On the interplay between environmental reporting and management accounting change

Outline

• Abstract
• Keywords
• 1. Introduction
• 2. Literature Review
• 2.1. Organizational Change in Response to Disturbances of the Natural Environment
• 2.2. the Role of Environmental Accounting in Organizational Change
• 2.3. the Interplay Between Er and Ema Practices
• 3. Research Method
• 3.1. Company Selection
• 3.2. Method of Data Collection
• 3.3. Conducting the Interviews
• 3.4. Data Analysis
• 4. Analysis and Discussion
• 4.1. Company a
• 4.1.1. Description of the Disturbances and Change Pathways
• 4.1.2. How Environmental Accounting Processes Are Bound Up in Organizational Change
• 4.2. Company B
• 4.2.1. Description of the Disturbances and Change Pathways
• 4.2.2. How Environmental Accounting Processes Are Bound Up in Organizational Change
• 4.3. Company C
• 4.3.1. Description of the Disturbances and Change Pathways
• 4.3.2. How Environmental Accounting Processes Are Bound Up in Organizational Change
• 4.4. Company D
• 4.4.1. Description of the Disturbances and Change Pathways
• 4.4.2. How Environmental Accounting Processes Are Bound Up in Organizational Change
• 4.5. Summarizing Discussion
• 5. Concluding Remarks
• Acknowledgements
• References

Concluding remarks

The purpose of the paper was to investigate how ER and EMA practices may interact in the process of responding to disturbances of the natural environment. Utilizing a middle-range thinking approach, we used Laughlin’s (1991) skeletal organizational change framework to describe the pathways that environmental disturbances have taken in four particular organizations and to articulate the roles of ER and EMA practices in the changing context. Over a two-year period, 15 semi-structured interviews were conducted with general, finance and environmental managers of four Belgian companies and internal documents were analyzed in detail. We found that in response to disturbances of the natural environment, organizations responded in a visible way, either by initiating ER or by subscribing to an EMS (that entailed a reporting and communication requirement). In the first case (Companies A and D), ER drives EMA practices because disclosing information brings about the realization that supporting data are required (albeit perhaps not immediately). In the second case (Companies B and C), the binding commitment of an EMS triggers a need for data, which may or may not be used for decision making. In either of the two cases, an interplay might arise between ER and EMA (i.e. procedural changes in the first may evoke procedural changes in the second and vice versa) and this may influence the organizational change process. More specifically, EMA information may be used to inform ER, just like ER may trigger a need for the development of EMA practices (Frost and Seamer, 2002). This confirms that ER can be both a response to as well a driver of the organizational change process, as suggested by Tilt (2006). We found that, for an interplay to emerge, the presence of strong environmental jolts, an environmental champion and top management commitment are important contingent conditions. This ‘assemblage’ of factors (Duncan and Thomson, 1998) was not present in Companies A and B, which resided in Laughlin’s (1991) reorientation change pathway. According to Gray et al. (1995), companies, like Company C, that experience environmental kicks that engender fear but leave the interpretative schemes unaffected can be located in Laughlin’s (1991) colonization change pathway. In a similar vein, evolution change occurs when top managers voluntarily absorb environmental disturbances in their systems and structures (Gray et al., 1995), as in Company D. Consequently, an interplay is more likely to emerge in companies that reside in one of these change pathways. Importantly, however, this interplay may be tailored in order to fit in with or even to strengthen the organization’s conventional business discourse such that organizational change is stifled, as in Company C. Hence, our case findings empirically support the conjecture of Gond et al. (2012) that an integrated sustainability strategy may not be ideal from a sustainability viewpoint. In fact, given that we found no evidence for second-order change, there might be some synergy between a legitimacy explanation of firm behaviour and first-order organizational change, as suggested by Tilt (2006). However, an important nuance may be added in that companies seem to realize that, ultimately, the ‘greenwashing’ rhetoric should be supported by some evidence in order to maintain legitimacy.

We acknowledge that the organizational change processes at our case companies may not have reached their endpoints (Larrinaga-González and Bebbington, 2001). In particular, we have noticed that the parallel existence of a sustainability discourse at Company D may not be stable and, furthermore, the outcome of any potential evolution is unclear. Therefore, we encourage future studies to follow similar ‘schizoid’ (Greenwood and Hinings, 1988; Hinings and Greenwood, 1988) companies over an extended timeframe in order to complement our insights by revealing the factors that determine organizational change processes in the long run. Furthermore, given the importance of champions in change processes, it would also be worthwhile to disentangle how individuals can embed sustainability thinking at all hierarchical levels (see also Fraser, 2012).