The revised edition of this text was in the making for seven years, but has been worth the wait. Some of the chapters from the first edition have been rewritten, while other new chapters have been incorporated.
The editors of the text set the scene in the first chapter by framing the sustainable development debate within the accounting and accountability context. This is critical because it acknowledges the role of accounting in ecological security, social justice and economic resilience, conceptually and practically.
Ian Thomson’s contribution “Mapping the terrain of sustainability and accounting for sustainability” extends his earlier work in the first edition through a review of research articles in “top” accounting journals from 2008 to 2012. The author reveals that there is an increase in sustainability-related research but laments the lack of research addressing real world contemporary problems. An accounting-sustainability research agenda with a sustainability science focus has been suggested as a possible approach to enable more meaningful and engaging research.
David Collison, John Ferguson and Lorna Stevenson focus on the critical aspect of education in relation to sustainability accounting. They highlight the socialising effects of education, acknowledge the influence of neoclassical economics on accounting values and discuss developments and challenges in social and environmental accounting education. They also discuss the role of the profession in sustainability education.
Nola Buhr’s chapter on the histories and rationales for sustainability reporting has been updated from its previous edition through involvement of two other authors (Rob Gray and Markus Milne) and inclusion of new voluntary initiatives such as integrated reporting. A highlight of this chapter is the coining of the phrase zustainbullity to denote organisational activity and reporting in the name of sustainability, thereby highlighting that a lot of these practices do not have much to do with the basic premises of sustainable development.
Stuart Cooper and David Owen discuss the independent assurance of sustainability reports. They identify recent trends in sustainability assurance, discuss the standardisation of the assurance practice and provide a critical assessment of this practice. A need for stakeholder-focused accountability and engagement at the heart of such audits is suggested as the way forward for sustainability assurance. The chapter illustrates that the assurance process for sustainability reporting is inadequate and requires a radical overhaul.
Jeffrey Unerman has been joined by Leonardo Rinaldi and Carol Tilt in the chapter on the role of stakeholder engagement and dialogue within the sustainability accounting and reporting process. The authors explain why engagement and dialogue with stakeholders are critical for sustainability accounting and accountability, discuss the expectations and information needs of stakeholders and identify difficulties in engaging with a broad range of stakeholders. They also provide theoretical and practical insights into stakeholder engagement. The chapter highlights the importance of a stakeholder-centric approach to accountability.
Colin Dey and Jane Gibbon discuss the notion of external accounts in Chapter 7. These are defined as alternative forms of social accounting which emanate outside the accounting entity. Through a historical review of prior experimentation with external accounting, the authors developed a typology of approaches to external accounting. External accounts can play a very critical role in making organisations accountable for their sustainability performance.
Andrea Coulson and Niamh O’Sullivan focus on environmental and social assessment in finance. The authors discuss the social and environmental criteria used in loan and project financing. They discuss the approaches used by financiers in evaluating environmental and social performance, and reflect on the sustainability reporting of financial institutions. The consideration of environmental and social issues in finance is critical for embedding sustainability into business operations.
Jan Bebbington and Michael Fraser examine the critical issue of organisational change and sustainability accounting. Laughlin’s (1991) characterisation of organisational change is described and complemented by a Freirian dialogics framing. These are used to explore the application of the sustainability assessment model in a New Zealand council and a social housing provider. The authors conclude that there is a need for broader theoretical framing in sustainability accounting and accountability, especially when exploring complex issues such as organisational change.
Roel Boomsma and Brendan O’Dwyer explore the nature of non-governmental organisation (NGO) accountability. Upward, internal and downward forms of accountability and associated mechanisms are discussed. The authors express concern over the overwhelming emphasis on upward accountability and stress the need for more flexible organisations that are able to respond to changing circumstances. NGOs will have an increasing role in ensuring sustainability accountability by other sectors in the economy, and their accountability requirements should not hinder their performance in delivering programs.
Amanda Ball, Suzana Grubnic and Jeff Birchall discuss sustainability accounting and reporting in a very important context, the public sector. The authors point out that in the public sector, sustainability responsibilities are twofold: managing operational impacts, coupled with developing and delivering public policy. Sustainability accounting and reporting practices in the New Zealand and the UK public sector are illustrated. It is hoped that in the future, the public sector plays a leading role in enabling sustainability accounting and accountability in all sectors.
Jan Bebbington and Carlos Larrinaga discuss the role of accounting in global climate change. Climate change continues to be a pressing problem for the society, and a specific focus on this is welcome. The scope of carbon accounting is identified before the emerging literature on carbon accounting is discussed. The authors posit that there is a need for a broader conceptual understanding of carbon accounting; one beyond that of stakeholder and legitimacy considerations.
Shona Russell and Linda Lewis explore accounting and accountability for fresh water in Chapter 13. Fresh water challenges and responses are outlined on a global context, and the innovations and initiatives in accounting and accountability for fresh water are highlighted, with the focus being on the water sector and water resource management. Future research on accounting and accountability for freshwater is also discussed.
Jesse Dillard’s chapter provides a philosophical frame within which the social accounting project can be situated. An ethic of accountability legitimates social accounting. A pragmatic perspective within a critical theory context operationalises this approach with an emphasis on enlightenment, empowerment and emancipation. Such insights are quite useful in framing and critiquing sustainability accounting and reporting practices.
Craig Deegan provides a comprehensive review of legitimacy theory as applied to social and environmental accounting research. Organisational legitimacy is discussed before legitimacy theory is described as a positive theory within a system-oriented perspective and derived from political economy theory. The notion of the social contract and the corporate responses to legitimacy gaps are highlighted. Prior literature that has utilised legitimacy theory in social and environmental reporting are discussed, together with an analysis of whether behaving in accordance with legitimacy theory is in the best interests of the society. The chapter concludes with the identification of the limitations of legitimacy theory and future research directions.
Colin Higgins and Carlos Larrinaga continue with the theoretical emphasis by applying institutional theory to sustainability reporting. Institutional and organisation fields are initially described before the mechanisms of institutionalisation; coercive/regulative, normative and mimetic/cognitive influences are addressed. The institutional change subject matter is also discussed in depth before institutional theory is compared and contrasted with legitimacy theory.
The final chapter by Jan Bebbington, Jeffrey Unerman and Brendan O’Dwyer concludes the book by offering the potential of accounting to provide insights into two critical research issues in sustainability science: the systems of incentive structures to guide society and nature towards more sustainable trajectories, and the integration and extension of operational systems for monitoring and reporting on environmental and social conditions to navigate a transition to sustainability.
Taken together, the chapters in this book make a valuable contribution to sustainability accounting and reporting research by articulating the “state of the art” in this discipline. They are a must read for students in early stages of research in sustainability accounting and accountability, as well as for the more experienced researchers. The book can also be used as a text for courses on sustainability accounting.
While this text has been updated to include new authors and content, and new research areas such as climate change and water (as well as the combination of some existing chapters), the full cost accounting chapter from the previous edition would have been useful. Similarly, the emerging practice of integrated reporting and its relationship with sustainability accounting and reporting warrants a new chapter. The role of technological tools, such as the World Wide Web and social media for sustainability engagement and communication, is another area that could have been addressed.
The coverage of theories in this text is useful with entire chapters devoted to legitimacy theory, new institutional sociology and critical theory, and mention of stakeholder theorising and organisational change in specific chapters. However, contemporary social and environmental accounting research has moved onto more extensive theorisation such as, for example, practice and actor-network theory, institutional entrepreneurship and logics, and philosophical insights. A chapter on more recent theoretical underpinning in sustainability accounting and accountability would have been welcome.
Overall, “sustainability accounting and accountability” reveals that even though there are a number of critical social and environmental problems that have been exacerbated by organisation activity, the accounting practice does have potential to be reformed and provide the basis for addressing sustainability issues. There is considerable scope for improvement in practice as well as in the educational process, and this book provides a vision for a brighter future, one where there is hope for a transition to development that is sustainable.
About the reviewer
Sumit Lodhia, Centre for Accounting, Governance and Sustainability, University of South Australia (UniSA) Business School. Sumit Lodhia is an Associate Professor in Accounting and Director of the Centre for Accounting, Governance and Sustainability. He received his PhD from Australian National University, Canberra. His research interests including sustainability accounting and reporting in corporations, NGOs and the public sector, integrated reporting, corporate social responsibility and accounting education. His sustainability accounting and reporting course will be a core third-year course at University of South Australia from 2015.
