Research on Corporate Sustainability: Review and Directions for Future Research
Foundations and Trends® in Accounting: Vol. 14: No. 2, pp 73-127, 2020
52 Pages Posted: 26 Oct 2020
Date Written: September 5, 2020
We review the literature on corporate sustainability and provide directions for future research. Our review focuses on three actions: measuring, managing and communicating corporate sustainability performance. Measurement is the least developed of the three and represents promising opportunities for research. Compelling evidence now exists on the role of management control systems, investor pressure and mandated disclosure in improving corporate sustainability outcomes. Research has moved beyond weighing the importance of all sustainability issues equally, with recent studies drawing distinctions between the financial materiality of different sustainability issues. Collectively, this new line of inquiry suggests that improving performance on material sustainability metrics is related to improved financial performance, helping to resolve four decades of inconclusive evidence on the relation between sustainability and financial outcomes. Finally, we review research on how disclosure mediums, accounting standards, information monitors and intermediaries shape the communication of sustainability performance. We conclude with a call for research on how to measure performance in the 21st century when corporate purpose extends beyond shareholder value maximization.
Keywords: Sustainability, ESG, Measurement, Accounting, Disclosure, Management Control Systems
JEL Classification: M12, M14, M41, M42, M48, M51, M54, G34, Q51, Q52
Suggested Citation: Suggested Citation