This conceptual paper explores the evolution of social and sustainability indicators in business reporting, contrasting it with developments in national accounting measures like GDP. The core inquiry examines how businesses can move "beyond profit" as the sole measure of success, similar to how nations are moving "beyond GDP." It argues that in the past decade, there has generally been a shift from single aggregate measures such as GDP for nations and profit for businesses to more comprehensive frameworks for assessing societal and business progress. In the case of national accounting, other measures such as the Human Development Index and initiatives such as ‘Beyond GDP’ and the OECD’s Better Lives Initiatives, aim to represent broader aspects of wellbeing and sustainability in addition to the conventional productivity based GDP measure (Durand, 2015; OECD, n.d., 2018; Stiglitz et al., 2009, 2018; UNDP, 1990).

In the business sphere, corporate reporting has increasingly incorporated non-financial information, particularly environmental, social, and governance (ESG) factors, in response to growing demands for sustainability and social responsibility disclosures. This is marked by the 2019 Business roundtable, when the rhetoric of business leadership overtly announced moving beyond shareholder value towards stakeholder capitalism (Business Roundtable & Stakeholders, 2019). Though these proceedings had been in development for some time prior to 2019, this overt shift accelerated major discussions, began significant alignment towards SDG efforts (UN Global Compact, n.d.; United Nations Global Compact, 2019), and the operationalization of instruments such as corporate impact assessments and ESG investing (Ellfeldt, 2022; Kell, 2018; UNPRI, 2017). During this period, the development, partnerships, take-overs, and consolidations of various corporate sustainability standards such as the GRI, IIRC, CDSB, CDP, TCFD, have also markedly escalated (IFRS Foundation, 2021, 2022a, 2022b). These are driven by a rising awareness of the negative externalities of businesses impacting the environment and also by stakeholder demands and increasing regulations (Deutscher Bundestag, 2021; Duarte & Matias, 2022; European Commission, n.d., 2023; European Commission & Directorate-General for Communication, 2020; The European Green Deal, 2019).

Several key issues and weaknesses however persist in current corporate reporting practices. Firstly, current corporate reporting practices disproportionately emphasize environmental metrics and climate-related disclosures over social factors and issues (Eccles et al., 2011). This is largely due to the relative ease of quantifying and integrating environmental data into valuation models compared to social issues (ibid). Environmental metrics like greenhouse gas emissions, energy consumption, and waste management have more established methodologies for measurement and reporting. In contrast, social issues are inherently more complex, multidimensional, and challenging to quantify (Kolk, 2003; O’Connor & Labowitz, 2017). They furthermore have the disadvantage of becoming a liability to firms once the issues that are relevant to them have been made known, and are treated in compliance as ‘risks’ to be avoided rather than transparently confronted and attended to to be properly resolved.

Secondly, within the asymmetrical emphasis against social impacts, there is an emphasis on internal over external social impacts, with the effect of not properly addressing stakeholders as actors, collaborators, or partners in discoursing and jointly resolving the social issues. When social issues are reported, there is a tendency to focus on internal workforce-related topics like equal opportunity, workplace diversity, and employee health and safety (Kolk, 2003). External societal impacts resulting from company activities receive much less attention. This comes at the significant disengagement with stakeholders implicated, and little attempt at jointly working as partners or collaborators to resolve the complexity of the social issues. As noted by Kolk (2003), "the use of truly 'societal', external indicators is rather infrequent."

Thirdly, corporate disclosures favors reporting on company policies, commitments, training programs and activities rather than real-world effects. A study by NYU Stern found that only 8% of social indicators in leading ESG frameworks evaluated the real-world effects of companies' practices on labor and human rights (O’Connor & Labowitz, 2017). The vast majority (92%) focused on assessing company efforts like policies, audits, and training programs rather than outcomes (ibid). This has the effect of focusing only on the company rather than the actual effects of the social issues on people and communities.

The proliferation of different reporting standards and frameworks has additionally led to a lack of standardization and comparability across reports. While recent consolidation efforts like the formation of the IFRS’s International Sustainability Standards Board (ISSB) (IFRS Foundation, 2021, 2022a, 2022b) aim to address this, there are concerns that the focus on investors' needs may further risk re-centering on the capital markets rather than broader stakeholder concerns, prioritize ‘shareholder primacy’ with a new veneer, and financialize social and sustainability measures. While corporate reporting has expanded to include more non-financial information, it still falls short in providing a comprehensive and meaningful picture of companies' social impacts. There is a need for more robust methodologies to assess and report on external societal effects, greater attention to social issues alongside environmental ones, and a shift towards outcome-based rather than policy-based social disclosures.

This paper examines how over two decades of innovation and fieldwork in Human Development has cultivated normative and methodological approaches that can significantly address challenges and deficiencies in the corporate reporting of social impacts and social issues. It firmly asserts that engaging with the human development framework can relevantly and meaningfully aid businesses in developing a more comprehensive, stakeholder-oriented approach to assessing corporate social and sustainability performance. In doing so, businesses can ultimately move beyond a narrow focus on profit or investor concerns towards a more holistic and people-centered assessment of their corporate social impacts from a multidimensional and participatory standpoint that respects stakeholder engagements. Since the human development framework is foremost generated from the fundamental precept of redressing social issues from a people-centered standpoint, it offers a more meaningful account for social and sustainability factors alongside financial performance, and vitally contributes to redesigning businesses for the common good.

Bibliography

Business Roundtable, & Stakeholders, I. C. to A. (2019, August 19). Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans.’ https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans

Deutscher Bundestag. (2021, June 11). Deutscher Bundestag—Bundestag verabschiedet das Lieferkettengesetz. Deutscher Bundestag. https://www.bundestag.de/dokumente/textarchiv/2021/kw23-de-lieferkettengesetz-845608

Duarte, D. R., & Matias, S. A. (2022, January 4). From the NFRD to the CSRD: Long story short. IFLR. https://www.iflr.com/article/2a647e1ubbp4gen3p7lz5/from-the-nfrd-to-the-csrd-long-story-short

Durand, M. (2015). The OECD Better Life Initiative: How’s Life? and the Measurement of Well-Being. Review of Income and Wealth, 61(1), 4–17. https://doi.org/10.1111/roiw.12156

Eccles, R. G., Serafeim, G., & Krzus, M. P. (2011). Market Interest in Nonfinancial Information. Journal of Applied Corporate Finance, 23(4), 113–127. https://doi.org/10.1111/j.1745-6622.2011.00357.x

Ellfeldt, A. (2022, July 26). They helped create ESG. Two decades later, some see a mess. E&E News by POLITICO. https://www.eenews.net/articles/they-helped-create-esg-two-decades-later-some-see-a-mess/

European Commission. (n.d.). Corporate sustainability reporting. Retrieved January 25, 2024, from https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en

European Commission. (2023, July 31). The Commission adopts the European Sustainability Reporting Standards. https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reporting-standards-2023-07-31_en

European Commission, & Directorate-General for Communication. (2020). Circular economy action plan: For a cleaner and more competitive Europe. Publications Office of the European Union. https://doi.org/doi/10.2779/05068

IFRS Foundation. (2021, November 3). IFRS - IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements. https://www.ifrs.org/news-and-events/news/2021/11/ifrs-foundation-announces-issb-consolidation-with-cdsb-vrf-publication-of-prototypes/

IFRS Foundation. (2022a, January 31). IFRS - IFRS Foundation completes consolidation of CDSB from CDP. https://www.ifrs.org/news-and-events/news/2022/01/ifrs-foundation-completes-consolidation-of-cdsb-from-cdp/

IFRS Foundation. (2022b, August 1). IFRS - IFRS Foundation completes consolidation with Value Reporting Foundation. https://www.ifrs.org/news-and-events/news/2022/08/ifrs-foundation-completes-consolidation-with-value-reporting-foundation/

Kell, G. (2018, July 11). The Remarkable Rise Of ESG. Forbes. https://www.forbes.com/sites/georgkell/2018/07/11/the-remarkable-rise-of-esg/

Kolk, A. (2003). Trends in sustainability reporting by the Fortune Global 250. Business Strategy and the Environment, 12(5), 279–291. https://doi.org/10.1002/bse.370

O’Connor, C., & Labowitz, S. (2017, March). Putting the ‘S’ in ESG: Measuring Human Rights Performance for Investors. NYU Stern Center for Business and Human Rights. https://static1.squarespace.com/static/547df270e4b0ba184dfc490e/t/58cad912e58c6274180b58b6/1489688854754/Metrics-Report-final-1.pdf

OECD. (n.d.). OECD Better Life Index. Retrieved November 7, 2022, from https://www.oecdbetterlifeindex.org/#/11111111111

OECD. (2018). For Good Measure: Advancing Research on Well-being Metrics Beyond GDP (J. E. Stiglitz, J.-P. Fitoussi, & M. Durand, Eds.). OECD. https://doi.org/10.1787/9789264307278-en

Stiglitz, J. E., Fitoussi, J.-P., & Durand, M. (2018). Beyond GDP: Measuring What Counts for Economic and Social Performance. OECD. https://doi.org/10.1787/9789264307292-en

Stiglitz, J. E., Sen, A. K., & Fitoussi, J.-P. (2009). Report by the Commission on the Measurement of Economic and Social Progress. http://ec.europa.eu/eurostat/documents/118025/118123/Fitoussi+Commission+report.

The European Green Deal, Document 52019DC0640, COM/2019/640 final (2019). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2019%3A640%3AFIN

UN Global Compact. (n.d.). The Ten Principles | UN Global Compact. Retrieved March 16, 2024, from https://unglobalcompact.org/what-is-gc/mission/principles

UNDP (Ed.). (1990). Human Development Report 1990: Concept and Measurement of Human Development. Oxford Univ. Pr.

United Nations Global Compact. (2019). United Nations Global Compact Progress Report 2019.

UNPRI. (2017). ESG Integration: How are social issues influencing investment decisions? https://www.unpri.org/download?ac=6529

Societal grand challenges, such as the climate crisis, urge businesses to move beyond symbolic gestures and actively drive positive social change. Achieving this requires organizations to complement top-down strategies with participatory bottom-up initiatives. However, the role of employees in driving social change within organizations has been largely overlooked in academia due to a predominant focus on the organizational and institutional level. This shortcoming has led to a growing interest in insider social change agents – employees advocating for positive social change from within their organizations through means such as activism or intrapreneurship (Heucher et al., 2024).

Recognizing that organizational change typically results from collective processes, existing research gaps related to the concept of insider social change agents include the emergence and impact of collective change agency and the relational dynamics between change agents. To address these gaps, my research adopts a relational approach that serves to explore the relationships and interactions between change agents. Specifically, I intend to systematically review the literature on collective insider social change agents, who emerge when individuals work together toward a common goal, and explore their dynamic interplay with individual agents.

As a contribution, I aim to offer a theoretical integration of individual and collective insider social change agents and show how they are interconnected and shape change endeavors. Practically, I hope to provide insights on how organizations can foster and scale bottom-up change by supporting collective efforts alongside individual initiatives.

The disappointing outcomes of corporate environmental commitments lead to accusations of greenwashing resulting from organizational hypocrisy and deception. In this conceptual paper, I offer another explanation of the disconnect between corporate environmental commitments and outcomes. While companies are often perceived as rational and well-integrated bureaucracies, they, in fact, are loosely coupled systems consisting of subassemblies that are simultaneously coupled and responsive yet hold a certain degree of separateness and independence. Such loose coupling isolates an organization from the external environment and gives the external stimuli only limited access to the system, allowing an organization to persist. Such an understanding of organisations indicates that greenwashing might be a consequence of loose coupling caused by causal indeterminacy, a fragmented external and internal environment, among other things.

An increasing number of academic studies and industry reports discuss the transformative power of impact investing to tackle Grand Challenges vis-à-vis other strategies in financial markets. A key topic in this context is the true nature of impact investing identity and its connection to strategic choices and actions. Being intentional about impact means embedding it across the key pillars of impact investing: materiality, additionality, and measurability. Moreover, aligning impact identity with strategy is crucial not only at the investor level but also at the investee level, though this alignment presents several challenges. Current studies only sparingly examine the nexus between identity and the interlinkage with strategic choices. Additionally, the practical frictions encountered in aligning strategy and identity are often not analyzed. Our research explores the link between strategy and identity in impact investing and the related frictions. We collected data through interviews and observation notes from impact investors, banks, for-profit organizations, NGOs, social enterprises, and academia. This research underscores the importance of aligning the pillars of impact investing strategy with the identity of investors and investees to distinguish this approach from other strategies within the broader field of sustainable finance. By adopting a bottom-up approach centered on practice, we explain how organizational identity and strategy are interlinked in impact investing and identify the main challenges that arise in aligning the two.

Abstract – Value transitions in a circular economy: Moral Entrepreneurs

A true transition from a linear to a circular economy (CE) requires more than just new business models or policy changes; it demands a moral revolution, where sustainability, social justice, and collective well-being become deeply embedded in societal values. This transition necessitates rethinking the relationship between economic activities and ecological systems, as well as transforming cultural norms around consumption, waste, and resource use. When individuals internalize new values, such as prioritizing planetary health over consumerism, these shifts can influence broader cultural and institutional changes, leading to systemic transformation. Historical moral revolutions, like the abolition of slavery or the civil rights movement, demonstrate how changes in ethical perspectives can drive large-scale societal shifts.

One of the key premises of this philosophical research idea is that the transition to a CE requires not only individual behavioural change but also leadership from moral entrepreneurs—posed as figures who actively promote new ethical norms and advocate for systemic transformation. Sociologist Becker (1973) coined the term "moral entrepreneur" to describe individuals or groups who identify social problems, push for new moral standards, and work to institutionalize these changes through laws, policies, or cultural shifts. These figures can take various forms, including activists, policymakers, religious leaders, or business executives who use their influence to challenge existing norms and drive progress. Throughout history, moral entrepreneurs have played a crucial role in shaping new ethical frameworks, as can be seen with e.g. abolitionists advocating for the end of slavery.

In the context of sustainability, moral entrepreneurs can bridge the gap between moral principles and practice (and from individual motivation to collective transformation), ensuring that moral imperatives translate into widespread action. While much of the CE transition has focused on technological and economic solutions, a true shift requires a deeper focus on ethical and behavioural change. This research idea aims to reconceptualize the role of moral entrepreneurs in sustainability transitions. It can provide a conceptual proposal for thinking about a certain role within this transition, and potentially positioning moral entrepreneurs as key figures in the business world who can drive the moral agenda forward. By analysing their role in moral revolutions and their potential impact on the shift toward a CE, this research highlights why moral entrepreneurship is essential for achieving long-term, systemic change.

The research idea will develop into a paper, first exploring the concept of a moral revolution, drawing on Appiah’s (2010) definition. It then introduces and dissects the concept of the moral entrepreneur into two components: (1) the entrepreneur, who drives innovation and systemic change, and (2) the moral agent, who promotes and upholds ethical values. By bringing these dimensions together, the paper will argue that moral entrepreneurs are essential for sustainability transitions and redefines their role in the business world. Ultimately, this study seeks to illustrate that the CE transition is not just a technical shift but a moral and cultural one, requiring leaders who can mobilize ethical change on a systemic level.