Rapid processes of economic globalization have led to the development of global value chains and a subsequent rise in responsibility challenges including local and global environmental and community impacts and worker wellbeing and rights. A number of different kinds of voluntary responsible business initiative have emerged to stimulate greater responsibility in the practice of multi-nationals and small enterprises, and voluntary initiatives articulate with mandatory initiatives. These intermediary responsible business initiatives include, inter alia, the Global Reporting Initiative and the UN Global Compact. However, it is not clear how successful the different initiatives may be in achieving greater corporate transparency and disclosure, and whether this leads to actual corporate behaviour change and positive impacts both at an individual corporate level and at a sector or industry level.
This paper presents the findings of a comprehensive literature review focused upon empirical evidence of the social and environmental impacts of businesses, which can be specifically linked to corporate reporting. Two key research questions guided the literature review which forms the basis of this study: First, to what extent is corporate reporting effective in changing corporate behaviour, and second, what is the evidence that this leads to positive social and environmental benefits? The academic evidence was reviewed against a theory of change for responsible business. The theory of change is presented for corporate reporting, as well as the inherent assumptions, capturing aspects of existing theory regarding why companies adopt corporate reporting (including internal and external drivers), and the less well theorised role and capacity of external users of corporate reports.
The methodology is explained for a review of scientific databases using word search terms, including effectiveness and impact, corporate reporting, and sustainability and the key findings are presented. Four databases were reviewed using eighteen specific search terms and following a screening process, sixty-six articles were selected as being of direct relevance to the topic. The findings are presented with respect to: a) the drivers of uptake of corporate reporting, referring to stakeholder and legitimacy theory; b) the quality of corporate reporting; c) the utility of corporate reporting to stakeholders; d) changes in corporate behaviour; e) impacts of corporate behaviour.
The paper presents reflections on the findings of the evidence review and sets out a research agenda on key gaps and priorities, as well as the challenges for researchers in seeking to evaluate private sector performance and sustainability impact. The paper further develops a theoretical framing of corporate reporting but also other types of responsible business initiatives, such as ISEAL, Ethical Trading Initiative and the Workforce Disclosure Project and B-Lab, which all engage with companies to improve their reporting and/or impact performance, including addressing supply chain sustainability and ISEAL, which is the membership body for sustainability standards. The analysis teases out the similarities and differences in their theories of change to contribute to an understanding of their effectiveness, as well as linking anticipated change to theories of sector-level and landscape transformation.
