THE MOVEMENT FROM SOCIAL AND ENVIRONMENTAL ACCOUNTING TO SUSTAINABILITY REPORTING

Introduction

The journey from social and environmental accounting to modern sustainability reporting represents one of the most significant transformations in corporate accountability over the past century. What began as informal, voluntary disclosures by a handful of pioneering companies has evolved into a complex ecosystem of binding standards, global frameworks, and regulatory requirements that now shape how businesses report their non-financial impacts.

Sustainability reporting, defined as a company’s voluntary disclosure of non-financial information from economic, environmental, and social perspectives—often referred to as the “triple bottom line”—has become a mainstream business practice. The movement from social and environmental accounting to sustainability reporting has been driven by growing stakeholder pressure, environmental crises, and a fundamental shift in understanding the broader accountability of organizations to society.

This comprehensive guide examines the historical evolution from social and environmental accounting to sustainability reporting, the development of key frameworks and standards, the current ESG landscape, and the implications for businesses navigating this rapidly evolving field.

The Pain Points: Why the Movement to Sustainability Reporting Matters

The Fragmentation Challenge

As sustainability reporting has grown, so has the diversity of frameworks, standards, and requirements. The lack of consensus on fundamental issues such as purpose, scope, and audience, combined with the potential for disclosure overload and the complexities of navigating multiple sets of standards, presents significant challenges for businesses.

The Greenwashing Concern

Persistent concerns surround the quality of ESG reporting and its tangible impact on sustainable development. Critics argue that some corporate reporting prioritizes economic profit over ecological sustainability, perpetuating existing power structures and masking underlying environmental problems. The movement from social and environmental accounting to sustainability reporting has been accompanied by accusations of greenwashing, as some companies have used reporting as a public relations tool rather than a genuine accountability mechanism.

The Skills Gap

The scarcity of interdisciplinary expertise across diversified fields is a crucial barrier to establishing robust reporting mechanisms capable of encompassing the multifaceted nature of sustainability. This scarcity is particularly acute for small and medium-sized enterprises, which often lack the specialised personnel required for comprehensive sustainability reporting.

The Regulatory Inconsistency

While ESG reporting has established itself as a global standard in financial markets, a universally accepted framework for assessing ESG performance does not yet exist. This fragmentation creates uncertainty for businesses and investors alike.

The Historical Evolution: From Social and Environmental Accounting to Sustainability Reporting

Early Roots: The 1970s – The First Wave

The origins of social and environmental accounting can be traced back to the social and environmental movements of the 1970s. During this period, the “current social, environmental and political developments focused increasing attention on the wider accountability of organizations.”

The concept of Socially Responsible Investing (SRI) emerged in the 1960s and 1970s, where investors began to consider environmental and social factors alongside financial performance. Initial social and environmental accounting was adopted by only a small number of socially responsible companies and aimed at increasing credibility and meeting stakeholder expectations through a combination of social and environmental elements.

By 1978, research showed that 90% of Fortune 500 companies were disclosing social performance information in their annual reports, though the information was typically limited to less than a page. The focus of reporting varied by region; compared to the United States, European reports placed greater emphasis on labour relations and less on community and environmental impacts.

Key Developments:

• Emergence of social and environmental accounting as a recognised practice

• Socially Responsible Investing (SRI) gains traction

• Many Fortune 500 companies began engaging in social reporting

• Some corporations issued separate social reports

The 1980s – The Decline and the Rise of Environmental Reporting

The 1980s saw a decline in social reporting due to economic downturns and a focus on market-oriented policies. However, the late 1980s brought renewed attention to non-financial reporting, this time focused on environmental issues. Pressure from non-governmental organizations prompted more companies to address their environmental impacts and assume responsibility for explaining their actions.

During this period, Corporate Social Responsibility (CSR) gained attention, with companies increasing transparency about their social and environmental impacts. The 1987 publication of the Brundtland Report (“Our Common Future”) by the UN World Commission on Environment and Development introduced a comprehensive definition of sustainable development that broadened the scope of corporate reporting.

Key Developments:

• Environmental reporting overtook social issues in prominence

• Major environmental disasters drove demand for corporate accountability

• The Brundtland Report introduced the concept of sustainable development

• Environmental reporting became a key focus for stakeholders and regulators

The 1990s – The Rise of Sustainability Reporting

The 1990s marked a significant turning point. The 1992 Earth Summit in Rio de Janeiro accelerated the adoption of sustainable development principles, and non-financial reporting began to cover more comprehensive sustainability topics. The late 1990s saw the establishment of the Global Reporting Initiative (GRI) in 1997, providing a detailed framework for companies to disclose their ESG impacts and activities.

Sustainability reporting was now defined as a company’s voluntary disclosure of non-financial information from economic, environmental, and social perspectives—the “triple bottom line.” This period saw the beginning of the mainstreaming of sustainability reporting.

Key Developments:

• Launch of the Global Reporting Initiative (GRI)

• Corporate sustainability reporting became a recognised practice

• The “triple bottom line” concept gained prominence

• Growing investor and public demand for sustainability information

The 2000s – The Mainstreaming of Sustainability Reporting

By the 2000s, sustainability reporting had become mainstream, focusing on a broader range of non-financial topics. The development of indexes such as the Dow Jones Sustainability Indices (DJSI) and FTSE4Good significantly shaped the evolution of sustainability reporting.

The Carbon Disclosure Project (CDP) was initiated in 2002, focusing on environmental issues, especially greenhouse gas emissions. In 2006, the UN Principles for Responsible Investment (PRI) were launched, further institutionalizing ESG considerations in investment decisions.

In 2010, the International Integrated Reporting Council (IIRC) was established to create a framework for integrated reporting that combines financial and sustainability performance. In 2011, the Sustainability Accounting Standards Board (SASB) launched, focusing on financially material ESG factors with a direct link to company’s financial performance.

Key Developments:

• Mainstream acceptance of sustainability reporting

• Launch of the CDP, DJSI, and IIRC

• Establishment of SASB focusing on financially material ESG factors

• Growing investor demand for sustainability information

The 2010s – The ESG Era

The adoption of the UN Sustainable Development Goals (SDGs) in 2015 provided a global blueprint for sustainable development and influenced many ESG frameworks. The European Union adopted the Sustainable Finance Disclosure Regulation (SFDR) in 2016, aimed at increasing transparency and reducing greenwashing in sustainable investments.

The shift from CSR to ESG represented a transition from voluntary, ethics-based initiatives to increasingly binding, legally anchored obligations. The ascent of environmental, social, and governance (ESG) reporting established itself as a global standard in financial markets, reflecting a paradigm shift toward corporate sustainability.

Key Developments:

• Adoption of the UN Sustainable Development Goals (SDGs)

• EU Sustainable Finance Disclosure Regulation (SFDR)

• Shift from voluntary CSR to binding ESG obligations

• Growing regulatory pressure for mandatory ESG disclosures

The 2020s – The Regulatory Era

The 2020s have seen an acceleration of regulatory requirements for sustainability reporting. The EU introduced the Corporate Sustainability Reporting Directive (CSRD) in 2023, requiring sustainability reporting for certain companies within the European Union. The EU Taxonomy for Sustainable Activities was introduced in 2021 to define economic activities that can be considered environmentally sustainable.

In 2024, the U.S. Securities and Exchange Commission (SEC) considered proposals for mandatory ESG disclosures for publicly traded companies. Regions like China and Brazil are developing their own ESG disclosure requirements.

The formation of the International Sustainability Standards Board (ISSB) represents a significant milestone in the movement from social and environmental accounting to sustainability reporting. The ISSB was formed with the long-term vision of creating a high-quality, comprehensive global baseline of sustainability disclosures.

Key Developments:

• EU Corporate Sustainability Reporting Directive (CSRD)

• EU Taxonomy for Sustainable Activities

• Formation of the International Sustainability Standards Board (ISSB)

• Global push for mandatory ESG disclosure requirements

Key Frameworks and Standards

The Global Reporting Initiative (GRI)

The GRI issued the first global sustainability guidelines in 2000 and has since shaped the architecture of contemporary sustainability reporting through successive revisions. GRI standards define detailed, measurable disclosure requirements, whereas ESG frameworks provide broader principles for organising sustainability information without prescribing specific metrics. The GRI has been instrumental in the movement from social and environmental accounting to sustainability reporting by providing a structured approach to non-financial disclosure.

The Sustainability Accounting Standards Board (SASB)

The emergence of the Sustainability Accounting Standards Board (SASB) in 2011 complemented the GRI’s framework by focusing specifically on financially material sustainability information for investors. SASB’s standards are designed to be industry-specific and focus on the sustainability issues most likely to affect the financial performance of companies.

The International Sustainability Standards Board (ISSB)

The formation of the ISSB, part of the IFRS Foundation and sister board to the International Accounting Standards Board (IASB), represents a significant milestone. The ISSB was formed with the long-term vision of creating a high-quality, comprehensive global baseline of sustainability disclosures.

Key ISSB Standards:

• IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information: Requires companies to disclose information about sustainability-related risks and opportunities that is useful to investors

• IFRS S2 Climate-related Disclosures: Requires companies to disclose information about climate-related risks and opportunities

The European Sustainability Reporting Standards (ESRS)

The European Union has established the European Sustainability Reporting Standards (ESRS) through the Corporate Sustainability Reporting Directive (CSRD), adopted by the European Union in 2023. The ESRS introduces the principle of double materiality—an innovative concept requiring companies to assess both sustainability risks affecting the company and the company’s impact on society and the environment.

Key Features:

• Mandatory compliance for certain companies under the EU CSRD

• Part of the EU’s broader efforts to align corporate sustainability disclosure with its sustainability goals

• Requires compliance with European Sustainability Reporting Standards (ESRS) developed by EFRAG

The European Financial Reporting Advisory Group (EFRAG) plays a central role in shaping sustainability reporting standards in the European Union, providing technical advice to the European Commission and drafting the technical content of the ESRS.

The Rise of ESG Reporting

From CSR to ESG

Corporate social responsibility emerged as a conceptual tool to incorporate social and environmental considerations into organisational contexts. However, the movement from social and environmental accounting to sustainability reporting has seen a shift from voluntary, ethics-based CSR initiatives to binding legal ESG obligations.

The Ascent of ESG

The ascent of environmental, social, and governance (ESG) reporting has established itself as a global standard in financial markets, reflecting a paradigm shift toward corporate sustainability. However, persistent concerns surround the quality of ESG reporting and its tangible impact on sustainable development.

Impact Accounting: The Next Frontier

Beyond ESG reporting, impact accounting is emerging as the next phase of sustainability measurement. Impact accounting evaluates how a company’s activities affect the broader world, rather than just how sustainability issues influence the company.

Impact accounting constitutes an advancement beyond ESG reporting, which primarily examines how sustainability issues influence a company; in contrast, impact accounting evaluates how a company’s activities affect the broader world.

Key Distinction: ESG often focuses on external disclosure, whereas impact accounting ‘starts internally with the information an organisation needs to understand value creation, including its future opportunities and how performance is developing’. Where ESG might note that a company has a biodiversity policy, impact accounting will measure the actual ecological gains or losses resulting from land use, supply chain choices, or restoration projects, and potentially translate them into measurable financial implications.

The Three Pillars of Sustainability Accounting

Human Resource Accounting

Human Resource Accounting was initially developed separately as a component of accounting for sustainability. It focuses on the measurement and reporting of the value of human resources, including employee development, retention, and well-being.

Social Accounting

Social accounting focuses on the social impacts of organisations, including community engagement, labour practices, and human rights. This was the earliest form of non-financial accounting and emerged alongside environmental reporting.

Environmental Accounting

Environmental accounting focuses on the environmental impacts of business activities, including resource use, emissions, and waste management. Environmental reporting became particularly prominent after major environmental disasters in the 1980s.

Integration

Human Resource Accounting, Social Accounting, and Environmental Accounting were initially developed separately from each other but are now important integrated parts of sustainability reporting. The movement from social and environmental accounting to sustainability reporting has seen these three pillars increasingly integrated into comprehensive sustainability frameworks.

The Global Regulatory Push

The Corporate Sustainability Reporting Directive (CSRD)

The EU’s CSRD, adopted in 2023, requires compliance with European Sustainability Reporting Standards (ESRS) developed by EFRAG. The CSRD introduces the principle of “double materiality,” requiring companies to report both how sustainability issues affect their business and how their operations impact society and the environment.

The sustainability information disclosed under these standards must be verified by either a statutory auditor or an independent assurance services provider, reinforcing the credibility and comparability of non-financial disclosures.

Impact on SMEs: While SMEs may not meet direct reporting thresholds, 68% report receiving sustainability information requests from larger business partners. This indirect effect stems from large companies’ obligation to report on their entire value chain, inevitably drawing in smaller suppliers and partners.

The ISSB Global Baseline

The ISSB was formed with the long-term vision of creating a high-quality, comprehensive global baseline of sustainability disclosures. Some jurisdictions are considering the ISSB sustainability standards as a basis on which to build their own, or are already doing so.

The Need for Harmonisation

Despite these developments, there is a growing recognition of the need for further global harmonisation of sustainability standards to build on the considerable strides forward that have already been made. Stakeholders want a coherent and detailed roadmap explaining the desired destination and how standard-setters intend to reach it.

Challenges in the Movement from Social and Environmental Accounting to Sustainability Reporting

Greenwashing

Persistent concerns surround the quality of ESG reporting and its tangible impact on sustainable development. Critics argue that some corporate reporting prioritizes economic profit over ecological sustainability, perpetuating existing power structures and masking underlying environmental problems. The movement from social and environmental accounting to sustainability reporting has been accompanied by accusations of greenwashing, as some companies use sustainability reporting as a public relations tool rather than a genuine accountability mechanism.

Lack of Standardisation

Despite the growth of frameworks and standards, a universally accepted framework for assessing ESG performance does not yet exist. This creates challenges for comparability and transparency.

Regulatory Fragmentation

The diversity of requirements across jurisdictions creates challenges for multinational companies navigating multiple frameworks. The push for a global baseline, led by the ISSB, aims to address this fragmentation.

Skills Gap

The scarcity of interdisciplinary expertise across diversified fields is a crucial barrier to establishing robust reporting mechanisms capable of encompassing the multifaceted nature of sustainability.

Data Accuracy and Reliability

Ensuring data accuracy and standardising sustainability metrics remains a significant challenge. The quality of reporting varies widely across companies and sectors.

Theoretical and Philosophical Tensions

Three distinct worldviews underpin approaches to sustainability reporting, creating ongoing theoretical debates:

• Cornucopian view: Posits that technological innovation and free markets will eventually provide solutions to environmental challenges, characterised by an optimistic belief in human ingenuity.

• Deep ecology: Emphasises the intrinsic value of all living beings regardless of their utility to human needs, advocating for harmony between humans and the natural world.

• Environmental stewardship: Refers to the responsible use and protection of the natural environment through conservation and sustainable practices, based on the understanding that humans have an ethical obligation to future generations.

How Qeeva Advisory Helps with Sustainability Reporting

At Qeeva Advisory, we understand that navigating the transition from social and environmental accounting to sustainability reporting can be complex. Our team of experienced professionals helps Nigerian and international businesses understand their sustainability reporting obligations, select appropriate frameworks, and implement robust reporting mechanisms.

Our Core Services

Advisory Services Nigeria – Our advisory professionals help you understand your sustainability reporting obligations, identify relevant frameworks, and develop a reporting strategy.

Regulatory Compliance – We ensure your sustainability reporting meets all regulatory requirements and stays aligned with emerging standards.

Risk Management – We help you identify and manage risks associated with sustainability reporting, including greenwashing risks and regulatory exposure.

Frequently Asked Questions

Q: What is the difference between social and environmental accounting and sustainability reporting?
A: Social and environmental accounting was the precursor to modern sustainability reporting. While SEA focused on specific social and environmental impacts, sustainability reporting integrates these with economic and governance considerations under comprehensive frameworks like GRI and ISSB.

Q: What are the key milestones in the movement from social and environmental accounting to sustainability reporting?
A: Key milestones include the social movements of the 1970s, environmental reporting in the 1980s–1990s, the launch of GRI in 2000, the rise of ESG investing, the formation of the ISSB, and the adoption of mandatory frameworks like the EU CSRD.

Q: What is the Global Reporting Initiative (GRI)?
A: The GRI is an international organisation that developed the first global sustainability guidelines in 2000. Its standards define detailed disclosure requirements and have shaped the architecture of contemporary sustainability reporting.

Q: What is the difference between CSR and ESG?
A: CSR (Corporate Social Responsibility) is a voluntary, ethics-based concept focused on social responsibility. ESG (Environmental, Social, and Governance) is increasingly a binding, standards-based framework focused on measurable performance for investors.

Q: What are the ISSB standards?
A: The ISSB has issued IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), which aim to create a global baseline for sustainability disclosure.

Q: What is double materiality?
A: Double materiality is a concept introduced by the CSRD requiring companies to assess both sustainability risks affecting the company and the company’s impact on society and the environment.

Q: What is impact accounting?
A: Impact accounting evaluates how a company’s activities affect the broader world. It constitutes an advancement beyond ESG reporting, shifting from managing reputation to managing reality.

The Bottom Line

The movement from social and environmental accounting to sustainability reporting represents a fundamental shift in corporate accountability. What began as voluntary, informal disclosures has evolved into a complex ecosystem of frameworks, standards, and regulatory requirements.

Key Takeaways:

Understand the Evolution: The journey from social and environmental accounting to sustainability reporting spans from the 1970s to today, with key milestones in the 1980s, 1990s, and post-2000 period.

Know the Key Frameworks: GRI (2000), SASB (2011), ISSB, and ESRS represent the key frameworks shaping sustainability reporting today.

Understand the Shift from CSR to ESG: The movement has seen a shift from voluntary, ethics-based CSR to binding, standards-based ESG.

Be Aware of the Regulatory Push: Mandatory frameworks like the EU CSRD and ISSB standards are driving the transition from voluntary to mandatory reporting.

Understand Double Materiality: The CSRD introduces double materiality, requiring companies to report both sustainability risks to the company and the company’s impact on society and the environment.

Address the Challenges: Greenwashing, standardisation gaps, and skills shortages are key challenges that require attention.

Your job is to be prepared. Understand the history and evolution of sustainability reporting. Select appropriate frameworks. Implement robust reporting mechanisms. Seek professional guidance.

With the right approach and the right partner, you can turn sustainability reporting from a compliance burden into a strategic advantage.

Suggested Reading from Our Blog

The Need for Regulatory Frameworks in Financial Reporting – Understand the importance of financial reporting regulation.

Regulatory Compliance In Nigeria – Comprehensive overview of tax and regulatory compliance requirements.

Risk Management – Identify and manage risks associated with sustainability reporting.

Reference Links / Sources

Springer – Regulatory Framework: From Traditional Accounting to Non-Financial Accounting – Comprehensive coverage of ESRS, double materiality, the CARE method, CSRD impact on SMEs, and EFRAG’s role

Cambridge University Press – Social and Environmental Reporting – Historical analysis of social and environmental reporting development and barriers

AB Magazine – Beyond ESG reporting – Impact accounting advancement beyond ESG, multiple capitals, and transition from managing reputation to managing reality

Springer – Corporate social responsibility and accountability – Theoretical foundation for CSR regulation and corporate accountability

Springer – Identifying transitions in corporate sustainability reporting – Analysis of cornucopian vs deep ecology vs environmental stewardship worldviews and planetary boundaries

LinkedIn – ESG Evolution Infographic – ESG evolution timeline from 1960s to 2024 including GRI, CDP, DJSI, IIRC, SASB, SDGs, SFDR, CSRD, and SEC proposals

Springer – CSR communication and climate change – CSR communication perspective and institutional change in corporate sustainability

Springer – Sustainability reporting development in China – Historical development of sustainability reporting including 1970s first wave, 1980s environmental focus, and GRI framework adoption

Socolar – SER research development 1970-2012 – Empirical research on SER evolution over four decades

Springer – Accounting for sustainability solutions – Growth of sustainability initiatives, GRI guidelines, and CFO’s role in sustainability management

Let’s Talk About Your Sustainability Reporting Needs

Navigating the movement from social and environmental accounting to sustainability reporting can be complex. At Qeeva Advisory, we understand the challenges faced by businesses in understanding their obligations, selecting appropriate frameworks, and implementing robust reporting mechanisms.

Whether you need help with sustainability reporting, regulatory compliance, or risk management, we are here to support you.

📞 Call us: (+234) 802 320 0801, (+234) 807 576 5799

📧 Email: info@qeeva.com

📍 Visit us: 5, Ishola Bello Close, Off Iyalla Street, Alausa, Ikeja, Lagos, Nigeria

Contact us today to schedule a consultation. Let us help you navigate sustainability reporting with confidence.

Your journey to effective sustainability reporting starts with a conversation. Let’s talk.