SUSTAIN consortium
A Comprehensive Examination of Internal and External Corporate Sustainability in China and Finland
Sustainable development is one of the biggest challenges modern societies presently face. Sustainable development “is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland’s Report of the World Commission on Environment and Development: Our Common Future, 1987).
As firms are both major producers and consumers of goods and resources, and their actions produce severe potential threats to the sustainability of life, they play an important role in achieving sustainable development. Indeed, developing sustainable societies requires the active participation of the business sector. Yet, sustainability adoption and enhancement in firms remains obscure and the internal and external factors that affect firm sustainability still need to be comprehensively analysed. Additionally, some extant research has attempted to identify differences between sustainability orientation and sustainability reporting in different countries but typically focuses on either sustainability orientation or sustainability reporting.
The SUSTAIN consortium was founded to comprehensively examine and analyse the sustainability construction in firms that have low and high sustainability profiles in China and Finland. The focus is on resource and energy intensive firms in basic materials, industrials and consumer goods industries. The objective is to examine the sustainability orientation, sustainability systems and sustainability reporting of firms; where sustainability orientation is the inclusion of sustainability in a firm’s overall strategy and business processes, sustainability systems is sustainability data collection, categorisation, recording and use within firms, and sustainability reporting is external disclosures to stakeholders.
Firm sustainability will be analysed through multiple methods: qualitatively in subproject 1 (sustainability adoption within firms) by using material from interviews, questionnaires, internal and public documents; and quantitatively in subproject 2 (determinants and impacts of internal and external sustainability and its reporting) by focusing on sustainability reporting material and empirical and statistical models. A set of control variables – size, strategy, industries, income, financial condition, ownership, and past performance – will be investigated.
The research employs institutional theory, a promising but insufficiently explored theory in sustainability accounting, which will allow the project to provide insights from two complementary perspectives on factors driving corporate sustainability. The internal perspective focuses on how companies exhibit sustainability orientation and utilise sustainability systems. This enables separating the influence of institutional and firm-specific factors. The external perspective analyses the extent and determinants of sustainability reporting.
The SUSTAIN research project contributes by examining the coherence of the internal and external dimensions of sustainability in organisations. The project will 1) reveal potential discrepancies between these two dimensions, and 2) understand factors leading to the improvement of sustainability, and 3) create a new firm level database on sustainability orientation, sustainability systems and sustainability reporting. By focusing on institutional theory, which provides insight into sustainability factors, the findings will also have managerial and legislative importance.