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ESG reporting – class actions, deterrence, and avoidance

ESG reporting – class actions, deterrence, and avoidance Purpose – The purpose of this paper is to expand our understanding of the motivations for corporate environmental, social and governance (ESG) reporting. Design/methodology/approach – This paper provides a conceptual exploration of the motivation for corporations to provide ESG reports and proposes deterrence theory and avoidance as a complementary explanatory motivation for such reports. Findings – Within this paper it is argued that part of the motivation for some corporations to increase ESG disclosures is to avoid, or mitigate, the risk of class actions and the associated financial penalties. This paper proposes that in Australia the deterrence impact, and ancillary avoidance behaviour, of civil litigation class action provides a further motivation for improving both corporate ESG disclosure and sustainability performance. Originality/value – This paper extends the social and environmental accounting (SEA) reporting literature by proposing deterrence theory and avoidance as a corporate motivation for environmental, social and governance (ESG) reporting. Deterrence is proposed as a different, yet complementary, motivation to the oft‐cited variations of stakeholder and legitimacy theory which are dominant in the SEA reporting motivation literature. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Sustainability Accounting, Management and Policy Journal Emerald Publishing

ESG reporting – class actions, deterrence, and avoidance

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Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
2040-8021
DOI
10.1108/SAMPJ-Apr-2012-0016
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to expand our understanding of the motivations for corporate environmental, social and governance (ESG) reporting. Design/methodology/approach – This paper provides a conceptual exploration of the motivation for corporations to provide ESG reports and proposes deterrence theory and avoidance as a complementary explanatory motivation for such reports. Findings – Within this paper it is argued that part of the motivation for some corporations to increase ESG disclosures is to avoid, or mitigate, the risk of class actions and the associated financial penalties. This paper proposes that in Australia the deterrence impact, and ancillary avoidance behaviour, of civil litigation class action provides a further motivation for improving both corporate ESG disclosure and sustainability performance. Originality/value – This paper extends the social and environmental accounting (SEA) reporting literature by proposing deterrence theory and avoidance as a corporate motivation for environmental, social and governance (ESG) reporting. Deterrence is proposed as a different, yet complementary, motivation to the oft‐cited variations of stakeholder and legitimacy theory which are dominant in the SEA reporting motivation literature.

Journal

Sustainability Accounting, Management and Policy JournalEmerald Publishing

Published: Aug 2, 2013

Keywords: Social and environmental accounting; Corporate governance; Deterrence theory; Corporate social reporting; ESG; Social accounting

References