A Critical Analysis of Corporate Sustainability Reporting of Joint Ventures
|Sustainable development is a major challenge facing the world today and corporations will play an important role in addressing this challenge. Some leading companies are even beginning to realise that the way in which they address sustainability issues is a driver of success. Those seeking to respond to these challenges need to be able to communicate this to their stakeholders who can influence their performance. Thus corporate sustainability reporting, which is a means of internal and external stakeholder communication of organisational performance, is becoming increasingly viewed as a valuable tool. However, limiting the reporting boundary to wholly-owned entities may fail to present a fair and balanced impression of the company. Joint ventures should therefore be included in the reporting boundary but there are a number of challenges facing businesses wishing to do so.
Research was therefore undertaken to determine how companies should be reporting on their joint ventures (JVs); to establish how the top reporters are currently tackling the challenges of JV reporting; to identify areas for improvement; and to investigate how this reporting is likely to develop in the future.
A literature survey was conducted to determine how companies should best report on their JVs. Using this information, a list of criteria was compiled against which six top reporters’ sustainability reports were scored. Low scoring criteria suggest opportunities for improvement in JV reporting. An interview and an examination of past trends in JV reporting were then used to gain insight into the future developments.
The findings suggest that joint venture reporting is still very much in its infancy. Most of the leading engineering companies do not even report on their joint ventures. Even those that do, as this research has found, still have many opportunities for improvement open to them. The most notable of which is to put in place and disclose a process not only to determine to what JV stakeholder issues to respond, but also to integrate these issues into their management, governance and change processes.
Past trends suggest the quality of JV reporting is improving as companies gain more experience and become more aware of its benefits. However, any future changes are likely to be gradual.