SUSTAINABILITY AND TRIPLE BOTTOM LINE REPORTING IN MANUFACTURING INDUSTRY IN VIETNAM

FOREIGN TRADE UNIVERSITY
FACULTY OF BUSINESS ADMINISTRATION
---------o0o---------

GRADUATION THESIS
Major: International Business Administration
SUSTAINABILITY AND TRIPLE BOTTOM LINE
REPORTING IN MANUFACTURING INDUSTRY
IN VIETNAM

Student name

: Hoang Thi Bich Ngoc

Student ID

: 1216250019

Class

: Eng 9 - FBA

Course

: 51

Mentor

: MA. Le Tra My

Hanoi, May 2016

TABLE OF CONTENT

2


LIST OF ABBREVIATIONS
ASEAN

Association of Southeast Asian Nations

Big 4

The Big Four are the four largest international professional services
networks, offering audit, assurance, tax, consulting, advisory, actuarial,
corporate finance, and legal services.
DOC/EPA The Green Suppliers Network
G250
The world’s 250 largest companies based on the Fortune ranking.
GDP
Gross Domestic Products
GRI
Global Reporting Initiatives
ICOR
Incremental Capital - Output Ratio
IFC
International Finance Corporation
IUCN
International Union for Conservation of Nature

MNCs
Multinational Companies
MOLISA Ministry of Labor, Invalids and Social Welfare
N100
The largest 100 companies in each country
OLS
Ordinary Least Square
TBL
Triple bottom line
TNCs
Transnational Companies
UNEP
United Nations Environment Programs
UNIDO
United Nations Industrial Development Organization
VBCSD Vietnam Business Council for Sustainable Development
VCCI
Vietnam Chamber of Commerce
VGCL
General Confederation of Labor
WTO
World Trade Organization
WWF
World Wildlife Fund

3


LIST OF FIGURES AND TABLES

4


ACKNOWLEDGEMENT
This graduation thesis consumed huge amount of work, research and dedication.
Still, implementation would not have been possible if I did not receive a lot of
advices and useful assistance from many people.
Firstly, I would like to express my sincere gratitude to my advisor Prof. Le Tra My
for the continuous support of my final thesis and related research, for her patience,
motivation, and immense knowledge. Her guidance helped me in all the time of
research and writing of this thesis. I could not have imagined having a better
advisor and mentor for my study.
Besides my advisor, my sincere thanks also go to teachers at Foreign Trade
University, for their insightful comments and kindly valuable lectures, but also for
hard questions, which incented me to widen my research from various perspectives.
Finally, I am particular grateful to my family and friends, for supporting me
spiritually throughout writing this thesis and my life in general.
Hanoi, April 7th, 2016
Hoang Thi Bich Ngoc

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INTRODUCTION
1. Rationale of the thesis

Vietnam is a developing economy in the Southeast Asia. Over the last few decades,
this nation has been rising at an increasingly fast rate of development, especially in
manufacturing industry, with the averaged GDP Growth Rate of 6.15 percent from
2000 until 2015 (according to Trading Economics). Nevertheless, as the

manufacturing industry continuously growth, newcomers as well as long-standing
history members are facing with more pressure in expanding market share and
keeping their favorable positions. Obviously, in that context, profitability is not the
only key competitive factor but the sustainable development becomes the leading
mission and important long-term strategy to any groups in the current and future
Vietnamese market economy.
After the reunification in 1975, the manufacturing became national objectives as it
is believed as the way to bring the financial resources and improve poverty
situation. In peaceful time, once again it is considered backbone of the economy,
contributing nearly 50% of total GDP. Besides the economic role, manufacturing
play multiple part in many different aspects such as social issues, employment,
environment, etc. It requires manufacturing companies pay more attention with
issues such as environmental damage, the treatment of workers, and product safety
to meet the expectation from public and stakeholders. For all mentioned reasons, a
consulting group invented a report called “Triple Bottom Line” (TBL) for
measuring the sustainable degree in three divisions (3Ps) – People, Planet, Profit. It
is a needed action to gain the belief from stakeholders, affirm the company’s
position not only financially but also in term of social corporate responsibility.
Although its impacts are great, sometimes publishing sustainable and triple bottom
line report are consuming. The research will review the Triple Bottom Line concept,
explains how it can be useful and applied in Vietnamese manufacturing companies,
and use econometric model to analyze various factors affecting the decision of
issuing Triple Bottom Line report. Therefore, the subject for the graduation thesis is

6


“Sustainability and triple bottom line report in manufacturing industry in
Vietnam”.
2. Overview of research issue

In recent years, there is growing concern of Vietnamese companies, especially
manufacturing enterprises, to sustainable development matter. In which, many have
chosen to issues sustainable or TBL report in order to affirm its economic situation
as well as express their spirit in term of social corporate responsibility. From the
collapse of many big companies, both national and multinational due to scandals
related to their corporate responsibilities such as Vedan with industrial waste
spoiled or Tan Hiep Phat with poor food safety, issuing sustainable reports
associated with annual reports is suggested for manufacturing companies to
improve their images and keep stakeholders’ belief.
However, since Triple Bottom Line is a new report for special purposes, it normally
takes time and money to prepare. Furthermore, based on business nature and
specific strategies of each company, only a specific company group is
recommended to issue this report. As a result, in this research, we will use statistic
data and econometric model in order to make suggestion to improve the application
of sustainability and triple bottom line reporting.
3. Objectives of the thesis

The purpose of this study is to investigate the extent of triple bottom line reporting
activities applied by Vietnamese companies, especially manufacturing companies.
By analyzing the econometric model between TBL and some factors, it is going to
answer the following questions:
1. What is sustainability and TBL reporting in manufacturing companies in

developed countries? What are lessons for Vietnamese manufacturing
companies?
2. What are the factors affecting the decision of issuing Triple Bottom Line

report in Vietnam?

7


3. How should manufacturing companies apply TBL report? What are

recommendations for them to increase sustainability degree?
In order to achieve the above objectives, this research will focus on some specific
tasks including synthesize the literature review of sustainability and Triple bottom
line report, analyze case studies in Japan and Denmark, analyze econometric model,
make recommendation for manufacturing company in Vietnam market.
4. Focus and Scope of the thesis

The paper attempts to provide a basic literature on sustainability and Triple Bottom
Line report. The study concentrates on main concepts of sustainability, Triple
Bottom Line, analyzes case studies in manufacturing companies in 2 developed
countries - Japan and Denmark, and gives recommendation of how to apply Triple
Bottom Line report on Vietnamese manufacturing companies.
Due to the limitation in time and the availability of data, this study will only focus
on the data of financial year 2014 at 50 companies having best annual report at
competition Ara Vietnam 2015 (in which, there are 34 companies in manufacturing
industry). Based on these data, it will analyze the relationship between issuing
Triple Bottom Line report decision and eight factors including total owner equity,
risk, type of industry, rank in Ara Vietnam 2014 competition, return on asset
(ROA), debt, age of companies, liquidity level.
5. Methodology

The study is conducted by various methods, including comparative methods to
compare the application of Triple Bottom Line in Japan and Denmark, statistical
analysis, studying and colligating theories, analyzing and synthesizing many
reliable sources of information. The information and data are collected from foreign

and domestic resources such as report, research, news, etc. Moreover, it is
highlighted that the evaluation and recommendations are given based on logical
judgment of the author.

8


In particular, the research uses quantitative method that the regression model is the
leading instrument. By collecting data of 50 companies through website for investor
-Cophieu68.com, Probit and Logit regression will be established, then the
mathematic equation illustrating relationship between TBL decision and 8 variables
will be built. Besides, the correlation between factors will be shown through Linear
Regression model with Ordinary Least Square (OLS) estimation. It is noted that the
reason for choosing Probit and Logit model and meaning of this model will be fully
explained in chapter 2, section 2.4 – Regression model.
6. Structure of the thesis

In order to solve the question mentioned in section 3 – objectives of the thesis, this
study will be logically divided into 4 chapters as follows:
-

Chapter 1: Literature review – provides theoretical background on
sustainability and Triple Bottom Line

-

Chapter 2: Sustainability and Triple Bottom Line in Vietnamese
manufacturing industry – Gives overview of TBL application in Vietnamese
manufacturing companies and analyzing regression model

-

Chapter 3: Recommendations to improve the application of sustainability
and TBL reporting in manufacturing industry in Vietnam – based on
regression model analysis and evaluation of Vietnamese manufacturing
industry, gives recommendation for manufacturing companies in Vietnam

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CHAPTER 1: LITERATURE REVIEW
1.1Sustainability and Triple Bottom Line
1.1.1 Sustainability

It is important to understanding the definition of sustainability and sustainable
development as it will be the main topic throughout this study. There are several
definition of sustainability and sustainable development as follows.
Sustainability is considered as the principle of ensuring that our actions today do
not limit the range of economic, social, and environmental options open to future
generations (John Elkington, 1994). He also argued that capitalism and states that
capitalism as it stands, is most likely not sustainable.
According to Luc Hens, sustainability may be defined as a dynamic condition in
which the economic, environmental and social systems meet the needs and wants of
the present generation, while maintaining or increasing the resource and productive
capacities that are donated to the future generations. Sustainable development is a
positive change, which does not occur at the expense of the environment or social
systems on which humans depend (Hens, 2010:875). This concept of Luc Hen will
be used as the definition of sustainability in this study.
Traditionally, business has focused on shareholder wealth maximization, however,
due to globalization, a company’s operating license is no longer granted by a single

interest group but by public stakeholders who have access to a company’s financial
and non-financial information. There is a growing recognition that the value of
corporate activity is defined too narrowly in that it influences the economic, social
and environmental factors that it sustains. This recognition has led to the increasing
popularity of the TBL or sustainable development reporting (Hens, 2010:876).
According to Pearce, Makandia and Barbier (1989), sustainable development
involves devising a social and economic system, which ensures that these goals are

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sustained, that is that real incomes rise, that educational standards increase, that the
health of nation improves, that the general quality of life is advanced.
However, the most well-knowed definition was stated in UN Brundtland
Commission that sustainable development is development that meets the needs of
the present without compromising the ability of future generations to meet their
own needs (1987). This definition will also be applied as official definition about
sustainable development in this paper.
It emphasizes that sustainability reporting should recognize the interdependence of
economic, social and environmental factors; and the importance of intergenerational
timescales. It also has a moral element to it – the need to focus on the impact on the
poor. Arguably, when this definition is applied in practice it is so broad and vague
that business and less enlightened governments can claim to care about the
environment, but actually give priority to social and economic considerations. There
is widespread interest in a global standard for sustainability (and well-being)
reporting, but a key barrier to developing this is whether it is possible to reach a
universal and meaningful consensus on what ‘sustainability’ or ‘well-being’ may
mean. (ACCA, 2010)
In 1991, IUCN, UNEP, WWF said “Sustainable development, sustainable growth,
and sustainable use have been used interchangeably, as if their meanings were the

same. They are not. Sustainable growth is a contradiction in terms: nothing physical
can grow indefinitely. Sustainable use, is only applicable to renewable resources.
Sustainable development is used in this strategy to mean: improving the quality of
human life whilst living within the carrying capacity of the ecosystems.”.
Corporate

social

responsibility (CSR) is

a

form

of corporate

self-

regulation integrated into a business model (D.Wood, 1991, pp.691). CSR policy
functions as a self-regulatory mechanism whereby a business monitors and ensures
its active compliance with the spirit of the law, ethical standards and national or
international norms.

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It is highlighted that in this thesis, the terms “corporate reponsibility”,
“Sustainability” can have the same meaning.
1.1.2 Triple Bottom Line

Over the last few years, the sustainable development has been considered as a
leading strategy at many companies. This long-term mission normally requires
companies to change in many areas covered by the economic, social and
environmental lines. In 1994, a phrase called “Triple Bottom Line” was introduced
by John Elkington. In 1997, Elkington wrote in his book “Cabinnals with Forks
triple bottom line of 21st century business” that described the separate financial,
social and environmental "bottom lines" of companies. Triple bottom line is
an accounting framework with three parts: social, environmental (or ecological) and
financial. (Elkington, 1997). Elkington believe that preparing three bottom lines
instead of focusing solely on its finances can give companies a more comprehensive
view by consideration companies’ influence on social, economic and environmental
situation.
Figure 1.1 Three bottom line factors

Planet

People

Profit

Source: Created by author

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Elkington's triple bottom line is intended to advance the goal of sustainability in
business practices. The three measures include profit (the economic value created
by the company, or the economic benefit to the surrounding community and
society), people (the fair and favorable business practices regarding labor and the
community in which the company conducts its business) and planet (the use of

sustainable environmental practices and the reduction of environment impact).
Economic Indicators – concern an organisation’s impacts, both direct and indirect,
on the economic resources of its stakeholders and on economic systems at the local,
national, and global levels. The reporting organisation’s wages, pensions and other
benefits paid to employees; monies received from customers and paid to suppliers;
and taxes paid and subsidies received are within economic indicators. (Introducing
the 2002 Sustainability Reporting Guidelines. 2002, GRI)
Environmental Indicators – concerns an organisation’s impact on living and nonliving natural systems, including eco-systems, land, air and water. Included within
environmental indicators are the environmental impacts of products and services;
energy, material and water use; greenhouse gas and other emissions; effluents and
waste generation; impacts on biodiversity; use of hazardous materials; recycling,
pollution, waste reduction and other environmental programmes; environmental
expenditures; and fines and penalties for non-compliance. (GRI, 2002)
Social Indicators - concern an organisation’s impacts on the social systems within
which it operates. GRI social indicators are grouped into three clusters: labour
practices (e.g., diversity, employee health and safety), human rights (e.g., child
labour, compliance issues), and broader social issues affecting consumers,
communities, and other stakeholders (e.g., bribery and corruption, community
relations). (GRI, 2002)
Wheeler and Elkington (2001) argue that communicating effectively with
stakeholders on progress towards economic prosperity, environmental quality and
social justice, and the TBL, will become a defining characteristic of corporate

13


responsibility in the 21st century. Raar (2002, pp.181) found a similar trend to that
of 11 Wheeler and Elkington (2001), and witnessed a move away from
environmental and social information in reports, to information that is aimed more
at external relations in the category of sustainability. However, there are no

particular subjects of TBL, most of companies have relied upon the guideline to
structure their sustainability reports, issued by the Global Reporting Initiative
organization (GRI).
Institute of Directors “King III Report” (2010, pp.23) recommended that enterprises
wanting to develop their stakeholder identification and engagement of nonfinancial
accounting, control and disclosure processes could draw on a growing volume of
guidance material, including industry codes of practice, standards, practical method
and management tools. Some examples according to the Account Ability 1000
report (1999) would be the work of the Institute for Social and Ethical
Accountability in its AA1000 framework, which include aspects such as the GRI
guidelines, SA8000 from Social Accountability International, OHSAS 18000
occupational health and safety standards, ISO 9000 quality management and quality
assurance standards, ISO 14000 environmental standards.
In short, sustainability reporting aim to provides information to group of intereststakeholders. Stakeholder is a person, group or organization that has interest or
concern in an organization. Stakeholders can affect or be affected by the
organization's actions, objectives and policies. Some examples of key stakeholders
are creditors, directors, employees, government (and its agencies), owners
(shareholders), suppliers, unions, and the community from which the business
draws its resources (Post, Preston, Sachs, 2002). A critical element of sustainability
reporting is that the stakeholders of the business need to be identified and their
information requirements taken into account when a sustainability report is planned
(Raar, 2002).
The value of the Triple Bottom Line report

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We are living in a limited resources world that requires company to operate
efficiency and sustainably to save resources and operate in long-term. Besides,
companies’ existence has large impact on not only the economy but also social and

environmental aspect and companies have to pay back society by fulfill their social
corporate responsibilities.
It is undeniable that triple bottom line report has successfully sent the information
of the companies’ sustainability degree to related parties, reaffirmed its compliances
and created positive images. In the today increasingly competitive society, the
success of a companies can depends on a variety of factors. It is unlikely to the
traditional business that profitability is the most important factor strengthening the
company’s position. Now, companies is expected to do more activities and
complete its social corporate responsibilities to satisfy the need of many
stakeholders.
Sustainability reporting, in some extent, can be the symbol of transparency.
According to Cheney (2004, pp.14) the debate regarding the reasons for a more
transparent way of reporting and the value of sustainability is one that is enjoying
an increased level of support from most leading companies. Sustainable
development can directly drive or limit value creation and that reporting can help
investors distinguish companies that are efficient now and well-positioned to protect
their market competitiveness from those that are headed for volatile conditions.
White stated in Redefining Corporate Disclosure (2002, pp.15) that while financial
reports were then meeting certain narrow technical requirements and providing a
glimpse of past performance, the future was to be questioned. Organizations need to
create capacity to innovate, train and enrich its human capital, enhance its
reputation, strengthen brands, alliances and partnerships. The measurement of
public trust and the quality of governance is also critical in this process. The
concept of triple bottom line reporting, an assessment of a company’s performance
in relation to profit, people and the planet, is increasingly welcomed by financial
analysts and investors, because it helps them to make better judgments about the
15


true value and prospects of a company across a broader range of assets. Moreover, it

enables management to anticipate and exploit opportunities to strengthen the firm’s
market competitiveness and boost a company transparency.

1.2Theoretical Framework
There are many different theoretical approaches applied to explain Triple Bottom
Line reporting, in which two widely used theories on the social and environmental
accounting literature are legitimacy theory (Suchman, 1995) and stakeholder theory
(R. Edward Freeman, 1984)
Legitimacy theory is one of the most discussed theories to explain the phenomenon
of voluntary social and environmental disclosures in corporate communication.
Legitimacy is a generalized perception or assumption that the actions of an entity
are desirable, proper, or appropriate within some socially constructed system of
norms, values, beliefs, and definitions (Suchman, 1995). It suggests that legitimacy
of business entity operates in society depends on an implicit social contract between
business entity and society.
Consistent with the notion of legitimacy theory, companies seek to gain, maintain or
repair their legitimacy by using social and environmental reporting. Legitimacy
theory may provide useful insights for corporate social and environmental
disclosures. However, there are a number of gaps in the literature dealing with
legitimacy theory, which have not been addressed, such as the development of a
general framework of legitimacy theory. These theories argue that a competitive
advantage would be easily gained by corporations with proactive social and
environmental programs by sharing their social and environmental activities with
stakeholder groups (shareholders, customers, suppliers and creditors). For example,
by publishing the accounting reports on the websites, companies build up the
relationship with stakeholders.
In 1984, R. Edward Freeman published his landmark book, Strategic Management:
A Stakeholder Approach, a work that set the agenda for what we now call

16

stakeholder theory. In the intervening years, the literature on stakeholder theory has
become vast and diverse.
Stakeholder theory suggests that companies will manage these relationships based
on different factors such as the nature of the task environment, the salience of
stakeholder groups and the values of decision makers who determine the
shareholder ranking process (Donaldson & Preston, 1995).
It considers corporations as a part of social system while focus on various
stakeholder groups in society. As such, management will tend to satisfy the
information demands of those stakeholders important to the corporations’ ongoing
survival. Majority of Japanese or Korean companies, the corporate governance
follow the pluralistic and inside system to conduct their businesses. The companies
have to adapt their operating and reporting behaviors to meet the stakeholder’s
expectations changing overtime (C. Deegan, 2001). In summary, stakeholder theory
considers corporations as part of a social system while focusing on the various
stakeholder groups within society.
1.3 Business benefit of sustainability and triple bottom line report
Group 100 (2010, pp.5) states, “TBL reporting has little relevance to reporting
company or its stakeholders if it is not aligned to company’s overall business
strategy. A decision to move to full TBL reporting should not be taken lightly. It
must have senior management endorsement and commitment, as it may have major
resource implementations, and half-hearted approach is likely to be worse than not
adopting it at all.”
Although adopting TBL report may take time and resources, there are variety of
benefits from sustainable reporting. The business case for TBL reporting centers on
improving relationships with key stakeholders such as employees, customer,
investors and shareholders. (Group 100, 2010).
Some benefits gained from issuing TBL report can be listed as follows:
•

•
•
•
•

Enhancement of reputation and brand;
Securing a ‘social license to operate’;
Attraction and retention of high caliber employees;
Improved access to investors;
Reduce risk profile;

17


•
•
•
•

Identification of potential cost savings;
Increased scope for innovation;
Aligning stakeholders needs with management focus; and
Creation of sound basic for stakeholder dialogue

Besides strengthening the relationships with key stakeholders, public accounting for
environmental and social line can be considered as an important factor for internal
behavior change. Managers and executives may be able to identify problems and
focus attention to specific aspects where enhancement is required if they can have a
well-rounded information on economic, environmental and social performance of
companies.

1.4Sustainability and TBL in manufacturing industry in developed countries
1.4.1 Definition of sustainability in manufacturing industry

For the purposes of Commerce's Sustainable Manufacturing Initiative, sustainable
manufacturing is defined as the creation of manufactured products that use
processes that minimize negative environmental impacts, conserve energy and
natural resources, are safe for employees, communities, and consumers and are
economically

sound.

(the

US

Department

of

Commerce’s

Sustainable

Manufacturing Initiative). To put simply, sustainable manufacturing is all about
minimizing the diverse business risks inherent in any manufacturing operation
while maximizing the new opportunities that arise from improving your processes
and products. The economic, environmental and social aspects embraced by this
concept are illustrated below. This Guide focuses on helping you to improve the
environmental performance of your facility
Figure 1.2 Three-dimensional aspects of sustainable manufacturing

18


Source: OECD, The sustainable manufacturing and the toolkit, 2011

With manufacturing industries, the Green Suppliers Network has defined the
concept of clean manufacturing as a systematic approach to eliminating waste by
optimizing use and selection of resources and technologies, thereby lessening the
impact on the environment. Sustainable manufacturing focuses on both how the
product is made as well as the product’s attributes. This includes the inputs, the
manufacturing processes, and the product’s design. Furthermore, sustainable
manufacturing includes things such as making products using less energy and
materials, producing less waste, and using fewer hazardous materials as well as
products that have greener attributes such as recyclability or lower energy use.
Sustainable manufacturing practices can range from very simple process
improvements to large investments in new technologies and product redesign.
These concepts play important part in sustainable reporting at many manufacturing
companies around the world.

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Key business benefit from sustainable manufacturing
Working and manufacturing in a sustainable manner can make a clear and positive
contribution to business and its bottom line. A number of studies have shown a
direct correlation between good environmental performance and better returns on
assets, equity and investments. Making your business environmentally sound can
also improve the stock price, increase sales, income growth and enhanced profit
margins. (OECD, Sustainable Manufacturing Toolkit, 2011)

Advantages from sustainable manufacturing can be divided into 3 dimensions
including

financial

performance,

business

excellence,

relationships

with

stakeholders.
First of all, in financial aspects, TBL reporting helps to increase sales by
anticipating environmental and social expectations better than your competitors. It
also improves efficiency and productivity by reducing resource use and waste, and
by cutting regulatory burdens. Besides, the dependence on expensive or hazardous
materials is reduced by exploring, innovating and introducing greener alternatives.
In terms of business excellence, companies issuing TBL report is able to stay ahead
of regulations by being proactive and shaping best practice, rather than reacting
after changes are implemented. There are also opportunities for them to win access
to capital by reducing risks in operations, strategy and the supply chain and by
developing innovative solutions and new products for market. In addition, TBL
reporting support manager to gain strategic foresight by anticipating how your
business can innovate solutions or adaptations to new added value.
Finally, regarding relations with stakeholders, sustainable report enhances
reputation of companies through demonstrating green know-how and setting a

positive example. Moreover, employees’ morale and retention is improved by
empowering them to contribute to a better environment and more productive
business. Last but not least, a better community relation will be built by
demonstrating a responsible and proactive approach to the local environment and
people.

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1.4.2 Application of sustainable and triple bottom line report in Australia

Today, with the growing concern in climate change and brand reputation, the
importance of sustainable or triple bottom line reporting is increasingly elevating
within many companies. Along with this trend, stakeholders tend to expect in more
accurate report, which truly reflects company’s position, performance and
underlying strategies. Therefore, there is a noticeable growth in issuing
sustainability report globally, and Australia is one of the leading countries.
Sustainable reporting appeared in Australia in 1993, and is on a increasingly
popular trend.
At the moment, corporate responsibility is not only considered as moral issue, but a
fundamental factors for the success or failure of a company. In many developed
countries including Australia, there are increasingly number of investors believe
that the environmental and social factors can have significant impact the company’s
value and financial situation. Therefore, a question of what the potential financial
influence of those issues on company’s financial performance could be, and how
the firms can do to mimimize the risks and maximize benefits (KPMG
International, The KPMG survey of Corporare responsibility reporting,2013).
According to a survey of KPMG, the incidence of corporate sustainability reporting
in Australia witnessed an upward trend. In particular, Australia is one of the
countries has fastest rate of growth in issuing sustainable report, increased from

57% of firms issuing report in 2011 to 82 % of firms issuing report in 2013
(Increase by 25 %). Triple bottom line report in Australia has high quality, reach 70
point over 100 points.

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Figure 1.3: Growth in Australia reporting since 2005

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

In Australia, disclosing corporate non-financial information in annual report is now
standard practice. In 2013, the number of companies issuing TBL report accounted
for up to 65% of total publiced companies. Moreover, normally, new companies,
which first time issue sustainable report, choose to attach information of TBL report
in their annual report rather than disclose it standalone. (KPMG,2013)
To be consistent with the world trend, manufacturing industry, including heavy
industry and resources-based sectors always has high rate of publishing report. In
Australia market, 83 % of mining companies has reported the sustainable level
(67% in 2011). Other sectors, such as financial, insurance and security sector, have
also witnessed a dramatic growth in reporting level from 33% in 2011 to 68% in
2013. (KPMG, 2013). The following figures describes the growth in reporting since
1993 of the largest 100 companies (N100) and the world’s 250 largest companies
based on the Fortune ranking.

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Figure 1.4: Growth in TBL reporting since 1993

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

At the moment, most of companies in Australia use the Global Reporting Initiatives
(GRI) guidlines as a standard to issues their corporate responsiblity (CR) report. In
the absence of regulatory requirement, voluntary reporting guidlines, such as GRI,
play an important role in driving consistency and improving quality accross CR
report. (KPMG, 2013). In the world, many companies as already adopted GRI for
their reporting (78% of total reportin over the world), and Australia is not an
exceptional. According to KPMG survey about sustainability reporting in Australia
in 2013, GRI guidline is dominant in Australia market, accounting for 82% of
reporting in G250 group. Besides GRI guidelines for sustainable reporting,
Australian Department of Environment and Heritage also issues a guideline for
companies to issues TBL report, which called Triple bottom line reporting in
Australia. It builds on these existing guides and complements the Global Reporting
Initiative’s work by providing Australian organization with tangible and easy to use
methodologies for measuring performance against key environmental indicators.
Through this approach, this guide will assist organisations seeking to improve and
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communicate their environmental performance.(Department of the Environment
and Heritage, 2003)
As many developed countries, environmental performance measurement is an
important part of TBL reporting which is highly concerned. Manufacturing industry
is highly sensitive area in terms of environment as its activities might greatly affect
surrounding environment and ecosystems. It is typical to define the scope of TBL
practice as including operations over which an organization has control or
influence. In these cases, normally, manufacturing businesses must decide whether
to address impacts upstream or downstream from the factory gate in their TBL
reports. A strong case could be made for including product distribution activities on

the basis they may cause significant environmental impacts.
Figure 1.5: Proportion of reporting using GRI guidline in Australia and in the world

Source:KPMG International, The KPMG survey of Corporare responsibility reporting,2013

In Australia, according to research , Balancing Act A triple bottom line of the
Australian Economy of Manfred Lenzen and Christopher Dey, notwithstanding the
traditional smokestack image of the manufacturing sectors, its overall TBL
performance is reasonably balanced. Energy use and greenhouse emissions are
above average while employment generation and income are below average. Many
24


of the manufacturing sectors currently face strong competition from countries with
lower wages and larger scale, and effective solutions are difficult to define.
Nevertheless, three issues emerge from this analysis. Industry strategies which aim
to increase value adding in Australia bring with them the social returns of increased
employment and possibly increased use of resources such as energy and water. If
these products can be developed with environmentally advanced production chains,
then this may give an advantage in affluent countries where markets are concerned
with sustainability issues. Finally, meeting the environmental challenges may
require industrial processes and material fabrication skills that are currently
underdeveloped in Australian industry. Overall, there does not seem much
advantage in Australia relying solely on being a cost efficient producer of average
quality materials and products.
In Australia, the creditability of information play an important role in building
relationship with stakeholders. Although external audit is not obligatory, 54% of
Australian companies are using assurance service from external source, especially
Big Four Audit firms, to increase the creditability of data as well as drive a better
quality and reliable CR data. In G250 group, this proportion is 59% in 2013 and

49% in 2011. It indicates a fact that in oder to gain competitve advantage, assurance
should be applied not only in Australian companies but also global ones. In 2013,
57% of Australian companies have chosen the option of issuing sustainable report
by major accounting firms, an increase from 46% in 2011. Transparency is key
factor in TBL reporting process. Fifty five percent of Australian companies and
seventy nine percent of G250 company identify that sustainable development and
coporate responsibility issues are important matter to their busines(KPMG, 2011).

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