Consequences of Mandatory Corporate Sustainability Reporting

Authors: Ioannis Ioannou (London Business School); George Serafeim (Harvard Business School)

HBS Working Paper Number: 11-100

Executive Summary:

The number of firms reporting sustainability information has grown significantly in the past decade, both due to voluntary actions and to mandates from several national governments and stock exchange authorities. In this paper, London Business School's Ioannis Ioannou and Harvard Business School's George Serafeim investigate whether mandatory sustainability reporting has any effect on a company's tendency to engage in socially responsible management practices. Key concepts include:

• The researchers show that mandatory sustainability reporting effectively promotes socially responsible managerial practices. Overall, supervision of managers by boards of directors improves, bribery and corruption decreases, and credibility of managers in society increases.
• In companies where sustainability reporting is a requirement, employee training becomes a higher priority, and corporate boards supervise management more effectively.
• These positive results are more pronounced in countries that have stronger law enforcement, countries where assurance of sustainability data is more frequent, and countries that are generally more developed.

Abstract: We examine the effect of mandatory sustainability reporting on several measures of socially responsible management practices. Using data for 58 countries, we show that after the adoption of mandatory sustainability reporting laws and regulations, the social responsibility of business leaders increases. We also document that both sustainable development and employee training become a higher priority for companies, and that corporate governance improves. Furthermore, we find that companies implement more ethical practices, reduce bribery and corruption, and that managerial credibility increases. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports. We conclude with thoughts about mandatory sustainability and integrated reporting.

 

Comments

[small business consulting]

These consequences should always be considered. They can probably affect that industry that's why there's a need for them to take notice on the issues.

[small business consulting]

These consequences should always be considered. They can probably affect that industry that's why there's a need for them to take notice on the issues.

[converse pas cher]

Il est temps opportun de faire des plans pour l'avenir et il est temps d'être heureux. J'ai lu ce post et si je pouvais je tiens à vous suggérer quelques choses intéressantes ou des conseils. Peut-être que vous pourriez écrire des articles à venir se rapportant à cet article. Je tiens à lire plus de choses à ce sujet!