A Comprehensive Measurement for Sustainability Reporting Quality: Principles-Based Approach

Paulina Permatasari,Magdi El-Bannany,Juniati Gunawan

doi:10.28992/ijsam.v4i2.282

Abstract

This study presents a comprehensive approach to measure sustainability reporting quality (SRQ) and examines levels of SRQ. It was then used to measure SRQ in Indonesia. Based on reporting guidelines, the new comprehensive measurement for SRQ was developed by not only evaluating the extent of disclosures, but also by examining the quality. The content analysis was conducted to measure the level of SRQ using this comprehensive measurement. The samples are from stand-alone sustainability reports of companies. The results indicate that the overall score for SRQ was moderate. The score was derived using five aspects: the extent of quantitative reporting, the extent of qualitative reporting, the content of the report, the quality of the report, and sustainability reporting accordance. This proposed comprehensive SRQ measurement was used to examine the quantitative and qualitative aspects. This measurement will help academicians to examine the quality of reports and provide more credible assessments that can be used by practitioners to analyze the content of the report. Applying the SRQ measure to Indonesian companies empirically enriches the existing literature and creates a new platform for future studies.

Highlights

The trend of sustainability issues has highlighted the significance of sustainability reports (SRs) and has established corporate sustainability as an important topic in business literature (Malik, 2015)
The sustainability reporting quality (SRQ) measurement as proposed in this study offers a new comprehensive measurement using many different scoring approaches for assessing SRQ level that consists of the extent of reporting (SRD), the principles of reporting (SRP), and the accordance of reporting (SRA)
This study proposes a new approach to the measurement scale for content analysis by using a scoring approach as described below: 1 = The disclosed information aligns up to 25% with the guideline requirements 2 = The disclosed information aligns more than 25% up to 50% with the guideline requirements 3 = The disclosed information aligns more than 50% up to 75% with the guideline requirements 4 = The disclosed information aligns more than 75% up to less than 100% with the guideline requirements 5 = The disclosed information aligns 100% with the guideline requirements

Summary

Introduction

The trend of sustainability issues has highlighted the significance of sustainability reports (SRs) and has established corporate sustainability as an important topic in business literature (Malik, 2015). The report can assist companies to reach their objectives, measure performances and manage changes (Perez & Sanchez, 2009). He and Loftus (2014) found that companies with better sustainability performance disclose higher levels of sustainability information and provide more objective and verifiable sustainability disclosures compared to those that do not. The use of GRI guidelines is continually growing (Roca & Searcy, 2012). This growing trend needs to be addressed and followed by good practices, the number of reports, and the quality

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Conclusion