Abstract:
ABSTRACT In light of increasing stakeholder pressure as well as regulatory efforts, corporate sustainability reporting is on the rise. Although there is increasing regulation, significant flexibility remains for firms how to report sustainability information. In this paper, we examine the effects of quantifying sustainability information in financial terms (i.e., monetization) on perceptions of reporting appropriateness. We develop and test theory predicting that the impact of monetizing negative sustainability information differs when the information concerns the environmental versus the social perspective of sustainability. Specifically, we predict and find that monetization negatively impacts the perceived appropriateness of reporting social sustainability information but to a lesser extent reporting environmental sustainability information. Additional explorative analyses indicate that such lower perceived reporting appropriateness spills over to further negative organizational consequences, specifically, that individuals' overall perception of a firm as respectable decreases. In conclusion, we suggest exercising caution in uncritically embracing monetization in sustainability reporting—particularly when severe negative social incidents are concerned—and to be more humble as to the limits of what accounting can legitimately quantify in such terms.
