A Review of Canadian Corporate Sustainable Development Reports

Abstract

Purpose: The purpose of this paper is to present the results of a content analysis of Canadian corporate sustainable development reports.

Design/methodology/approach: A comparison of existing content analyses of corporate sustainable development reports was conducted. Based on the comparison, eight key areas were identified for further research in the content analysis of Canadian corporate reports. A total of 89 reports were reviewed in the content analysis.

Findings: The content analysis highlighted several interesting trends in Canadian reporting. For example, the analysis highlighted that relatively few corporations explicitly identify the audience for the report, include an endorsement from the board chair, provide details on specific standards used for managing the supply chain, discuss linkages to public policy, or use third party assurance. The analysis also highlighted the wide variety in report structure.

Research limitations/implications: The content analysis did not address all issues related to corporate sustainable development reporting. Numerous areas for further research were identified, such as focusing on how companies decide on what to include in the reports, how the reports are used, the accommodations made for specific audiences, challenges in auditing the reports, and future directions of company reporting.

Originality/value:The content analysis focused on several areas that have been highlighted in previous studies as well as areas that have not previously been investigated. The analysis is based on a larger sample size than the most recent Canadian studies. The research will be of interest to both research and practitioners in corporate sustainable development reporting.

Keywords: Sustainability reporting, corporate social responsibility, Canada, content analysis

Paper type: Research paper.

A Review of Canadian Corporate Sustainable Development Reports

1.0Introduction

Over the past two decades, there has been an increasing focus on the environmental and social impacts of corporations. In response, many corporations have instituted sustainable development programs designed to account for and manage these impacts (Adams and Frost, 2008). The results of these efforts are increasingly published in internal and external corporate sustainable development reports. In practice, there are many terms used to refer to such a report, including sustainability, responsibility, corporate social responsibility, environmental, and accountability reports. However, while the quality of these reports have improved greatly over the last several years (Stratos, 2008), there is still much debate regarding the information that should be included, how it should be structured, and how it is used in practice.

While numerous definitions of sustainable development have been published, the majority are similar to the most widely-used definition of the term (Glavic and Lukman, 2007): “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). There are also many definitions of a sustainable development report (Daub, 2007). For the purposes of this paper, it is defined as a report that contains “qualitative and quantitative information on the extent to which a corporation has managed to improve its economic, environmental, and social effectiveness and efficiency in the reporting period and integrated these aspects into a management system” (Daub, 2007).

The most widely-applied corporate sustainable development reporting framework is the Global Reporting Initiative (GRI, 2006). The GRI outlines several reporting parameters, reporting principles, and standard disclosures, including a list of 79 performance indicators. The GRI guidelines have been voluntarily applied in hundreds of companies worldwide. For example, KPMG reported in their 2008 survey of international corporate responsibility reports that more than three-quarters of the 250 reports sampled applied the GRI guidelines (Slater, 2008). However, while the GRI has done much to raise awareness of corporate sustainable development reporting, it has been the subject of much criticism. For example, Moneva et al. (2006) note that it does not explicitly define sustainable development, the high number of indicators makes it difficult to identify the key issues, there is confusion regarding the scope, there is no requirement for independent verification of the report, and the different application levels allow companies to selectively report on the indicators. Beyond the GRI, there are other guidelines for corporate sustainable development reporting; notably from the World Business Council for Sustainable Development (WBCSD, 2002). However, the WBCSD guidelines provide no concrete requirements and are fast becoming dated.

In response to the voluntary nature and broad discretion on behalf of reporters for what is included in a corporate sustainable development report, several analysts have tried to gain perspective on what is being reported through content analyses and comparison. For example, at the international level KPMG has conducted an international survey of corporate responsibility reporting every three years since 1993, most recently in 2008 (Slater, 2008). SustainAbility has produced four international benchmark surveys on corporate sustainability reporting, most recently in 2006 (Beloe et al. 2006). Kolk (2003 and 2008) has also conducted studies on trends in sustainable development reporting in multinational corporations. Canadian Business for Social Responsibility (CBSR) has produced two surveys of North American and non-North American corporations, most recently in 2008 (CBSR, 2008). Several regional level studies have also been conducted. For example, Stratos has produced four reviews of corporate sustainability reporting in Canada, most recently in 2008 (Stratos, 2008). Langer (2006) conducted a comparative content analysis of Austrian sustainability reports while Daub (2007) and Stiller and Daub (2007) have conducted research on corporate sustainability reporting in Switzerland. These studies have helped highlight broad trends in corporate sustainable development reporting, particularly the variance in the content and quality of reporting. This variance underlines that corporate sustainable development reporting does not currently have a widely applied point of reference or development framework, as is the case in annual financial reporting. However, the studies noted above also highlight the need for further research. For example, there is a need for research on the similarities and differences between the various content analyses. Building on that point, there is also a need for research on areas that have not been adequately addressed in existing studies. Finally, there is also a need for studies that have not been carried out by consulting companies who may have contributed to the development of some of the reports under examination (Daub, 2007).

This paper contributes to these challenges by providing a comparative analysis of several prominent studies on the content of corporate sustainable development reports. The similarities and differences between the reports, as well as the gaps in coverage, are highlighted and briefly discussed. Building on the identified gaps, a content analysis of 89 Canadian corporate sustainable development reports is provided. The content analysis provides further understanding of what is currently being reported. Finally, the comparative analysis and content analysis of Canadian corporate sustainable development reports provides a basis for identifying possibilities for future research.

2.0 Comparative Analysis of Completed Studies

Corporate sustainable development reporting has been the subject of much research. As indicated in the previous section, several consultancies have completed reviews of these reports over the last three years, including KPMG, SustainAbility, Stratos, and CBSR. Several academics, including Kolk, Daub, and Langer have also conducted content analyses of corporate sustainable development reports over the last three years. However, many questions remain in terms of developing an understanding of what has been reported in the past, what is being reported in the present, and what is to be reported in the future. Given the wide variety of material addressed in sustainable development reports and the associated content analyses, there are many different categories on which a comparative analysis could potentially be based. With that in mind, Table 1 presents an illustrative comparative analysis of the studies noted above. Table 1 highlightssome of the convergences and divergences, as well as some of the key gaps, in the existing studies.

As indicated in Table 1, there are several similarities and differences between the completed content analyses. For example, while the sample size varied widely, all of the analyses were based on publicly available information, all provided examples of best practices, and all used qualitative scoring criteria in their assessments.

In terms of what the content analyses focused on, Table 1 also highlights that there were several similarities. For example, all the studies assessed whether stakeholder relations was covered in some way and six of the seven studied whether the GRI guidelines were used by the corporations in their sample. Other areas covered by the majority of the studies (four or more) included whether there was a statement from top management, if there was a corporate governance section, if there was integration with annual reports, if the sustainability reports were stand-alone vs. integrated, if the reports explicitly addressed materiality, if the report was externally verified, if the reports mostly used GRI-based indicators, if there was special treatment of climate change, and if issues related to the supply chain were addressed in some way.

Table 1 also highlights that there are several differences in the focus of the content analyses. For example, areas covered by only one of the studies included if procurement policies were covered, if stakeholders were involved in the development of the reports, if sector-specific management systems are being utilized, the time horizon covered by the reports, and if programs such as AA 1000 and SA 8000 were being addressed. As indicated in Table 1, several other areas were covered in two or three of the studies, such as linkages to public policy.

Finally, Table 1 highlights that there are several areas not covered in the existing content analyses at all. For example, the future directions of company reporting, the indicator measurement methodology, the use of the sustainable development report internally, the use of ISO 14031, and the length of the reports in the sample were all not addressed. As noted above, these examples are illustrative; there are certainly other areas not covered in any of the existing studies. These issues help highlight the wide variety of perspectives on what should be included in sustainable development reports.

3.0Content Analysis of Canadian Corporate Sustainable Development Reports

While the content analyses examined in the previous section have made several useful contributions, they also highlight the need for further work. In a Canadian context, there are several areas that have not been adequately studied. Moreover, in the areas that have been studied, there is a need for additional work using up-to-date reports and a larger sample size. Therefore, to enhance understanding on what is reported inCanadian corporate sustainable development reports, a content analysis of these reports was conducted in the summer of 2009. In addition to addressing gaps in the current literature, the study was also intended to provide insight into areas for possible research on corporate sustainable development reports. With that in mind, the study design and key findings of the study are presented in the following sub-sections.

3.1Study Design

A complete list of Canadian sustainable development reports published on the Corporate Register website ( and the GRI website ( as of June 1, 2009 was developed. All reports older than three years, all reports from non-corporate entities, and all French-language only reports were then removed from the list. After the most recent reports for each corporation were identified, a total of 89 reports remained. These 89 reports formed the sample for the study.

After the sample of the reports had been established, the key areas of focus for the content analysis were selected. A worksheet was developed around these areas and then was used to record the results for each corporate report. A combination of manual keyword searches and qualitative analysis was used to address each area. A pilot study focused on sixreports was conducted prior to reviewing the remaining reports. This provided the basis for some refinement to the areas noted below. With that in mind, the content analysis focused on eight key areas:

  • Report demographics: This area focused on basic report demographics including the industry sector and location of the corporate headquarters.
  • Report structure: This area focused on the length of the report and integration of sustainable development reporting with annual reporting.
  • Audience: This area focused on whether the key audience for the report had been identified.
  • Management and board statements: This area focused on whether top management and the board chair had endorsed the report. It also focused on investigating how sustainability is addressed at the board-level.
  • Supply chain management:This area focused on whether the reports addressed the corporation’s supply chain management strategy and if it employed explicit supply chain standards.
  • Public policy links: This area focused on how the corporations were linking their efforts to broader public policy.
  • Third party assurance: This area focused on if third party assurance was used in the reports and, if so, who did the assurance.
  • Feedback:This area focused on the process for readers of the reports to provide feedback.

As the list above indicates, the content analysis focused both on areas that have been previously addressed, as well as areas that have not been previously addressed in content analyses of Canadian sustainable development reports. For example, the top management and board statements, public policy linkages, and third party assurance has all been previously checked in Canadian studies. However, all three of these areas merit study with a sample size larger than used in the Stratos (7) and CBSR (25) studies. Although supply chain management has been addressed in general by both Stratos and CBSR, specific procurement policies and standards used have not been previously addressed. Finally, neither Stratos nor CBSR explicitly focused on identifying the specific audiences the reports were targeted to. This is an important piece since the target audience will clearly influence the content of the report.

It is also important to acknowledge that the content analysis did not address all of the gaps noted in Table 1. As a representative example, the study did not address the use of specific standards (such as ISO 14001, SA 8000, etc.) since there is already data on the use of these standards available at the national level. It did not specifically address the indicator measurement methodology, how the report is used internally, who is responsible for developing the reports, or the future direction of company reporting since no information on these sections was found during the pilot study. All of these are potential areas for further research, but may need to be addressed through other research methods, such as questionnaires or interviews.

With the above in mind, the key findings from the content analysis are provided in the sub-sections that follow.

3.2Report Demographics

The province or territory in which the reporting corporation’s head office is located is indicated in Table 2.

Provincial representation in most cases roughly mirrors the population levels. The two most significant exceptions are Alberta (over-represented) and Quebec (under-represented). The former could be explained by a concentration of energy industry companies, while the latter could be attributed to limitations of only being able to use English-language reports.

The number of reports according to industry sector is presentedin Table 3.

The energy, metals-mining, and financial sectors stand out as making up a large percentage (over 60%) of the reports. One possible explanation for these sector concentrations is that these three sectorsare subject to a relatively high regulator burden. However, further research is required in order to arrive at a more definite conclusion.

3.3Report Structure

The review of the report structure focused on two areas. In the first area, the question “Is the report integrated into other annual reporting?” was explored. The review highlighted that only three of the reports opted to bundle their corporate sustainable development reports with annual financial reporting. The three corporations employing integrated reports were BC Hydro, Norbord, and Investissement Quebec. This underscores that most corporate reporters in Canada continue to emphasize the production of stand-alone sustainable development reports.

In the second area of focus on the report structure, the length of the reports was reviewed. The review showed that the average length of the reports was 45 pages, the maximum was 184 pages, the minimum was 4 pages, and the median was 41 pages. This highlights the significant variability in report length. Despite outliers at both extremes, the close median and mean lengths suggests that somewhere in the 41-45 page range is a good representation of the most common lengths among the sample. Further investigation into the outliers may be warranted to investigate why corporations were compelled to publish a longer or shorter report than their peer group. This investigation may also provide some insight into how corporations determine what information should be reported.