Sustainability Reporting: Frontstage, Backstage, Façades and Hypocrisy

Posted by CHARLES CHO - May 24, 2019

This blog summarizes the recent talk I recently delivered as part of the York University President's Sustainability Council Seminar Series – which, as its name indicates, addresses a broader audience primarily composed of non-accounting and non-business student, staff and faculty participants interested in various facets of sustainability-related issues. I believe that such exposure makes the topic, hence this blog, perhaps (and hopefully) more relevant.

The talk itself was based on two recent papers (Cho et al., 2015; 2018) which provide both empirical and theoretical insights on some critical aspects of sustainability reporting and contributions to its current literature. In fact, while they ended up in two separate pieces, both papers emanated from a single project which aimed at looking at sustainability reporting from a more complete and nuanced perspective.

Despite the order in which they were published, I will start with a brief overview of sustainability reporting, then provide a summary of Cho et al. (2018) and Cho et al. (2015), and conclude with an invitation to the upcoming EAA Symposium on non-financial reporting.

While there are many definitions of sustainability reporting or disclosure out there, I will focus on a simple one adapted from Berthelot et al. (2003): “the set of information items related to a company’s past, current and future [sustainability] management activities and performance”. Such reporting has led researchers in the field to investigate and attempt to explain differences in disclosure across firms in terms of “what”, “how much/many”, “how” and most importantly – “why”. Prior research on corporate sustainability reporting has relied primarily on two competing underlying theoretical reasonings:

1. Voluntary disclosure theory, which is based on neo-classis economics and views sustainability disclosure as a signaling tool, emphasizing its usefulness: “Investors can infer useful information from nonfinancial disclosures such as those concerning CSR activities” (Dhaliwal et al., 2012), accuracy and reliability: “[…] transparent reports that provide accurate and reliable data, as well as a fair picture of overall performance” (Ballou et al., 2006).

2. Socio-political theories, which are based on sociology and management, and views such disclosure as a legitimacy device and impression management strategy, highlighting its lack of relevance, objectivity and reliability: “[…] the vast majority of current corporate reporting practice is […] voluntary, partial, and, mostly, fairly trivial” and “with such data, no reader could make any kind of reliable estimate of the organisation's social or environmental performance” (Gray, 2006).

While these competing views are still subject to debate today, the two studies mentioned above (Cho et al. 2015; 2018) offer a more in-depth analysis but also a more nuanced approach to sustainability disclosure in general.

In Cho et al. (2018), my co-authors and I draw on Erving Goffman’s (1959) self-presentation theory, dramaturgical analysis and its frontstage/backstage analogy to look at differences between the public face (frontstage, “on the scene”) and private (backstage, “behind the scene”) actions of corporations. More specifically, we compare companies’ frontstage sustainability communications on environmental stewardship and responsibility, to their less visible but proactive backstage political activities targeted to facilitate the passage of the American-Made Energy and Good Jobs Act, also known as Arctic National Wildlife Refuge (ANWR) Bill – a legislation that would allow oil exploration and drilling of the most sensitive environmental areas in the refuge. Results document and reconfirm the sharp contrast and persistent significant gap between corporate sustainability (cheap and deceptive) talk and “action”.

In Cho et al. (2015), the (same) co-authors and I remind that the two competing legitimacy and signaling perspectives have generally produced contradictory results with regards to the significance and effects of sustainability disclosure – and despite this substantial body of research, the role that sustainability disclosures can play in any transition toward a less unsustainable society remains unclear. Therefore, in an effort to advance our collective understanding of corporate sustainability reporting, we propose a richer and more nuanced theoretical lens by drawing on prior work in organized hypocrisy – defined by Brunsson (2007) as “a way of handling conflicts by reflecting them in inconsistencies among talk, decisions, and actions’’, and organizational façades – defined by Abrahamson and Baumard (2008) as “symbolic front[s] erected by organizational participants designed to reassure their organizational stakeholders of the legitimacy of the organization and its management”) to push this idea of ‘disconnect’ between discourse and practice. In essence, we suggest that inherent contradictory societal and institutional pressures – as well as conflicting stakeholder demands – require companies to engage in organized hypocrisy and develop façades, and this severely limits the prospects that sustainability reports will ever evolve into substantive disclosures.

Overall, in these two studies, we delve deeper into some aspects of sustainability reporting and found that despite its growing pervasiveness and potential to help corporations be more accountable and transparent about their social and environmental impacts, the growing criticism asserting that such reporting is utilized primarily as an impression management tool is clearly supported. Such finding highlights that CSR/sustainability disclosure can be used as a legitimacy tool, disconnected from sustainability action or performance. Implications for research on the use by investors and stakeholders of such disclosures are therefore particularly important.

If you attend the EAA 2019 Annual Congress in Paphos this week, and are interested in the topic of non-financial / CSR / sustainability reporting, I invite you to attend the EAA Corporate Reporting Committee (CRC) Symposium below as there will be some engaging discussions specifically around this theme:



Friday 31 May – 14:00-15:30 – Auditorium (Room 1)

Non-financial reporting is a new area of information in which both entities and stakeholders are especially interested nowadays. New forms of external corporate reporting have emerged such as intangibles and intellectual capital, sustainability, CSR, ESG, and most recently, integrated reporting and the non-financial information statement in Europe. These recent developments bring a series of challenges, from the need of regulation, to the possible gap of expectations, and the interaction with financial reporting. The EAA is launching the Corporate Reporting Committee (CRC), the scope of which is described by the IASB as ‘wider corporate reporting’ – alternatively, integrated, nonfinancial, ESG or sustainability reporting. The CRC sits alongside, and complements, the existing Financial Reporting Standards Committee (FRSC) in bringing contributions of academic research to the standard-setting process, in a wider sense.

The purpose of the symposium is twofold: to officially launch the CRC as a platform for engagement between EAA members and those institutions that are already very active in this type of information, such as EU/EFRAG, GRI, IASB and IIRC, and stimulate discussion on non- financial reporting.

Chair: Richard Barker (Oxford University & EAA ASC Chair)

Charles Cho (Schulich School of Business, York University & EAA CRC Member)
Carlos Larrinaga (University of Burgos)
Mario Abela (Director, “Redefining Value” Project, WBCSD (World Business Council for Sustainable Development)
Begoña Giner (University of Valencia & EAA CRC Chair)


Abrahamson, E. and Baumard, P. (2008). What Lies behind Organizational Façades and How Organizational Façades Lie: An Untold Story of Organizational Decision Making. In G. Gerard, P. Hodgkinson, & W. H. Starbuck (Eds.), The Oxford Handbook of Organizational Decision Making (pp. 437–452). Oxford: Oxford University Press.

Ballou, B., Heitger, D. and Landes, C. (2006). The Future of Corporate Sustainability Reporting: A Rapidly-Growing Assurance Opportunity. Journal of Accountancy, December, 65-74.

Brunsson, N. (2007). The Consequences of Decision-Making. Oxford: Oxford University Press.

Cho, C.H., Laine, M., Roberts, R.W. and Rodrigue, M. (2015). Organized Hypocrisy, Organizational Façades, and Sustainability Reporting. Accounting, Organizations and Society, 40(1), 78-94.

Cho, C.H., Laine, M., Roberts, R.W. and Rodrigue, M. (2018). The Frontstage and Backstage of Corporate Sustainability Reporting: Evidence from the Arctic National Wildlife Refuge Bill. Journal of Business Ethics, 152(3), 865-886.

Dhaliwal, D.S., Radhakrishnan, S., Tsang, A. and Yang, Y.G. (2012). Nonfinancial Disclosure and Analyst Forecast Accuracy: International Evidence on Corporate Social Responsibility Disclosure. The Accounting Review, 87(3), 723-759.

Goffman, E. (1959). The Presentation of Self in Everyday Life. New York: Doubleday.

Gray, R. (2006). Social, Environmental and Sustainability Reporting and Organisational Value Creation?: Whose Value? Whose Creation? Accounting, Auditing & Accountability Journal, 19(6), 793-819.