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Sustainability Accounting and Accountability in Sainsbury’s Group PLC: Analytical Essay

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There is an emerging trend in large and small companies around the globe on sustainability reporting since the “early part of the 1990’s, when it became the focus of academic and skilled accounting” (Lamberton, 2005). This trend is a result of more people becoming aware of the importance of sustainability development and the benefits and impacts it brings to businesses and society at large. Additionally, sustainability is becoming a way of life mainly in developed countries as businesses endeavour to be responsible and sustainable at the same time (GRI, 2015). The thrust of this case study will focus on sustainability, accounting and accountability and on the social and environmental impacts of human activities around the globe by analysing the 2018/19 Sainsbury’s Group PLC sustainability report. From this premise, a theoretical framework for analysing the place for sustainability development as a galvanising ethos in multiple policy frameworks and its pivotal role in a variety of scales (Bebbington & Larrinaga, 2014) will established.

The case study will also explore and discuss the misconceptions and arguments on public accounting practices as a form of corporate self-reporting and explain systematic failures to open up substantive critique. Spence (2009) posits that “rather than rendering transparent the contradictions within capitalism, corporate social accounting primarily obfuscates these”. The case study will further advance accounting and academic theories such as agency, legal and stakeholders and the Global Reporting Initiative, AA100, ISO2600, SA8000 frameworks, focusing on different aspects of the Sainsbury’s Sustainability report. Furthermore, literature on sustainability development and reasons why most business reports on sustainability are deemed unsustainable will be utilised. Lastly, the essay will explore sustainability, accounting and accountability with the main focus of linking them to theories highlighted within the Sainsbury’s Sustainability Report.

Sustainability is a complex field with a lot of uncertainties and everyone has a part to play to avoid unforeseen circumstances in the next decade or so (Holland & Wielgus, 2013). For example, breathing air, food, global warming, carbon foot print, waste and environment impact, including the social aspect of life. All these factors have to be looked at in detail when analysing and reviewing sustainability development. The European Union (EU) defined “corporate and social responsibility as a concept whereby companies integrate social and environmental concerns in their business operations and their interaction with their stakeholders on a voluntary basis”. This definition shows that in order to be sustainable, global partnerships must be maintained with other nations, and all stakeholders are to be educated by utilising technology and available sustainable learning tools. The United Nations (UN), for example, developed 17 Sustainable Development Goals (SDGs) and set a target to be achieved by 2030. The SDGs include “no poverty, no hunger, good health and well-being, life below water, responsible consumption and production etc.” (UN, 2015).

All the above goals can be adopted by Sainsbury’s Group PLC as one of the big four retail supermarkets in the United Kingdom. There has been negative press on large organisations that outsource their operations to less privileged countries where they pay workers salaries that still put people in poverty. The research by the United nations revealed that approximately half of the world’s population live on a salary of about $2 a day. Hence, there is a need for societies to create decent working environments to ensure that poverty is eradicated. The Business World Council (BWC) defined sustainability development as, the commitment of a business to contribute to sustainable, economic development, working with employees, their families, the community and society at large to improve their quality of life’The BWC places much emphasis on stakeholders, a theory that can be applied in this case study. This theory looks at those stakeholders who have a direct influence on decision making or affected by the organisation. According to Deegan (2014), stakeholders were divided into primary and secondary. In simple terms, primary stakeholders are the owners of the business or those who ensure that the company will continue operating on an ongoing concern basis whilst secondary stakeholders are defined as those who influence or affect, or those who are influenced or affected by the organisation. This shows that in order for organisations to be successful and act sustainably, they must ensure that all stakeholders that have an interest either directly or indirectly get involved in one way or the other in order to attain the complex issue of sustainability development.

Stakeholder theory looks at the power and interest that each stakeholder has. For example, shareholders have high power and interest in the businesses and wants to get all the positive returns of their investments and employees have less power and interested in the business for job security. Care must be taken not to dissatisfy to third parties like the government, trade unions and NGOs and they might either promote or negatively impact the reputation of the organisation (Geegan & Unerman, 2011).

Likewise, the World Commission for Environment and Development (WCED, 1987, P54) views sustainability development as development that meets the needs of the present, without compromising the ability of future generations to meet their own needs. This definition has been used interchangeably with corporate and social reporting. In exploring the WCED definition, it becomes clear that every decision that we make now has either a positive or negative impact to present and future generations. A study of the Sainsbury’s 2018 update on sustainability shows a reduction in the clothing carbon footprint by over 8,600 tCO2e and saved over 11 million m3 of water since 2012. However, there is still more work to be done as most of Sainsbury’s products where not sustainable and certified by environmental standards. In criticising sustainability reports within businesses, it is not mandatory for every company to produce one, and these reports are not audited. As a result, companies tend to cherry pick the areas of interest to their stakeholders so that they are seen as being socially and environmentally sustainable. The more interesting definition of corporate social responsibility comes from Horrigan (2002) who postulates that “a responsible corporation is one which produces and sells only safe and beneficial products; does not accept government subsidies or special tax breaks, provides secure jobs and a living wage, fully internalises its environmental and social costs, and does not make political contributions or otherwise seek to advance legislation or policies contrary to the broader public interest”. This is more relevant to Sainsbury’s as a retail supermarket. There must be an understanding and integration by all stakeholders from the inception of the product to the final output, and all the production process must be done through sustainable means to ensure the present generation does not consume everything now without looking to the future and taking into consideration the risks involved. This is why the UN came up with their 17 SDGs to ensure that no one is disadvantaged by 2030.

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On the other hand, accounting is the process of identifying, Measuring, recording, processing and communicating information to users of the business. Using Sainsbury’s report. Sainsbury’s Annual financial statements report has been prepared in accordance with the International Financial Reporting Standard (IFRS), International Accounting Standards (IAS), United Kingdom (UK) Company Act 2006 and Generally Accepted Accounting Practice (GAAP) in line with the UK company law (Sainsbury’s Annual Report, 2019). Accounting is linked to accountability. Deegan (2014) defined accountability as a duty that must be rendered by those appointed to run the affairs of the business on behalf of the third party and then give a report on their findings to those that have an interest either directly or indirect to the business.

For example, the Sainsbury’s annual reports were directed the shareholders of the business appointed to run the company on their behalf with the aim of maximising shareholders wealth. It is well known that, the aim of every business is to make maximum profit on every return invested and to ensure that the business is running on a going concern. However, shareholders do not put all their reliance on directors due to the fact that directors have their own personal interest in enlarging their profile and ensuring that they receive their bonuses when due. Hence, auditors are appointed by the shareholders who act as independent agents to the company and analyse the financial statements of Sainsbury’s in accordance with the IFRS, IAS and UK accounting standards and then report their findings back to the shareholders with their opinion as to whether financial statements prepared by those directed show a true and fair view and that the company will continue to operate in the foreseeable future. This theory is known as Agency Theory. Sainsbury’s have applied the agency theory effectively on its financial statements but unfortunately it is not clear who has reviewed or audited its sustainability report. All committee members are employees of Sainsbury’s and there are no independent members to suggest that Sainsbury’s sustainable report has been prepared in accordance with the Global Reporting Initiative as the main guideline framework for sustainability reporting. This is why organisations are seen to be a form of corporate self-reporting on sustainability as stated by Spence (2009). Needless to say, organisations cherry pick the areas of interest or current hot topics on sustainability so that the businesses are seen to be sustainable.

Being a voluntary report (GRI Framework), sustainability is not transparent and this can be explored further buy looking at the triple bottom line reporting (Sridhar, 2012). This theory explains that organisations will be acting sustainably and seen to be sustainable by stakeholders if their focus is on the Profit, People and Planet. Profit looks at the overall aim of the business which is to get a positive return on shareholders investments and this attracts potential investors. Whilst people is concerned with the social aspect of life for all stakeholders such as employees, trade unions, equality of life and gender issues and lastly the environment we live in to ensure that it is well looked after for future generational benefits (Deegan, 2014).

Sainsbury’s report has highlighted the benefits and negative impacts on sustainability reporting. The Chief Executive Officer of Sainsbury’s Mike Coupe alluded to the values they stand by that in order to be champions in the retail business, they must have a positive impact nationally and internationally with all their partners to build a sustainable future (Sainsbury’s Annual report, 2019). They have also stated that in their report Accounting for Sustainability (A4S) that their value is to remain competitive with their main rivals, have a strong brand awareness and by being efficient and effective in applying sustainable approach which leads to better integration with other stakeholders across the globe. They have adopted a prioritisation approach to tackling sustainability issues by looking at three key areas namely total impact, full business values and system thinking. This approach looks at the High Low method on value creation, business protection and also importance to shareholders and potential for sustainable impact (A4S). This type of approach is very questionable and imbalance. For example, if there is a sudden shift of sustainability impact to the environment and society after the report has been made, the reputation of the Sainsbury’s Group PLC will be held to account. This is why (Gray, 2010) stressed that “is accounting for Sustainability actually accounting for sustainability…and how do we know?”. The other thing is that been one of the large retail business, competition is very high and not intellectual capitals (Deegan, 2014) will be disclosed as competitors my carry out reverse engineering.

It is good to see that Sainsbury’s has taken full use of International Integrated Reporting Council (IIRC) as a guiding principal in their business. The IIRC looks at the six capitals that are connected namely Manufactured, Intellectual, Human, Social and Relationship and Natural Capitals (Barry Elliott and Jamie Elliott 2017). These capitals play an important role in sustainable value creation. An example here shows how these are linked, if human capital is misused, it will have an adverse impact on the environment and the reputation (intellectual capital) of the company will be at risk and in turn the brand or image of the entity will be affected. This in turn will have a negative impact on the financial capital the shareholders in generating their return and will put away potential investors. IIRC will also help Sainsbury’s in using Integrated thinking in effective decisions making and how they compete with there rivals. However, both integrated framework and GRI are voluntary guidelines and organisations have options to report on areas that they are doing well, where this is seen as self-reporting (Spence, 2009).

On the other hand, Sainsbury’s have highlighted the key importance of sustainability in their business which include, obeying the law, building their brand, to be commercially viable by cutting down on energy use and abnormal costs, attract talented people to enhance their brand image, attract potential investors in moving the business forward and to be resilient on their values that brings sustainability. They also joined The Prince's Accounting for Sustainability Project (A4S) in 2006 to ensure that financial leaders were inspired so that they can make informed financial decisions-making to matters that affected the social and environment factors. In the report, the Sainsbury’s CEO stated that there is still a lot to be done and the business had no clear goals and understanding on what long term goals on sustainability meant to the organisation. Sainsbury’s are also seen to be adapting the 17 United Nations SDGs. However, the last UN Climate Conference held in Madrid, on 02 December 2019, called “the Conference of Parties 25 (COP25) attended by over 30000 people”, and reported by Channel 4 News highlighted a shocking revelation on tackling climate change Channel 4, 2019). The UN Secretary General, Mr Antonio Guterres asserted that “we are now confronted with global failure” and some people think that 25 years of sustainability has resulted into 25 years of failure. At the same conference, it was discovered that not all the report and information was openly disclosed as it was considered to be highly sensitive. Therefore, it makes it difficult to ascertain sustainability implications without fully disclosing information to the general public for a big institution like the UN. Another example is the speech by Prime Minister of Netherlands Mr Mark Rutte who theorised that 7 million people in his country will disappear in the near future if drastic measures on climate change and global warming are not implemented effectively. The Prime Minister was asked to create positive change in his country by stopping subsidies and fossil fuel in order to combat climate change. The prime minister’s response, however, showed that this quest for sustainability was only on paper but far from practical implementation.


This paper researched, analysed and discussed a case study focusing on Sainsbury, a retail organisation based within the UK. This study was deemed necessary for the purposes exploring the misconceptions accountability findings of the case study where to critically analyse the academic literature and theorical frameworks that helps businesses to be sustainable and help to eradicate the social, environmental issues around the globe. The report also highlights key achievements by Sainsbury’s in 2018/19 by following the SDGs (UN 2015) guidelines and using lessons learnt to ensure that they are ahead of the game and remain competitive. From the environmental point of view and complexity of reporting on sustainability, Sainsbury’s PLC has adopted the use of advanced technology and has joined forces with other partner so that they work collaboratively and integrate the businesses with the use of six capitals of the business (IIRC). It is still unclear and more has to be done to ensure that all organisations act responsibly and follow the guidelines and abide the law. The deadline set by the UN for 2030 is still debated with the recent findings on current issues and impact of global warming during COP25. This is why all stakeholders are to get involved at every level regardless of their demographic. Finally, sustainability reporting will be seen to be very effective if all companies are mandated to report on it. However, there are still concerns that due to the choices given to companies to report any issues they think is relevant to their business on a voluntary basis, reduces its effectiveness and audits are not carried out by third parties (GRI).

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