Corporate Accountability Towards Species Extinction Protection: Insights from Ecologically Forward-Thinking Companies

In recent years, policymakers, NGOs, academics, and companies have devoted greater attention to the strategic implications of biodiversity loss and species extinction (hereafter B/E). Yet, the relationship between corporate accountability¹ in terms of species² protection and factors affecting such accountability (assurance, environmental performance, country, partnerships, etc.) remains underexplored in accounting and business literature (Atkins & Atkins, 2018; Gaia & Jones, 2019; Reade et al., 2015). Biodiversity and species extinction are part of wider global environmental challenges facing humanity (Sobkowiak et al., 2020), with the United Nations Sustainable Development Goals (SDGs), specifically SDGs 14 and 15³ the most recent call to action to develop solutions and protect the planet from further biodiversity loss⁴ (UN, 2020a).

It is acknowledged that business activities are recognized as one of the main drivers of biodiversity loss and species extinction (Hassan et al., 2020a; Maroun & Atkins, 2018; Roberts et al., 2020a). Thus, we contribute to the extant literature and examine how the accountability of ecologically conscious/forward-thinking⁵ (hereafter EC/FT) companies can prevent further species and biodiversity loss in the future and align with SDGs 14 and 15. Our motivation for this paper is to respond to the recent calls to contribute to developing solutions for the B/E crisis (Gibassier et al., 2020). This research is significantly timely, as experts suggest that pandemics such as COVID-19 are a result of habitat loss, wildlife trafficking, and humanity’s destruction of biodiversity (Ceballos et al., 2020; Johnson et al., 2020). Potentially, COVID-19 may not be an isolated pandemic; therefore, there must be a seismic shift from companies in valuing and protecting nature. In addition, biodiversity loss is now recognized as one of the top five global risks (WEF, 2020)⁶ with severe implications for society if transformational changes are not made (WHO, 2020).

The above discussion motivates us to examine how EC/FT companies that initiated efforts in conserving and protecting species before the current pandemic can influence companies’ reporting in the post-COVID-19 era. Therefore, we would expect corporates to consciously make tremendous efforts in conserving biodiversity and protecting species from extinction as companies realize their dependence on nature. Thus, our findings can guide and encourage companies to improve future reporting to achieve SDGs 14 and 15 targets by 2030, as “accounting academics can and should play a substantial role helping embed policy and action at an organizatinal level in a way that contributes towards the achievement of the SDGs” (Bebbington & Unerman, 2018, p. 2). The findings of this study will extend the existing academic findings on emerging issues about B/E accounting (e.g., Adler et al., 2018; Atkins & Maroun, 2018; Hassan et al., 2020a, b). The combination of the theoretical framework along with robust empirical findings will assist academics in advancing this stream of emerging literature, and help companies to understand how to consider various factors to be sustainable in the future. Additionally, this will give a clear indication to regulators about the changes required to motivate companies for preventing further B/E loss.

Furthermore, extant B/E literature is limited. Specifically, most studies employed one theoretical construct to explain the companies’ accountability towards the extinction of species, which contains several caveats. We respond to the previous call (Gaia & Jones, 2019) that a single theory is not adequate in explaining B/E disclosure, by adopting a triangulation of deep ecology, legitimacy, and stakeholder theories. By applying deep ecology and stakeholder concepts, we support the argument of Roberts et al. (2020b), who suggest that species are of fundamental value to business survival and are main stakeholders in society; therefore, companies should consider species as an important stakeholder of their business. Legitimacy theory can explain how a company’s legitimacy can be achieved by considering species as important as other stakeholders in company operations. The comprehensive theoretical model allows us to contribute to the limitation of the extant literature theoretically. To date, seminal contributions in literature stimulate the development of species protection by providing extinction accounting frameworks (Atkins & Maroun, 2018; Hassan et al., 2020b) and examination of organizational accountability for biodiversity (Adler et al., 2018; Maroun et al., 2018). Emerging studies (e.g., Raar et al., 2020) open a debate on how the incorporation of biodiversity accountability can assist in the prevention of further species loss. Flowing from extant literature, this paper builds on these bodies of work to empirically examine company disclosure on species and what factors motivate relationships for such disclosure. This research responds to Roberts et al. (2020b) who identify the urgency in B/E literature for the examination of species protection disclosure to extend knowledge in the field and contribute to advancing solutions.

Based on the above discussion, the objective of this paper is to investigate factors affecting the relationship between corporate accountability and species protection of EC/FT companies. We believe that providing disclosure on species protection enhances stakeholders’ trust and accountability (Hassan et al., 2020b). To empirically test our idea, this study uses a sample of the top 200 companies from Fortune Global in 2012, 2014, and 2016, to highlight how EC/FT companies reported on the protection of species before the recent pandemic and provide a springboard to develop solutions after the pandemic. These companies directly or indirectly make significant use of ecosystems, and therefore gain the most public attention (Adler et al., 2018; Hassan et al., 2020b). Our justification is to present how EC/FT companies report on conserving and protecting biodiversity and species, which could influence reporting in the recent and coming years. By applying advanced empirical analysis, we find that companies that are disclosing responsibly about species and are actively protecting against extinction, for which these companies are recognized by awards, have extended partnerships with species protection organizations and are also getting favorable assurance for their business.

The study makes several contributions to the extant B/E literature. First, to the best of our knowledge, no studies have examined the relationship between species disclosed by organizations and its determinant factors. Therefore, this paper aims to close this gap by contributing to the extant B/E literature and demonstrate how EC/FT companies are displaying significant efforts on species protection and restoring habitats. Second, theoretically, we adopt a triangulation of theories; deep ecology, legitimacy and stakeholder theories. We also suggest that species should be considered as one of the main stakeholders’ categories in addition to customers, employees, etc., as businesses have a two-way relationship with biodiversity and species, including both the impact of companies on biodiversity and the impact of biodiversity on companies (Adler et al., 2018). Third, our paper has an empirical contribution. Instead of adopting OLS regression that is commonly used by previous studies (Adler et al., 2018; Hassan et al., 2020b), we test and create Poisson pseudo-maximum likelihood (PPML) regression with a multi-way fixed effects model. We believe the PPML model is more relevant to explore the relationship between the species disclosed by companies and determinant factors because our disclosure index includes positive count values only. Fourth, our study has a number of implications for policymakers. The proposed empirical model and theoretical framework in this study will allow policymakers to process a post-2020 framework to reshape the global relation with nature (UN, 2020b) and support the United initiatives and achieve the SDGs 14 and 15 objectives. The study will guide decision-makers to understand how disclosure of species protection by companies can assist society to mitigate further B/E loss in the future. Finally, our paper responds to recent calls (Gaia & Jones, 2019; Lambooy et al., 2018) to develop solutions by showing how the potential for reporting for B/E can mitigate the further risk of ecological collapse.

The rest of the paper is structured as follows: the next section covers the literature review. Section three discusses the theoretical literature. Section four discusses empirical literature and hypothesis development. Section five illustrates the research design. Section six presents the empirical analysis. Finally, a discussion of findings and limitations is exhibited in the last section.

Research on corporate accountability for B/E is in its infancy (Addison et al., 2019; Adler et al., 2017) and is an emerging strand of literature (Haque & Jones, 2020). To date, academics have been relatively silent on examining the role of companies in conserving biodiversity and species protection (Adler et al., 2018) and thus, there is a huge call for company awareness from stakeholders of businesses (Hassan et al., 2020b). To provide context, B/E accounting emerges from biodiversity reporting and this extends to include the ‘extinction’ element due to the severity of the decline of nature (Atkins & Maroun, 2018). The early seeds of biodiversity reporting were set by Jones (1996) who suggested that organizations are stewards of natural capital and have a moral duty to protect and to publicly disclose their efforts (Atkins et al., 2014). Early empirical studies began to explore reporting of companies on biodiversity issues at country level (Boiral, 2016; Rimmel & Jonäll, 2013; van Liempd & Busch, 2013) and industry level (Adler et al., 2017; Boiral & Heras-Saizarbitoria, 2017). Prior studies are consistent in finding that most companies provide poor disclosure, vague statements, and are generally unimpressive with their efforts to manage and protect biodiversity. Literature suggests that companies fail to recognize the risk of biodiversity loss, leaving them unconvinced that conservation warrants their efforts (Skouloudis et al., 2019). It seems to be only when endeavors provide rewards of stakeholder impressions or reputational advantage that companies will pay attention (Bhattacharya & Managi, 2013; Hassan et al., 2020b).

It is argued that biodiversity reporting on its own is insufficient (Atkins & Maroun, 2018; King & Atkins, 2016). The widely adopted Global Reporting Initiative (GRI) standards only make some reference to biodiversity (Jones & Solomon, 2013), and therefore company accountability is limited. Companies following the GRI framework are found to be indulging in impression management (Gray & Milne, 2018; Solomon et al., 2013), with a lack of consistent, transparent reporting. Atkins and Atkins (2018) suggest that continuing to report in this method will lead to a fossil record of species. Haque and Jones (2020) support the previous arguments and mention that companies are using GRI standards as a mechanism to refer to biodiversity, providing symbolic statements and failing to provide clarity on operational impact to natural capital.

In response to the limitation mentioned above, extinction accounting evolves from biodiversity reporting by critically recognizing the need to address the current extinction crisis (Atkins & Maroun, 2018). Incorporating GRI biodiversity principles, extinction accounting aims to promote change by companies and reverse species loss (Atkins & Atkins, 2018; King & Atkins, 2016), providing companies opportunity to disclose how they are acting to prevent further extinctions (Hassan et al., 2020b).

The framework provides the opportunity to include narrative detail and self-reflection, and to further articulate extinction prevention measures with the hope that this will lead to changes in company behavior (Hassan et al., 2020b). Furthermore, companies should seek to consolidate numerical data and narrative and pictorial evidence to comprehensively communicate conservation efforts (Atkins & Maroun, 2020). Atkins (2020) argues that companies should be integrating extinction accounting into annual reports to trigger change and would have to “assess the populations of threatened species living near their operations; work out whether their business puts them at risk; come up with plans to protect them; and explain them to investors”. Studies from extinction accounting give evidence of a genuine concern for nature and represent the need for compassion for species (Atkins et al., 2018; Buchling & Maroun, 2018); they support the idea that companies begin to acknowledge their dependence on natural capital. Motivated by extinction concern, evidence of species names emerges in corporate reports (Adler et al., 2018; Atkins et al., 2014). However, an argument builds that certain alluring or desirable species may attract more attention from companies than others, as Weir (2018) observed that mammals and birds warranted greater conservation efforts than insects and invertebrates. Atkins et al. (2014) reinforce this theory, reporting that favoritism may be shown towards certain species, especially species which are beneficial to humans.

Smith et al. (2019) found that the corporate motivation to engage in conservation efforts is unclear. However, the existing studies assist companies to recognize that the threat of extinction is a material risk (Addison et al., 2019). Global policymakers are also taking the initiative to encourage companies to be accountable towards the extinction of species. For example, The Natural Capital Coalition (2020) urges companies to realize that their success is driven by ecosystems; the loss of any species to extinction is devastating, but species which provide such intrinsic worth to industries is frightening.⁷ Indeed, the global Aichi targets of the ‘Strategic Plan for Biodiversity 2011–2020’ have been considered a failure as biodiversity decline is accelerating at an unprecedented rate, with humanity’s legacy of biodiversity at a crossroads for future generations (CBD, 2020). The most recent call to action is the United Nations SDG targets ‘The 2030 Agenda for Sustainable Development’. Global governments have agreed on a vision of ‘Living in harmony with nature’ by 2050, and it is imperative lessons are learned from the past decade if the SDGs are to be met. The UN Biodiversity Conference in September 2020 emphasizes the need for “Urgent action on biodiversity across all sectors and from all actors” to meet the SDG target of 2030 (CBD, 2020). Furthermore, the post-2020 biodiversity initiatives must be achieved, or humanity could potentially face future pandemics.

The current COVID-19 crisis provides forewarning to further encroachment between natural capital and humans that can have detrimental impacts (Carrington, 2020). Corporates must make transformational changes to restore their relationship with nature and engage in sincere stewardship of natural capital, as it is their moral duty to protect future generations (Gaia & Jones, 2019). Turning a blind eye to warning signs could be catastrophic for business prosperity and survival. There is no extensive literature to explain the accountability of companies towards species extinction. Therefore, in this study, we discuss how the disclosure of species by global companies can assist them in achieving environmental awards, gain assurance from Big 4,⁸ and allow companies to expand biodiversity partnerships leading to a financially sustainable company. The findings of this study will be an example for stakeholders of companies and will encourage academics to extend the studies on B/E to assist companies to be more accountable towards B/E. Furthermore, to meet SDGs 14 and 15, we offer a solution that can assist in preventing further decline by advocating that companies transform their reporting practice to include information on their efforts to protect biodiversity and species.

Prior B/E research applies various theories to explain company viewpoints including impression management (Boiral, 2016), greenwashing (Hassan et al., 2020b), and legitimacy (Adler et al., 2017; Bhattacharyya & Yang, 2019). However, we observe that companies have not done enough to protect species from extinction, and, as experts explain, it may be that this is one of the reasons for zoonotic disease spillover such as COVID-19 (Ceballos et al., 2020). Lack of a comprehensive theoretical model cannot motivate companies to identify a strategy for species protection. Therefore, we introduce a triangulation of theories, namely deep ecology, legitimacy, and stakeholder theories. Deep ecologists are of the view that nature has intrinsic value, and all nonhuman life should be preserved (Naess, 1989, 2008), thus rejecting anthropocentric shallow ecology, which places humans of most importance, believing nature has value because of what it contributes to human satisfaction (Callicot, 1990, 1994; Thompson & Barton, 1994). Deep-ecologists debate whether environmental and extinction crises are human-induced (Samkin et al., 2014) and support the suggestion that the crisis is the result of dominating anthropocentric bias in corporate behavior (Atkins et al., 2014). Absolute deep ecology would reject business use of natural assets as a commodity. However, to mitigate corporate financial risk and prevent societal collapse, a middle ground must be reached. Companies must consider embedding an ecological culture and stewardship (Jones, 1996) by protecting and investing in nature. For example, Gaia and Jones (2019) found that elements of deep ecology must be ethically rooted to enable a sustainable society. Similarly, Samkin et al. (2014) found deep ecology embedded in biodiversity disclosures and mention that the approach requires a long-term commitment. Embracing deep ecology is not to put a financial value on species as this would be refuted by deep-ecologists; rather, companies must evaluate their behavior and engage in a balanced perspective to mitigate the risk of financial loss, together with responsibly protecting species and habitats. The relationship with nature must be realigned and eliminate the arrogant profit-seeking objectives, which have driven us to a planetary emergency (Gray & Milne, 2018).

Empirical evidence considers corporates to be rife in legitimizing activities (Boiral & Heras-Saizarbitoria, 2017; Cho & Patten, 2007; Milne & Gray, 2013; Patten, 2002). Extant literature considers B/E accounting as a continuation of corporate social responsibility (CSR) research into corporate disclosure practices (Bebbington & Larrinaga, 2014; Hassan et al., 2020b). Legitimacy theory is one of the most applied theories to explain the increasing CSR reporting over the past two decades (Hassan & Guo, 2017) and it “involves the selective disclosure of positive actions resulting in misleading and biased reporting” (Mahoney et al., 2013, p. 352). Extant literature uses legitimacy theory to explain that dishonest companies misreport their CSR efforts to capitalize on their face value to influence stakeholders’ perceptions and gain legitimacy (Lyon & Maxwell, 2011; Zijl et al., 2017).

Adler et al. (2018) argue that biodiversity and threatened species information is provided in order to fulfil the desires and expectations of stakeholders. Bhattacharyya and Yang (2019) specifically note that considering the current planetary emergency, for businesses to gain societal legitimacy, they must increase biodiversity disclosure. Lewis (2016) explains that legitimacy is a practice that is deceivingly used to endorse that organizations’ policies or practices are environmentally friendly, when arguably they are not. Patten (2015), for example, explains that an organization with specific environmental adversity intensifies the extent of CSR reporting to signal to stakeholders that the organization is addressing the concern. This continues a tradition of impression management-oriented literature in environmental accounting (Hassan et al., 2020a, b). This research argues that companies provide disclosure to legitimize companies’ concerns for B/E issues (Adler et al., 2018; Cho et al., 2015a; Lyon & Maxwell, 2011).

As the species extinction crisis intensifies, it can be expected that companies must meet external pressures (Rimmel & Jonäll, 2013) and enhance reputation to maintain their “licence to operate” (Adler et al., 2017, p. 1714). Research highlights that stakeholder and legitimacy theories overlap in social and environmental studies (Deegan, 2002; Gaia & Jones, 2017, 2019). Stakeholder theory has been used to explain the needs and expectations of human groups and individuals affected by the company (Boiral & Heras-Saizarbitoria, 2017; Gaia & Jones, 2019). Theoretically, we recognize a limitation within stakeholder literature that prior studies have failed to recognize or explain for the prevention of further species loss. Roberts et al. (2020b) argue that species should be included as a main stakeholder with the established groups of employees, NGOs, government agencies, environmental groups, and customers (Jones, 1995; Schaltegger et al., 2017). We believe that for deep ecology to be embedded in corporate strategy, species of flora and fauna should be considered as one of the main stakeholders’ categories, discarding human hierarchy, for companies to protect and restore species and their habitats. In this vein, we focus on a triangulation of deep ecology, legitimacy, and stakeholder theories, which can explain the relationship between species numbers and determinant factors. We recognize that corporates may be disclosing species-specific information for legitimizing purposes, but we are also hopeful that those companies who are disclosing species numbers have started to realize the intrinsic worth of natural capital and are consequently embedding ecological culture and displaying a genuine concern for the extinction crisis by identifying species as stakeholders. We hope that providing disclosure on species protection will be the new norm for other companies to follow. Societal health is underpinned by nature (Roberts et al., 2020a); we expect that by application of the triangulation of theories, we can assist companies to explain the underlying motivation to reform B/E impact, which will reduce potential future pandemics (Ceballos et al., 2020).

B/E accounting is considered as an extension of CSR (Bebbington & Larrinaga, 2014; Bhattacharyya & Yang, 2019; Hassan et al., 2020b). From the existing literature, we identified that the assurance by leading assurance providers, presence of partnerships, environmental performance, and environmental award are some important factors that will assist the stakeholders to assess the accountability of the companies towards nature. In the following section, we discuss these factors in detail to develop the hypotheses related to the research question, which is supported by the comprehensive theoretical model explained previously.

The main aim of this paper is to explore the disclosure of the number of species from the top 200 Fortune Global companies to understand how EC/FT companies are answering the collapse of biodiversity and threat of further species extinction. We create and test with Poisson pseudo-maximum likelihood (PPML) regression, the relationship between the number of species protected and its determinant factors. Using a comprehensive sample of Fortune Global companies from before the COVID-19 pandemic, from 2012, 2014, and 2016, our results reveal that 75% of reports omit any species numbers, showing that most companies are failing to address the B/E crisis. However, the remaining 25% present how EC/FT companies have initiated efforts before the current pandemic, which can influence companies’ reporting in the post COVID-19 era. We contribute to developing solutions with this empirical study by extending B/E literature and encouraging companies to provide responsible reporting and disclose B/E accountability to align with SDGs 14 and 15.

The empirical model is based on a comprehensive theoretical framework. These findings support prior B/E disclosure studies that have found that few companies provide B/E information (Adler et al., 2018; Hassan et al., 2020b). This evidences a huge call for companies to make transformational changes from anthropocentrism, given the urgency of the extinction crisis and existential threat to civilization (Ceballos et al., 2020). The link to COVID-19 and human infringement with nature through illegal wildlife markets and trade is inextricably linked to business survival. Corporates are dependent on natural resources and must cease to be disrespectful to nature and engage in stewardship of natural assets (Jones, 1996). However, we focus on the remaining EC/FT companies (25%) that are responding to the extinction crisis and showing efforts to conserve and protect habitats. Supporting deep ecology theory and recognizing species as stakeholders, these companies are displaying responsible corporate governance by embedding deep ecological culture. Specifically, our regression presents significant relationships between the number of species disclosed and assurance, poor environmental performers, presence of partnerships, and gaining environmental awards (refer to Fig. 2). Our results imply that there is a huge call for corporate consciousness and opportunity for companies to display their responsible efforts.

These findings make an important contribution to B/E literature in at least four ways. First, our results suggest assurance for B/E reporting as one important channel through which corporate governance may influence B/E outcomes, ascertaining a clear mechanism through which external corporate governance may influence the firm’s B/E reporting. Second, to our knowledge, this study is the first to directly measure the number of species using a comprehensive dataset. Thus, we can demonstrate a clear positive relationship between environmental performance (incentives for species protection) and species reporting, contributing to the nascent but growing research investigating how environmental performance and species reporting activities might be associated. Third, we contribute more broadly to the literature by improving the understanding of the antecedents of species reporting of firms using a cross-country sample. Fourth, this study extends the extant B/E literature by taking species reporting into consideration in a country-level institutional context. It has been argued in the accounting literature that developing economies suggest an interesting setting that explores both regular questions in addition to a unique phenomenon (Lau et al., 2016). Last, we suggest a reporting strategy for companies to achieve wider global efforts of achieving SDGs 14 and 15 by advocating B/E accountability. Our evidence shows that institutional context has a moderating effect on the relationship between environment score, environment award, assurance, and disclosure of the number of species.

These results have several implications. Our evidence implies that businesses should begin to realize the intrinsic worth of natural capital and their reliance on balanced ecosystems to survive. Embedding ecological culture and aligning with societal and government expectation to prevent further pandemics will be crucial for future organizational survival. Additionally, our findings suggest that companies who engage with wildlife partnerships are leading in the protection of species. These results imply that partnerships are a key driver in preventing further species extinctions and preventing pandemics. The collaboration between wildlife and biodiversity experts and companies can achieve long-term sustainability and contribute to developing solutions. Our work can also guide policymakers in developed and developing nations to the need to improve the surveillance and capacity of the regulatory frameworks in the context of B/E reporting, and to improve stakeholders’ pressures to enhance B/E reporting adoption. Specifically, policymakers and regulators need to make a generally agreed set of B/E reporting guidelines and assurance standards. Collectively, the visionary SDGs can be met by the targeted 2030, as failure to meet these targets will have severe consequences to societal health and economic systems. This research aligns with the United Nations initiatives and post 2020 biodiversity frameworks and will guide decision-makers to understand how disclosure of species protection by companies can assist society to mitigate such risks in the future.

One of the caveats of this study is that our sample is a qualitatively small representation of a larger population to which it could apply. Our sample selection is limited to the top 200 companies from the Fortune Global. Therefore, future studies could extend the number of companies or countries. Second, counting species numerically on its own is not enough to advance solutions. Although this research provides a seminal understanding of the relationship between species and key determinants, additional future research might qualitatively examine corporate motivations and emotions for such disclosure, in order to support our findings. Third, future studies might consider case-studies and interviews with executives, boards, shareholders, and stakeholders to investigate their views on corporate initiatives to protect species and biodiversity, and to align with the SDGs. There is a distinct lack of primary data analysis in B/E literature; this would provide invaluable insights into company motivations to protect species. Also, there are undoubtedly other factors affecting the number of species disclosed, such as ethnic identity, religion, country-level or industry-specific factors, which requires an expanded dataset to consider these additional indicators. Research on why and how companies’ engagement in biodiversity loss and species extinction reporting differs across nations is a promising avenue for future work. In addition, exploring the influence of ethical decision making on biodiversity loss and species extinction reporting across cultures would be a fruitful avenue for further work. Furthermore, a potential avenue for future research is to investigate the alignment of B/E, circular economy model, and integrated reporting to enhance the development of solutions for a sustainable society.