THE MOVEMENT FROM SOCIAL AND ENVIRONMENTAL ACCOUNTING TO SUSTAINABILITY REPORTING

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. 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 .

A vigorous debate on how to account for the social and environmental impacts of organizations existed long before the term “sustainability reporting” became commonplace . The origins of accounting for sustainability can be traced back to the 1930s and developed continuously until it became a widely recognised business practice . The movement from social and environmental accounting to sustainability reporting reflects a paradigm shift in how businesses view their responsibilities and how they communicate their impacts to stakeholders .

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 . 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: 1930s – 1960s

The origins of social and environmental accounting can be traced back to the social and environmental movements of the 1930s and 1940s . However, it was not until the 1960s that a major shift occurred as public awareness of environmental and social issues grew, driven by events like labour unrest and ecological crises .

During this period, the “current social, environmental and political developments focused increasing attention on the wider accountability of organizations” . Workers and unions rights were legally advanced, particularly with respect to participation in the organisation and the provision of information.

Key Developments:

• Workers and unions rights were advanced in the 1970s, particularly with respect to participation in the organisation and the provision of information 

• Some large corporations in the 19th century included human resources and community engagement in their reports 

The 1970s: The Birth of Social Accounting

The 1970s marked the true emergence of social and environmental accounting as a recognised concept. 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 .

The emergence of social and environmental accounting dates back to the social and environmental movements of the 1970s and 1980s, driven by understanding of the importance of reporting non-financial effects . This change led to the beginning of the inclusion of social and environmental issues in accounting procedures, with early sustainability and corporate social responsibility reports being formed as voluntary disclosures.

During this period, many Fortune 500 companies began engaging in social reporting in response to growing public pressure and environmental disasters .

Key Developments:

• Emergence of social and environmental accounting as a recognised practice

• Early CSR and sustainability reports formed as voluntary disclosures

• Growing public pressure on corporations to report social and environmental impacts

• Some corporations issued separate social reports

The 1980s – 1990s: The Rise of Environmental Reporting

In the 1980s and 1990s, environmental reporting became more prominent, overtaking social issues. Disasters like the Exxon Valdez oil spill and the Seveso disaster pushed businesses to report their environmental impacts .

By the 1990s, sustainability reporting had begun to take shape as a distinct practice. The 1996 triennial KPMG survey of corporate environmental reporting placed New Zealand last among 13 OECD countries, a fact shocking enough to make prime-time television news at the time, demonstrating the growing public and regulatory interest in corporate environmental performance .

Key Developments:

• Environmental reporting overtook social issues in prominence

• Major environmental disasters drove demand for corporate accountability

• Environmental reporting became a key focus for stakeholders and regulators

The 2000s: The Mainstreaming of Sustainability Reporting

By the 2000s, sustainability reporting became mainstream, focusing on a broader range of non-financial topics . The launch of key initiatives like the Global Reporting Initiative (GRI) and the development of indexes such as the Dow Jones Sustainability Index and FTSE4Good significantly shaped the evolution of sustainability reporting .

During this period, companies that were active in social and environmental reporting prior to the birth of sustainability reporting had the power to devise, in a more or less deliberate way, what reporting practices and expectations could be realistic or even plausible .

Key Developments:

• Mainstream acceptance of sustainability reporting

• Launch of the Global Reporting Initiative (GRI) and other key frameworks

• Development of sustainability indexes

• Growing investor demand for sustainability information

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, including major updates in 2016 .

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 later emergence of the Sustainability Accounting Standards Board (SASB) 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 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 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 .

Key Features:

• Mandatory compliance for certain companies under the EU CSRD (EU Directive 2022/2464)

• 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 Rise of ESG Reporting

From CSR to ESG

Corporate social responsibility (CSR) 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 .

Key Differences:

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 .

The Standardisation Challenge

A universally accepted framework for assessing ESG performance does not yet exist . The term ESG “standards” can refer to voluntary guidelines, industry best practices, or enforceable legal norms .

Typology of ESG Standards:

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. The movement from social and environmental accounting to sustainability reporting has integrated HR accounting as an important part of sustainability disclosure .

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 and 1990s .

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.

Theoretical Foundations

Stakeholder Theory

Stakeholder theory argues that firms are responsible not only to shareholders, but also to a wider range of stakeholders, including employees, consumers, and the environment . Social and environmental reporting serves as a key tool for demonstrating the company’s commitment to stakeholders by transparently articulating their approach to managing social and environmental impacts .

Legitimacy Theory

Legitimacy theory states that companies must maintain their social legitimacy by aligning their operations with the values and expectations of society. Social and environmental reporting serves as a tool for companies to demonstrate their compliance with social norms and ethical standards, and to strengthen their commitment to broader responsibilities beyond mere financial results .

The Two Approaches

Karimi et al. acknowledged two independent intellectual attitudes in the changes and development in accounting :

1. Philosophical approach: The process and role of accountability of organisations and how they relate to sustainable development

2. Management perspective: Various and effective conditions and tools for the sustainability of the organisation

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 . This represents a significant move from voluntary to mandatory sustainability reporting.

National and Regional Requirements

Various sustainability reporting requirements have been developed by jurisdictions including the United Kingdom, the United States, and others . This patchwork of requirements creates challenges for multinational companies.

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 . 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.

The Role of Technology

Digital technologies are increasingly seen as critical in enhancing the quality, quantity, and reliability of reporting and enabling management action . However, technology alone is not sufficient; it must be accompanied by appropriate skills, processes, and governance structures.

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 the EU CSRD?
A: The Corporate Sustainability Reporting Directive is an EU regulation adopted in 2023 that requires companies to report under the European Sustainability Reporting Standards (ESRS).

Q: What are the main challenges in sustainability reporting?
A: Challenges include greenwashing, lack of standardisation, regulatory fragmentation, skills gaps, and ensuring data accuracy and reliability.

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 1930s to today, with key milestones in the 1970s, 1990s, and post-2000 period .

Know the Key Frameworks: GRI (2000), SASB, 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 .

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

Tax Administration in Nigeria: Roles, Functions, Composition and Powers of JTB, NRS, SBIR, JSRC, LGRC, Tax Appeal Tribunal and the Taxes and Levies Act – Comprehensive guide to Nigeria’s tax administration landscape.

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

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

Reference Links / Sources

ScienceDirect – The pre-history of sustainability reporting: a constructivist reading – Analysis of early social and environmental reporting history, role of ACCA and KPMG surveys, and development of SR norms before GRI

Korea University – Navigating the Challenges of Environmental, Social, and Governance (ESG) Reporting – ESG reporting challenges, skills gaps, and SEA framework contributions

Taylor & Francis – Sustainability Reporting Origins and Development – Historical development of sustainability reporting and key frameworks including GRI, SASB, and ISSB

Springer – From voluntary CSR to binding ESG frameworks – Evolution from CSR to ESG, GRI launch in 2000, typology of ESG standards, and legal dimensions of sustainability standards

Taylor & Francis – Historical Development of Accounting for Sustainability – Origins of accounting for sustainability from the 1930s, three pillars of sustainability accounting, and UN SDGs

ASJP – Foundational Models to Global ESG Standards – Evolution of SEA from 1970s models to modern ESG frameworks, GRI, ISSB, and EU CSRD

Taylor & Francis – Evolution of Voluntary Business Reporting – Late 19th century origins of voluntary reporting, 1960s-70s social reporting, and rise of GRI

Semantic Scholar – From voluntary CSR to binding ESG frameworks – Transition from voluntary CSR to binding ESG obligations

Redalyc – Challenges and Opportunities for Integrated Reporting in Latin American SMEs – Barriers and progress in SME sustainability reporting

Sanad – Financial Reporting to Global Sustainability – Theoretical foundations of SEA, stakeholder and legitimacy theories, and evolution from financial to social and environmental accounting

ICAEW – Why sustainability standard setting matters – CSRD, ESRS, ISSB IFRS S1/S2, standardisation challenges, and need for global harmonisation

Springer – Identifying transitions in corporate sustainability reporting – Analysis of reporting gaps in JSE/FTSE companies and need for standardised reporting

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.