Sustainability reporting in Indo-Pacific countries: an integrative response to local and global frameworks

The Indo-Pacific region has been emerging economically in recent years. The rapid economic and trade development between the Indo-Pacific and the resource-rich Middle East and Africa has made the Indian Ocean area one of the busiest trade corridors in the world. In 2017, it was reported that the Indian Ocean accounted for 22% of global container traffic (Wignaraja et al., 2019). The region’s geo-political importance has also prompted the USA to refocus on the development of this region, and recently launch a new economic initiative – Indo-Pacific Economic Framework for Prosperity 2022 – to help this region grow even faster.

Along with the proliferation of economic position and development in Indo-Pacific countries, there are growing concerns and awareness of social and environmental challenges in this region, such as climate change, resource consumption and social inequity (Dissanayake et al., 2021b; Qian et al., 2020). Indo-pacific countries are mostly island developing nations, vulnerable to climate change and rising sea levels. Countries like the Philippines, Sri Lanka and Bangladesh are repetitively rated as the most vulnerable nations to global warming and climate change threats (Eckstein et al., 2019). Many developing countries in the region are low to middle income countries with limited climate coping capacity (Dissanayake et al., 2021b). Large populations and population densities in India, Indonesia and Bangladesh, have also made the region extremely vulnerable to environmental and resource problems, including over-consumption of resources and large quantity of garbage generation. Rapid economic development and urbanisation accelerate these problems (Adhariani and de Villiers, 2019). In addition, concerns over workplace safety became viral in Bangladesh, the world’s second largest ready-made garments exporter, after the collapse of the Rana Plaza building that killed over 1,200 garment workers in 2013 (Akbar and Deegan, 2021; Sinkovics et al., 2016). Since then, Bangladesh has been constantly criticised for its poor occupational health and safety conditions, especially the poor work environment of women (Hossain et al., 2021).

Governments and regulators in these countries have actively responded to the pressing social and environmental issues by implementing rules and regulations, some of which require business corporations to report on their social and environmental responsibilities and performance. For example, the Indonesian government, through the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan [OJK]), issued a significant regulation, POJK 51/2017, mandating that public companies prepare and publish sustainability reports either as stand-alone reports or as part of annual reports. The Philippines Securities and Exchange Commission (Secco et al., 2020) released the Sustainability Reporting Guidelines for Publicly Listed Companies in 2019. The guidelines explicitly require all listed companies to report sustainability information to the SEC, and impose an “if not, why not” policy.

In addition to local regulatory, social and environmental demands, companies in developing countries are increasingly influenced by international pressures to fulfil social and environmental responsibilities. For instance, as a result of many high-profile workplace safety incidents in Bangladesh, the USA suspended its trade privileges in June 2013 (Sokou and Schneider, 2013). International buyers also started to impose greater pressure on Bangladeshi companies and demand more corporate social responsibility (CSR) disclosures (Akbar and Deegan, 2021; Islam et al., 2016). Against this context, globally influential frameworks for sustainability reporting, such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Integrated reporting (IR), Sustainable Development Goals (SDGs) ^[1] as well as Taskforce on Climate-related Financial Disclosures (TCFD), have been increasingly adopted by businesses in developing countries (Gunawan et al., 2020; Mougenot and Doussoulin, 2024). In some instances, regulators have drawn inspiration from these frameworks when setting sustainability reporting requirements. The Philippines is an example of this, with its SEC Sustainability Reporting Guidelines for Publicly Listed Companies document (SEC Mem. Circ. No. 04, 2019), explicitly acknowledging that its guidelines and indicators have been influenced by international reporting frameworks.

In response to the local and global pressures and coercions, Indo-Pacific companies, especially among large, listed companies, have paid greater attention to sustainability and non-financial reporting. There has been a surge of sustainability reporting in developing countries, particularly in the Asia-Pacific or Indo-Pacific regions in the past decade (Qian et al., 2021). A recent survey conducted by KPMG (2022) reveals that 84% of top companies in the Asia-Pacific region produce sustainability reports, close to the figure (96%) among global leading companies which are dominated by Western developed countries.

However, research into developing countries in the area of sustainability reporting remains patchy in volume and broad in scope (Qian et al., 2020). This has potentially been due to the limited access to data in these countries which are typified by slower industrialisation and economic growth (Qian et al., 2020), unstable governments and policy regimes (Dissanayake et al., 2016) and constrained capacity to undertake the practice (Dissanayake et al., 2019) and the previously insufficient but now growing external pressure to do so (Qian et al., 2020). The significant disruption and tragic effects of the COVID-19 pandemic in developing countries may also have affected sustainability reporting practice (see, for example, Hazelton et al., 2023). Our understanding of corporate responses to local and international pressures in the developing context remains limited (Dissanayake et al., 2021b). This is particularly the case for Indo-Pacific countries within the Asia-Pacific region, since their lack of significant economic influence in the past has led to them attracting much less attention in the global landscape (Qian et al., 2020). Most extant sustainability reporting literature on developing countries tends to apply Western theories directly to developing country contexts, without considering their different country and institutional contexts (Qian et al., 2021; Tilt, 2016). The importance of understanding the influence of context (local, global and the combination of the two) has been highlighted in a recent special issue of the Accounting, Auditing and Accountability Journal (Qian et al., 2021). Developing countries face different prominent sustainability issues, different regulations and regulatory enforcement and different socio-economic settings, despite the global trend and expectations on sustainability reporting practice from the outset. Therefore, this study is to explore the question:

Given the unstandardised nature of sustainability disclosure and different institutional contexts of each developing country, both country regulatory pressures and adoption of global reporting frameworks are likely to significantly shape corporate pursuit of sustainability and their behaviour towards sustainability reporting. While global approaches to sustainability may be more standardised and proactive at the macro level, they often lack legitimacy and acceptance at the local (micro) level particularly in developing countries (Jamali, 2010). Research has found that in developing countries, continuous pressures exist between the two ends of abiding by international frameworks for CSR/sustainability reporting and also continuing reporting at a national/local level based on local regulations and policies (Dissanayake et al., 2021a; Jamali, 2010). To align these two, companies often choose to take an integrative approach to proceed with sustainability reporting in seeking legitimacy (Dissanayake et al., 2021a). Therefore, Integrative Social Contract Theory (ISCT) is adopted for this study to help illuminate the impact of the two layers of “social contracts” that companies in developing countries may have to grapple with when undertaking sustainability reporting.

The Indo-Pacific countries investigated in this study include Indonesia, Philippines, Sri Lanka and Bangladesh, which are considered relatively large and representative in the region. As will be seen, the four countries have very different sustainability reporting regimes. Indonesia has mandatory sustainability reporting rules governed by the Financial Services Authority of Indonesia. The Philippines has a detailed comply-or-explain listing rules issued by its SEC. While Sri Lanka does not have mandatory reporting rules, the corporate governance code issued by the Institute of Chartered Accountants of Sri Lanka may have a significant effect on corporate sustainability reporting levels. In contrast, despite growing research and practice of sustainability reporting in Bangladesh, neither any legislative pronouncement, nor Securities and Exchange rules, mandate sustainability reporting for public listed companies in this country. Lack of legal enforcement for reporting is considered a major issue in Bangladesh (Belal and Cooper, 2011). To capture these differences, this study develops a comprehensive sustainability reporting index covering key social and environmental areas to map and benchmark company reporting against major global guidelines and local/country frameworks.

This study makes three contributions to the literature. First, it addresses a gap in the extant sustainability reporting literature, which focuses predominantly on developed countries (Qian et al., 2021; Tilt et al., 2021). In particular, this study highlights the significant yet overlooked changes and developments of sustainability reporting in the increasingly influential Indo-Pacific region. The findings of this research will provide context on the potential gaps between existing reporting within Indo-Pacific countries and global norms that many jurisdictions have codified in response to the proposed international Sustainability Standard Board or TCFD guidance (Abhayawansa et al., 2021; Bui et al., 2022; de Villiers and Dimes, 2023). Second, this study uses a novel theorisation that provides insight from an international business ethics perspective (Brenkert, 2009) which is distinct from the often used legitimacy theory or institutional theory perspectives. The theoretical nuance of ISCT in understanding the sustainability reporting trends within the region is of special significance given the recent global convergence of sustainability reporting frameworks and their varied impacts across different local contexts (Qian et al., 2021; Tilt, 2018). Third, this study also makes a methodological contribution by developing a comprehensive, multi-faceted sustainability reporting index which enables the cross-country comparison and benchmarking of sustainability reporting practice in the Indo-Pacific region.

The paper is structured as follows. Section 2 presents a literature review of sustainability reporting practice in the Indo-Pacific countries. Section 3 reviews the theoretical perspective used for this study. Section 4 provides the method used to perform the sustainability reporting analysis, whilst Section 5 reports the findings of that analysis. In Section 6, the conclusion and implications from this paper are outlined ^[2].

While there is a growing number of studies concerning sustainability issues in developing countries (Qian et al., 2021), little attention has thus far been given to the Indo-Pacific region, despite its increasing economic and geo-political influences and the significant impact that issues like sustainability and climate change have on the region (Sharma et al., 2017; Sharma and Davey, 2013). It is also important to acknowledge that the Indo-Pacific is a diverse region where countries have distinct socio-political and economic contexts. For example, the South Pacific region is heavily affected by issues of climate change and have limited ability to impact it, and this may signify why voluntary engagement with sustainability reporting practices by companies within, for example, Fiji, is low (Sharma and Davey, 2013). We have focused on four countries with diverse and contrasting environments to frame how sustainability reporting practices are taking shape. Of the four Indo-Pacific developing countries examined in this paper, Sri Lanka and Bangladesh have arguably attracted the most sustainability reporting research attention, even though Indonesia and the Philippines are relatively larger. Relevant prior research on these countries is discussed in turn in this section.

Bangladesh has a history of significant workplace safety and human right concerns. While this has resulted in growing pressures for occupational health and workplace safety disclosure (Akbar and Deegan, 2021; Islam et al., 2016; Islam and McPhail, 2011), sustainability reporting is still lacking. This has been highlighted in a series of publications on CSR reporting practice in Bangladesh since the early 2000s by Imam (1999, 2000), Belal (2000, 2001), Belal and Cooper (2011), Belal and Owen (2015, 2007), Islam and McPhail (2011), Khan et al. (2009), Khan et al. (2011) and Khan et al. (2020). This literature mostly criticised the limited disclosure of social and environmental issues in corporate reporting practice, and much of the problem was attributed to a lack of legal requirements, resources and awareness (Belal and Cooper, 2011; Hossain et al., 2015).

In a recent examination of 196 Dhaka Stock Exchange listed companies, Masum et al. (2019) found that whilst public companies have started to disclose more information on employee related issues in sustainability reports, environmental concerns have been given much less attention. Hossain et al. (2017) further noted that reporting in Bangladesh focuses more on self-interest and image-building activities, such as community investment and governance policies, but less on workplace rights. Issues relating to female workplace safety are particularly prominent in Bangladesh. Although women account for a significant proportion of the labour force in Bangladesh, they tend to work for long hours at lower wages, often do not get proper maternity leave and have to work in unsafe working conditions (Alam et al., 2011). Hossain et al. (2021) report that most gender-related discourses in Bangladesh are rhetorical rather than substantive, providing little information in critical areas such as equal opportunities and improving female employees’ welfare. Overall, the level of workplace and human rights disclosure is still low, leading to Hossain et al. (2017) calling for greater attention and research in this country.

Sustainability reporting research in Sri Lanka was virtually non-existent prior to 2010, but the last decade has seen a significant expansion of such work, often focusing on publicly listed companies and flagging similar concerns about the low level of disclosure (Wijesinghe, 2012). More recent research has found a steady increase in Sri Lankan sustainability reporting practice (e.g., Dissanayake et al., 2019, 2016; Qian et al., 2020). Dissanayake et al. (2016) examined the extent to which publicly listed companies report sustainability issues and used the GRI standards. Their study revealed that over 40% of the top 30 listed companies have started to report on sustainability KPIs, although the compliance with the GRI framework is still far from adequate. Beddewela and Herzig (2013) explored the pressures, barriers and enablers of sustainability reporting in multinational subsidiaries operating in Sri Lanka and found that, in the majority of cases, CSR information was provided primarily to satisfy the wishes of head office, with the wishes of the Sri Lankan people being at best a secondary concern.

Research also suggests that Sri Lankan companies focus on disclosing social rather than environmental responsibilities. For example, Fernando et al. (2015) explored environmental and social practices of a sample from the largest 200 listed companies and found that Sri Lankan companies engage more in social activities compared to environmental commitments. Dissanayake et al. (2019) support this and provide further evidence that larger companies and those that adopt the GRI guidelines produce a higher level of social disclosure.

There is only a slim body of literature concerning sustainability reporting practice in Indonesia. Currently, this literature is predominantly focused on the relationship between sustainability reporting and financial performance (Gunawan, 2016; Oeyono et al., 2011), although there are a few papers which either analyse the reporting of a specific sustainability issue (Cahaya et al., 2017; Faisal et al., 2018), or perform a comprehensive analysis of sustainability reporting practice against SDGs (Gunawan et al., 2020). In relation to climate change, Faisal et al. (2018) reviewed annual reports of 37 listed Indonesian companies and found that approximately one-third of the companies disclosed total greenhouse gas (GHG) emissions, that around 50% of the companies disclosed total energy consumption, and that the most disclosed item was risks and opportunities of climate change. Cahaya et al. (2017) analysed the annual reports of 223 publicly listed Indonesian companies and found that approximately 30% of the sample provided some form of occupational health and safety (OHS) disclosure, with the most disclosed items being health and safety programs. However, other areas were barely reported. For example, less than 9% of companies disclosed the rate of injury, and the disclosure rate was even lower when it came to the percentage of total workforce represented in formal joint management-worker health and safety committees (0.45%), and health and safety topics covered in formal agreements with trade unions (0.9%). Gunawan et al. (2020) conducted a content analysis on 453 annual reports and 44 sustainability reports of Indonesian companies from 2014 until 2016 to assess the extent to which Indonesian companies reported on the SDGs, especially in achieving the goal of responsible consumption and production (RCP). They found that good health and well-being comes in as the top reporting area in sustainability reports, while environmental issues such as RCP are less reported compared to social and economic development.

Many studies suggest that the overall level of sustainability information reported by Indonesian companies tends to be low. For example, Djajadikerta and Trireksani (2012) found that the extent of sustainability reporting made by Indonesian listed companies on corporate web sites is low, and that the nature of disclosure is mostly descriptive, without a clear time frame specified for disclosure. More specifically, Cahaya and Hervina (2019) indicate that very few public companies report on social equity issues such as child labour, forced and compulsory labour. Utama (2011) argued that the reason for the low level of reporting in Indonesia is because of the limited infrastructure support for reporting (defined as standards, governance and assurance) within the organisations and the nonexistence of a single reporting standard. This resonates with the findings of Gunawan (2016), who concluded that government regulations are the primary driver for CSR reporting in Indonesia and previous attempts to change this to “moral obligation” drivers for CSR have proven unsuccessful.

A number of studies of sustainability reporting in ASEAN countries have included the Philippines. Compared with popular countries such as Thailand, Singapore, Malaysia and Indonesia, reporting in the Philippines is low, particularly in the area of employee relations and environmental disclosure such as responsible consumption and production processes (Chapple and Moon, 2005). Mita et al. (2018) and Tran and Beddewela (2020) also find that the overall level of sustainability reporting and the adoption of the GRI indicators by Philippine companies are one of the lowest among ASEAN countries. In an investigation of 10 Philippine mining companies, Aquino (2009) found that reporting is sporadic and varies significantly among large mining companies. Briones (2020) analysed CSR reports produced by the top 30 publicly listed companies in the Philippines and found that the only sustainability issues prioritised were community involvement and environmental issues.

Clearly, previous studies of the Indo-Pacific countries, especially Indonesia and Philippines, are too limited to provide insightful conclusions concerning sustainability reporting practice in the region. Much of this literature is descriptive in nature and/or concerned with a few broad sustainability initiatives and activities. Very rarely is there a comprehensive analysis on how various sustainability issues are reported upon, or how companies grapple with different sustainability issues and challenges. As a result, the depth of analysis and findings is limited. Following the local regulatory and institutional changes, there does seems to be a recent increase of sustainability reporting in the Indo-Pacific region, particularly in Sri Lanka (Dissanayake et al., 2019) and Indonesia (Gunawan et al., 2020). International influences and global standards adoption may also contribute to the change of sustainability reporting practice in this region. It is important to acknowledge the recent global efforts to synthesise various non-financial and sustainability reporting frameworks, such as the International Sustainability Standards Board which arose from a merger between the Value Reporting Foundation and Climate Disclosure Standards Board (de Villiers and Dimes, 2023), and the regulatory shifts this has catalysed with the introduction of S1 and S2 on climate-related disclosure. Nonetheless, the focus of the present paper is to understand how Indo-Pacific countries respond to local and global norms and pressures as they increasingly report on sustainability issues using the GRI specifically. This provides a foundation for understanding how the future, and yet to be solidified changes to sustainability reporting frameworks, may impact this region in their reporting efforts. ISCT offers a unique framework to encapsulate the influences of both local and global norms on corporate sustainability reporting.

ISCT, conceptualised by Donaldson and Dunfee (1994), derives its roots in the classical social contract theory but advocates for a more balanced approach to be pursued by individuals and organisations in seeking social and environmental objectives (Dissanayake et al., 2021a). ISCT integrates two distinctive social contracts – “a normative and hypothetical contract among economic participants” at a macro level and a second kind of contract that occurs “among members of specific communities” at a micro or local level (Donaldson and Dunfee, 1994, p. 254). This aggregate reconciles the two traditionally disparate views and provides a realistic approach to principle-based decision-making. In the business context, this decision-making process involves managers considering the company’s obligations towards the local community and environment as well as universal moral principles, which are called hypernorms (Donaldson and Dunfee, 1994; Husted, 1999).

Hypernorms are justified through commonly or universally accepted ethical reasoning (e.g., to tackle the critical climate change or social equity issues) or evidence of a global convergence for particular norms (e.g., international standards developed and agreed upon climate change and social accountability) (Husted, 1999). They stand at the top of the pyramid of all ethical norms and constitute the basis of macrosocial contracts that uphold or limit the design and interpretation of microsocial contracts (Donaldson and Dunfee, 1994). This said, more recent work in the area also points to issues of power, where hypernorms are not necessarily exceptional but are just a status that certain perspectives achieve as convergence between societies takes place (Brenkert, 2009). This “contextualist view”, which emphasizes the potential of “local” interpretations and formulations of hypernorms (Brenkert, 2009), is particularly important in the codification of global guidance around sustainability reporting practice where legitimacy and obligatory forces must also be considered (Glac and Kim, 2009).

International frameworks and standards such as the GRI and SDGs have been developed as key conceptual resources to resolve ethical and sustainability issues in a global context. They are considered to represent universal sustainability reporting hypernorms that are expected to guide local practice broadly and at times perhaps override local practice if it contradicts these global injunctions. Companies in developing countries have been subject to greater pressures from powerful international communities and buyers to increase sustainability reporting (Belal and Owen, 2007; Islam et al., 2016). They are found, for example, to be increasingly adopting international sustainability reporting frameworks such as the GRI or the Integrated Reporting “IR” framework, or using the SDGs to guide production of their reports, which enables them to be accepted by international stakeholders. In Indonesia, Adhariani and Sciulli (2020) found that approximately 60% of large listed companies (mostly in the banking, finance and mining industries) show an adequate degree of conformity with the “IR” framework, although most Indonesian companies do not explicitly adopt the “IR” framework. As Alawattage and Fernando (2017) argued, globalisation can have a dominating and colonising effect on the social and environmental accountability of local companies. Local companies may be coerced to embrace global reporting standards to be accepted by the global communities and stakeholders because companies are acutely aware that, ultimately, the macro level social contract can define “the normative ground rules” which create the second/local level contract (Donaldson and Dunfee, 1994, p. 254).

Many prior studies find that global reporting frameworks have a positive impact on the quality and quantity of sustainability reporting. Dissanayake et al. (2019), for instance, found that listed companies that used the GRI guidelines had a higher volume of sustainability reporting compared with those that did not. Khan et al. (2021) analysed reports released by Bangladeshi banks and found that the use of GRI guidelines was positively associated with the quality of sustainability reporting. A similar result was found by Islam et al. (2016), who analysed disclosures by banks in four Asian-Pacific countries and found that those banks which used the GRI released extensive disclosures compared to those banks which did not. The GRI, given its comprehensive indicator list, has also been found to provide guidance to enhance the reporting quality of specific issues such as the work environment including health and safety (Greig et al., 2021). Moreover, David and Giordano-Spring (2022) conducted a study comparing climate-related disclosures made by airlines before and after the release of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. They found whilst overall compliance with the TCFD recommendations remained low, the compliance score did increase from 22% in 2015 to 33% by 2018, suggesting that the TCFD framework did influence corporate climate reporting.

However, prior research also warns that utilisation of global frameworks is no guarantee of reporting quality. Although pressures from “parent” companies and international buyers can drive sustainability reporting, there has been some superficial adoption of Western ideologies through conforming to global reporting standards without real meaningful and context-specific disclosure (Dissanayake et al., 2016; Nguyen et al., 2022; Qian et al., 2021). As suggested by the ISCT perspective (Spicer et al., 2004), a normative approach is needed to understand how specific communities are able to outline moral norms that suit their contexts, rather than only be directed by what is happening at a global level (Donaldson and Dunfee, 1994). This allows stakeholders to have significant freedom to specify particular local norms supported by a clear majority of the local community (Dissanayake et al., 2021a). It is also important to be aware that global CSR or sustainability concepts and standards may have different meanings for leaders or managers, depending on their unique localised contexts and varying representations of principles relevant to social and environmental objectives (Dissanayake et al., 2021a). When managers are able to analyse CSR or sustainability within a strategic global and local framework, they are in a far better position to decide which sustainability activities would be aligned towards global hypernorms and which would be aligned towards requirements/challenges of the local context (Gilbert and Behnam, 2009). In this regard, ISCT helps in understanding how company managers may vary their attitudes when they are constricted within national boundaries, or whether managers remain consistent irrespective of these boundaries.

Regulations and standards at the country level and the rules enshrined in stock exchange listing requirements may reflect the local norms and expectations which shape sustainability reporting at the local level (Gunawan, 2016; Islam and McPhail, 2011; Khan et al., 2020). These local/micro level contracts represent the shared agreements of community members regarding their moral obligations. In the national context where regulatory enforcement is a powerful driver for local sustainability reporting changes, companies are found to be more capable of increasing not only the quantity (Tauringana, 2020), but also the quality (Khan et al., 2021) and credibility (Abernathy et al., 2017) of the reporting. The four Indo-Pacific countries investigated in this study are similar in some ways, but considerably different in other ways, particular in terms of how sustainability is viewed and the diverse challenges present in each individual country. Regulatory enforcement significantly varies between these countries, with the Philippines and Indonesia having more stringent reporting requirements than Sri Lanka or Bangladesh.

The Philippines and Indonesia have clear requirements for sustainability reporting. In the Philippines, sustainability reporting is governed by the Philippines SEC Memorandum Circular No 4 Series of 2019, which is entitled Sustainability Reporting Guidelines for Publicly Listed Companies ^[3]. These rules require companies to either report certain information to the SEC, or explain why they are unable to do so. Companies are expected to report on a wide range of social and environmental indicators based on the Guidelines. In Indonesia, sustainability reporting is governed by POJK No. 51/POJK.03/2017 (herein POJK 51/2017 for short) – Sustainable Finance Implementation for Financial Institutions, Issuers, and Public Companies, which is based on Act No. 40/2007 (AKA the Law of the Republic of Indonesia No. 40 of 2007 concerning Limited Liability Companies). This policy was released by the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan [OJK]) and requires certain public companies and other organisations to release sustainability reports, either as stand-alone reports or as part of an annual report (Adhariani and du Toit, 2020). However, it is only applicable to businesses working in fields related to natural resources and does not specify any topics or indicators that must be included within sustainability reports.

Sri Lanka and Bangladesh do not mandate sustainability disclosure, but do provide a few voluntary disclosure guidelines. The Code of Best Practice on Corporate Governance 2017 contains a small portion of guidelines on environment, society and governance (ESG) reporting which seems to be influential, as the Colombo Stock Exchange’s Listing Rules (particularly Section 7.10) include several requirements that are inspired by this Code (Kirchmaier and Gerner-Beuerle, 2021). However, there are no mandatory listing rules regarding the contents of sustainability reports in Sri Lanka and the Code itself refrains from specifying which indicators should be included in a sustainability report. Similarly, despite the increasing demand for sustainability reporting in Bangladesh (Belal and Owen, 2015), especially in the banking (Khan, 2010; Khan et al., 2009) and garment industries (Akbar and Deegan, 2021; Islam and McPhail, 2011), there are no reporting rules in this country. Whilst the Corporate Governance Code No. BSEC/CMRRCD/2006–158/Admin/80, issued by the Bangladeshi SEC in 2018, does require disclosure of any threat to sustainability and risk to the environment, it is generic and does not provide any specific indicators or guidance.

Clearly, the broad spectrum of local requirements is likely to result in significant differences in the level and focus of sustainability reporting by the companies situated in these countries. Cahaya et al. (2015) compared Indonesian annual reports released both before and after the implementation of Act No. 40/2007 and found that after the implementation of Act No. 40/2007 in Indonesia, the overall labour disclosure levels rose by 8.68% from 2007 to 2010. In contrast, Belal and Cooper (2011) and Hossain et al. (2015) noted that the lack of local reporting requirements and pressures in Bangladesh is the main reason for its low quality disclosure. However, prior literature also cautions that the anticipated benefits of mandatory disclosure may be elusive. Arena et al. (2018) reviewed reports from nine different Southeast Asian countries and revealed that in the majority of cases where a formal law requiring broad CSR disclosures was introduced, it had a positive impact on levels of disclosure, albeit with significant variations in the level of compliance and the quality of disclosure (Abernathy et al., 2017). Thus, for all the benefits regulation can potentially provide, it is still unclear how managers responded to local guidelines or whether stricter requirements lead to better quality and more completeness of sustainability reporting within the global context of universal principles. This is likely because the local (mandatory) reporting frameworks are often vague and non-specific, providing interpretive flexibility but limited guidance on specific sustainability indicators, implementation procedures and monitoring mechanisms (Qian et al., 2021).

As such, from the ISCT perspective, companies are influenced by both global and local ethical standards in their reporting practices. On the one hand, macro hypernorms—universal principles that transcend cultural and geographic boundaries—drive companies to adopt similar ethical attitudes and reporting behaviours, regardless of their location (Dissanayake et al., 2021b). This convergence is particularly evident in developing countries, where companies must align with global standards like international reporting guidelines to maintain legitimacy and competitiveness in the eyes of the international community (Dissanayake et al., 2021a; Jamali, 2010; Qian et al., 2021). Even if some indicators are less relevant to their specific context, adherence to these global norms is seen as essential. On the other hand, companies are likely to integrate local standards, conditions and norms into their reporting decisions. This dual approach underscores a middle ground in which company behaviours are largely uniform in meeting international sustainability reporting requirements but exhibit variations due to local influences. By adopting the ISCT perspective, the empirical process in this study aims to reveal how companies in the Indo-Pacific region navigate the interplay between global hypernorms and local norms in their sustainability reporting efforts and what strategies these companies are likely to employ to balance the demands of international standards with the nuances of local contexts, providing a comprehensive understanding of their reporting practices.

A comprehensive content analysis of company reports was conducted for this study. The content analysis method enables the researchers to delve deep into various issues in the documents analysed, identify areas of focus and draw insights relevant to the questions explored (Krippendorff, 2004). In this study, the content analysis was performed on the annual and sustainability reports of the top 50 publicly listed companies from the main stock exchanges of the four Indo-Pacific countries over the two years of 2019/20 and 2020/21^[4]. This data range was used for a number of reasons:

• the volume of data analysed across all four countries meant we had to choose a focused time period;

• this time period provides insight into impacts of the COVID-19 pandemic and whether this featured in sustainability reporting; and

• this data set was supplied by the GRI from their proprietary databases populated by their staff and verified by the researchers.

The stand-alone sustainability reports were the main source of data for this study. If a stand-alone sustainability report was not produced by the company, its annual reports were analysed instead. A total of 249 sustainability and annual reports were collected and analysed. The data collection and analysis were performed between January 2022 and March 2023 in collaboration with the GRI ASEAN regional hub.

To make the content analysis manageable and more focused, we selected four important sustainability issues to examine – two social issues and two environmental issues. The two social areas are employee benefits, health and well-being (EHW) and diversity and equity (DE), whilst the environmental issues are actions on climate change (CC) and responsible production and consumption (RPC). Each of these topics is an important component of sustainability that has been reflected in the SDGs, the GRI and previous accounting academic literature, such as Parsa et al. (2018), De Aguiar and Bebbington (2014), Gunawan et al. (2020) and Adler et al. (2022). To understand the extent to which these key social and environmental areas were reported upon, we identified important issues and themes in each area based on multiple global standards and guidelines including GRI^[5], SDGs^[6], the “IR” framework^[7], SASB^[8] and ISO 14000 and ISO 26000^[9]. The GRI has the most detailed standards on each of the topic areas investigated, while the SDGs and the “IR” framework consist of more broad and generic requirements. Additionally, the TFCD and carbon disclosure project (CDP) frameworks were also used to identify indicators specifically related to climate change.

As for the local frameworks, Indonesia’s POJK No. 51/2017 and Philippines’ SEC Mem. Circ. No. 04, 2019, Sri Lanka’s Code of Best Practice on Corporate Governance 2017 and Bangladesh’s Corporate Governance Code, were the main sources of reference. However, as mentioned earlier, the Codes in Sri Lanka and Bangladesh contain no specific areas of reporting, and thus could only provide generic guidance to the local companies. Also note that due to the language barrier, our understanding of Indonesian POJK 51/2017 does not come from the regulation itself, but an English translation of the regulation which was found on the internet. Whilst there may be other regulations mentioning sustainability disclosure requirements in Indonesia, these regulations do not contain disclosure provisions beyond those required by POJK 51/2017 ^[10].

In total, 49 reporting items were developed for this study (see Table 1). 14 were for EHW, 9 were related to DE, 17 were about CC and the final 9 items related to RPC. The mapping of these items with the global reporting frameworks and local regulatory frameworks is included in the findings section.

The content analysis was conducted by examining the annual and sustainability reports of the sample listed companies to identify the extent to which these items and themes were reported. Each item reported was mapped against the global and local frameworks to reveal how companies responded to these frameworks and guidelines. In addition, to enable the statistical analysis, if an item was reported, a code of “1” was recorded; otherwise “0” was assigned. As such, the quantified codes can be added to reflect the reporting level of a particular area for a company.

The overall analysis is focused on the extent of sustainability reporting among four countries (Table 2), the country comparison (Table 3) and overall reporting statistics (Table 4). This is followed by an extensive analysis on the contents of reporting in the four key social and environmental areas in Section 5.2.

The overall results clearly show that the Philippines stands out as the highest reporting country among the four Indo-Pacific countries. In 2020/21, 43 (86%) of the top 50 listed companies reported on sustainability information, a slight increase from 41 (82%) reporting companies in 2019/20. This is followed by Indonesia. In Indonesia, there is a notable increase in the number of companies that have reported on sustainability, from 30 (60%) companies in 2019/20–37 (74%) in 2020/21. The Sri Lankan companies have been consistent reporters as 34 (68%) of the top listed companies have produced sustainability information in both years. In contrast, Bangladesh has the lowest number of reporting companies in the region. Only 15 (30%) companies within the top 50 listed companies reported sustainability information in 2019/20 and that number has not changed in 2020/21.

Table 3 compares the reporting levels between countries and the results confirm that there are significant differences between the four countries examined (F = 7.23; p = 0.00). A series of two country comparisons further reveal that all three countries, Philippines (t = 5.08; p = 0.00), Indonesia (t = 2.78; p = 0.01) and Sri Lanka (t = 2.32; p = 0.02), have significantly higher levels of sustainability reporting compared to Bangladesh. The reporting level in the Philippines is also significantly higher than Sri Lanka (t = 2.74; p = 0.01) and Indonesia (t = 2.21; p = 0.03). However, the difference between Sri Lanka and Indonesia (t = 0.52; p = 0.61) is insignificant. These results imply a three-tier reporting practice among the four countries, with the Philippines being the highest reporter, Indonesia and Sri Lanka in the middle and Bangladesh being the lowest. The higher level of reporting by companies in the Philippines is driven by the stronger level of regulatory pressure and scrutiny from the country’s Securities and Exchange Commission (SEC) which has made it mandatory for publicly listed companies to file a sustainability report. As highlighted previously, the findings seem to support the effectiveness of local frameworks on sustainability reporting. An interesting implication here is that local regulations is contributing to an increased extent and quality of reporting by using global frameworks such as the GRI. This shows how local norms may reinforce a convergence of practice around global hypernorms, such as the more universally accepted GRI standards. However, the local pressure has not made much difference for companies in Indonesia, as their mandatory sustainability reporting practices present little difference compared to those found in Sri Lanka, where the disclosure form is predominantly voluntary. In these middle-tier reporting countries, the interplay between less rigid local norms and global hypernorms becomes visible through the “muddying” of a clear legitimacy and obligation to subscribe to any particular framework (Glac and Kim, 2009).

Table 4 presents the descriptive statistics and the comparison of sustainability reporting levels between the two years investigated. The overall results show that, on average, companies reported 14.4 (29%) of the 49 items in 2019/20 and this improved to 17.77 (36%) in 2020/21. The paired comparison confirms a statistically significant increase of reporting levels for the four countries examined (t = 5.62; p = 0.00). The Philippine companies provided the highest level of reporting, disclosing nearly 45% (mean = 21.17; median = 21) of all indicators in 2020/21. This is followed by Indonesia (nearly 37%) and Sri Lanka (34%). A significant improvement in sustainability reporting from 2019/20–2020/21 was also exhibited by these three countries. The reporting practice by Bangladeshi companies appear to be the lowest, with only around 9 (18%) of 49 indicators reported in both years. There is also a slight decrease of sustainability reporting level in Bangladesh, although the change is insignificant (t = −0.08; p = 0.94). This points to the less stringent and specific regulatory pressures for sustainability reporting that are impacting companies in Bangladesh compared to the other three countries observed. Once again, the impact of “obligation” in integrating hypernorms such as global reporting standards is made clear (Glac and Kim, 2009).

This section presents further analysis on each of the social and environmental areas examined. To understand the connection and overlaps between the global and local frameworks, a mapping of these two levels of frameworks was conducted. Climate change is the area subject to the greatest global and local coercive pressures, with 14 of 17 items specified in local frameworks, particularly in Philippines. As for the other three areas, employee benefits, health and well-being, diversity and equity and responsible production and consumption, only half of the items addressed in the global standards are specified at the local level. A detailed analysis of these four themes of sustainability reporting practice in each country is included in  Appendix 1.

Table 5 presents the breakdown of individual EHW indicators and the mapping of these indicators against global and local frameworks and guidelines. The most (least) reported EHW indicators, i.e. reported by over 50% (less than 20%) of companies in respective countries, are identified and ranked in the Panels A and B of the table. A description of the reporting status in each country is also presented in Panel C of the table.

The analysis of employee benefits, health and well-being (EHW) reporting shows that the top listed companies have reported an average of six (43%) of 14 EHW indicators, which aligns with the six indicators specified in the local frameworks. Clearly, both global and local frameworks play a significant role in driving positive sustainability reporting practices. As shown in the framework mapping in Table 5, Philippine companies are subject to the highest level of reporting regulations and therefore its level of EHW reporting is more consistent across all aspects studied, ahead of other three countries in many indicators. However, Indonesian companies were rated higher in several individual elements such as occupational health and safety and employee well-being. As Indonesian companies did not cover the depth of many indicators explored, both Indonesia and Sri Lanka, score somewhat in the middle on the EHW disclosure. This is likely due to both countries possessing has some form of local guidelines, either through stock exchanges or through professional accounting bodies. Bangladesh has neither mandatory reporting requirements, nor local guidelines imposed by regulatory bodies, and as a result, its EHW reporting level is the lowest. These findings highlight how hypernorms are not necessarily a set of moral principles that hold pre-eminence over others – instead, there are local interpretations of various hypernorms which can express themselves in different ways according to contextual characteristics (Brenkert, 2009). In this sense, issues with employee conditions and worker rights have been a perennial issue in Bangladesh despite international pressure over universal norms such as “human rights” (see, for example, Rahim et al., 2023).

Based on the statistical results, Philippine companies are the highest reporters, disclosing over 50% (Mean = 7.20; Median = 7.50) of EHW indicators. The highest disclosing companies report 13 (93%) of the 14 indicators. There are nine indicators reported by over 50% of Philippine companies. This is closely followed by Indonesian companies, which has an average disclosure value of 6.26 (Median = 7) and eight items reported by over 50% of companies. Sri Lankan companies show a relatively lower level of disclosure (Mean = 5.59) and six indicators reported by most companies. However, there is only one item (employee training and skill upgrade) reported by over 70% of the companies (while Indonesia and Philippines each has three items reported by over 70% of the top companies). Bangladeshi companies report the least, with an average of less than four (Mean = 3.77) indicators reported by most companies. Employee training and skill improvement is the only indicator reported by 67% of Bangladeshi companies. None of the other indicators are significantly covered. The details in  Appendix 1 show that only one third of Bangladeshi companies report information related to OHS systems which is one of the mostly reported indicators in the other countries.

A further analysis of reporting indicators shows that employee training and skill upgrade is the most reported indicator, with over 90% of the reporting companies in the Philippines, Indonesia and Sri Lanka. This indicator is also specified in local frameworks in both Philippines and Indonesia. Many companies have paid considerable attention to protecting workers’ rights, with over 30 companies (75%) reporting information related to the status of their unions or collective bargaining. Work-related injuries data, employee benefits, employee health service (insurance and/or medical facilities) have also been reported by over 60% of Philippine companies, with work-related ill health data provided by 52% of the companies. All of these significantly reported items are specified in the local legislative framework on sustainability reporting (SEC Mem. Circ. No. 04, 2019).

Undoubtedly, the global standard compliance has taken hold in Indo-Pacific countries. The increasing adoption of global frameworks and reporting according to the indicators specified in these frameworks is evident in these countries. A few OHS-related items such as the establishment of formal OHS system to safeguard workers health and safety (71%), prevention and mitigation of work-related injuries (54%) and provision of OHS training (50%) are not specifically mandated in the local framework, but still highly reported by Philippine companies. It seems that areas such as the OHS systems and employee benefits have become part of moral principles accepted and adopted by companies as important EHW indicators. These hypernorms are regarded as fitting with local needs and thus reported to fulfil the social contract on the moral ground irrespective of local contracts or frameworks.

In contrast, detailed employee benefit items, such as providing employee health services, support for preventing and mitigating work-related injuries, are reported by less than half of the companies. In particular, consultation with employees on OHS and the notice period given to employees prior to significant operational changes are mostly absent from reporting. Interestingly, employee consultation for OHS is reported by only 4% of Sri Lankan companies, although implementing OHS systems is reported by 66% of these companies. These are neither regulated nor reported by companies in these countries, despite being included in the global standards.

One thing worth noting is that reporting on COVID-19-related health issues is marked as a result of the enormous impact of the global pandemic on business sustainability in 2020/21. To minimise the deviation from the impact of the Pandemic issues on reporting, we separate the indicator of prevention and mitigation of work-related ill-health to Covid and non-Covid related. As seen from the details in  Appendix 1, the significant increase of reporting on Covid-related health issues can be observed in all countries, especially in Sri Lanka where its non-Covid related employee health is reported by only 5.5% of the companies while Covid prevention strategies are reported by 60% of the companies. The significant difference is also evident in Bangladesh where 57% of the companies report on the impact of COVID-19 and comparatively only 20% report on non-Covid health issues.

Table 6 presents the reporting level on diversity and equity (DE). On average, companies report three (33%) of the total nine DE indicators, which again is consistent with the three (two) indicators outlined in the local frameworks in the Philippines (Indonesia). The highest average level is close to 4 indicators, by Philippine companies, while the lowest average is only 1.6 indicators in Bangladesh.

The results show that DE reporting is lower (less than three of nine indicators) than EWH reporting (an average of six out of 14 indicators), with no country reporting over 50% of the nine DE indicators. Comparatively, the area of DE is less regulated than EHW, as SEC in the Philippines specifies only three DE items while Indonesia requires only two. The average DE reporting level seems to match the level of the local frameworks, indicating that global hypernorms are less relevant on these issues. This may make sense as diversity and equity can be viewed as a “softer” challenge to deal with, and open to much more contextually specific interpretations as to what is appropriate, for instance, around gender equity at work. The Philippines remains the strongest in DE disclosure, with five indicators reported by over 50% of the top listed companies. The highest DE reporting indicator is metrics on gender diversity employment. Almost 90% of the companies in the Philippines provide the metrics on female and male workforce to demonstrate the balance of gender in employment. This is also an item mandated in both the Philippines and Indonesia. Age diversity is also highly reported by all countries except for Bangladesh. Indonesia is the only country requiring the disclosure of age diversity metrics at the local level, and as a result, it has the highest level of such disclosure (79%).

Interestingly, although no county mandates reporting gender diversity in leadership, this metric was nonetheless one of the mostly reported indicators in these Indo-Pacific countries. These results appear to be better than previous findings even in some developed countries. For example, Searcy et al. (2016) analysed 100 Canadian company reports and find that although nearly 60% of CSR leaders disclose gender diversity in employment, only 46% of CSR leaders report on female employees by category or managerial positions. Also, gender diversity disclosure is much less prominent in non-leading companies with only 18% of them reporting on female leadership status. Ghauri et al. (2021) reviewed the diversity disclosures contained with the 2014 annual and sustainability reports of 152 New Zealand Stock Exchange firms. Of those companies, only 15 (11%) provide details concerning board level gender composition. Therefore, it seems that a momentum is being built among large companies in Indo-Pacific countries to seek more equal leadership opportunities for women beyond simply employment opportunities. In this regard, the moral belief is driving the change in reporting to meet the universal voice of increasing female representation in leadership, despite the absence of such requirement in the local framework. As stressed in Dissanayake et al. (2021a), many developing countries such as Sri Lanka have an increasing proportion of female participation in the labour force, and closing the gender employment and leadership gap is becoming important in these developing countries. While local interpretations of diversity and equity dominate, these trends hint towards the convergence that is taking place globally around issues of gender parity, especially in terms of gender pay equity as discussed below.

However, when it comes to the remuneration gap, most companies are reluctant to communicate full information. Only seven of the top 50 companies have revealed the gender remuneration “puzzle” in their annual or sustainability reports in Philippines and Indonesia. This perhaps is no surprise, since the gender pay gap remains of critical concern in many developing nations (Hossain et al., 2021). For example, Parsa et al. (2018) examined the extent to which Forbes listed companies complied with the G3 guidelines concerning human rights and labour practices, and found that the salary ratio between men and women was not disclosed by 87% of the sample. Equal parental leave entitlements, only 51% of Philippine companies report this indicator. The “non-universality” of issues such as “human rights” has been discussed in earlier ISCT research (Brenkert, 2009), and the lack of disclosure on these key issues in these Indo Pacific nations may express entrenched norms and perspectives regarding “gender roles” (Silva, 2024).

Furthermore, communication on age diversity and training is significantly less prevalent compared to gender equity and training, despite both being equally subject to local frameworks. For example, in the Philippines, only two companies report on equal training opportunities across different age groups, even though it is the strongest reporter among the four countries. Age diversity in leadership opportunities is largely overlooked in reporting, with only 20% of companies addressing this issue. This oversight could have significant implications for the workforce, as it fails to leverage the unique strengths and perspectives that different age groups could bring to the business. Clearly, the analysis of DE reporting shows that gender diversity and leadership have gained traction, while age equity and leadership are still evolving, even though both are subject to local requirements.

Climate change (CC) has emerged as a prominent global challenge, affecting every country on the planet. As island countries, Indo-Pacific nations are particularly vulnerable to climate change, since climate change can potentially increase ocean acidification and cause a rise in sea levels (Nikinmaa, 2013),which threatens the survival and sustainability of island nations. Therefore, CC is a highly anticipated reporting area with 14 (82%) of 17 CC indicators specified within local frameworks. Against this backdrop, however, it is surprising to find that the CC reporting level is unexpectedly low. Neither global nor local standards have significantly promoted CC reporting in the Indo-Pacific region. The descriptive statistics in Table 7 reveal that on average companies report just over 5 (29%) of 17 CC indicators. Although the Philippines remains the highest reporters, of the 17 CC indicators, Philippine companies reported only between six and seven indicators, while Indonesian and Sri Lankan companies reported five or less and Bangladeshi companies only report two or three of the total 17 indicators. This may be due to a general reluctance for private companies to risk taking responsibility for what they consider macro level issues which may potentially negatively impact their future operations and prospects (Lodhia and Martin, 2014; Pellegrino and Lodhia, 2012; Tregidga and Milne, 2022). While previous research is primarily in developed country contexts, our findings suggest that these sentiments are shared by peers in developing countries.

The detailed results show that more than 80% of companies report on carbon/GHG emission data, including both Scope 1 and Scope 2 emissions, and energy consumption data in the Philippines. Whether the energy consumption is from a renewable source is also picking up pace in reporting, with 52% of companies reporting on renewable energy use. Similarly, reporting on climate risk and mitigation plans is significant (63%) among the Philippine companies, although this item is a more dominant indicator in other three countries. The full data in  Appendix 1 reveals that nearly half of the Philippine companies have statements about their CC strategies and policies, but only 30% of companies have made actual disclosure on climate change risk management process or specified the role of boards regarding climate policies. However, only 13% of companies set their emission reduction targets, even though this information is clearly required by the SEC. Compared to the other three countries, climate change reporting in Philippines tends to focus more on common metrics of GHG emissions and broader policy statements, which are mainly driven by local standard requirements.

The other three countries appear to place greater emphasis on energy-related data, such as energy consumption and relevant reduction targets, although the extent of their climate change reporting varies significantly. In addition to a high level of disclosure on climate strategy and policies to set out climate risk and impact mitigation plans (75%) and Scope 1 emission data reporting (57%), the reporting focus in Indonesia is predominantly on energy. Energy data, such as energy consumption statistics (79%), reduction of energy consumption metrics (57%), energy intensity ratio (52%) and energy from renewable sources (52%) are frequently reported indicators. Interestingly, the only three indicators specified in the local framework in Indonesia are all associated with energy. Also notably in  Appendix 1, there are significant increases in the numbers of companies reporting on energy consumption (23 to 30) and energy intensity ratio (14 to 21) from 2019/20 to 2020/21, which aligns with the global attention on renewable energy, given the recent pressures on traditional energy sources. In contrast, compared with the Philippines, Indonesian companies draw less attention to direct and indirect carbon emissions and emission intensity. Less than 30% of Indonesian companies report on these emission data. Clearly, the absence of local requirements on emission data reporting has played an important part on company reporting decisions. Similar to Indonesian companies, Sri Lanka and Bangladeshi companies provide little quantitative reporting on emission data. Apart from the extensive disclosure on broad climate policies and strategies, such as reporting on climate risk and mitigation plans reported by 87% of Bangladeshi and 76% of Sri Lankan companies, a key focus in these two countries is on energy consumption and renewable energy data, although there is no mandate on the provision of such information in these countries.

Clearly, energy reporting, especially renewable energy reporting has gained momentum and becomes a reporting norm for companies in all countries. This may be because reporting on renewable energy is seen as a less risky option when discussing climate change, focusing on “win–win” outcomes from investing in renewable technology to lower costs, but ultimately not speaking to fundamental changes in electricity consumption etc. However, a few important indicators such as value chain emissions are less reported. Even the highest reporter – the Philippines – has only 10 out of 50 companies mentioning Scope 3 emissions and none reporting supply chain energy consumption information. This lags the global trend found in some developed countries. For example, Blanco et al. (2016) reviewed the disclosures made to the CDP by companies listed on the S&P 500 index and found that out of the 397 companies which reported to the CDP, 265 firms reported Scope 3 carbon emissions. Lombardi et al. (2022) conducted an analysis of sustainability reports from 34 Italian industrial products and services listed companies and found that over 90% of the sample reported Scope 1 and 2 greenhouse emissions and although still limited, 26% of these companies reported Scope 3 emissions. This is clearly an area that needs more attention in the Indo-Pacific context, given the growing CC issues in global supply chains.

Unexpectedly, the least reported area among the four social and environmental issues is responsible production and consumption (RPC) – even though this is a critical component of the circular economy which many countries claim to be aiming for in this decade. The overall mean of RPC reporting is only 1.96, suggesting that on average, companies report less than 2 (22%) of 9 indicators. This is despite more than half of the total indicators are specified in the local frameworks in the Philippines and Indonesia. Many companies in these Indo-Pacific countries disclose no more than one single RPC indicator Table 8.

A closer examination reveals that the two RPC indicators reported by more than 50% of the companies are total waste generated and actions taken to reduce waste generation. The former aligns with local standards in the Philippines and Indonesia, where the majority of companies quantify and disclose waste generation data. However, this type of reporting is not common among Sri Lankan and Bangladeshi companies due to the absence of such requirements. In contrast, actions taken to reduce waste generation is a highly reported indicator across all four countries, even though none of the local frameworks in these countries requires reporting on it. For most companies, waste generation directly affects their production efficiency and costs. Thus, companies have an incentive to reduce waste and demonstrate their positive actions on waste reduction. They tend to adopt similar reporting behaviours to meet universal expectations for improving the circular economy. However, disclosing concrete quantitative RPC data on waste generation, such as waste volume and material flows, remains an anecdotal practice in Sri Lanka and Bangladesh.

It appears that many reporting companies track waste flow data separately from material flows. The high reporting rates on waste flows have not translated into reporting on different material flow streams, such as landfill or recycling streams. Despite local requirements, less than half of the companies in the Philippines and Indonesia track material flow data and report on how materials are diverted from landfill to recycling, incineration and other processes. Even fewer companies report on the use of renewable and recycled materials versus non-renewable and non-recycled raw materials. Although material usage is a critical factor for businesses, as material extraction often leads to waste generation, it is only captured by a few companies across all countries. Unsurprisingly, green labelling—product and service labelling concerning environmental impacts—has not received any attention among top companies. Without demands from local standards, indicators such as metrics on the usage of reclaimed products and packaging material are nearly non-existent. These trends reflect the interplay between local norms and global hypernorms where, despite the increasing legitimacy to pursue responsible production and consumption activities, there is a lack of “obligatory” force (Glac and Kim, 2009) to the implicit social contracts in place for companies to reduce waste or do more recycling.

Driven by the increasing importance of the Indo-Pacific region in the context of sustainable development, and the notable gap in the existing research on this critical topic, this research explores sustainability reporting practices in four Indo-Pacific countries, Indonesia, the Philippines, Sri Lanka and Bangladesh, and more specifically, how their reporting practice is influenced by local and global reporting frameworks. A comprehensive sustainability reporting index is developed to analyse and compare disclosures in four key social and environmental dimensions within the region. Based on the analysis, ISCT provides a novel theorisation to unpack the impacts of local and global forces that companies in developing countries navigate when engaging in sustainability reporting.

The analysis reveals that sustainability reporting has taken shape in the Indo-Pacific region. Except for Bangladesh, the majority of top listed companies in the region produce some form of sustainability information. The Philippines leads with a reporting rate of 86%, significantly higher than other countries. This high rate aligns with the Philippines’ local reporting framework, which includes the most comprehensive indicators among the countries investigated. Although Indonesia’s local framework provides guidelines for several sustainability dimensions, it covers fewer indicators. As a result, Indonesian companies disclose significantly less information compared to those in the Philippines. Indonesia’s disclosure levels are similar to those of Sri Lankan companies, which have a disclosure rate of nearly 70%. This is despite the fact that Sri Lankan companies follow the general guidelines and expectations set by professional and industry bodies rather than specific indicators required by powerful stock exchanges or regulatory authorities. Bangladesh has the least local enforcement, resulting in its lowest disclosure rate. Less than 30% of top companies in Bangladesh report sustainability information. These findings underscore the importance of “obligatory force” in driving sustainability reporting behaviour within these Indo-Pacific nations, regardless of the normative pressures and other motivating factors that are present (see, for example, Mahmood and Uddin, 2021). This is an important implication as the results have shown that the GRI has a stronger influence in how the local norms of sustainability reporting ultimately become expressed, pointing to a more synergistic and unifying use of the GRI framework than may be present in Western contexts (see, for example, Chelli et al., 2018).

The findings of this study highlight the significant impact of local expectations on sustainability reporting in the Indo-Pacific region. While companies are keeping up with the global standards related to sustainability issues, the presence and comprehensiveness of key local frameworks influence the extent of sustainability reporting in these emerging economies. This is particularly the case in social reporting areas, such as on employee benefits, health and well-being (EHW) and diversity and equity (DE) issues, where the average reporting levels are consistent with the number of indicators included in local standards. Reporting on EHW is the highest among the four sustainability areas where top companies have increasingly accepted that workplace safety and work environment can exert significant influence on an employee’s physical or mental well-being (Greig et al., 2021; Searcy et al., 2016). Many pronounced themes in EHW reporting, such as improving employee training, implementation of the OHS system, employee health service and work related health issues and injuries, have long been accepted in local routines and included in local frameworks and guidelines in these emerging economies (Cahaya and Hervina, 2019; Fernando et al., 2015). However, equally important indicators developed in the global frameworks, such as OHS training and adequate employee consultation for OHS, are largely missing, as they have not yet been specified in any local standards. As the ISCT implies, companies are likely to take an integrative approach to harmonising global ethical principles with the diversity of local reporting norms and practices. Although companies in developing countries become aware of the macrosocial norms and principles, which are primarily based on business ethics and philosophy in developed countries, they strive to meet local expectations predominantly set by local regulatory and professional bodies (Dissanayake et al., 2021a; Spicer et al., 2004). This also applies to reporting on environmental issues. For example, although reporting in two environmental dimensions, CC and RPC, is limited, compared to social reporting in all four countries, companies in the Philippines emphasise both (direct and indirect) GHG emissions and energy in their reporting practices, as the local framework highlights the importance of these areas. In contrast, local regulations in Indonesia are primarily focused on energy-related issues, leading Indonesian companies to report more extensively on energy than on GHG emissions.

However, it is notable that certain aspects of the OHS system, such as implementation and training, are not included in the local frameworks but have received considerable attention in reporting. It appears that these aspects have been incorporated into the ethical principles that companies consider as crucial indicators of EHW. These ethical norms, or hypernorms, are seen as aligning with company needs and are thus reported to uphold the social contract based on moral grounds, regardless of local contracts or frameworks (Spicer et al., 2004). Of particular note, the impact of Covid19 on employee health has dominated the discourse in most sustainability reporting in 2020/21. The health issue and impact of Covid19 is also greatly reported by most top companies in all four countries during 2020–2021. No specific difference in these reporting items can be observed among the four countries. There seems to be a normative drive in reporting on these perceived important issues as hypernorms at the global level irrespective of the local influences (Brenkert, 2009).

Another two positive highlights worth noting are gender diversity on leadership and renewable energy reporting. Although female leadership is not specified in local frameworks, companies have gradually embraced the growing momentum of improving gender equity at all levels. This shift reflects a broader commitment to not only ensuring equal employment opportunities but also increasing leadership roles for women in the global trend and expectations. Similarly, reporting on renewable energy is gaining prominence among top companies in the Indo-Pacific region. This focus reflects a positive response to the global challenges of energy shortages and security, as well as the normative shift in the global energy market towards greener and cleaner energy solutions. Clearly, companies report on these areas beyond the local framework and norms to meet the “ought to be” standards of moral authority and universal principles (Husted, 1999). Although macrosocial contracts are usually hypothetical, these hypothetical contracts can create obligations through legitimacy, despite not directly establishing actual binding force at the local space (Glac and Kim, 2009). Hypothetical contracts may provide legitimate rules, which means that “they can confer legitimacy upon the terms of the contracts in that they can tell us what is fair and what is right” (Glac and Kim, 2009, p. 694). This, in turn, compels companies to ensure their reporting in these areas aligns with overarching hypernorms. The findings of this study highlight that companies in the Indo-Pacific regions are moving towards integrating the two distinct contracts in response to both global and local challenges and pressures.

Despite positive progress, some areas clearly need more attention and development. Despite the equal importance placed on age diversity and gender equity by local frameworks, communication and initiatives surrounding age diversity and training lag significantly behind those focused on gender. This disparity is evident across various countries, including the Philippines. Interestingly, while the Philippines leads among the four countries in reporting on age diversity, only two companies actively disclose information about providing equal training opportunities for different age groups. This indicates a broader context where age diversity in corporate training programs is largely neglected. The issue extends to leadership opportunities as reporting on age diversity within leadership roles is almost non-existent. This lack of attention suggests that while companies are making strides in promoting gender diversity and leadership, the same level of commitment and transparency is not made for age equity. Likewise, despite the global demand for reduction targets to mitigate climate change, there has been a lack of focus on establishing and tracking concrete emission reduction targets in corporate reporting, particularly across value and supply chains. Further education and training support may be needed to improve reporting on these prominent areas as companies embrace the growing global momentum.

Furthermore, despite global and local attention to the circular economy and responsible consumption, this key area remains underreported. RPC reporting is the lowest among the four sustainability dimensions, and there is little variation in the focus of RPC reporting across Indo-Pacific countries. The RPC reporting focus is mainly on broader issues such as waste generation statistics and actions taken to reduce waste generation. Specific information related to waste and recycling management, material flows and renewable materials, is largely unavailable. It seems the focus of RPC is still on the end-of-life solution – reducing waste and landfill use, rather than on the design phase of the production (e.g., managing material flows in the production process) or on the product use phase (e.g., managing product labelling to promote responsible consumption).

The limited reporting on equally important areas such as age diversity and the circular economy highlighted above suggests that global sustainability reporting guidelines need to acknowledge the nuanced complexities of local or country “bounded” situations and challenges faced by companies. Ethical decisions made by companies are often bounded or constrained by various contextual factors (Donaldson and Dunfee, 1994; Spicer et al., 2004). For instance, without comprehensive value chain information, choosing not to report energy reductions beyond the production phase can appear to be a rational decision. Given the challenges, particularly for companies in developing countries, to achieve impartiality in reporting across all sustainability criteria, they are likely to take an integrated approach that balances global standards (hypernorms) with local expectations. Therefore, global frameworks for sustainability reporting may benefit from allowing greater flexibility, enabling companies to prioritise and report on sustainability aspects most pertinent to their local contexts. This approach encourages localised adaptation in implementing global sustainability practices and producing sustainability reports, enhancing the credibility of sustainability communications to stakeholders.

The insights from this paper present important practical implications from the burgeoning part of the world. Recent trends to “harmonise” sustainability reporting frameworks need to be particularly mindful for how adaptability to local contexts needs to be embedded to ensure the long-term success and viability of sustainability reporting. Companies also need greater support to overcome locally “bounded” challenges to better align with the global ethical principles. Future research needs to focus more on facilitating this process. There are limitations with this current work due to its focused timeframe, therefore, future work also could expand the data collection and analysis time period to understand longitudinal trends across all four countries and how these are interfacing with the rapidly evolving sustainability reporting landscape (see, for example, de Villiers and Dimes, 2023). Further, interviews with managers could shed light on the tensions between local and global pressures and how they navigate the reporting process.

This project was conducted in collaboration with the Global Reporting Initiative (GRI). The authors gratefully acknowledge their financial and in-kind support. The authors are grateful for the constructive feedback and suggestions from two anonymous reviewers and the associate editor Professor John Dumay. Thanks are also given to the seminar participants at the University of South Australia Business School and the participants of the 21st Australasian Centre for Social and Environmental Accounting Research Conference where the authors presented the early versions of the study.

Table A1 

Table A2