Financial crisis impact on sustainability reporting

Abstract

Purpose – The purpose of this paper is to shed some light on the effect of the current financial crisis on corporate social responsibility (CSR) reporting and CSR assurance strategies that companies disclose online to stakeholders, by dividing the time horizon into two periods, before 2008 and from 2008. Design/methodology/approach – The sample includes Spanish listed companies, differentiating CSR reporters from non CSR-reporters. Also distinguished in the CSR-reporters sample, are those companies that assure the CSR report from those that do not. The authors contrast whether there is a trend as regards CSR reporting and CSR assurance, depending on whether the crisis has already begun or not. Next the authors focus on companies that change their CSR reporting strategy or change their CSR assurance strategy and see if there is an impact on performance (both from an accounting and from a market perspective). Findings – Even though the financial crisis has raised the question whether assurance of CSR reports could be a threat for business, bearing in mind the generalized initiatives to cut costs, the results show that the number of CSR reports increased significantly with the crisis (indeed, significant differences were found in ROE from CSR adopters to CSR discontinuing companies). Nonetheless, no significant impact was found regarding the changes in assurance strategy, even though there are no grounds to expect cuts in this area because the absolute number of assured reports is increasing, yet not significantly. Practical implications – In spite of the current financial crisis, this study identifies a business in a stage of expansion, not only CSR reporting but also assurance of CSR reports, and confirms the stability in time of the CSR assurance decision by companies as an added-value strategy to CSR reporting. There seems to be an investment view of CSR reporting and CSR assurance, which can help companies differentiate their products or services from the competition and reinforce stakeholders ' trust. Originality/value – This is a pioneering study on the actual effects that the financial crisis has had on CSR reporting and assurance strategies.