Sustainability Report Evolution: The Nestlé Case Study Applicability

Introduction

In recent years, the use of terms such as 'sustainability', 'sustainable development', 'corporate sustainability' and 'shared value creation' has become increasingly common, as they have become important concepts in political and economic agendas.

Sustainability Reports and Integrated Reports have become quite common and a widespread practice both in larger companies as well in medium and smaller firms. With the publication of the Brundtland Report in 1987, and subsequent United Nations-sponsored summits of Rio de Janeiro and Johannesburg, they have definitely contributed to fostering a shared awareness of the need to “reflect deeply on the ways in which society can contribute to social welfare without threatening the survival of the earth” (Moneva, et al., 2006, p. 123).

While “sustainability” and “sustainable development” are increasingly gaining attention from individuals, businesses, NGOs and governments, there has been and still is some misunderstandings, as well as a considerable controversy of what “sustainable development” truly means and how it is implemented (Russel and Thomson, 2009; Moneva et al., 2006).

Some authors consider sustainability as a condition and sustainable development as a process by which human activity moves towards sustainability (Bebbington and Gray, 2001). Others use the terms “sustainability” and “sustainable development” indifferently. (Moneva, et al., 2006).

Gray (1991) addresses sustainability and what it really is. In a simple way, he explains the depreciation process in accounting to the sustainable process in business and claims that sustainability means taking out an income which leaves the capital intact. He refers the importance of the Elkington and Bruke (1989) book: “The green capitalists: how industry can make money and protect the environment”. These authors show how major international companies match environmental concern and commercial performance improvement. The book outlines ten steps that all businesses can undertake to turn environmental problems into profits. These insights can help modern businessmen.

One of the important issues to be addressed is a definition of sustainability reporting and its interrelation with existing frameworks of financial reporting. The concept of sustainability accounting and reporting has been emerging over the last forty years. Therefore, it is a broad view of research on the topic. According to The United Nations Conference on Trade and Development (UNCTAD) (2015) a sustainability reporting should cover economic, environmental, social and governance performance and its impact on society. Furthermore, the UNCTAD claims that “despite an ongoing discussion about the specific details of sustainability reporting, there is a common understanding that this type of reporting refers to the procedure of quantifying and disclosing sustainability information in the annual report or in a separate document.” (p.5). Global Reporting Initiative (GRI) published standards to help companies to report a sustainability report. More recently, the International Integrated Reporting Council (IIRC) disclosed a framework with guidelines to disclosure an integrated report (that also refer the GRI guidelines). So, both organizations have contributed to the companies’ non-financial report.

According to the KPMG (2017) the majority of N100 (74 percent) and G250 companies (89 percent) are using guidance or frameworks for their reporting. The GRI framework is the most used, with 63 percent of N100 reports and 75 percent of G250 reports applying it. This report also refers that the vast majority (78 percent) of the world’s top companies now report non-financial information. The third-party assurance of their Corporate Responsibility reporting has grown steadily since 2005. Assurance to this kind of reports represents now more than two thirds (67 percent) of the top companies.