Assuring Sustainability Shaping the assurance concept in Sweden.doc

Department of Business LawAssuring Sustainability:Shaping the assurance concept in SwedenÖresund Auditing Research NetworkConference 17-18th January 2008Amanda SonnerfeldtDepartment of Business LawLund Universityamanda.tan-sonnerfeldt@busilaw.lu.se1 Introduction1.1 Purpose of the paperThis paper presents a part of my PhD dissertation entitled: “Assuring Sustainability: Shaping the assurance concept in the sustainability reporting domain” The title, theoretical framework and findings are still preliminary. It aims to study the development of assurance on sustainability reports from both a legal and social science perspective. The development of standards in this area has been rapid since2003, energised by: the proactive measures by the different institutions, the synergistic effects generated by development of reporting standards and competition between the accountancy profession and AccountAbility. There had been 2 significant developments since this study:· The IAASB’s announcement in September 2007 to use NiVRA’s standard on sustainability assurance as a starting point to set a specific global standard for sustainability assurance; · The Swedish government’s publication requiring all 55 companies the Swedish Government Offices administers to commission third party assurance on their sustainability report;Academic contribution to date is lacking, there is no known study on the role, interaction and influence of institutions at a global level on the development of standards in this field nor is there a developed framework to enable a thorough understanding of how sustainability assurance is understood by various constituencies, how it is current practiced under different institutional environments and the idiosyncratic needs of organisations voluntarily commissioning these engagements. This project attempts to contribute through an explanatory, longitudinal analysis of the contents of standards (legal analysis) at a global level (product of political negotiations) and how these global standards are transposed to the national context and practiced in Sweden (social science methods). This paper presents preliminary findings of how assurance on sustainability reports developed in Sweden from 1996-2007 in relation to developments in the global context and highlights issues of concerns. Other types of assurance services, certifications, consultations are not within the scope of this paper. It also focuses on audit profession (the Big 4). The study of other organisations is performed in context of how those activities affect the profession. Following the introduction, section 2 presents briefly development of standards of assurance relating to sustainability in the global arena. Section 3 presents the Swedish case.1.2 BackgroundGlobalisation and development in technological systems have brought about growing interdependence, increased complexity and impersonalization of institutions, organisations and their activities characterising today’s “risk society”. Critique of the negative environmental and societal impact of globalization, high profile public protest E.g., Battle of Seattle 99 and law suits against corporations Nike, Shell, BP, Monsanto, etc have generated public distrust of multinationals’ approach to commerce. Restoration of trust: the fundamental building block of social life Tomkins, C "Interdependencies, trust and information in relationships, alliances and networks", Accounting, Organizations and Society2001, Vol. 26 No.2, pp.161-91. 1 and key to building social relationships Zucker, L.G., "Production of trust: institutional sources of economic structure, 1840-1920", in Staw, B.M., Cummings, L.L. (Eds),Research in Organizational Behaviour, Sage Publications, Thousand Oaks, CA, 1986, Vol. 8 pp.53-111. have in particularly the last 8 years been intensified through political, civil and private institutions through a common “sustainability agenda”. Although the sustainability notion is well supported, it is not well understood. A widely accepted definition of Sustainable development: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” originates from the Brundtland report United Nations Department of Economic and Social Affairs, Division for Sustainable Development: Agenda 21. This development-oriented conception regards sustainability as a global concept concerning eco-efficiency, allocative efficiency of resources over time as well as fair distribution of resources and opportunities between the current and future generations Gray, R.H., Milne, M., Sustainability reporting: Who’s kidding whom? Chartered Accountants Journal of New Zealand, year: 2002, volume: 81, issue: 6, pages: 66–70. This term has been widely “borrowed” by the reporting community to refer to or used interchangeably with ‘triple bottom line’ reports O'Dwye。