International Sustainability Reporting Guidelines

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Chapter 3 Research Methodology


There is little objective evidence that the reliability of financial reporting has improved over the last 30 years, despite many attempts to do so. The corporate responsibility report is rapidly becoming a valuable source of detailed information-in addition to annual reports – for all stakeholders (McCuaig, 2006). Stakeholders want to have more disclosure regarding non-financial performance, more forward looking information and more information about intangible assets (Upton, 2001). Sustainability reporting is aimed at addressing some of the shortcomings of traditional financial reporting. The popularity of sustainability reporting is on the rise, but determining what and how it should be reported is still problematic for most large companies. McCuaig argues that many companies and Financial Executives are seeking the development of assurance standards to guide independent opinions on reporting. He continues to state that corporate reporting frameworks need to be created (McCuaig, 2006: 62).
Annual reports that are issued by listed companies have traditionally included only the financial results that reflect past performance. During the last number of years, leading companies have started to include sustainability reports in the annual reports or as a separate report that is issued at the same time as their annual financial reports. The topic of sustainability reporting is still in its infancy and not much has been written about it. The researcher has been associated with the topic for the last five years and has been exposed to the practical difficulties that companies encounter when considering the implementation of sustainability reporting.
Sustainability reporting is new to most companies across the world. This new type of reporting is not mandatory for any company, yet it has become an addition to traditional annual reporting for many leading companies. The requirements for traditional corporate reporting are largely prescribed in contrast to sustainability reporting that is voluntary.
This growing use of sustainability reports to provide stakeholders with more information has many limitations that may threaten the future of this practice. A careful definition of the concept is lacking and different supporters of triple bottom line/sustainability conceive it in a variety of ways (Wayne and MacDonald, 2004). Most authors have avoided the attempt to define the concept and the academics have also refrained from taking a position on the concept. The confusion that exists about the concept and what should be included in reports needs clarification before the concept can be entrenched into a meaningful communication method that will get closer to meeting the needs of different stakeholder groups.
The question asked by companies in most cases crystallizes into: “What do we report and how?” The concept of sustainability reporting is still in the development stage due to a lack of theory and previous research. Although many guidelines exist, the available theory is still inaccurate and the need exists to develop new theory. The sustainability reports that have been issued reflect the confusion that exists regarding the desired content of these reports.
To answer the question of “what to report and how”, is complicated when dealing with a new practice that is voluntary and where no simple guidelines exist. The number of listed companies that embrace the practice are limited and there is only a small number of experienced reporters. The small number of experienced sustainability reporters and the lack of experience complicate the choice of a research approach to be used in this particular study.
The objective of this study is to develop simplified guidelines that can be applied when a company wishes to issue a Sustainability Report or when a company wishes to improve its future reports. In order to gather the required information that would allow the researcher to develop a simplified framework, the researcher had to consider the most appropriate approach to gather information and analyse the information in a way that would allow the researcher to develop such a simplified framework.
In the following paragraph the contribution that this study will make to new theory will be discussed.

Significance of the Study

This study contributes to the development of a new phase in sustainability reporting and will furthermore provide information that will be used to develop a new framework for sustainability reporting. Although stakeholders require more information and companies wish to meet those requirements, the future of sustainability reporting is threatened unless the process is simplified. Company executives complain that reporting and compliance issues are becoming unnecessarily lengthy, tedious and costly. Company executives mostly agree that if a practice adds value, it should be considered. Existing sustainability reporting guidelines has become lengthy and are perhaps adding little value.
Corporate stakeholders have begun to take a keen interest in the sustainability of businesses and the contribution that companies make to the sustainability of the environment where it operates. The term remains ambiguous and politically charged and is commonly limited to environmental management or social equity (Funk, 2003). This study makes a business case for sustainability, as a sustainable organisation is one that creates value for all stakeholders. The purpose of a sustainability performance report therefore is to inform all the company’s stakeholders about the non-financial performance of the company.
As far as can established the concept of sustainability reporting has not been investigated in an academic and structured manner, but some trends have been established which allows that researcher to formulate research propositions. These are summarised in the next paragraph.
This study aims to develop a simplified framework for sustainability performance reporting which will encourage companies to issue sustainability reports that will meet stakeholder requirements and contribute to an improved image of the company.

Research Proposition

Erik Hofstee (2006) states that the thesis is the central argument to one’s work and that a thesis statement names that argument. He confirms that a thesis is an assertion that you put forward as being (supposedly) true. The thesis of this study is that sustainability reporting needs to be taken to a next level that is characterised by less prescription and simplified guidelines, hence this study aims to develop a simplified framework for sustainability reporting. This research will provide the facts and evidence with which to check that argument.
The planned research aims to develop a simplified sustainability reporting framework. In order to arrive at this framework, the researcher needs to confirm or refute the statements above. The outcome of the analysis will allow the researcher to develop a simplified sustainability reporting framework.
In this study, the researcher has formulated the following research propositions:
Proposition 1: Sustainability reporting guidelines from different organisations recommend too many performance indicators.
Proposition 2: Sustainability performance reporting has developed to a next level which may replace the triple bottom line as a structure for sustainability and sustainability performance reporting.
Proposition 3: Company Executives currently view sustainability as the company’s impact upon its external environment.
Proposition 4: Information regarding the long-term sustainability of the firm is not seen as a subject that should be included in the sustainability report.
Proposition 5: Sustainability reports do not include comments regarding the company’s contribution to national agenda priorities.
Proposition 6: Sustainability issues are not included in the strategic plans of companies.
Proposition 7: Company Executives view sustainability reports as important in enhancing the company’s reputation.
Proposition 8: Listed companies that do not issue sustainability reports currently are considering the possibility of issuing such a report in future.
The method that will be used to gather data and conduct the analysis is summarised in the next paragraphs.

Research Methods

Creswell (2003) argues that the choice of methods turns on whether the intent is to specify the type of data to be collected in advance of the study or to allow it to emerge from participants in the project. “Less well known than either the quantitative or qualitative strategies are those that involve collecting and analysing both forms of data in a single study” (Creswell,2003: 15). A mixed methods approach combines qualitative and quantitative approaches in the same study. By combining the traditional survey methods, the researcher gains advantages as the mixed methods approach applies to:
Both predetermined and emerging methods
Both open and closed-ended questions
Multiple forms of data drawing on all possibilities
Statistical and text analysis
In this study, the researcher has selected an emerging practice that has been applied in many different ways by leading companies. There is a need to investigate the current state of affairs of sustainability reporting both locally and internationally to determine the topics that are currently included in annual reports. It must be acknowledged that there will be a wide array of topics currently included. Once some correlation of topics is found, leading South African companies will to be investigated in order to obtain their views about the desired content of future Sustainability Reports.
This study into the state of sustainability reporting lends itself to a mixed methods approach as the study has to start with a strategy of inquiry where data will be collected from existing sustainability reports that have been issued by companies that are leaders in the practice of sustainability reporting. This will be followed by a phase where numeric information is gathered to create a final database, which consists of qualitative and quantitative information. In this study the first phase creates the basis for the inquiry into the future of sustainability reporting.

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Research Design

In this study, the objective is to develop a simplified framework for sustainability reporting to major stakeholder groups. The researcher decided to approach the research in three phases. The phases were planned as follows:
Phase 1: Qualitative Analysis:
In this phase the researcher will conduct a content analysis of annual reports that have been published by leading South African and International companies that have released at least 2 sustainability reports. This phase will allow the researcher to establish which topics are most frequently included in these sustainability reports.
Phase 2: Quantitative Analysis:
In this phase the findings from the qualitative analysis will be used to develop a questionnaire that will be sent to companies that are listed on the Johannesburg Securities Exchange and have registered their sustainability reporters on the Global Reporting Initiative’s web-site. Companies that have registered their reports on this web-site are viewed as the most experienced sustainability reporters as they are prepared to publish their reports in the public domain. This phase will allow the researcher the opportunity to establish the topics that expert reporters believe should be included in future sustainability reports.
Phase 3: Development of Simplified Framework:
The findings from phase 1 and phase 2 will provide the information required to be able to develop a simplified framework and guidelines that companies will be able to use in the compilation of future sustainability reports.
The decision to select the approaches listed above has been determined by the objective of the study, the nature of the concept that has to be investigated and the different research methodologies that are available.
It was decided to adopt a mixed methods approach to the research. The first phase of the research is qualitative research that is exploratory. This phase will be conducted by analysing recent sustainability reports that have been issued by leading International and South African Companies. The purpose of this part of the research is to develop an understanding of the topics and performance indicators that are currently included in sustainability reports of leading companies.
The topics most frequently included by experienced sustainability reporting companies will then be included in a questionnaire that will be sent to a selection of companies listed on the JSE. The questionnaire will also include indicators that have been discovered in the literature review.
These criteria lend themselves to a mixed methods approach to the research. The initial study will be qualitative, followed by a quantitative analysis. The reason for this is that during the qualitative study the current reporting topics that are included in the sustainability reports of leading companies will be explored and during the quantitative analysis the researcher will explore the topic in further depth. Creswell (2003: 53) argues that in a mixed methods format, the researcher is able to bring together approaches that are included in both quantitative and qualitative formats.
In the following paragraphs, qualitative, quantitative and mixed methods research approaches will be defined.

Phase 1: Qualitative Analysis

During the qualitative phase of the study, the researcher wants to answer the following question: “What are the topics that experienced sustainability reporters include in their annual sustainability reports?”
In order to understand the topics that are most frequently included in existing Sustainability Reports, the researcher decided to start the research into this subject in a qualitative manner as a content analysis. The qualitative analysis part of the study is aimed at analysing sustainability reports from leading South African and International companies. This analysis will enable the researcher to establish the topics most frequently included in sustainability reports by these companies. Sustainability reports include the non-financial performance areas that companies deem important for stakeholders. The content of sustainability reports that are issued by experienced sustainability reporters provide the researcher the ability to investigate the topics most frequently included in reports. The findings from this phase of the study will allow the researcher to develop the content of the questionnaires that will be sent to companies included in the sample for the second phase of the study.
Qualitative research focuses on meaning rather than frequency and quantification. It focuses on understanding organisational processes and less on predicting outcomes. A qualitative study will allow the investigator the opportunity to understand “what life is really like” (Miles and Huberman, 1994: 10). In other words, the investigator will be able to investigate the way that sustainability performance is reported to stakeholders. The best way to approach this was by analysing recent annual reports where sustainability reports are included.
The researcher chose to analyse the annual reports of companies as this source was available to all stakeholders and there was little chance of the evidence becoming biased due to the influence of eloquent company executives during interviews. For this reason, the researcher decided not to conduct interviews with company executives. The researcher also had no control over the compilation of the report. The analysis of annual sustainability reports from different companies will highlight similarities and differences which will enable the researcher to answer many of the “what is included in sustainability reports” questions.
The phenomenon of sustainability reporting is still in its infancy and for this reason a qualitative approach would be best suited for phase 1 of the study. John W Creswell (2003) argues that if the theory base is unknown, a qualitative approach should be used. Morse (1991: 120) supports this view when the following is said:
“Characteristics of a qualitative research problem are: (a) the concept is “immature” due to a conspicuous lack of theory and previous research; (b) a notion that the available theory may be inaccurate, inappropriate, incorrect or biased; (c) a need exists to explore and describe the phenomena and to develop theory; or (d) the nature of the phenomenon may not be suited to quantitative measures.”
The researcher chose to adopt this approach for the first phase of the analysis. The objective of the first phase is to ascertain the current state of affairs in terms of sustainability reporting both locally and internationally. This phase will be addressed by means of a content analysis of existing reports. Content analysis is defined by Colorado State University (Colostate, 2008).
( as a research tool used to determine the presence of certain words or concepts within text or sets of texts.
Researchers quantify and analyse the presence, meanings and relationships of such words and concepts, then make inferences about messages within the texts. Text can be defined as books, newspapers, articles or really any occurrence of communicative language. To conduct a content analysis of any such text, the text is coded or broken down into manageable categories on a variety of levels and then examined using one of content basic methods: conceptual or relational analysis. Content analyses can be used to: reveal international differences in communication content; detect existence of propaganda; identify intentions, focus or communication trends of an individual, group or institution; describe attitudinal and behavioural responses to communications and determine psychological or emotional state of persons or groups (Colostate, 2008).
The researcher wants to establish the following:
a. Which performance areas are most frequently included in sustainability reports,
b. Which performance areas are included in reports and supported by a level of detailed performance metrics, and
c. Which performance areas are included by a limited number of companies
This approach will provide the researcher with the required understanding of the approach and topics included by experienced sustainability reporters. The next issue that has to be considered is the decision on the sample that will be used in the study.


Qualitative researchers usually work with small samples unlike quantitative researchers who aim for large numbers. (Miles and Huberman, 1994: 27) In the content analysis phase of this study a small sample will be used which elevates the importance of selecting the appropriate companies. The companies that will be included in the qualitative study will be leading local and international companies that have displayed an understanding of sustainability reporting.
A judgement sample of 8 organisations was selected with the aim of reviewing their annual reporting practices in terms of sustainability performance. The 8 annual reports were from major companies in the consumer services, consumer goods, industrial and telecommunications sectors. Included in the 8 companies were 4 South African listed companies and 4 International companies.
The selected organisations were considered a representative sample due to the fact that they have all issued 2 or more sustainability reports and they were viewed as leaders in their industries.
In this study the word ‘participant’ refers to a single company that has displayed a level of competence in sustainability reporting.
Eisenhardt (1989: 537) supports the view that random sampling for a qualitative study is not preferable. The emphasis should rather be to choose participants which are likely to replicate or extend the emergent theory. For the selected topic in this study, reports from leading local as well as international companies were selected. This allowed the researcher the ability to analyse the sustainability related issues, topics and performance indicators deemed most important to provide stakeholders adequate information about the sustainability performance of the company. Some topics discussed in the literature review were also included in the analysis as many valuable reporting issues were mentioned in publications. The purpose was to build theory from reports that are more advanced.
At the outset it is important to select companies that display a level of competence in the area of sustainability reporting for the analysis. Leedy and Ormond (2005) define a method of sampling for a particular purpose as “Purposive sampling”. This method allows the researcher to select Sustainability Reports of companies that have displayed a commitment to sustainability and a high level of competence in sustainability reporting. For the qualitative analysis companies have to satisfy the following criteria to be included in the analysis:
Only sustainability reports issued by large leading companies will be analysed as they are seen to be more advanced in terms of sustainability reporting and much more exposed to stakeholder activism.
Only companies that operate in countries that are rated higher than South Africa in the Business Competitive Index that is issued annually by the World Economic Forum in Davos Switzerland will be selected.
Only companies that have issued at least two sustainability reports during their last two reporting periods
Only companies from South Africa, Scandinavia, the United Kingdom and Europe will be included. The analysis will be more accurate where the English language is used as a primary language for company reporting.
Companies in the USA will be excluded due to the prescriptive approach of the Sarbanes Oxly Act. Reports from companies in the United States have less freedom in selecting the desired content due to the prescriptions of the Act. This contradicts the freedom of choice that other International countries have.
Due to ethical considerations in research, the names of the companies will not be revealed.
As stated earlier, the topic of Sustainability Reporting is still new. The fact that it is still new, places certain constraints upon the researcher’s ability to perform the study. The result of this is that the population from which a sample could be drawn was limited. For that reason, the most appropriate approach was to select a sample from a population that displayed some commitment to sustainability reporting. It is accepted that many leading companies use the Global Reporting Initiative (GRI) guidelines and GRI is the only organisation that allows reporting companies a facility to register their sustainability reports. Companies that register their sustainability reports on the GRI web-site can be viewed as committed to sustainability reporting. At the end of 2007 a total of 817 companies across the globe have registered their sustainability reports on the web-site and form the population from which a sample could be selected for the qualitative part of the study. It was decided to select the International sample from the companies that are GRI-listed reporters from different mainly English speaking countries and different industries.
Four South African companies will be selected from those companies included in the SRI Index of the JSE. Companies that are included in this Index all embrace the principles of sustainability. The selection of companies will include two companies that are registered with GRI as reporters and two companies that are not listed on the GRI Index as reporters but are members of the SRI Index. The reason for selecting two companies that are not listed as GRI reporters is to include companies that issue sustainability reports but do not necessarily follow specific guidelines. The following South African companies will be included in the qualitative study:
Clothing Retailer (Not GRI registered Reporter)
Large Bank (GRI Registered Reporter)
Telecommunications Company (GRI registered Reporter)
Platinum Mining Company (Not GRI Registered Reporter).
The following International companies are selected:
Food Retailer (United Kingdom)
Information Technology Company (Scandinavia)
Telecommunications Company (United Kingdom)
Pharmaceutical Company (Europe)
The companies are selected from specific industries due to the following reasons: South Africa Clothing Retailer: The researcher views the retail industry in South Africa as an industry that competes well with International Companies in the Retail Industry. South Africans are famous as being among the best retailers in the world and for that reason South Africa is famous internationally for its retail expertise.
Large Bank: South Africa is known for its sophisticated banking system and a number of international banks have been interested in purchasing South African Banks.
elecommunications Company: The cell phone industry is the fastest growing industry in the world and the companies in the industry are viewed as leading in terms of innovation.
Platinum Mining Company: Since the turn of the century. platinum has overtaken gold as the most desired and expensive mineral in the world, which resulted in growth for companies in platinum mining.
These companies were selected as the researcher viewed these companies as the ones where the most information can be gathered from.
Food Retailer: This is one of the oldest companies in the United Kingdom and has reported consistent growth of the last half century. This retailer is also listed as one of the most sustainable companies in the world.
Information Technology Company: It was decided to include a leader in Information Technology and cellular telephony as this company has taken the lead over most other companies in its sector.
Pharmaceutical Company: Pharmaceutical Companies have a special way of creating value and for this reason an International leader was selected.
Cellphone Provider: This remains a leading sector and it was important to select a British Company that was viewed as innovative and advanced.
The United Kingdom has 31 of the 100 companies worldwide that are classified as sustainable in the long term in the sense that they stand the best chance to be around in 100 years because of their demonstrated performance and strategic ability to manage the triple bottom line ( The Food Retailer and the Information Technology Company are both included in this list.
The study attempts to contribute to the knowledge base by exploring the most appropriate topics that should be included in future sustainability reports. The researcher therefore selected to analyse annual sustainability reports from leading companies. From the preceding exposition, the sample can be classified as a judgment sample. A method that is often used in qualitative research.
In the qualitative phase of the study, the sustainability reports included in the annual report, or issued as a separate report were analysed.

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Content Summary
1 Introduction and Background
1.1 Background
1.2 Research Problem
1.3 Purpose of the Study
1.4 The Context of the Research
1.5 Reasons for Research
1.6 Research Question
1.7 Research Objectives
1.8 Delimitations and Limitations
1.9 Significance of the Study
1.10 Assumptions
1.11 Definition of Terms
1.12 Conclusions
2 Literature Review
2.1 Introduction
2.2 History of Sustainability
2.3 The Role of Business
2.4 Business Strategy
2.5 Corporate Reputation
2.6 Company Objectives
2.7 Factors that Contribute to the Success of Businesses
2.8 Corporate Governance
2.9 The Importance of Stakeholders
2.10 Performance Measurement
2.11 Performance Reporting
2.12 Sustainability Indices
2.13 Sustainability Definitions
2.14 The Value of Sustainability Reporting
2.15 Sustainability Reporting
2.16 International Sustainability Reporting Guidelines
2.17 Conclusion
3. Research Methodology
3.1 Introduction
3.2 Significance of the Study
3.3 Research Proposition
3.4 Research Methods
3.5 Research Design
3.6 Phase 1: Qualitative Analysis
3.7 Phase 2: Quantitative Analysis
3.8 Phase 3: Development of a Sustainability Reporting Framework
3.9 Ethical Considerations
3.10 Summary
4. Research Results
4.1 Introduction
4.2 The Qualitative Analysis
5. Overall Conclusion
5.1 Qualitative Analysis
5.2 Quantitative Analysis
5.3 Attainment of Research Objectives
5.4 A Framework for Sustainability Reporting
5.5 The Sustainability Reporting Framework (Graphic)
5.6 Limitations of the Study
5.7 Conclusion
5.8 Recommendations for Further Research
5.9 Final Remarks
6. Reference List

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