Corporate sustainability: historical development and reporting practices

Purpose - The purpose of this paper is to compare the sustainability disclosure methods-instruments practiced by the two most widely employed indexes/instruments (DJSI World and GRI-G3 Guidelines). The paper suggests that the newly created triple bottom line (TBL) reporting practices need to undergo further standardization and enforcement to avoid, or give early warnings about, future corporate mismanagement that leads to socio-economic consequences detrimental to investors and consumers in general. Design/methodology/approach - This paper utilizes sample firms from the DJSI World Index and the GRI-G3 Sustainability Guidelines membership list to draw inferences on sustainability indicators of performance. The authors compare the GRI reporting guidelines with the disclosure indicators of the DJSI World. Findings - The authors' findings suggest that TBL reporting has made enormous progress over the last two decades. However, the two widely used sustainability reporting instruments/indexes (DJSI World and GRI-G3 Guidelines) differ in disclosure practice-methods and the authors recommend that further standardization and enforcement is necessary. The authors' view is that the Securities and Exchange Commission (SEC) and Financial Accounting Standards Board (FASB) should become actively involved with the issue of standardization and enforcement of corporate socio-environmental disclosures. The paper presents evidence that investors have neither rewarded nor penalized firms for adhering to or violating sustainability matters in their corporate decisions. Practical implications - The authors argue for further standardization and enforcement with regard to the disclosure methods of the two widely used (GRI and DJSI) sustainability indicators in order to avoid future corporate mismanagement that leads to (systemic) economic and socio-environmental consequences detrimental to citizen investors and consumers in general. Originality/value - The research is of interest to academicians and practitioners who are interested in the theory and practice of sustainability reporting or TBL reporting. The findings suggest that this newly created disclosure instrument needs to undergo further standardization and enforcement for meaningful and accurate disclosure of economic-social and environmental performance. The authors' view is that the SEC and FASB should become actively involved with the issue of standardization and enforcement of socio-environmental disclosure of corporate sustainability.