Importance of CSR and Sustainable Reporting: Analysis of Link Administration Holdings Limited

Accounting Theory & Contemporary Issues
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1. Executive Summary
The importance of developing the CSR reports for business entities has been discussed
within the present report. The significance of the CSR information provided by the businesses is
discussed in relation to the stakeholder and legitimacy theory. Also, the analysis of the annual
report of a selected ASX listed entity, that is, Link Administration Holdings Limited, to examine
its governance and financial performance. Also, its sustainability report is analyzed in
accordance with GRI guidelines.
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2. Introduction
The report is developed for the purpose of developing an understanding of the importance
of corporate social responsibility (CSR) activities for a company and the importance of providing
information about such activities by development of sustainable reports. In this context, the first
part of the report ahs discussed the importance of CSR and its relevant theoretical frameworks.
The next section of the report has analyzed the annual report of a selected ASX listed entity, that
is, Link Administration Holdings Limited, or understanding of its governance and financial
performance. This is followed by analysis of the extent of its compliance with the GRI standards
and guidelines to determine the appropriateness of the information disclosed within the report.
3. Part A: Theoretical Knowledge
(i) Literature Review for Demonstrating the Significance of Corporate Social Responsibility
(CSR) for Firms to Attain the Financial Objectives
According to Horvathova (2010), the interest of business organizations in the Corporate
Social Responsibility (CSR) activities is increasing worldwide to promote their goodwill among
all its stakeholders. The CSR disclosures prepared by different business corporation are intended
to provide information about the various measures that they are undertaking to increase their
social and environmental performance. The rapid business expansion and growth is having a
negative impact on their community and environment and therefore it is becoming essential for
the firms to provide complete information about their social and environment management
activities (Horvathova, 2010). This is causing the firms to state their social and economic
performance in addition to provide information about their financial performance. This is
essential for them to ensure that their different business activities are carried out in a responsible
manner. The importance of sustainable management has been recognized by firms for achieving
their long-term growth and thus they are emphasizing on using CSR as an important business
strategy to drive success by achieving stakeholder satisfaction (Doktoralina, Anggraini, &
Melzathia, 2018).
Martínez-Ferrero, Garcia-Sanchez & Cuadrado-Ballesteros (2013) has stated that the
businesses are realizing the importance of gaining support from the community in which it
conducts its different operations and therefore improving their social and environmental
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performance to achieve continued support from the community members. Besides communities,
businesses have also recognized the importance of being responsible towards its different
stakeholders such as customers, employees, investors and others (Martínez-Ferrero, Garcia-
Sanchez & Cuadrado-Ballesteros, 2013). The increased transparency and integrity attained by
businesses through disclosing the information related to their social and environmental
performance help in increasing the satisfaction of its different stakeholder members. The
stakeholder satisfaction leads to increasing the firm financial performance. The customers tend to
consume more the products and services that they believe are produced in a responsible
manner. Also, the investors tend to invest more in business companies that have a responsible
image among the society. Thus, the CSR activities undertaken by a business firm helps in
achieving higher sales and also promoting more funds from the investors that have a direct
impact on increasing their financial performance (Guenster, Derwall & Koedijk, 2011).
On the other hand, it has also been argued by some researchers that CSR activities also
tend to increase the business costs as they have to contribute more towards undertaking different
activities that increases their social and environmental performance. However, it has now been
proved by various researches held in this context that CSR is presently being regarded as a
symbol of status by businesses and the reputation of companies are likely to be improved by
actions relating to sustaining the community that have a positive influence on the sales of
businesses (Horvathova, 2010).
(ii) Importance of Sustainability Reporting in Comparison of other Reporting Concepts for
Depicting a Holistic View of CSR
Porter & Kramer (2010) has argued that the businesses traditionally focused on
developing and publishing their financial reports for facilitating the economic decision of end-
users. However, they have gradually realized the importance of publishing the reports that
provides disclosures about their non-financial performance as well for addressing the varying
requirements of its different stakeholders. As such, the business corporations have adopted the
use of developing their sustainable reports that are regarded as a most important communication
channel used by firms for interacting with its internal as well as external stakeholders (Porter &
Kramer, 2010). In accordance with the Global Reporting Initiative (GRI), sustainable reporting
can be described as a form of reporting that provides a complete overview regarding its social,
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