Introduction
Sustainability accounting and reporting (SAR),
1 has received significant research attention in the field of accounting within the last two decades (Lamberton
2005; Schaltegger et al.
2013). The concept of SAR has evolved out of the need to increase corporate accountability and transparency about the impact of corporate decisions on the environment and society as a whole (Ball et al.
2000; Adams and Whelan
2009). This according to Henri and Journeault (
2010) is critical to the development of decision support systems for enhancing corporate sustainability management. The importance of engaging in a SAR is well emphasised in the literature. As argued by some studies (Özsözgün Çalişkan
2014; Schaltegger and Burritt
2010), engaging in SAR may lead to potential legitimacy gains for firms and other corporate benefits necessary for the long-term value creation of firms.
Although, prior literature suggests the existence of divergent views on what constitutes SAR and its processes (Parker
2011; Bebbington and Gray
2001; Burritt and Schaltegger
2010), majority of the existing studies recognise the relevance of accountants’ involvement in environmental and sustainability management (Zvezdov et al.
2010; Evans et al.
2011). This consensus in part is attributable to the professional accountants’ role in the conduct and design of firms’ reporting system, preparation and interpretation of timely information to management to make informed socio-environmental and economic decisions (Özsözgün Çalişkan
2014; Aras and Crowther
2009b).
Generally, SAR involves corporate reporting on environmental, social responsibility and economic performance of firms, conceptualised as the ‘triple bottom line (TBL) reporting’ (Asif et al.
2011; Herzig and Schaltegger
2011). SAR augments the current external corporate financial reports in benefitting wider external parties of economies and societies, which hitherto have mostly been beneficial to shareholders of companies (Özsözgün Çalişkan
2014).
2 SAR practices, thus, encompass companies reporting on their performance regarding the environment, health, safety and social matters, in addition to the traditional financial performance over a period.
3 For this reason, SAR is suggested as part of firms’ external reporting system (Sisaye
2011a,
2011b; Gray,
2006), for which the practical design and implementation of such system is a fundamental role of the professional accountant (Aras and Crowther
2009a,
2009b). Accountants also play an integral role in the value creation process of firms by providing services related to the development of sustainable business strategies – with their risk and opportunities evaluation skills (EY
2011), and SAR and assurance – by providing measurement, accounting, reporting and assurance skills (Özsözgün Çalişkan
2014). Moreover, accountants are perceived to be knowledgeable about the financial and non-financial information, including SAR, relevant for managerial decision-making and performance management and control (Granlund and Malmi
2002; Scapens and Jazayeri
2003; Jack and Kholeif
2008).
These traditional roles performed by the accountant in organisations, coupled with their advisory role to top management and decision makers, have positioned them in a very strategic way to influence the establishment and implementation of an efficient SAR system in organisations (Pierce and O’Dea
2003). The need for professional accountants to be more engaged in providing sustainability information has become more pressing than before because of: the need to comply with emerging jurisdictional requirements of sustainable development for organisations; market demands for firm’s greater awareness of sustainability; and increased social/media attention from social change that has influenced the society’s perceptions on sustainability (Parker
2000,
2011; Ferreira et al.
2010; Schaltegger and Zvezdov
2013; Mistry et al.
2014). In response to these demands, there has been a renewed effort by the accounting profession to address sustainability issues within the general framework of reporting (Özsözgün Çalişkan
2014; Lusher
2012).
However, while the professional accountants’ roles and involvement in conventional accounting and reporting process are extensively researched in existing literature, very few studies have examined the involvement of accountants in SAR (Schaltegger and Zvezdov
2013; Albelda
2011). The few existing studies on accountants’ involvement in SAR suggest that accountants are not adequately if at all, involved in environmental and sustainability information management in organisations (Wilmshurst and Frost
2001; Carter et al.
2011; O’Dwyer and Owen
2007; O’Dwyer
2002). Although professional accountants are acknowledged to have positive attitudes towards the environment, their response to SAR has been “
fairly lukewarm and superficial” (Gray et al.
1993, 10) and mostly unwilling to get involved in SAR (Wilmshurst and Frost
2001; O’Dwyer
2002).
As Wilmshurst and Frost (
2001) assert, the seeming reluctance of accountants to engage in SAR may be a reflection of their limited understanding of their roles towards sustainable development, which may be a consequent of their perception of the practice.
4 For instance, it has been argued that some accountants generally perceive SAR to be only a means of gaining corporate legitimacy (O’Dwyer
2002), and also a practice beyond their purview (Wilmshurst and Frost
2001). An understanding of the accountants’ perceptions on SAR is therefore relevant in predicting the extent of their engagement in practice and that of their companies. Moreover, the attitudes and perceptions of corporate managers and decision makers have also been found to significantly impact information disclosure, including SAR (Adams and McNicholas
2007; Wilmshurst and Frost
2001; Thoradeniya et al.
2015; O’Dwyer
2002). Suggestively, accountants’ perception about SAR may affect their attitude towards SAR and their willingness to engage in the practice.
As studies on SAR increases and firms continue to embrace sustainability issues in both developed and developing countries (Schaltegger et al.
2013; Parker
2011; KPMG
2011), it is envisaged that most companies have gained better understanding and experience in SAR and its related issues (Bennett et al.
2013). However, SAR is still in its embryonic stage in developing countries in practice compared to developed countries (Belal and Owen
2007; KPMG
2011). Similarly, research focus on SAR in developing countries is still at the evolution stage compared with the developed world (Thoradeniya et al.
2015). The few existing studies from the perspective of developing countries have also concentrated in the Asia-Pacific region (Kamla et al.
2012; O'Dwyer et al.
2005; Belal and Owen
2007; Thoradeniya et al.
2015; Kuasirikun
2005). Moreover, despite the growing interest in SAR globally, questions still linger around whether accountants now understand their roles in SAR and most importantly their willingness to engage in the practice (Schaltegger and Zvezdov
2013). Besides, Gray et al. (
2010, 36) call for studies to
“discover why individuals [i.e. key managers, such as accountants] do (or do not) support and develop social accounting.”
Guided by the fact that the perception and attitude towards SAR may be influenced by context-specific factors (Kamla et al.
2012), this study attempts to explore the perception of accountants towards SAR from Sub-Saharan African perspective. By relying on the Theory of Planned Behaviour (TPB), the study further investigates the factors that influence accountants’ intentions to engage in SAR practices in Ghana. Our empirical analysis provides some relevant insights into the fundamental factors that can affect SAR practices in Ghana. Further, the current study adds-on to research on individuals’ beliefs and perceptions about action and the effect on their attitude towards that action.
The next section of this paper reviews the current literature on SAR and highlights the need to examine the perceptions, intentions, and behaviour of professional accountants on SAR practices. The research design, data collection and the data analysis procedures employed are then described followed by the presentation of results and discussion of the findings. Lastly, some concluding remarks are given, and the implications of the findings are highlighted.
Literature review
Sustainability management which entails the formulation, implementation, and evaluation of the decisions and actions related to environmental, social and economic sustainability issues (Starik and Kanashiro
2013) has been an issue of interest to global businesses, researchers, and society at large. At the firm level, a key concern has been how corporate managers can minimise the impact of their firm’s operations on the environment by establishing business systems, models and behaviours necessary for the long-term value creation of firms and sustainable development. Firms need to communicate all information on their management and performance on environmental, social, economic and sustainability issues to stakeholders by engaging in SAR to demonstrate their commitment to sustainable development. Consequently, the need for SAR practices by companies has been emphasised in the literature (Schaltegger et al.
2003; Martin and Hadley
2008) and within the last two decades, it has become an important concept in financial reporting that is receiving a significant amount of attention across the globe (KPMG
2011).
Despite the growing interest, it is apparent from existing literature that SAR is inadequately conceptualised as scholars are yet to have a consensus on the descriptive constituents, processes and expectations of SAR (Parker
2011; Bebbington and Gray
2001; Burritt and Schaltegger
2010). Nonetheless, SAR is widely construed to be concerned with the process through which organisations report to stakeholders on the social, environmental and economic impacts of their business activities (Asif et al.
2011; Herzig and Schaltegger
2011; Sisaye
2011a,
2011b). This process involves integrating the concerns for social and environmental issues into core business operations, formulating long-term plans, controlling and measuring performance on such issues by organisations and communicating them to organisational stakeholders (Zvezdov et al.
2010). Thus, in addition to the conventional corporate financial reporting, SAR includes reporting on environmental, health, safety and other social issues to relevant and broader scope of external stakeholders. SAR, in this regard, is contended to be an extension or modification to companies accounting systems designed to promote a strategy of sustainability and hence part of corporate external reporting system (Sisaye
2011a,
2011b; Gray,
2006).
Extant literature suggests that companies can create long-term value, manage their business risk and gain a competitive advantage by considering the social, environmental and economic impacts of their business operations relative to solely emphasising corporate profit (Asif et al.
2011; Herzig and Schaltegger
2011; Porter,
2003). Companies therefore engage in SAR to better manage and communicate their business risk and create and enhance long-term shareholder value.
5 It is suggested that, principal actors of the corporate environment, including employees, businesses, industries and government, play an integrative role in this firm value creation process by linking company strategy to sustainability, evaluating risks and opportunities, and providing measurement, accounting and reporting skills (Zvezdov et al.
2010; Evans et al.
2011). In this regard, if SAR is assumed to be a way that firms internalise and manage sustainability needs to make it measurable and observable, then the role of accountants in ensuring useful SAR and assurance practices, to create corporate value cannot be overemphasised.
SAR and the accountant
Traditionally, corporate accountants are mainly responsible for the provision of accounting information structured to measure, observe and assess business activities and their results (Özsözgün Çalişkan
2014). They also verify financial data, assess compliance status, undertake cost-benefit analysis and ensure the practical design and implementation of organisational internal control systems. Accountants are, thus, mandated to provide reliable, timely and useful information to guide, direct and protect the interests of stakeholders (Aras and Crowther
2009a,
2009b). Impliedly, accountants have the skills and expertise to value environmental impact, evaluate environmental performance and monitor the entire environmental management system of companies as this falls within their purview (Wilmshurst and Frost
2001). For instance, accountants are better equipped to identify and measure the direct and indirect social and environmental costs financially and develop practical consumption-based measures of current and future social and environmental performance required in green accounting (Vincent,
2000). Wilmshurst and Frost (
2001) therefore contend that accountants can ensure the successful implementation of the environmental management system by inculcating the traditional functions of accounting into the environmental management process.
Accountants also provide auditing and assurance service, which involves assessment of compliance with standards and regulations, identification and evaluation of risks and attesting to the reliabilities of the information provided (Özsözgün Çalişkan
2014). In the context of SAR, accountants could play a significant role in socio-environmental performance via environmental auditing, i.e., assessing compliance, evaluating environmental risks and providing feedback for continuous improvement of firm’s sustainability policies and performance (Wilmshurst and Frost
2001). For example, accountants are likely to be responsible for developing an information and decision support systems to ensure environmental compliance and avoid any environmental disputes or claims in the future (Bisk CPA Review Editorial Team,
2012). Suggestively, the expertise of professional accountants to verify financial information makes them better placed in assessing and verifying the compliance status and the economic viability of environmental management accounting systems.
In sum, accountants can provide the needed expertise for developing and verifying information, decision supporting and control system necessary for the provision of both financial information and non-financial information, including sustainability reports, to enhance managerial decisions for creating long-term firm value (Aras and Crowther
2009b; Sisaye and Birnberg
2010). These specific roles of the accountant, coupled with their ability to establish and interpret connections between non-financial and financial information of firms and responsibility to inform and educate related parties (Özsözgün Çalişkan
2014), suggest the crucial part they play in effective corporate SAR practices.
6 Thus, for companies to improve their financial, social, and environmental performance reporting, accountants must be active in SAR to provide such comprehensive accounting information (Lusher
2012). This provides a massive opportunity for accountants to spearhead environmental and sustainability management via their active involvement in the SAR process (Lewis
2000).
It has been argued that the attitude of top-level managers is very relevant in formulating sustainability goals and the communication of sustainability information (Schaltegger and Wagner
2006). Hence, if top management is uncertain about the relevance of SAR reporting, they may not commit resources to ensure its implementation thereby hindering the practice of SAR in an organisation (Martin and Hadley
2008). The authority that accountants have in organisations (Dezaley and Sugarman
1995) because of the formally established access they have to essential decision-makers cannot be overemphasised. Accountants are deemed information providers to corporate decision-makers, including top management, if not top managers themselves in organisations. The influential role of the accountant as information broker has made them internal business consultants (Burns and Vaivio
2001) and business advisors (Francis and Minchington
1999). This suggests that accountants potentially influence corporate management decisions to engage in SAR because of their information brokerage role for firms’ top management.
Notwithstanding the fact that studies have generally found the attitudes of top managers, including accountants towards the environment to be positive (Kuasirikun
2005; Lodhia
2003; O’Dwyer
2002; Wilmshurst and Frost
2001), the willingness of accountants to engage in environmental and sustainability reporting has been questioned (Deegan and Rankin
1996; Gray et al.
1995). This explains why in recent times there have been calls for accountants to be more involved in SAR and other environmental sustainability management issues (Evans et al.
2011). Gray et al. (
2010) call for the need for researchers to investigate why key managers such as accountants do not support and help develop social and environmental accounting. While acknowledging the fact that some works have been done in responding to this call, especially in examining the attitudes of accountants and other top managers towards SAR, research on SAR from the perspective of developing countries is still at the infant stage (Thoradeniya et al.
2015). Motivated by the need for more studies into SAR within the context of developing countries, this study explores the perception of accountants on their companies’ intentions towards SAR and investigates the main predictors of such intentions. The next section discusses the theoretical review and the primary hypotheses to be tested.