only in research articles,8 _{but also in the Sustainability} Reporting Guidelines of GRI.9 _{This might also be the reason why many executives and} business people still do not see and understand the economic aspects of their actions when it comes to sustainability engagement. Sustainable economic success according to TBL

1_{Cf. Blackburn, 2009, p. 2.}

2_{Word Commission for Environment and Development WCED, 1987, p. 43.} 3_{Cf. Elkington, 2004, p. 2.}

4_{Cf. Blackburn, 2009, p. 4.}

5_{Cf. Global Reporting Initiative, 2013a, Internet:} https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.pdf

6_{Cf. Visser, & Crane, 2010; Lawrence, & Weber, 2008; Thorne, 2006; Scruggs, 2003.}

7_{Cf. International Federation of Accountants, 2015, Internet; Deutsche Norm. DIN EN ISO 14031, 2013; Werther,} 2011; Harmon et al., 2009; International Finance Corporation, 2002; National Academy of Engineering and National Research Council Committee on Industrial Environmental Performance Metrics, 1999.

8_{Cf. Blackburn, 2009, p. 25.}

9_{Cf. Global Reporting Initiative, 2013a, p. 2, Internet:} https://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosures.pdf

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refers to the prudent use of financial resources in order to encourage the sustainable economic health of the company and its community.10 _{Consequently, this is one point where} the connection to the traditional view of economic sustainability can be found. While the going-concern-principle is a terminology of the classic financial analysis, it regards the same topics and financial ratios that are also proposed within the sustainability literature, namely cash flows, capital expenditures, liabilities, market share, profits, wages, return on investment, dividends, retained earnings, etc.11 _{Nevertheless, when it comes to the} implementation of sustainability and economic sustainability reporting, like GRI as such, the classical interpretation of economic sustainability seems to lose significance.

In this regard, this paper covers the topic of economic sustainability, while specifically comparing and analysing already existing sustainability reports of Austrian companies in order to bring clarity about what companies refer to when reporting about economic sustainability and what is supposed to be considered when including the classical financial position and the results of a company's operations and cash flows. This statement is a first step in indicating the research question of this thesis. For each research paper, it is crucial to formulate a clear, researchable, and open-ended question12 _{in order to shed light on what will} be revealed within the paper, which methods and materials can be used and how can findings be analysed and interpreted.13 _{It is equally crucial to find a question that has not} been answered yet.14 Therefore, deriving a research question from already existing but untagged issues and spotting theoretical and conceptual gaps is called problematizion. In other words, this is about developing new theories by identifying and challenging already existing assumptions and concepts.15 _{Therefore the research questions can be formulated as} following:

 Which aspects of economic sustainability are regarded within selected Austrian sustainability reports?

 To what extent do the regarded sustainability reports follow the concept of GRI?

10

Cf. Blackburn, 2009, p. 7, p. 23. 11

Cf. Guserl, & Pernsteiner, 2011, p. 195, own translation; Blackburn, 2009, p. 25. 12

Cf. Bufkin, 2006, p. 2. 13

Cf. Flick, 2009. p. 98.

14_{Cf. Tosi, 1984, p. 169.}

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 How can sustainability reports be improved in order to present a holistic view of economic sustainability?16

For answering these questions, there are not only abundant scientific papers about the concept of sustainability and classical economic perspectives, but also practical material of companies already engaging in sustainable business practice. Consequently, the research method can be specified to be analytical descriptive and will be considered in more detail in chapter 5.1. Furthermore, not only the field of sustainability has been narrowed, by focusing specifically on the economic sustainability, but also by stating the GRI standard considered for comparison and by geo-locating the analysis on Austria. Including more than one sustainable report of Austrian companies, allows for comparison by finding compliance with and/or contrast to the GRI and also enables drawing conclusions and making suggestions about missing aspects within the reports.

While the main part of the research questions is about the status quo of the current economic sustainable reporting aspects and thus describes a state of being, it also entails recommendations about how it can further be developed in order to combine them with the classic economic view of sustainability, which is one characteristic of a process. The content of this master thesis begins therefore with an theoretical overview about what sustainability is and how is it understood from different researchers' perspectives. It subsequently continues by further focusing on sustainability reporting in only. In doing so, the emergence and development of sustainability reports, their aim and purpose and the most established international standards are regarded. The theoretical core of this paper, namely the corporate economic sustainability, is looked upon within the fourth chapter. Herein, not only various definitions are presented in order to find the most suitable one that describes economic sustainability within the context of this paper, but an insight into the traditional view of reporting on economic sustainability is also given before going over to uncover the economic aspects regarded within the GRI guidelines. A final critical view of economic

16_{When testing the accuracy and quality of the afore stated questions, there are certain indicators to be kept in}

mind. Questions must be clearly stated and do not offer room for interpretations. Furthermore, they should be researchable (offer the possibility to find appropriate scientific material to answer the question), linked to clearly defined concepts of theory and specific about what the paper will focus on. The outcomes should be focused on as well, which means that questions should be avoided that cannot be answered. Moreover, a good research question involves explicit comparison, disparities or both. (Cf. Bradley, 2001, p. 574) A last comment on research questions in general is about their nature. Two types of research questions can be differentiated: those oriented toward describing states and those dealing with processes.(Cf. Flick, 2009, p. 102)

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sustainability reporting and recommendations concludes the fourth chapter before going over to the analysis of the sustainability reports of selected Austrian companies. The six chosen companies (Erste Group Bank AG, Raiffeisen Zentralbank Österreich AG, Palfinger AG, EVVA Sicherheitstechnologie GmbH, Austria Glas Recycling GmbH and the Holding Graz - Kommunale Dienstleistungen GmbH) represent three business sectors. While they might not be representative for their specific sector, as such an analysis would go beyond the scope and size of this master thesis, they can for sure demonstrate companies' disparities and serve as a starting point for further research in this field.

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In the last decades the concept of sustainability has turned into a widely recognized megatrend.17 _{Those who were sceptical at the beginning have been taught better, as} advantages seem to pay off the time consuming, financial, personal, and physical investments done by corporations in order to act in an sustainable way.18 _{Benefits have been} statistically demonstrated, such as better organizational results due to improved employee engagement and productivity,19 _{reduced operating costs due to a more efficient use of} material and energy resources,20 _{increased innovation potential, fewer market risks}21 consequently leading to enhanced brand images, better access to financial markets and a rise in market share.22

The reasons that have led governments, businesses and financial institutions to introduce and adopt sustainability policies are manifold. Population growth can be seen as the starting point for social, environmental and economic concerns, as it constantly elevates the global demand for commodities and energy resources. 23 _{There are 7.3 billion people living on this} planet nowadays.24 Although growing rates are currently declining,25 the world's population tripled during the 20th century and is expected to reach a peak of 9.3 billion by 2050.

17

Cf. Mittelstaedt et al., 2014, p. 255; Fernando, 2012, p. 579; Lubin, & Esty, 2010, p. 44.

18

Cf. Anonymous, 2015, p. 27.

19

Cf. Harmon et al., 2009, p. 95. 20

Cf. Anonymous, 2015, p. 29; Harmon et al., 2009, p. 95. 21

Cf. Hecht et al., 2012, p. 62; Harmon et al., 2009, p. 95. 22

Cf. Anonymous, 2015, p. 29; Harmon et al., 2009, p. 95. 23

Cf. Hecht et al., 2012, pp. 63-64.

24_{Cf. United States Census Bureau, 2016, Internet: http://www.census.gov/popclock/} 25_{Cf. Worldometers, 2016, Internet: http://www.worldometers.info/world-population/}

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Developing countries are most affected by increasing inhabitants' numbers. Evermore people seek access to food, drinking water, shelter, electricity, education, healthcare and communication systems, as well as to clothes and consumer goods.26 _{However, this does not} mean that the western world is not affected by changes taking place in other parts of the world. The current refugee situation in Europe perfectly demonstrates. the world's interconnectedness.27 _{Poverty, conflicts, hunger, hopelessness and human exploitation} existent in less developed countries do not linger geographically isolated.28 _{In order for} nations, NGOs, businesses and international institutions to tackle the world's problems jointly, the United Nations published in 2005 the Millennium Development Goals (MDGs) for a sustainable world. There are 17 goals currently published, representing global environmental, social, and economic issues that are to be addressed. Ending poverty29 _and hunger30_{, ensuring healthy lives}31_{, quality education}32_{, and affordable access to modern} energy33_{, promoting inclusive and sustainable economic growth and employment}34_{, building a} stable infrastructure35_{, reducing inequalities within and among countries}36 _{and gender}37_, establishing safe, resilient, just, peaceful, and sustainable cities38 _{and societies}39_{, taking} urgent actions for diminishing climate change and its impacts40 _{are just a few objectives to be} mentioned here. Put in a nutshell four major issues can be identified worldwide and allocated to the three bottom lines of sustainability that will be discussed in this chapter later on in more detail, namely energy and fuel consumption (economic and environmental), material resource scarcity (economic and environmental), urbanization (social and environmental), and nutrition security (social and environmental).41

26_{Cf. Hecht et al., 2012, p. 63.}

27_{Cf. Tonkin, Independent, 2015, Internet:} http://www.independent.co.uk/voices/comment/war-famine-and-drought-the-unholy-trinity-changing-our-world-10202751.html; Bruecker, & Van Weizsaecker, 2007, p. 227. 28_{Cf. Hart, & Milstein, 2003, p. 56.}

29_{Cf. United Nations, 2016a, Internet: http://www.un.org/sustainabledevelopment/poverty/} 30_{Cf. United Nations, 2016b, Internet: http://www.un.org/sustainabledevelopment/hunger/} 31_{Cf. United Nations, 2016c, Internet: http://www.un.org/sustainabledevelopment/health/} 32_{Cf. United Nations, 2016d, Internet: http://www.un.org/sustainabledevelopment/education/} 33

Cf. United Nations, 2016f, Internet: http://www.un.org/sustainabledevelopment/energy/ 34

Cf. United Nations, 2016g, Internet: http://www.un.org/sustainabledevelopment/economic-growth/ 35

Cf. United Nations, 2016h, Internet: http://www.un.org/sustainabledevelopment/infrastructure-industrialization/ 36

Cf. United Nations, 2016i, Internet: http://www.un.org/sustainabledevelopment/inequality/ 37

Cf. United Nations, 2016e, Internet: http://www.un.org/sustainabledevelopment/gender-equality/ 38

Cf. United Nations, 2016j, Internet: http://www.un.org/sustainabledevelopment/cities/ 39

Cf. United Nations, 2016l, Internet: http://www.un.org/sustainabledevelopment/peace-justice/ 40_{Cf. United Nations, 2016k, Internet: http://www.un.org/sustainabledevelopment/climate-change-2/} 41_{Cf. Fernando, 2012, p. 582.}

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For entirely understanding the concept of sustainability it is also crucial to be familiar with its roots. The first notion of sustainability developed during the 18th century in forestry.42 _{At that} time wood stock was scarce due to its excessive use for charcoal stoves, furniture, salt extraction, and ore mining. Furthermore, forests have been damaged during the Thirty Years' War from 1618-1648 and in the years after through wood clearing. Against this background, the term Nachhaltigkeit (German word for sustainability) has first been mentioned in 1713 in the paper work "Sylvicultura Oeconomica - die naturmäßige Anweisung zur wilden Baumzucht", where planned reforestation and finding surrogates for wood was requested. Till the 19th century the principle of sustainability, including its esthetical and ecological function was fully implemented in forestry. At the same time, the English literature coined the term sustained yield, which was the beginning of the ecological interpretation of sustainability.43 Attention was again captured in the 20th century with the report "The Limits of Growth" of the Club of Rome, stating that continuing exploiting natural resources the way it is done, will lead to many of them being exhausted within one or two generations.44 _{During the same} year, in 1972, the Conference on the Human Environment was held in Stockholm. Influential representatives from developed and developing nations debated on which aspect was more important, environmental protection or economic growth.45 _{Beginning in the 1960s, this was} the first of three waves of public pressure on sustainable matters according to Elkington.46 _It was a time of environmental legislation establishment and implementation in business and politics.47 _{Pressures from the outside forced companies to become more transparent about} their operational activities and environmental risks, as a result of numerous natural catastrophes caused by the business sector. There was the massive oil spill in Alaska from Exxon Valdez, as well as the radiation release at the nuclear power plant in Chernobyl. Social issues, such as the Apartheid racial segregation in South Africa as well as the emergence of a new disease - acquired immune deficiency syndrome (AIDS) - began to raise attention and concern among the global public.48 _{Business reaction on this first} pressure wave was defensive, oriented toward compliance at best.49

42

Cf. Prammer, 2009, p. 47, own translation; Kuhlman, & Farrington, 2010, p. 3437. 43

Cf. Prammer, 2009, p. 47, own translation. 44

Cf. Kuhlman, & Farrington, 2010, p. 3437. 45

Cf. Blackburn, 2009, p. 2.

46

Cf. 2004, pp. 7-9.

47

Cf. Drexhage, & Murphy, 2010, p. 7; Elkington, 2004, p. 7.

48_{Cf. Blackburn, 2009, p. 3.} 49_{Cf.Elkington, 2004, p. 7.}

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In 1983 therefore, the United Nations Organization (UNO) brought together an international commission for addressing the evolving worldwide uncertainties. During the United Nations Conference on Environment and Development (UNWCED) chaired by the Norwegian Prime Minister Gro Harlem Brundtland, today's most commonly used definition on sustainability was emerged: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs"50_{. The}

description was published in 1987 within the publication of Our Common Future, also known as the Brundtland Report. It was this report, that brought the recognition to the conception of sustainability it enjoys today among business and political mainstream.51 _{Five years later and} 20 years after the Stockholm Conference, The Earth Summit was held in Rio de Janeiro by the UNWCED ending up with the Rio Declaration on Environment, which comprised environmental and economic concerns, at that time the two main issues of sustainability.52 _By the end of this second green pressure wave, businesses acknowledged the necessity of implementing new technologies and started to see sustainability as a competitive advantage.53

Further international conferences on multilateral agreements were held in 1997 (Earth Summing) in New York and in 2002 (World Summit on Sustainable Development) in Johannesburg. The last one represented a contentual shift in the perception of sustainable development - focusing not only on the environmental and economic development, but including social subjects as well.54 _{The third globalization wave mentioned by Elkington}55 _is characterized by protests against international institutions, such as the World Trade Organization (WTO), World Bank, International Monetary Fund (IMF), etc. for highlighting their role in promoting or hindering sustainable development. Businesses recognized the need for good corporate governance and started focusing on market creation additionally to compliance and competitiveness.56 _{The most recent UN Climate Change Conference was} held in December 2015 in France and resulted into the development of the Paris Agreement, which specifies the core objective of limiting temperature rising by at least 2 degree Celsius.

50

World Commission for Environment and Development WCED, 1987, p. 41.

51

Cf. Drexhage, & Murphy, 2010, p. 7; Elkington, 2004, p. 7; Blackburn, 2009, p. 3. 52

Cf. Blackburn, 2009, p. 4. 53

Cf. Elkington, 2004, p. 7. 54

Cf. Drexhage, & Murphy, 2010, p. 8. 55_{Cf. 2004, pp. 7-9.}

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While implementation on the national basis should start in 2020, this target is aimed to be reached between 2030 and 2050.57

Summing up the historical incurrence of sustainability, it is apparent that the theoretical framework was developed during the 20th century through a sequence of international conferences and initiatives.58 _{However, the early notion of sustainability coined much earlier} in forestry. Nowadays, global issues have to be dealt with from a threefold perspective, including environmental protection, social well-being, and economic prosperity considerations, also called TBL.59 _{The term of the triple bottom line by Elkington}60 _first surfaced in 1994 and was then reformulated in 1995 to embrace the 3P terminology 'people, planet, and profit'.61 _{Although social justice and economic prosperity gained momentum} within the concept, the environmental pillar was and still is the one most accentuated in the idea of a sustainable strategy.62 _{Nevertheless, the three base lines can never be considered} in total isolation. They are in a constant flux, influencing each other permanently63 _and creating synergies. Landscape conservation and maintenance for instance not only preserves nature and ensures environmental quality, but also attracts eco-tourism which consequently economically ensures income to the region and socially generates jobs for the people living there.64 _{Furthermore, sustainability is not only about balancing the sometimes} challenging and conflicting pillars, but also about keeping an eye on these aspects' inner and outer influence. As represented below in table 1, each of the three perspectives has an internal and external characteristic. For companies to set up their long-term survival and success, their actions have to ensure the longevity of the communities they operate in as well.65

57_{Cf. United Nations, 2016m, Internet:} http://www.un.org/sustainabledevelopment/blog/2015/12/the-paris-agreement-faqs/

58

Cf. Drexhage, & Murphy, 2010, p. 7. 59 Cf. Hecht et al., 2012, p. 63. 60 Cf. 1997. 61 Cf. Elkington, 2004, p. 1. 62

Cf. Estes, 2009, p. 45; Drexhage, & Murphy, 2010, p. 2. 63

Cf. Elkington, 1997, p. 73.

64_{Cf. Hansmann et al., 2012, p. 452.} 65_{Cf. Blackburn, 2009, p. 28.}

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TBL Component Internal Company Aspect External Societal Aspect

Economic Achieving economic success of

company

Achieving economic prosperity of society

Environmental

Leaving enough resources to meet current and future needs of company

Leaving enough resources to meet current and future needs of society

Treating living things with respect within company operations (e.g. respecting animal rights)

Protecting ecosystems for living things to survive in the

environment Preventing and controlling

in-door pollution (also considered part of social sustainability)

Preventing and controlling pollution of the external environment

Social Respecting the needs of people

inside the company

Respecting the needs of people outside the company

Table 1: Examples of Internal and External Aspects of Sustainability66

Each sustainable component of the TBL integrates specific subtopics, which can be considered to be related to the internal economic aspects. Nevertheless, economic subtopics such as brand strength, dividends, taxes, subsidies, etc affect a company's performance internally, but also the external stakeholders of the company. Therefore there is no clear barrier to be drawn between those subtopics that regard rather internal company or external societal aspects. By way of example, the higher the sales taxes, the higher the duties for the company and the higher the prices of the final goods that customers consequently have to pay. Regarding subsidies, for instance, the more subsidies the company receives from the government, the more relieved it gets when it comes to production costs and the more it can concentrate on other aspects such as product or service quality that it will serve the customers in the end. The more satisfied the clients are, the more they buy while also strengthening the brand image at the same time. Further economic topics refer among others to brand strength, capital expenditures, cash flow, credit rating, debt and interest rates, dividends, market share, profits, retained earnings, return on investment, sales, taxes and wages. Social considerations include access to company's products and services by the

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disabled and the poor, anti-sexual harassment policies, antitrust policies, bribery and corruption, employee diversity, child labour, charitable donations, community engagement, consumer protection and privacy, corporate governance, employee training and development, work-life-balance, ethics, fair wages, human rights, impacts on local cultures, indoor pollution, industrial hygiene and workplace safety, etc.67 _{The environmental pillar} consists of topics such as air, soil and water pollution, energy and raw materials conservation, endangered species, greenhouse gases, noise, packaging reduction, recycling, land use, biodiversity, chemical spills, compliance with environmental regulations etc. 68

Another approach in regard to the perception and application intensity of the concept refers to the so-called weak or strong sustainability. It is about defining the substitutability of natural resources with man-made capital.69 _{At this point, the meaning of the term capital should be} enlightened in more detail. There are two main types of capital within this conception, namely natural capital and anthropological or man-made capital. Both can again be divided into renewable and non-renewable capital, as depicted below in table 2. Furthermore, natural capital includes quantitative as well as qualitative components, such as air and water quality. Anthropological capital can also be classified into tangible and intangible goods, like for instance know-how, patents, cultural heritage, and social capital.70

Renewable capital Non-renewable capital71

Natural capital water, wood, clean air soil, fossil fuels

Anthropological capital financial capital cultural heritage

Table 2: Types of capital within the concept of weak and strong sustainability.72

The question of renewability depends on the time span we are looking at. It took millions of years for fossil fuels to develop the state we currently know and use them.(Environmental and Energy Study Institute, n.a., Internet) Compared with the average global human life expectancy of 71.4 years by 2015, (World Health Organization, 2016, Internet) it becomes obvious why fossil fuels are determined to be non-renewable in the eyes of a human observer.

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A wide perceptual diversity exists when defining the substitutability of capital. The main idea separating the views of natural scientists and traditional economists refers to the conservation of capital stock. Hereby, there main comprehensions of sustainability have been defined as weak sustainability, strong sustainability, and the critical ecological sustainability. The last one can be seen as a compromise between the first stated two extremes.73

Weak sustainability is an environmental economic principle based on neoclassical models. It emerged as a reaction to the first Club of Rome Report in the 1980s.74 _{Under this perception,} a sustainable usage of resources is given as long as the consolidated sum of man-made capital and natural capital is held constant, independent of the particular stock level. From this point of view, countries with a long history of abusive resource depletion and environmental destruction are still considered sustainable, as long as their level of anthropological goods compensates the natural capital stock.75 _{At this point, it is perfectly} clear that this concept comprises some drawbacks. First of all, natural and anthropological capital are perceived as perfect substitutes as long as they have been allocated the same values. Secondly, the approach can only be implemented in the eye of an ample availability of natural resources and high technical advancement to compensate for resource necessities. Besides, there is no manufactured good that does not need or depend upon natural resources, such as water, soil or air, which again accentuates the dependence of man-made goods on natural capital and thus the problem of substitutability between these two.76

The opposite pole to weak sustainability is the principle of strong sustainability. It entails the insistence that not only the total amount of aggregate capital stock has to be kept constant, but also the natural capital level.77 _{While the environmental resilience is kept in mind for} setting depletion thresholds, natural stock levels are chosen following socially and economically determined inclinations.78 _{Here is where the first criticism can be found, as} aggregates can be deliberately defined and can also vary in time which consequently blurs

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the straightness of the strong sustainability concept.79 Furthermore, there are strong counterarguments why such a principle cannot be implemented as proposed. A strong reliance on the concept would mean that even non-renewable or finite natural capital should be kept at constant levels. Given the current progress of the industrial economy and its dependence on natural resources, this is an objective that is already too late to be fulfilled and not practicable at the moment. Besides, the natural environment itself is in a constant change. There are ecological developments that are, even without human influence, about to alter.80

As a purpose of integrating the two principles of the economic desirable, but doubtful weak sustainability and the pure ecological strong sustainability, the critical ecological sustainability has evolved.81 _{It entails both ecological-economic perspectives demanded by Hediger}82_{, by} admitting that certain natural resources serve as inputs for the production of man-made capital while they are at the same time part of the ecosystem's capital base. For a sustainable development in this sense, the preservation of the total capital stock is required as well as setting critical stock and/or time limits that are not allowed to be exceeded for certain resources that cannot be substituted either by manufactured goods nor by technical advances. Thresholds are thus set for environmental depletion and exposure likewise.83 The question to be answered at this point is, in how far the capital substitutability remarked above help us to fully understand sustainability in today's economic market. Classic economics states that the human being is an 'homo economicus', meaning that we act in order to satisfy our preferences and acquire the highest possible utility. The highest economic condition and consequently a high level economic sustainability only is probably to be reached by totally adhering to the theory of weak sustainability. Without paying attention to the environmental resilience, companies could carelessly extract those natural resources need and would not have to invest in finding resource alternatives for instance. This would mean to take the easiest way by basing our actions merely on preferences.84 _{At this point it} should nevertheless be mentioned that little to none research has been previously done to connect the theory of strong/weak sustainability with business economics, but rather with

79_{Cf. Hediger, 1999, p. 1125.}

80_{Cf. Ayres et al., 1998, pp. 4-5; Prammer, 2009, pp. 56-57.} 81_{Cf. Prammer, 2009, p. 58.}

82_{Cf. 1999, pp. 1138-1139.} 83_{Cf. Prammer, 2009, p. 57.} 84_{Cf. Ayres et al., 1998, p. 6.}

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political economic concepts.85 While economists would probably be satisfied with the idea of weak sustainability, the earth's ecological diversity is a precondition for humans' surviving still. Finding an appropriate middle way like the afore noted critical ecological sustainability and implementing it on the governmental, business, and consumer level as presented in figure 1, is necessary for advancing toward a sustainable development.86 _{The economic} sustainability addressed within this master thesis is also a issue having a bearing on the below presented levels. Although the core focus lies on the business perspective, corporate economic sustainability affects and is affected by external stakeholders, such as governments and consumers as well.87 _{Moreover, fostering public-private collaboration on} the regional, national, and international stage would increase the enforcement and establishment of policies that could stabilize the weakening of the ecosystem88 _{and reach} further goals of the MDGs. The TBL agenda can hence serve as an idea ignition platform for finding appropriate policies, like labour policies, economic development policies, security policies, tax policies, environmental protection policies, and also corporate reporting policies.

Figure 1: Requirements for global sustainability89

88_{Cf. Hecht et al., 2012, p. 63; Estes, 2009, p. 43; Hedinger, 199, pp. 1139-1140.} 89_{Fernando, 2012, p. 584, slightly modified.}

Sustainability Requirements

Government Business Consumers

Sustainable policies

Sustainable consumption Sustainable Business/

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3 S

R

As presented in the previous chapter, shifts in the societal, economic, political, cultural and technological mindsets have led businesses to recognize the importance of sustainability as an omnipresent megatrend90 _{and to respond to it adequately. As a result, stakeholder's} pressures on information publishing on behalf of corporations has increased as well.91 Internally, information about a company's sustainability performance is needed for better process and product decision-making,92 _{for an appropriate financial planning and} coordination, cost control and performance evaluation. While the last aspect is considered by external stakeholders as well, they further consult sustainability data for making investment decision and verifying credit worthiness.93 _{Usually, a company first figures out its individual} interpretation of sustainability, basis its sustainability strategy on this understanding and stipulates targets and performance indicators. After implementing its plans, the results of the efforts are presented openly within an sustainability report.94 _{A sustainability report serves as} a communication tool, focusing not only on publishing the opportunities and positive effects companies face in regard to economic, environmental and social issues, but also the risks and negative developments of the daily business. It is sometimes used synonymously with other non-financial terms, such as TBL reporting and CSR reporting.95

Publicly demonstrating transparency also makes companies vulnerable as influencing parties, such as NGOs, governments, investors, and rating companies can easily pinpoint weaknesses. Managers are most of the times reluctant when it comes to sustainability reporting. One reason is the perception that a vast amount of new information has to be collected and prepared for proper presentation. In addition, they have to make decisions about which information to be included and which not, how often to report, to whom and in which form. Not to forget the consulting, personal, validation, and publication costs.96 _Reports can therefore regard only a geographic area, an operating division or the entire company. Moreover, they can be included in the annual corporate reports or issued separately.97 _Some

90_{Cf. Mittelstaedt et al., 2014, p. 255.} 91_{Cf. Epstein, 2008, p. 223.} 92_{Cf. Epstein, 2008, p. 223.} 93_{Cf. Gale, & Stokoe, 2001, p. 119.} 94_{Cf. Searcy, & Buslovich, 2014, p. 149.}

95_{Cf. Global Reporting Initiative, n.a. g, Internet:} https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

96_{Cf. Blackburn, 2009, pp. 10-11.} 97_{Cf. Epstein, 2008, pp. 223-224.}

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companies may communicate sustainability issues on their homepage, while others continue to present them on paper only.A very popular way of passing on sustainability reports is to make them accessible online as a PDF.98 _{Regardless of their form, reports can, but do not} have to be subject to external verification. Companies want the presented data to be perceived as reliable and trustworthy. Therefore, verifications are carried out by accountancy and technical firms, certification institutions, or by other NGOs.99

Reading through this chapter, a focused insight into how sustainability reporting has emerged and developed in the course of time will be gathered and what its aim and purpose is. Further subchapters will contain main international standards and their proposed contents. As the paper is geographically concentrated on the Austrian market, the last part of this chapter provides facts and numbers about the application of sustainability reports on the Austrian market.

3 . 1 E

D

The number of reporting companies and countries has steadily increased in the last 20 years,100_{as it will be demonstrated further below among the German speaking countries as} well. While some corporations started publishing sustainability issues voluntarily, others have been forced to do it by legislation. In 1986 for instance, the United States have started requiring annual public reporting on pollutant releases to the environment through the so-called Toxics Release Inventory (TRI) Program.101 _{Other countries, such as Denmark, Japan} and the Netherlands have also published pollutant disclosure laws and pose annual requests about environmental data of companies. In addition, Canada (Canadian Environmental Protection Act, CEPA),102 _{the Czech Republic (Integrated Pollution Register),}103 _Hungary, Norway, and Poland have established national registers for environmental emissions.104 Some countries also mandate to include social and environmental information within financial

98_{Cf. ibid., p. 232.} 99_{Cf. Kolk, 2004, p. 60.} 100_{Cf. Kolk, 2004, p. 51.}

101_{Cf. US Environmental Protection Agency, 2015, Internet:} https://www.epa.gov/toxics-release-inventory-tri-program/tri-around-world

102_{Cf. Environment and Climate Change Canada, 2016, Internet:} https://www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=D44ED61E-1

103_{Cf. Environmental Rights Database, n.a., Internet:} http://environmentalrightsdatabase.org/czech-republics-integrated-pollution-register/

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reports. Since 2001, the Nouvelles Regulations Economiques (NRE) in France demands an integrated annual reporting from companies listed on the French stock exchange. In the U.K. (based on the 2003 European Union Accounts Modernization Directive), information about the supply chain, the effectiveness of the organization's sustainability policy program, and social and community matters have to be reported within annual financial statements. Norway and Australia (National Greenhouse and Energy Reporting, NGER)105 _{also ask} companies to attach an environmental statement within their financial reports, while in Sweden a brief statement on companies' environmental aspects is requested. The South African King Commission recommends (within the King II Report on Corporate Governance)106 _{companies listed on the Johannesburg Securities Exchange to use the GRI} reporting standard for publishing data about economic, environmental, and social performance. 107 _{Within the European Union, a new CSR directive launched in 2014 will have} to be transposed into national law by all member states by 6th of December, 2016. This Directive 2014/95/EU impose large public-interest bodies, such as listed companies, banks, and insurance entities to publish non-financial data on environmental, social and employee issues, aspects of respect and human rights, anticorruption and bribery matters, and diversity within the board of directors. These information can rather be presented within a stand-alone report or included within other reports.108

It was in the late 80s109 to the beginning of the 90s when the first environmental reports were published sporadically by a very few companies who have started linking accounting to the emerging concept of sustainability.110 _{Same as the duration of establishing uniform external} financial reports, sustainability reporting and standardization has been following very slow development paths, which can be traced back to a little more than a hundred years. Employee reporting was the beginning of the process, followed by social reporting,

105_{Cf. Australian Government. Department of the Environment and Energy, n.a., Internet:} http://www.environment.gov.au/climate-change/greenhouse-gas-measurement/nger 106_{Cf. Integrated Reporting South Africa, n.a., Internet:}

http://www.integratedreportingsa.org/SustainabilityReporting/StandardsandGuidelines/KingReportsonCorporat eGovernance.aspx

107_{Cf. Blackburn, 2009, pp. 318-319.}

108_{Cf. European Commission, 2016, Internet:} http://ec.europa.eu/finance/company-reporting/non-financial_reporting/index_en.htm#related-documents

109_{Cf. Kolk, 2004, p. 51.}

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environmental reporting, triple bottom line reporting111 and finally, still not yet concluded in its concept, integrated reporting (IR).112

Employee reporting about workplace safety, community development and mortgage assistance has been already documented by US Steel from 1901 to 1980 and can therefore be seen as the first intents of sustainability reporting. Nevertheless it was only in the 1970s, when academic literature started emphasizing social reporting. This second stage of the process has experienced a up and down wave of interest since then, depending also on societal developments. Though economic periods have shifted the focal point toward more economic aspects, while catastrophic incidents, such as the already mentioned Chernobyl catastrophe and others have again redirected the interests of the public.113 _{A survey of 1978} revealed that only one per cent of the Future 500 companies provided additional social accountability data on human resources, fair business practices, community involvement, product safety and others. By the beginning of the 1980s, interests about social impacts started blurring again, making space for a new reporting stage to develop in the period from the late 1980s to the early 1990s, the environmental one. A major influencer was the Brundtland report published in 1987, motivating a few avant-garde thinkers to implement their first environmental reports at the beginning of the 1990s.114 _{Triple bottom line reporting} has mainly surfaced with the eponymous definition of Elkington that was introduced the first time in 1994 and was further developed till its final version in 1997.115 This concept turned out to be the dominant idea influencing further sustainability reporting developments, continuing to pervade business statements on this topic till the present days.116 _{The same} year, namely 1997, Allen White and Robert Massive conceived the original idea of the Global Reporting guidelines. Although the first thoughts about the GRI have been existent since the 1960s-70s, as a consequence of consumer activism of that period,117 _{the first guidelines draft} including its first voluntary reports have only been published in 1999.118 _{The next step of} integrated reporting that was also mentioned by Elkington in 1997 already,119 _{was about to} come more than ten years later, with the inception of the International Integrated Reporting

111

Cf. Buhr, 2007, p. 59. 112

Cf. Integrated Reporting, n.a. e, Internet:: http://integratedreporting.org/when-advocate-for-global-adoption/ 113 Cf. Buhr, 2007, pp. 59-60. 114 Cf. ibid. pp. 60-61. 115 Cf. Buhr, 2007, p. 61; Elkington, 2004, p. 1. 116

Cf. Milne, & Gray, 2013, p.13. 117

Cf. Nikolaeva, & Bicho, 2011, pp. 136-137. 118_{Cf. ibid.; Blackburn, 2009, p. 4.}

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Council (IIRC) in 2010.120 IIRC is a global coalition, which works together with international partners,121 _{among others with the GRI, for aligning financial information with appropriate} sustainability subjects in order to improve the effectiveness and efficiency of corporate reporting practices.122 _{Furthermore, IR intends to reduce duplication in the reporting process} while focusing on the aspects of current and future value creation.123

According to the aforementioned, the history of sustainability reporting begun long before the dating of the timeline presented below.124 _{Nevertheless, it was during the last 50 years that} the concept evolved the way we know and implement it nowadays.

120_{Cf. Global Reporting Initiative, n.a. e, Internet:} https://www.globalreporting.org/information/current-priorities/integrated-reporting/Pages/default.aspx

121_{Cf. Integrated Reporting, n.a. e, Internet:: http://integratedreporting.org/when-advocate-for-global-adoption/} 122_{Cf. Global Reporting Initiative, n.a. e, Internet:}

https://www.globalreporting.org/information/current-priorities/integrated-reporting/Pages/default.aspx

123_{Cf. Integrated Reporting, n.a. a, Internet: http://integratedreporting.org/. Integrated Reporting, n.a. b, Internet:} http://integratedreporting.org/resource/international-ir-framework/; Integrated Reporting, n.a. d, Internet: http://integratedreporting.org/what-the-tool-for-better-reporting/

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Figure 2: Timeline of sustainability reporting cornerstones (own depiction)

1987 - Brundtland report

1997 - TBL definition and original idea of GRI

1989 - Publication of the first separate environmental reports

2010 - Inception of the IIRC

1999 - 1st _{draft of the GRI guidelines and first voluntary reports} 1960s-1970s - The idea of GRI emerged

1970s - Social reporting decade

1990s - Emergence of environmental (late 1980s - early 90s) reporting 1960 1970 1980 1990 2000 2010

2016 2016 - National transcription of the EU directive 2014/95/EU 2013 - 4th _{draft of the GRI guidelines}

2002 - South Africa: King II Report on Corporate Governance; Czech Republic: Integrated Pollution Register

2nd _{draft of the GRI guidelines}

1986 - USA: TRI Program establishment

2000 - Canada: CEPA (National Pollutant Release Inventory) 2001 - France: NRE

2006 - UK: Request for additional information within the financial report 2001 - Australia: NGER

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3 . 2 A

P

Companies engage in sustainability reporting for certain reasons. While some are only motivated by mandatory rationales, such as legal laws, requirements, and legislations,125 others do it on a voluntary basis in anticipation of the positive benefits it brings along internally and externally to the company.126 _{According to Buhr,}127 _{there are four major} motivation fields covered by companies when embarking sustainability reporting, namely accountability, legitimacy, political economic and stakeholder driven. Moreover, the European Commission has stipulated three key elements of the Eco-Management and Audit Scheme (EMAS) that explain why companies purpose to engage in certification activities. Performance, credibility and transparency128 _{can also be rolled over to elucidate reporting} motivations, as various authors129 _{and official institutions}130 _{have highlighted. Thus, theses} seven major motives will consequently be used to explain underlying benefits companies can enjoy when properly implementing reporting measurements on the topic of sustainability. Those motives that are equal in their meaning, such as performance and political economic purposes will be gathered together. However, each of the presented motives should not be seen as isolated, but mutually influencing and reinforcing each other.131

Transparency as a first core aim of reporting, is driven by increasing pressures from a company's stakeholders.132 _{By openly presenting the past, present and future performance of} the operating procedures, a company demonstrates understanding for the needs and concerns of its stakeholders,133 _{improves decision making and fosters trust building internally}

125_{Cf. Buhr, 2007, p. 65.}

126_{Cf. Nikolaeva, & Bicho, 2011, p. 138; Global Reporting Initiative, n.a. c, Internet:}

https://www.globalreporting.org/information/sustainability-reporting/Pages/reporting-benefits.aspx 127_{Cf. 2007, p. 63.}

128_{Cf. European Commission, 2015d, Internet: http://ec.europa.eu/environment/emas/about/summary_en.htm} 129_{Cf. Blackburn, 2009, p. 309; Epstein, 2008, p. 38; Buhr, 2007, pp. 64-65.}

130_{Cf. European Commission, 2015c, Internet: http://ec.europa.eu/environment/emas/tools/faq_en.htm;} Global Reporting Initiative, n.a. f, Internet: https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

International Organization for Standardization, n.a. b, Internet: http://www.iso.org/iso/home/standards/benefitsofstandards.htm; 131

Cf. Buhr, 2007, p. 63. 132_{Cf. Epstein, 2008, p. 226.} 133_{Cf. ibid., 38.}

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and externally.134 The more transparent a company, the more accountable (another major motive) it is for its actions and the more motivated it is to improve sustainability performance on all corporate levels,135 _{which will subsequently bring along an enhanced corporate} reputation136 _{(political economic, performance motive). Transparency, ongoing} communication and trust are tightly interconnected leading to improved stakeholder relations and credibility, which is crucial for a sustainable economic world.137

Accountability, credibility and stakeholder orientation do not only improve the relationships with external parties, such as creditors, owners and potential investors, credit rating audiences, governments and the general public,138 _{but serves the management and the} employees by the same token.139 _{Business leaders can make optimal strategic and} operational decisions, which again might lead to cost and risk reduction,140 _{evaluate potential} projects more efficiently and decide on capital investments by having a holistic business picture. Another internal aspect is the employees satisfaction and increased performance, when they are able to track a company's positive image and influence toward a more sustainable community and region.141 _{Sustainability reporting also cultivates legitimacy,} aiding to pass regulatory burdens or relieving them, which again might lead to cost reduction. Moreover, it might also alleviate the access to new markets and not to forget, decrease the environmental impacts of the company.142

Summing up the major motivators and their subsequent benefits, the reasons for engaging in sustainability reporting are manifold, as table 3 summarizes below.

134 _{Cf. Global Reporting Initiative, n.a. g, Internet:} https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

135_{Cf. Buhr, 2007, p. 66.}

136_{Cf. Blackburn, 2009, p. 313; Epstein, 2008, p. 75.}

137_{Cf. Blackburn, 2009, p. 311; Global Reporting Initiative, n.a. f, Internet:}

https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx 138_{Cf. Epstein, 2008, p. 226.}

139_{Cf. ibid., p. 218.}

140_{Cf. Epstein, 2008, pp. 74-75; European Commission, 2015c, Internet:} http://ec.europa.eu/environment/emas/tools/faq_en.htm

141_{Cf. Epstein, 2008, p. 218.}

142_{European Commission, 2015c, Internet: http://ec.europa.eu/environment/emas/tools/faq_en.htm; . Global} Reporting Initiative, n.a. f, Internet:

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Benefits Driving motivators

Improve stakeholder relation and trust - internally and externally

Accountability, stakeholder orientation, transparency and credibility

Financial benefits from investor

reactions143

Political economic, accountability, credibility, stakeholders, transparency, performance

Reduced environmental impacts Legitimacy, performance

Improved decision making Political economic, performance

Enhanced image and reputation Political economic, performance,

transparency, credibility

Competitive advantage144 _{Political economic, performance}

Cost reduction Performance

Risk minimisation Political economic, performance

Increasing employee motivation Transparency, credibility, performance,

stakeholder Regulatory benefits and facilitated access

to new markets

Political economic, legitimacy, performance

Table 3: Benefits of sustainability reporting and their driving motivators

There are two further motives that can influence a company to engage in sustainability and sustainability reporting respectively, namely ethical and moral inclinations145 _{as well as} greenwashing. While the first mentioned one is a noble, altruistic way of thinking, the latest motive is driven by worries about rising competition. Greenwashing means pretending to engage in (majorly environmental and social) sustainability matters, while companies only slightly measure these particular outcomes146_{. Nonetheless, once greenwashing is} recognized by the public, the consequent impacts use to be highly negative for the entire company in the long-run. 147