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ESG reporting – class actions, deterrence, and avoidance

Daniel Murphy (School of Accounting & Finance, Charles Sturt University, Albury, Australia)
Dianne McGrath (School of Accounting & Finance, Charles Sturt University, Albury, Australia)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 2 August 2013

Abstract

Purpose

The purpose of this paper is to expand our understanding of the motivations for corporate environmental, social and governance (ESG) reporting.

Design/methodology/approach

This paper provides a conceptual exploration of the motivation for corporations to provide ESG reports and proposes deterrence theory and avoidance as a complementary explanatory motivation for such reports.

Findings

Within this paper it is argued that part of the motivation for some corporations to increase ESG disclosures is to avoid, or mitigate, the risk of class actions and the associated financial penalties. This paper proposes that in Australia the deterrence impact, and ancillary avoidance behaviour, of civil litigation class action provides a further motivation for improving both corporate ESG disclosure and sustainability performance.

Originality/value

This paper extends the social and environmental accounting (SEA) reporting literature by proposing deterrence theory and avoidance as a corporate motivation for environmental, social and governance (ESG) reporting. Deterrence is proposed as a different, yet complementary, motivation to the oft‐cited variations of stakeholder and legitimacy theory which are dominant in the SEA reporting motivation literature.

Keywords

Citation

Murphy, D. and McGrath, D. (2013), "ESG reporting – class actions, deterrence, and avoidance", Sustainability Accounting, Management and Policy Journal, Vol. 4 No. 2, pp. 216-235. https://doi.org/10.1108/SAMPJ-Apr-2012-0016

Publisher

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Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited