Sustainability Reporting in Corporate India: An Emerging Phenomenon

Introduction Sustainability concerns have gained prominence in recent years with the controversies of high profile companies like Volkswagen’s emission scandal (2015) or Nike’s use of child labor in Pakistan and Indonesia (2019). These controversies have not only triggered a global crisis of investor confidence but have also heightened the global attention and pressure on businesses to operate in a sustainable manner. In fact, in the wake of the Covid-19 pandemic, the United Nations have upheld the core promise of 2030 Agenda for Sustainable Development and asserted the businesses to recover in a more advanced manner by building sustainable and inclusive societies in order to withstand future shocks (UNGC, 2020). Thus, the presence of a range of stakeholders has moved the concept of sustainability from the margins of academic discussions to the middle of corporate boards and political agenda. Sustainability is evolving as a core philosophy of companies with over 90% of CEOs highlighting that sustainability has become a fundamental concern in their business operations (Loprevite et al., 2020; Wang, 2017). Today companies need to justify their activities to a critical public and they should no longer confine themselves to communicating only the economic dimension of their operations. They ought to disclose on the non-financial aspects of their business. Therefore, reporting on the sustainable actions of a company has become a new trend in corporate reporting which integrates financial, environmental and social performance of the company. Further the formation of United Nations Global Compact (UNGC) in 2000 and the set up of United Nations Agenda of Sustainable Development Goals in 2015 have been fuelling the need for worldwide adoption, enforcement and establishment of corporate as well as governmental approach towards sustainability. But the developed nations were more prompt in implementing it than the developing ones. OPEN ACCESS


Introduction
Sustainability concerns have gained prominence in recent years with the controversies of high profile companies like Volkswagen's emission scandal (2015) or Nike's use of child labor in Pakistan and Indonesia (2019). These controversies have not only triggered a global crisis of investor confidence but have also heightened the global attention and pressure on businesses to operate in a sustainable manner. In fact, in the wake of the Covid-19 pandemic, the United Nations have upheld the core promise of 2030 Agenda for Sustainable Development and asserted the businesses to recover in a more advanced manner by building sustainable and inclusive societies in order to withstand future shocks (UNGC, 2020).
Thus, the presence of a range of stakeholders has moved the concept of sustainability from the margins of academic discussions to the middle of corporate boards and political agenda. Sustainability is evolving as a core philosophy of companies with over 90% of CEOs highlighting that sustainability has become a fundamental concern in their business operations (Loprevite et al., 2020;Wang, 2017).
Today companies need to justify their activities to a critical public and they should no longer confine themselves to communicating only the economic dimension of their operations. They ought to disclose on the non-financial aspects of their business. Therefore, reporting on the sustainable actions of a company has become a new trend in corporate reporting which integrates financial, environmental and social performance of the company.
Further the formation of United Nations Global Compact (UNGC) in 2000 and the set up of United Nations Agenda of Sustainable Development Goals in 2015 have been fuelling the need for worldwide adoption, enforcement and establishment of corporate as well as governmental approach towards sustainability. But the developed nations were more prompt in implementing it than the developing ones.
Thus, the paper aims to review the literature on how sustainability reporting gained recognition internationally and its latent emergence in India and other such developing nations. The paper attempts to illustrate how corporate India is embracing this new trend in reporting.

Sustainability and its Reporting
The principal inspiration behind the concept of sustainability originated from the 1987 Report of the Brundtland Commission presented at the United Nations World Commission on Environment and Development. It defined sustainability as meeting the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability found its place in the literature in the 1980s that began from defining the concept of sustainability to developing frameworks for sustainability reporting.
It was the 1950s, when the notion of business was first associated with something non-financial. Howard Bowen in his book 'Social Responsibility of the Business man' propounded the term 'corporate social responsibility'. By the 1970s it became a part of business ethics and traditional financial reports were complemented with social reports (Leite and Padgett, 2011). The 1980s saw the publication of first environmental report and the concern towards environmental issues like emissions and waste generation was evident. By the late 1980s, the academic focus shifted towards defining the new phenomenon of sustainability (Brown et al., 1987). However it was in the 1990s that business reports were covering social and environmental dimensions jointly. This led to the development of Triple Bottom Line in 1998 that covered the three business dimensions of society, environment and economy simultaneously (Elkington, 1998;Kolk, 2005). This became the foundation of sustainability and made it more substantive and comprehensive than corporate social responsibility.
The World Business Council for Sustainable Development (WBSD) defined the sustainability reports as public reports by companies to provide internal and external stakeholders with a picture of the corporate position and activities on economic, environmental and social dimensions. The definition by KPMG (2017) focuses more on the balanced reporting aspect and states that sustainability reports include quantitative and qualitative information on their economic, social and environmental performance in a balanced way.
The formation of Global Reporting Initiative in 1997 and UNGC principles in 2000 further led to the development of guidelines on sustainability reporting. The coming years saw sustainability reporting as a core business strategy (Hahn and Kuhnen, 2013; Siew, 2015; Wu et al., 2018). As given by Global Reporting Initiative (GRI), 2006, "sustainability reporting (SR) is the process of measuring, disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development" (Yadava and Sinha, 2015).
The reasons behind the prevalence of such non-financial reporting are many like regulatory requirements, reducing potential costs of litigation, improving stakeholder relations, good publicity, enhancing brand value and promoting ethical business practices (Seiw, 2015; Goel and Misra, 2017).
Further it improves transparency in operations which makes a company ethical and legitimate, ensures favorable investment climate that can help in acquiring national and international listings SR is quite popular nowadays but in its earlier stages companies showed reluctance to extend their disclosure regime as they doubted substantial public or stakeholder interest in social and environmental performance, there was confusion about what to report and how to report and the perception of low cost to benefit. It is expected that public policy and greater standardization of reporting would provide it the required importance to be taken seriously by the managers (Stubbs et al., 2013).
The various advantages might prompt the companies to prepare such non-financial reports without actually engaging in sustainable actions and increase the chances of green wash (Laskar and Maji, 2018). This has also necessitated the formulation of proper frameworks and guidelines which would not only help in preparing such reports but also in assessing their credibility. Efforts are being made internationally to bring non-financial reporting at par with financial reporting and developing norms for social and environmental disclosures as well (Goel and Misra, 2017). Global initiatives by various stakeholders gradually led to the development of frameworks and guidelines that could account for sustainable actions of the companies. Presently there are three kinds of sustainability reporting (SR) tools (Siew, 2015

Global Reporting Initiative (GRI)
Among the various guidelines and standards for sustainability reporting, Global Reporting Initiative (GRI) is the most widely accepted set of guidelines (Siew, 2015;Wu et al., 2018) as it is based on foundations that consider social, economic and environmental dimensions that directly relate to UNGC principles and prescribe fair reporting even when it negatively reflects on a company. The confirmation of such prevalence has been highlighted in various studies across different countries. It provides a common ground for sustainability reporting and it aims to create reports that complement rather than substitute for other company reports like financial reports. GRI has been very successful in terms of adoption rate, comprehensiveness, prestige and visibility because its scope of reporting is larger, more inclusive and its target audience comprises multiple stakeholders rather than investors alone ( ). This requires more and more academic research and contribution by CEOs, NGOs, and other such stakeholders in order to refine the already existing frameworks and aligning them with international standards to be more relevant.

Sustainability Reporting: The Indian Scenario
Sustainability is a critical issue and more so for developing nations as they are responsible for one-third of the global carbon emissions and are major polluters. Especially in emerging economies like India, China and Indonesia, where there is huge consumption of fossil fuels and carbon intensity along with social issues of poverty, corruption and malnutrition (Bhatia and Tuli, 2018). Despite these problems being a much grave issue, it is still in the initial stages in most of these countries and has not gained the required momentum.
Large companies in developing nations are gradually engaging in sustainability practices. Like in India, companies are speedily moving on the path of sustainability with bulk of companies like GAIL, Infosys, ITC, L&T, ONGC, Reliance Industries, Tata Industries, etc. preparing SRs as per GRI guidelines. But this adoption is primarily in response to factors such as regulations, globalization, to attract foreign investment, to gain foreign loans and aid from international lending institutions and aimed more at publicity than providing accurate and honest information about the efforts of companies towards sustainability (Laskar, 2016).
Although, the recent years have seen a surge in sustainability reporting in Indian companies, it is just for the sake of adhering to regulations and gaining good publicity. In this era of globalization, all the companies strive to have an international presence and gain from the rising trend of ethical investment. Rather than imbibing sustainability in the corporate culture it further led the companies to do 'green washing'. This necessitates the assessment of reliability and credibility of the information that is reported by the companies.
The Indian studies have explored the difference between quantity of sustainability reporting and the quality thereof and observe a significant difference in the two ( India has more prevalence of corporate social responsibility due to its mandatory nature. However, CSR is about how the profits earned have to be given back to the society, while sustainability is about earning those profits in a socially responsible manner. Thus, the core philosophy behind both the concepts is quite different and makes SR more relevant than CSR. (Goel and Misra, 2017; Jha and Rangrajan, 2020; Kumar, 2020). Thus in the Indian context, the primitive research revolved around the CSR but as SR gained momentum in Indian companies, the subsequent research work started converging towards sustainability.
Indian studies have explored the difference between the quantity of sustainability reporting and the quality thereof and observed a significant difference in the two (Aggarwal and Singh, 2018;Laskar and Maji, 2016) implying that SR could just be a symbolic action intended to present companies as being engaged in sustainability issues (Laskar, 2016). This compels for more research into the quality of SR.
Previous work shows that the quality of reporting is significantly influenced by a number of internal company characteristics like company's age, industry type, firm size, environmental sensitivity (Mathivanan and Kasilingam, 2020 Therefore, Indian studies have attempted to explore many such aspects pertaining to SR but most of the studies seemed inconclusive or neutral due to certain drawbacks like limited study period, inconsistent reporting or inadequate disclosure in the sustainability reports (Godha and Jain, 2015; Laskar, 2016; Laskar and Maji, 2017; Kumar, 2020).

Conclusion
The concept of sustainability reporting is considerably well-explored in the foreign countries and many of the conclusions and results are acceptable in Indian context also. But there are certain aspects which have different implications based on the country, region or sector in which the company operates. Sustainability reporting has started gaining importance in India. But apparently the reports lacked the desired level of quality and disclosure. This problem has been highlighted in past studies and more research is called for into the factors at organizational level that directly influence the quality of such reports like corporate governance, age of the company, nature of industry etc. Moreover, the companies cannot ensure sustainability just by reporting about it, in order to contribute substantially, they need to imbibe it into their operations and culture.
It is also essential for the people working in organizations to be aware and responsible about the sustainable actions as this would lead to more inclusive efforts towards a sustainable society. Lack of understanding of the sustainability concept is a significant impediment to effective goal-setting in organizations and hence is one of the primary barriers. Sustainability is a major concern for not only this generation but also the future ones. Thus, the study intends to contribute to literature and help in contriving this concept into the educational curriculum to make the future managers and employees well versed about it.
The study holds significance for managers, policymakers, regulatory authorities, investors and stakeholders. Corporate managers and practitioners are the people responsible for implementation of such practices as well as reporting about them. Thus, research in this area would help them identify the relevant and important areas to emphasize upon. It would also help them to devise strategies for sustainability which would in turn indicate to the stakeholders regarding the managerial attention to this issue. Other regulatory bodies and policy makers like the government, accounting bodies, stock exchanges need to be aware about any new changes so that they can fill in the gaps, requirements and problems in application by imposing and amending the laws and regulations. The study would help the investors and stakeholders to be well aware about the concept and help in identifying sustainably active companies as ethical investment or socially responsible investment is gaining popularity. Lastly, this study intends to serve as a reference point for companies in other emerging economies like India.