Encyclopedia of Sustainability in Higher Education

Living Edition
| Editors: Walter Leal Filho

Accountability and Sustainable Development

  • Tiffany C. H. LeungEmail author
  • Artie W. Ng
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-63951-2_38-1


Accountability is a term that has been widely discussed and is defined as, “The duty to provide an account or reckoning of those actions for which one is held responsible. Accountability has two crucial components: it arises as a result of a relationship between two or more parties (be the individual, loose associations or organizations) and its nature is determined by the social and moral context in which the relationship is manifest” (Gray et al. 2014: 50). Accountability is often overlapped with other related concepts, such as transparency, responsibility, and clarity (Bovens 2007).

Linkage Between Accountability and Sustainable Development to MNCs

According to the above definition of accountability, each individual will have an innumerable relationship with different individuals, parties, and organizations. Each relationship could be in different purposes. What is considered acceptable behavior in the relationship? Different customs, different cultures, and different socioeconomic systems will have different acceptable standards and practices (Gray et al. 2014). The combination of the nature of the relationship and the certain form of governing the relationship in the context is called “ethic of accountability” that is suggested by Dillard (2007). Each particular relationship has a moral aspect strongly determined by the certain expectations and the nature of the relationship (Gray et al. 2014). In particular, one feature of this moral aspect is to provide “accounts” to elucidate one’s behavior, to express one’s intentions, and to provide justification of one’s intended actions (Gray et al. 2014). We always undertake accountability in various degrees of transparency, responsibility, and formality (Gray et al. 2014). These accounts could be broadly divided into two accounts: informal accounts and formal accounts (Gray et al. 2014). Informal accounts refer to Rawls’s (1972) “closeness” that is an intimacy, a physical closeness, and moral proximity between two or more parties, whereas formal accounts normally require some formality in a written form, for example, public statements (Gray et al. 2014).

Accountability usually involves two major responsibilities: an accountee (the responsibility to take certain actions) and an accountor (the responsibility to offer an account of those actions) (Gray et al. 2014). A simple model of accountability (Fig. 1) illustrates the relationship between an accountee (the principal) and an accountor (the agent) suggested by Gray et al. (2014). The flows between the two parties will take accountability and actions. The flows can be seen a function of the relationship between the parties (or a “contract” between the two parties) (Gray et al. 2014). The contract could be referred to “the Companies Acts” in the business setting. The Companies Acts show the social context of the relationship between the accountee and the accountor who may be individuals, groups, or organizations in the simple model of accountability as shown in Fig. 1 (Gray et al. 2014).
Fig. 1

The simple model of accountability (Source: Gray et al. 2014, p. 52)

Applying this model to the simple structure of an organization at the senior management level, this model shows the relationship between the principal (shareholders) and the agents (directors of a company). Shareholders often give instructions and expectations about certain actions to directors of a corporation, such as profit maximization, project investment, and maximizing shareholders value. If directors could meet certain targets set by shareholders, directors will receive monetary reward for return. Shareholders could have power to take over resources. By contrast, directors of a corporation normally have a responsibility to provide an account or information about certain actions on how they manage their business operation. In other words, directors should be accountable to shareholders, manage the company on behalf of shareholders, and act for shareholders’ interests. This relationship is typically based on economic incentives or financial objectives and requires formal accounts, i.e., the rules, regulations, and legislations. However, agency problems develop when directors pursue self-interest over shareholders’ interests.

How is accountability related to sustainability? The following paragraphs provide a brief overview of sustainability or sustainable development. According to the World Commission on Environment and Development (WCED 1987: 43), sustainable development has been widely defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Sustainability and sustainable development have gradually received an attention in the early 1990s. In 1992, the United Nations organized the Conference on Environment and Development at Rio de Janeiro in Brazil to discuss environmental policies and subsequently received approximately 170 signatures from various countries (Blowfield and Murray 2014). Notably, the Earth Summit and Agenda 21 were a crucial step to enhance the development of environmental policies. In 1997, the United Nations held a summit in Kyoto (Japan) to impose countries to follow a protocol to reduce greenhouse gas emission (Blowfield and Murray 2014).

Based on the successful achievement and accomplishment of the Millennium Development Goals (MDGs), the United Nations continued to establish the extended version of 17 Sustainable Development Goals (SDGs) of the 2030 Agenda (The United Nations 2017b). In particular, the goal 17 states “Revitalize the global partnership for sustainable development.” In order to achieve the targets of the 2030 Agenda for sustainable development, the global partnership and collaboration with governments, businesses, and the civil society are very crucial to mobilize the resources of the private sectors, to set a clear direction of the public sectors, and to enhance the power of international institutions (The United Nations 2017a).

The United Nations established Framework Convention on Climate Change which is known as the Paris Agreement. This agreement brings all the nations into a common goal to solve the climate change issues. This agreement was signed by the nations on 22 April 2016 in New York and enforced on 4 November 2016, and almost 86% of parties have ratified to the Convention (The United Nations 2017c). The objective of the Paris Agreement is to strengthen the global partnership and collaboration to avoid a global temperature rise up to 2 °C in order to remain a low greenhouse gas emission (The United Nations 2017c). Thus, developed countries have the obligations to provide sufficient financial resources and new technologies so as to build the potential capacity (The United Nations 2017c). This agreement requires all the parties to set “nationally determined contributions” (NDCs), and these parties report on their carbon emission level and their progress. The United Nations will access their greenhouse gas contributions for every 5 years.

Importantly, the role of MNCs in most developed countries plays a significant contribution in sustainable development (Unerman et al. 2007). Most MNCs tend to incorporate and integrate Elkington’s (1997) triple bottom line framework, including economic development, social equality, and environmental protection, into their business operation. Critical scholars contend that most of organizations tend to use the concept of sustainability as a part of business strategies in order to achieve the win-win or the triple wins scenario. Other organizations simply adopt sustainability as a public relation tactic to obtain approval from powerful stakeholders and gain societal support in the business context (Unerman et al. 2007).

Major Bodies Promote Accountability and Sustainable Reporting

There are five major parties which extensively promote accountability and sustainable reporting, namely, the World Business Council for Sustainable Development (WBCSD), the International Organization for Standardization (ISO), the Global Reporting Initiative (GRI), AccountAbility, and the Global Compact (see Table 1). The following sections provide a general overview of the common accountability frameworks.
Table 1

The various reporting guidelines



Reporting requirement

The World Business Council for Sustainable Development (WBCSD)



International Organization for Standardization (ISO)



The Global Reporting Initiative (GRI)






The Global Compact



Source: Adams and Narayanan (2007): 81

First, the World Business Council for Sustainable Development (WBCSD) was formed with the World Industry Council for the Environment and Business Council for Sustainable Development in 1995. The WBCSD consists of around 200 multinational companies (MNCs) from over 60 countries. The Council identified the following categories for sustainable development in 2004: accountability and corporate reporting, advocacy and communication, competence building, climate change, and energy saving and sustainable healthcare systems (Adams and Narayan 2007). The Council integrated the 17 SDGs and around 170 targets, which showed the new ambition to achieve the 2030 agenda as suggested by the United Nations in 2015, into their main four major missions: (1) energy, (2) food and land use, (3) cities and mobility, and (4) redefining value (WBCSD 2017). In particular, the fourth mission is redefining value which all companies adopt an integrated approach to disclose account not only for financial capital but also for nonfinancial capital (i.e., social and natural capital) valuation, measurement, and disclosure (WBCSD 2017). The Council will assist their members to prepare and produce such reporting so as to achieve the 2030 agenda for SDGs.

Second, International Organization for Standardization (ISO) is an independent and nongovernmental organization that covers over 160 national standard bodies of around 150 countries (ISO 2017a). ISO brings professionals to exchange ideas and share practical knowledge in order to develop voluntary policies and procedural standards that provide guidance on what type of information to disclose and how to report for organizations (Adams and Narayan 2007). The ISO standards could be used to encourage organizations to report their sustainability performance and impact of their business operation (Adams and Narayan 2007). There are three main standards in relation to accountability and sustainable reporting practices, namely, ISO 14000, ISO 26000, and ISO 50001.

In 1996, the ISO established ISO 14000 environmental management system that provides a series of standards that cover environmental management and helps organizations to improve their environmental performance in a number of areas: waste reduction, energy efficiency, resource allocation, competitive advantage, and stakeholder management (see ISO 2017b).
  • ISO 14001, ISO 14004, and ISO 14006: Environmental management system

  • ISO 14040 and ISO 14043: Environmental management – life cycle assessment

  • ISO 14010, ISO 14011, and ISO 14012: Environmental auditing

  • ISO 14032: Environmental performance evaluation

  • ISO 14064 -1: Quantification and reporting of greenhouse gas (GHG) emissions

ISO 26000: 2010 – Guidance on social responsibility assists organizations to follow certain frameworks and guidelines to manage their operation in a socially responsible way in order to achieve sustainable development (ISO 2017c). This guideline is designed for all types of organization in different sizes and locations, provides clear definition of key terms, and helps companies to understand the linkage and association between social responsibility and SDGs (ISO 2014). There are core seven principles of social responsibility: accountability, transparency, ethical behavior, human rights, stakeholder interest, respect for the law, and follow international norms of behavior (ISO 2014). ISO 26000 is linked to international norms and common practices, namely, the GRI guideline, the UN Global Compact, International Labour Organization, the United Nations Sustainable Development Goals, The OECD Guidelines, and the United Nations working on the issues of business and human rights (ISO 2017c).

ISO 50001: 2011 energy management system assists organizations to incorporate energy management into their business operation in order to enhance the overall quality on environmental management. This guideline includes installing new energy-efficient technologies, minimizing energy waste, or reducing energy costs. The ISO 50001 (2016: 6–8) offers a series of standards and related guidelines on energy savings and management portfolio:
  • ISO 50002: Energy audits

  • ISO 50003, ISO 50004, and ISO 50006: Energy management systems

  • ISO 50045: Energy saving evaluation

  • ISO 50046: General quantification methods for expected energy savings

  • ISO 50049: Calculation methods for energy efficiency and consumption variations at different levels (city, regional, and country)

Third, the Global Reporting Initiative (GRI) (the Guidelines) was established by the Coalition for Environmentally Responsible Economies (CERES) with the assistance of the UN Environment Programme (UNEP) in 1997 (Crane and Matten 2016). The Guideline provides an international guideline for organizations to disclose not only the economic performance but also social and environmental performance and impacts of organizations voluntarily (Global Reporting Initiative 2015). The Guidelines are a multi-stakeholder approach that includes financial experts, professionals, auditors, labor unions, and civil society (Global Reporting Initiative 2015). The Guidelines for reporting sustainability and related issues are primarily based on reporting major principles of accuracy, auditability, completeness, comparability, neutrality, relevance, transparency, and timeliness (Adams and Narayan 2007). The standard disclosure of a sustainability report covers seven main areas: (i) corporate strategy, (ii) corporate profile, (iii) identification of material aspects and limitations, (iv) stakeholder engagement, (v) corporate disclosure profile, (vi) corporate governance, and (vii) ethics and integrity (Global Reporting Initiative 2015). The Guidelines involve three main disclosure categories: economic, social, and environmental dimensions. In particular, social categories are generally subdivided into four aspects that include human rights, employee working practices, impacts on society, and product responsibility (Global Reporting Initiative 2015). Environmental dimensions cover a number of major aspects, such as energy, emission, water, waste, environmental compliance and assessment. Some of these categories are closely linked to the OECD Guidelines for Multinational Enterprises and the UN Global Compact (Global Reporting Initiative 2015). Over 70% of the global companies have adopted the GRI guidelines in 2015 (Global Reporting Initiative 2015).

Fourth, the Institute of Social and Ethical Accountability (AA1000) standard was established by AccountAbility that provides a clear standard and guideline on ethical and social accountability and reporting practice in the UK in 1999 (Adams and Narayan 2007). The AA1000 framework was designed with two major objectives: (1) to act as a separate framework to manage accountability and other relevant issues and (2) to integrate other sustainable development frameworks, such as Social Accountability International (SA 8000) standards, the ISO standards, and the Global Reporting Initiatives (GRI) (Adams and Narayan 2007). The AA1000 framework has been strongly affected by traditional financial accounting principle and accountability principle. In particular, an organization should integrate not only the principle of standard financial accounting but also the principle of accountability into its ethical and social accounting, auditing, and disclosure practices to business operation (Adams and Narayan 2007). The term “accountability” is referred to transparency, responsibility, and compliance with legal framework (Adams and Narayan 2007). Apart from accountability, inclusivity is another important principle that includes three main areas: (i) completeness, materiality, and timeliness; (ii) assurance, accessibility, and information quality; and (iii) continuous improvement (Adams and Narayan 2007).

Fifth, the Global Compact is initiated by the United Nations Environment Programme (UNEP) at New York Headquarters in 2000 and provides general guidance for organizations to address sustainability issues on voluntary basis. The Ten Principles of the UN Global Compact mainly include four main dimensions: human rights, labor, environment, and anti-corruption. These principles and initiatives are often derived from the global institutions, such as the Universal Declaration of Human Rights, the International Labour Organization, and the United Nations Convention Against Corruption (The United Nations Global Compact 2014). Over 8000 companies, mostly small medium enterprises (SME) from European countries and 4000 nonbusinesses, for example, NGOs, business associations, and academics, participated in the Global Compact (The United Nations Global Compact 2014). This requires both business and nonbusiness members to offer a platform for an annual Communication on Progress (COP) that reports how these participants incorporate the Ten Principles into their strategies, operations, and management systems (The United Nations Global Compact 2014).

The Overall Sustainable Reporting Performance of MNCs

The development of sustainability reports has gradually received attention over the past two decades. International companies tend to disclose their sustainability information in terms of economic, social, and environmental performance. A simple model of accountability (Fig. 1) illustrates the relationship between an accountee (the principal) and an accountor (the agent) (Gray et al. 2014). This model could apply to an organization that seeks to pursuit sustainability. This model represents the relationship between the principal (shareholders) and the agents (directors of a company). Shareholders tend to give certain instructions or particular expectations on how to achieve sustainability, such as community involvement, green investment, or environmental engagement, to directors of a corporation. If directors meet these targets set by shareholders, directors will receive monetary reward for achieving these targets. Therefore, directors of a corporation are expected to be accountable to shareholders for the extent to which the organization is working on economic, social, and environmental performance about sustainability. Thus, the members of the community may wish to hold the organization to account for its economic, social, and environmental performance (both favorable and unfavorable news) for record (Gray et al. 2014). Global 250 companies, such as Walmart, Royal Dutch Shell, and Apple, tend to produce different accounts on economic, social, and environmental information on sustainability reporting to external stakeholders. These companies tend to adopt the major reporting guidelines from five main bodies that promote accountability and sustainable reporting as discussed above (see Table 1).

However, such information on sustainability reporting appears to be inconsistent, incomplete, and unverified (Crane and Matten 2016). Measurements of sustainability reporting practices vary across industry, country, and jurisdiction. Klynveld Peat Marwick Goerdeler (KPMG), one of the four international accounting firms, has provided a continuous and systematic assessment on these voluntary sustainability reports of national and global companies since 1997 (Gray and Herremans 2012). Approximately 92% of the global 250 companies and around 75% of national 100 companies disclose sustainability and related issues in their annual reports and standalone sustainability reports (KPMG 2015). The main driver of such reporting practices continues to be mandatory rather than voluntary, since local governments require companies to disclose nonfinancial information (KPMG 2015; Leung 2015). Currently, the reporting rate of the traditionally and environmentally sensitive industries, namely, mining, utilities, and oil and gas, is nearly 80%, as these companies tend to report more environmental and social information on sustainability reports (KPMG 2015). However, the global reporting rate of some environmentally sensitive industries, such as transports and leisure, manufacturing and metals, and retail, is still below 65% in 2015 (KPMG 2015).

The original aim of elevating sustainability reporting is to make it as creditable as financial reporting in terms of comparability, verifiability, and rigor (Crane and Matten 2016: 188). However, different companies in different industries intend to report on different types of information on sustainability reports. Thus, the latest G4 version of the GRI guideline emphasizes on materiality that companies could identify issues that are relevant for their business operations and important stakeholders (Crane and Matten 2016). Importantly, KPMG employs seven criteria to assess the quality of sustainability reporting: corporate strategy, risk management, materiality, key performance indicators, supply chain management, corporate governance, stakeholder engagement, and transparency (KPMG 2015). The KPMG’s report indicates that there has not been an overall improvement in the quality of sustainability reporting among the global 250 companies. Companies tend to disclose positive information rather than negative information in order to distract from stakeholders’ attention (Leung and Gray 2016; Leung and Snell 2017; Noronha et al. 2015). More pertinently, the third-party assurance of sustainability reporting is a standard practice for multinational companies. External assurance could show to stakeholders with confidence in the quality of sustainability information and enhance internal improvement (KPMG 2015). Approximately 65% of the global 250 companies have their sustainability information independently assured by the third party, such as major accountancy organizations (KPMG 2015). Half of the companies tended to choose to seek external assurance for the whole sustainability report, while one third selected to have particular performance indicators assured (KPMG 2015). Large companies in France, South Korea, and Greece tend to seek independent assurance of sustainability information.

Final Remarks

Accountability of organizations toward sustainable development is expected to be growing significant concern as the world strives to improve sustainability performance. These organizations should include profit, nonprofit, and other governmental organizations that are supported by public funding. Accountability of multinationals that continue to expand across borders seeking market opportunities and possessing tremendous economics should be considered exceptionally for their potential impacts on sustainable development. Such weighted accountability could provide better check and balance against the hegemonic claims of businesses about their sustainable development (Gray 2010).



  1. Adams C, Narayanan V (2007) The standardization of sustainability reporting. In: Unerman J, Bebbington J, O’Dwyer B (eds) Sustainability accounting and accountability. Routledge, Oxon, pp 70–85Google Scholar
  2. Blowfield M, Murray A (2014) Corporate responsibility. Oxford University Press, OxfordGoogle Scholar
  3. Bovens M (2007) New forms of accountability and EU-governance. Comp Eur Polit 5(1):104–120CrossRefGoogle Scholar
  4. Crane A, Matten D (2016) Business ethics: managing corporate citizenship and sustainability in the age of globalization, International edn. Oxford University Press, OxfordGoogle Scholar
  5. Dillard J (2007) Legitimating the social accounting project: an ethic of accountability. In: Unerman J, Bebbington J, O’Dwyer B (eds) Sustainability accounting and accountability. Routledge, Oxon, pp 37–54CrossRefGoogle Scholar
  6. Elkington J (1997) Cannibals with forks: the triple bottom line of 21st century business. Capstone Publishing Ltd, OxfordGoogle Scholar
  7. Global Reporting Initiative (2015) G4 sustainability reporting guidelines. Global Reporting Initiative, NetherlandsGoogle Scholar
  8. Gray R (2010) Is accounting for sustainability actually accounting for sustainability...and how would we know? An exploration of narratives of organisations and the planet. Acc Organ Soc 35(1):47–62CrossRefGoogle Scholar
  9. Gray R, Herremans IM (2012) Sustainability and social responsibility reporting and the emergence of the external social audits: the struggle for accountability. In: Bansal P, Hoffman AJ (eds) The Oxford handbook of business and the natural environment. Oxford University Press, Oxford, pp 405–424Google Scholar
  10. Gray R, Adams CA, Owen D (2014) Accountability, social responsibility and sustainability: accounting for society and the environment. Pearson Education Limited, HarlowGoogle Scholar
  11. ISO (2014) ISO 26000 guidance on social responsibility. International Organization for Standardization, GenevaGoogle Scholar
  12. ISO (2016) ISO 50001 energy management systems. International Organization for Standardization, GenevaGoogle Scholar
  13. ISO (2017a) About ISO. https://www.iso.org/about-us.html. Accessed 18 Sept 2017
  14. ISO (2017b) ISO 14000 family – environmental management. https://www.iso.org/iso-14001-environmental-management.html. Accessed 25 Nov 2017
  15. ISO (2017c) ISO 26000:2010 Guidance on social responsibility. https://www.iso.org/iso-26000-social-responsibility.html. Accessed 25 Nov 2017
  16. KPMG (2015) KPMG International Survey of Corporate Social Reporting 2015. Netherlands, KPMGGoogle Scholar
  17. Leung TCH (2015) An initial exploration of corporate social disclosure and responsible gambling disclosure in Macau’s gambling industry. In: Noronha C (ed) Corporate social disclosure: new observations in China and Japan. Palgrave Macmillan, Hampshire, pp 153–197Google Scholar
  18. Leung TCH, Gray R (2016) Social responsibility disclosure in the international gambling industry: a research note. Meditari Account Res 24(1):73–90CrossRefGoogle Scholar
  19. Leung TCH, Snell RS (2017) Attraction or distraction? Corporate social responsibility in Macao’s gambling industry. J Bus Ethics 145(3):637–658CrossRefGoogle Scholar
  20. Noronha C, Leung TCH, Lei O (2015) Corporate social responsibility disclosure in Chinese Railway companies: corporate response after a major train account. Sustainability, Accounting, Management Policy Journal 6(4):446–476CrossRefGoogle Scholar
  21. Rawls J (1972) A theory of justice. Oxford University Press, OxfordGoogle Scholar
  22. The United Nations (2017a) 17 goals to transform our world. http://www.un.org/sustainabledevelopment/globalpartnerships/. Accessed 25 Sept 2017
  23. The United Nations (2017b) The sustainable development agenda. http://www.un.org/sustainabledevelopment/development-agenda/. Accessed 25 Sept 2017
  24. The United Nations (2017c) The Paris agreement. http://bigpicture.unfccc.int/#content-the-paris-agreemen. Accessed 14 Oct 2017
  25. The United Nations Global Compact (2014) Guide to corporate sustainability: shaping a sustainable future. Two United Nations Plaza, New YorkGoogle Scholar
  26. The World Business Council for Sustainable Development (WBCSD) (2017) Our approach. http://www.wbcsd.org/Overview/Our-approach. Accessed 17 Sept 2017
  27. Unerman J, Bebbington J, O’Dwyer B (2007) Sustainability accounting and accountability. Routledge Taylor & Francis Group, LondonGoogle Scholar
  28. World Commission on Environment and Development (WCED) (1987) Our common future. Oxford University Press, OxfordGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.School of Professional Education & Executive Development, College of Professional & Continuing EducationThe Hong Kong Polytechnic UniversityHong KongChina

Section editors and affiliations

  • Mark C. Mifsud
    • 1
  1. 1.University of MaltaMsidaMalta