Accounting Forum 35 (2011) 176– 186

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Accounting Forum

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Sustainability reporting by local government in Australia: Current andfuture prospects

Belinda Williamsa,∗, Trevor Wilmshursta,1, Robert Cliftb,2

a School of Accounting & Corporate Governance, University of Tasmania, Locked Bag 1314, Tasmania, Australiab School of Accounting & Corporate Governance, University of Tasmania, Private Bag 86, Tasmania, Australia

a r t i c l e i n f o

Article history:Received 2 June 2011Received in revised form 20 June 2011Accepted 20 June 2011

Keywords:Sustainability reportingPublic sectorLocal governmentMail survey

a b s t r a c t

Sustainability reporting research has historically focused on the corporate sector, withpublic sector research still very much in its infancy. This exploratory study extends suchresearch in considering the current and future state of local government sustainabilityreporting in Australia. We utilized a mail survey instrument to collect data. We found thatlocal government in Australia reports on aspects of sustainability, with 50% of respondentsindicating that they report on at least one area of sustainability with social reporting beingmost prevalent. Reporting existed across an array of reports, with no standout reportingfocus found. The future of sustainability reporting in local government looks promising,with almost 40% of current non-reporters indicating that they are likely to report in thefuture.

© 2011 Elsevier Ltd. All rights reserved.

1. Introduction

The concept of sustainable development is regarded as one of the key research and policy issues of today (Brandon& Lombardi, 2011), with the emergence of this term having led to a groundswell in sustainable development activity, anoutpouring of academic and professional literature and the embracement of the term in both political and social arenas.

Sustainable development is essentially the recognition that global problems of environmental degradation and the socio-economic issues tied up in poverty and inequality are unsustainable in the long term. Sustainable development has thepotential to address fundamental challenges for humanity, now and into the future (Hopwood, Mellor, & O’Brien, 2005). Whilethere are numerous schools of thought and approaches as to how sustainable development can be achieved, one approachthat has emerged as a potential means of progressing the sustainable development agenda has been the contribution ofaccounting through sustainability reporting techniques (Ball & Bebbington, 2008; Guthrie, Ball, & Farneti, 2010; Unerman,Bebbington, & O’Dwyer, 2007).

While this form of accounting has been particularly addressed by the private sector, in comparison, its use by publicsector organizations has been patchy, and it is seen to be an emerging field (Ball, 2004a, 2004b; Dickinson, Leeson, Ivers,& Karic, 2005; Dumay, Guthrie, & Farneti, 2010; Tort, 2010). Nevertheless, with approximately 40% of all economic activitybeing accounted for by the public sector (Ball & Grubnic, 2007), the public sector should be expected to “walk the talk”regarding sustainability, through leading by example and reporting publicly and transparently on their activities to promote

∗ Corresponding author. Tel.: +61 3 63243661; fax: +61 3 63243711.E-mail addresses: Belinda.Williams@utas.edu.au (B. Williams), Trevor.Wilmshurst@utas.edu.au (T. Wilmshurst), Robert.Clift@utas.edu.au (R. Clift).

1 Tel.: +61 3 63243570; fax: +61 3 63243711.2 Tel.: +61 3 62267804; fax: +61 3 62267845.

0155-9982/$ – see front matter © 2011 Elsevier Ltd. All rights reserved.doi:10.1016/j.accfor.2011.06.004

B. Williams et al. / Accounting Forum 35 (2011) 176– 186 177

sustainability (Ball, 2006). There have been some recent indicators of change, with shifts in momentum within the publicsector demonstrated by increased interest and engagement in the practice of sustainability reporting (Leeson & Ivers, 2005).

One such level within the public sector that has been highlighted as potentially a major player in the sustainable devel-opment agenda is local government (Ball, 2004b). The responsibilities and functions of local government are broad and wideranging, yet they are based at the community level and are accountable to the community they represent. The decisionsthat are made at this level directly affect the economic, social and environmental well-being of the communities that localgovernments serve. As such, local government is in a prime position to foster and pursue the sustainability reporting agenda.This exploratory paper seeks to highlight the progress of local government toward this agenda in responding to recent callsfor more research into sustainability reporting within the public sector (Ball & Grubnic, 2007; Guthrie et al., 2010; Lewis,2008).

The objective of this paper is to contribute toward an initial understanding of sustainability reporting within the Australianlocal government context by examining, using a mail survey technique, the extent to which local government authoritiesare reporting on sustainability. It considers four specific research questions: Are local government authorities in Australiareporting on sustainability? What reporting media are being used to report this information? What is the reporting focus ofsustainability reporting? What are the future plans for sustainability reporting in local government?

The article is structured as follows. Section 2 provides the background to the study, while Section 3 provides a reviewof sustainability studies that have been conducted in the local government sector. Section 4 presents the research methodsused in the study. Section 5 reports on the results of the analysis, with Section 6 providing conclusions and suggestions forfuture research.

2. Sustainable development in local government

The concept of sustainable development is not new. The origins of the term can be traced back to the agricultural,forestry and fishery industries of the 18th and 19th centuries (Kula, 1994; Lamberton, 1998). However, recent business andcommunity focus would appear to have evolved from the release of Our Common Future in 1987, commonly referred to asThe Brundtland Report. The report provided a definition of sustainable development that has become one of the most widelyadopted definitions for sustainable development used today: “development which meets the needs of the present withoutcompromising the ability of future generations to meet their own needs” (WCED, 1987, p. 8).

This definition, while general in nature, provides a global perspective on sustainable development by encompassing thethree fundamental components that are deemed critical to the progression of sustainable development for both today’sgeneration and future generations: environmental protection, economic growth and social equity. The Brundtland defini-tion has been seen as a critical marker – it initiated an explosion of work on sustainable development and sustainability,through which the course of sustainability thinking and practice today can be charted (Sneddon, Howarth, & Norgaard,2006). Interestingly, over time, it has been estimated that there are over 300 varying definitions that have been coined sincethe Brundtland definition (Johnston, Everard, Santillo, & Robert, 2007), exhibiting tremendous diversity in definition andinterpretation (Giddings, Hopwood, & O’Brien, 2002; Hopwood et al., 2005). This is partly the result of the generalized natureof the Brundtland definition, leading numerous researchers to question the specifics of the concept, and some have evenlabeled it as a “confusing”, “vague”, “unknowable” term and as an “oxymoron” (see Jabareen, 2008 for an overview).

There have also been various concerns and criticisms of the Brundtland definition, with one such criticism highlightingthe need to move the term from a theoretical concept to an operational concept. While there is no general agreement onhow the concept should be translated into practice (Berke & Conroy, 2000), it has become increasingly recognized that localgovernment has a key role to play if the sustainable development agenda is to be pursued (Ball, 2002, 2004b).

Local government, with strong established links to the local community, is in a key position to foster a bottom-upapproach to regional and national development in the pursuit of sustainable development. However, to allow for the theo-retical development of sustainable development within local government, the term “sustainable development” needs to beoperationalized at the local level. This process concurs with Hilden and Rosenstrom (2008), who considered that the termhas to be particularized and contextualized before it can be used, while Byrch, Kearins, Milne, and Morgan (2007) concludedthat there is a risk of not ever being able to achieve sustainable development if we cannot agree on what it is. For the pur-poses of this paper, the approach adopted to sustainable development encompasses the three fundamental components ofsustainable development as defined in the Brundtland definition but applied specifically to the local community level3:

Sustainable development consists of those activities undertaken at the local community level that seek to maintain,integrate and improve environmental protection, social equity and economic/financial growth within the community.

One potential tool for progressing sustainable development is sustainability reporting – i.e., reporting on an organization’scontribution to sustainable development. The importance of sustainability reporting has grown in prominence today, withorganizations beginning to realize the importance of such reporting “as powerful tools in the management, planning, controland accountability of organizations for their social and environmental impacts” (Unerman et al., 2007, p. 7). A number ofresearchers regard such reporting as perhaps the most important advance in organizational reporting of the last few decades

3 Adapted from Pearce and Warford’s (1993) definition.

178 B. Williams et al. / Accounting Forum 35 (2011) 176– 186

(Ball, 2004b). Such reporting attempts to provide a more holistic viewpoint of the settings in which organizations operate(Lamberton, 1998) by reporting beyond mandated reporting requirements to incorporate the environmental, social andeconomic aspects of the organization.

3. Literature review

The private sector has dominated the development of the sustainability reporting agenda (Ball & Bebbington, 2008), withsome observers considering this form of reporting as part of mainstream business reporting (Epstein, 2008; KPMG, 2008).In comparison, sustainability reporting in the public sector has lagged. Such differences have extended into sustainabilityreporting research, which has historically been geared toward the private sector, with little attention given to local govern-ment (Ball, 2004a, 2006; Ball & Grubnic, 2007; Dickinson et al., 2005). However, as was pointed out by Ball (2002, 2004a,2004b, 2005, 2006, 2007), in focusing on local government, there is greater potential for the further development of thesustainability development concept and for developing a sustainable development agenda.

At the international level, local government research has included studies that have focused on the uptake of sustainabilityreporting (Dickinson et al., 2005; Dumay et al., 2010; Tort, 2010), the value of triple-bottom-line (TBL) reporting (Ministryfor the Environment New Zealand, 2002) and social reporting disclosure practices by local authorities (e.g., Farneti, Guthrie,& Siboni, 2010; Marcuccio & Steccolini, 2005, 2009). These studies have generally indicated that sustainability reporting inlocal government is in its infancy.

Studies that have focused on the Australian environment include Jones, Frost, Loftus, and Van der Laan (2005), who inves-tigated sustainability/TBL reporting in Australia across a broad range of private and public sector entities (which includeda limited number of local government authorities). Their results suggested that few councils in Australia report on theirsustainability performance, instead confining their sustainability disclosures to general statements of policy. However, withthe sample restricted to 35 councils (representing just 5% of the local government population in Australia at that time), cau-tion needs to be exercised in generalizing from these results. Other studies have focused on the sustainability/TBL reportingpractices of individual local authorities in Australia (Farneti & Guthrie, 2009; Herbohn & Griffiths, 2008; Jigsaw Services,2004; Potts, 2004), while studies that have focused on particular reporting aspects include Mladenovic and Van der Laan(2007), who reported on the state of environment (SoE) reporting by local authorities. Other studies that have examinedtypes and patterns of sustainability disclosures include Guthrie and Farneti (2008) and Scuilli (2009), with the general con-sensus being that disclosure levels are low and that there is a lack of consistency in reporting approaches in Australian localgovernment.

While there has been limited research conducted on sustainability in local government, there has been greater researchinterest in examining Local Agenda 21 (LA21). The focus of LA21 has been a key driver in promoting and commencingthe sustainable development agenda in local authorities (Cotter & Hannan, 1999; Keen, Mahanty, & Sauvage, 2006; Neil,Sansom, Porter, & Wensing, 2002). These studies, in general, have concluded that sustainability reporting in local authoritieshas clearly focused on environmental sustainability reporting, with reporting provided through a variety of forms (e.g., ICLEI,undated; Kupke, 1996; Lewis, 2000; Mercer & Jotkowitz, 2000; Tuxworth, 1996; Whittaker, 1996, 1997).

A review of prior research suggests that sustainability reporting within the local government sector is in its initial stagesof development, reflected by a lack of consistency in the type and extent of sustainability reporting. This paper contributestoward an initial understanding of sustainability reporting practices in local government by identifying the extent to whichlocal government authorities in Australia are reporting on sustainability. In doing so, four research questions were developedto investigate this issue:

1. Is voluntary sustainability information currently being reported by local authorities in Australia?2. What reporting media are adopted by local authorities to report sustainability information?3. What is the reporting focus adopted by local government authorities in providing sustainability information?4. Is it anticipated that local government authorities will continue/commence reporting on sustainability in Australia in the

future?

While previous research in this area of accounting has traditionally concentrated on content analysis (Guthrie &Abeysekara, 2006; Milne & Adler, 1999; Owen, 2008) and literature/theoretical historical commentaries (Parker, 2005, 2011),this research was conducted via a mail survey. This method allowed for a broader analysis across a wide geographical areato determine whether sustainability information is being reported by local governments in Australia.

4. Research design

A mail survey was sent to the chief financial officers (CFOs) of local government authorities in Australia to collect data todetermine the extent of sustainability reporting. Currently, there are 566 local government agencies in Australia (Departmentof Infrastructure, Transport, Regional Development and Local Government, 2009) situated across seven states/territories.Because this study was not dealing with known sustainability reporters but local authorities in Australia, by focusing onthe senior position of CFO, it was felt that, if sustainability reporting was being undertaken, this officer would have anunderstanding of the local authority’s approach to sustainable reporting. In doing so, a whole-of-organization approach to

B. Williams et al. / Accounting Forum 35 (2011) 176– 186 179

sustainability reporting would be achieved. This methodology was similar in approach to recent research conducted in thelocal government sector by Pilcher and Dean (2009), who, in distributing a mail survey to the Director of Corporate Services(or similar position) in all local authorities within Australia in 2006, considered that the position had the advantage of havingan overview of what was happening in the organization – from both an internal and external reporting perspectives.

A pilot test was undertaken involving the mailing of the survey document to 30 local government authorities selectedby random sampling. A response rate of 20% was achieved, with no major changes resulting from the pilot survey. The mailsurvey was subsequently mailed in March 2009 to 536 local government authorities with two follow-up reminders sent afterthree and six weeks. The survey consisted of 38 questions. Apart from personal and organizational data, the 38 questionsexplored four issues, with this paper specifically focusing on the core issue of the extent of sustainability reporting in localgovernment.4

To provide a frame of reference, definitions of sustainable development and sustainability reporting were provided to helprespondents in determining whether their organizations were engaging in such activities. For the purposes of this research,sustainability reporting was defined as reporting from the three fundamental components of sustainable development5 andapplied to the local level as follows:

An integrated approach to reporting to stakeholders that focuses on the environmental, social and economic activitiesundertaken that seek to achieve specific objectives in the pursuit of sustainable development by the local governmentauthority.

To provide further guidance, examples for each area of sustainability reporting were provided from the GRI Guidelines(2006). This approach can be contrasted with that of Dickinson et al. (2005), who, in utilizing a mail survey approach,allowed survey respondents to self-identify if they were reporting on sustainability. However, by doing so, the approach didnot provide a measure against which the respondents could assess themselves and therefore resulted in identifying a rangeof activities representing sustainability reporting (Leeson & Ivers, 2005). The approach used in this study was consideredto be more appropriate in that a frame of reference was provided by which survey respondents could assess their currentreporting practices against.

The mailing included a cover letter explaining the purpose of the research project, two reply-paid envelopes and a guar-antee of confidentiality to encourage participants to complete and return the survey. Participants were offered a summaryof the results when the study was completed. To obtain the summary, participants were asked to complete a separate sheetattached to the survey, providing their contact details, and to place it in one of the reply-paid envelopes, while the surveydocument was to be returned in the other reply-paid envelope. This process ensured the confidentiality of the participants.

As each completed survey was received, it was opened, date-stamped and consecutively numbered. Each survey wasthen examined to ensure that it was acceptable for processing. The completed surveys were subsequently sorted and thencoded manually to allow for inputting of the data into a computer spreadsheet.

5. Results and findings

5.1. Descriptive statistics

A total of 190 usable responses were received, equaling a response rate of 35.5%. This response rate is consistent withprevious Australian sustainability studies conducted in this area of research, ranging from 25% for the National Local Sus-tainability Survey conducted by Whittaker (1997) to 52% for the LA21 study by Kupke (1996), which focused on localgovernment in South Australia. To assess reliability and non-response bias, Cronbach’s alpha testing was conducted, withthe results indicating consistency (Oppenheim, 1966), thereby highlighting the quality of the data collected.

Of the 190 responses, the highest response rate was received from New South Wales (NSW) (30.53%), with WesternAustralia having the second highest response rate at 18.42% (Table 1a – column 2). However, when these response rateswere compared to the total number of potential survey respondents in each state/territory, differing results were found.The results indicate that a higher proportion of local authorities responded from Tasmania (55.56%). A possible explanationfor the higher response rate from Tasmania may be that there was greater understanding and interest on the part of localauthorities because the research originated in Tasmania.

Respondents were asked to provide their organizations’ total revenue from their latest financial statements (Table 1b).The results were quite evenly distributed across categories, with the greatest percentage of respondents (26.84%) in therevenue range of $20 million to $50 million, followed by organizations in the range of $10 million to $20 million (20%). Inseparating the responses by urban/rural classification, a higher percentage of responses were received from respondentsin rural authorities (Table 1c), who returned 101, in comparison to urban authorities, who returned a total of 89 responses(based on the classification scheme of the Australian Classification of Local Government [ACLG]).

4 The three other issues covered in the mail survey focused on the key factors in the establishment of sustainability reporting, the role of the accountantin the sustainability reporting process and the guidelines currently being used in sustainability reporting in local government.

5 As previously defined in Section 2.

180 B. Williams et al. / Accounting Forum 35 (2011) 176– 186

Table 1Descriptive statistics.

Number ofrespondents(1)

Percent ofrespondents(2)

Total numberof localauthorities(3)

Percent of localauthorities thatresponded(4)

(a) State or territoryNew South Wales 58 30.53 147 39.46Northern Territory 3 1.58 16 18.75Queensland 28 14.74 69 40.58South Australia 24 12.63 70 34.29Tasmania 15 7.89 27 55.56Victoria 27 14.21 75 36.00Western Australia 35 18.42 132 26.52Total 190 100 536(b) Total revenue valueLess than $5 million 21 11.05$5 million to $10 million 23 12.11$10 million to $20 million 38 20.00$20 million to $50 million 51 26.84$50 million to $100 million 31 16.32Greater than $100 million 26 13.68Total 190 100(c) ClassificationUrban 89 46.84Rural 101 53.16Total 190 100

5.2. Analysis of research questions

5.2.1. Reporting of sustainability information by local government in AustraliaThe first question examined whether sustainability information is being reported by local government in Australia.

As a result of previous research (Farneti & Guthrie, 2009; Herbohn & Griffiths, 2008; Jigsaw Services, 2004; Jones et al.,2005; Mercer & Jotkowitz, 2000; Potts, 2004; Whittaker, 1996, 1997), it was anticipated that while reporting on sustain-ability information in the local government sector may be minimal, local governments in Australia do, in fact, report onsustainability.

Respondents were asked to indicate whether they reported any voluntary sustainability information to their externalstakeholders in the areas of environmental, social and/or economic reporting. Requiring respondents to indicate specificallyin which type of voluntary reporting they were engaging provided more in-depth and complete insight into sustainabilityreporting practices in local government. A total of 95 respondents (50%) were found to be reporting voluntary sustainabilityinformation, with the remaining 95 respondents (50%) indicating that they did not report any voluntary sustainabilityinformation. Of the 95 reporting respondents, 59 were classified as urban local authorities (62.10%), while 36 were rurallocal authorities (37.89%).

In the next stage of the analysis, the focus of sustainability reporting by local authorities was explored. The resultsindicate (Table 2a) that the highest level of reporting was social reporting, with 86 reporting respondents (90.5%) reportingvoluntary social information (i.e., either reporting it on its own or in combination with environmental reporting, economicreporting or both). These results are interesting when viewed against comments from Burritt, Thoradeniya, and Saka (2009,p. 9), who considered that attention to accounting for social issues is not an established practice (from the viewpoint of thepublic sector in general) and that, as a consequence, the social accounting pillar in sustainability accounting is underutilized.Perhaps the local government sector is an anomaly to this general trend in public sector reporting. The research of Guthrie

Table 2Reporting on sustainability.

Number Percent

(a) Focus of reportingEnvironmental 78 82.1Social 86 90.5Economic 80 84.2(b) Number of reporting areasOne 12 12.6Two 17 17.9Three 66 69.5

100

Note: the reporting areas are environmental, social and/or economic reporting.

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Table 3Why local authorities are not reporting sustainability information.

Reason Number(1)

Percent ofresponses(2)

Number –urban(3)

Percent –urban(4)

Number –rural(5)

Percent –rural(6)

Insufficient resources 37 42.5 14 40 23 44.23No current mandated requirement 24 27.6 7 20 17 32.69No expertise in this area of reporting 4 4.6 2 5.71 2 3.85No systems in place to report such information 4 4.6 3 8.57 1 1.92Not seen as a priority 6 6.9 3 8.57 3 5.77Not requested by the community 5 5.8 2 5.71 3 5.77Planning to commence in the near future 7 8 4 11.44 3 5.77

Total 87 100 35 100 52 100

and Farneti (2008) provided some support for this statement in finding social disclosures to be most common in a groupof seven Australian public sector organizations scattered across three tiers of government. However, with their results notproviding specific disclosure levels for local authorities, this issue requires further examination to determine if, in fact, socialinformation is as widely reported in local government as these survey results suggest.

The results were further examined to determine the number of areas in which authorities were reporting sustainabilityinformation, specifically whether it was one, two or three areas of sustainability.6 It was found that respondents reportedsustainability information in each of the three areas. Table 2b shows that 12 respondents reported on one area, 17 respondentsreported on two areas and 66 respondents reported on all three areas. Thus, the majority of respondents (69.5%) werereporting sustainability information that incorporated voluntary environmental, social and economic information (hereafterreferred to as “integrated sustainability reporting”).

With this paper focusing on voluntary sustainability reporting, the effect, if any, of mandatory reporting requirements onthese voluntary reporting practices was examined. With NSW having mandated SoE reporting, further testing was conductedto determine whether there was a significant difference in the level of voluntary sustainability reporting between NSWrespondents and all other respondents in answering whether they reported voluntary sustainability information.

Using independent-sample t-tests, significant differences were found for voluntary environmental reporting (t = −2.323,p < .05), economic reporting (t = −3.3118, p < .005) and reporting from an integrated reporting (t = −3.337, p < .005) perspec-tive. With all differences indicating higher levels of voluntary reporting by NSW authorities, this result indicates that NSWlocal authorities may have a heightened awareness of voluntary sustainability reporting, brought about by the mandatoryreporting requirements of SoE reporting. This issue requires further research and investigation.

Respondents who did not report sustainability information (50% of the survey respondents) were asked to provide areason for their lack of reporting. Sixty-three respondents indicated at least one reason, while a number offered multiplereasons, yielding 87 responses to the question, as shown in Table 3. The two most commonly cited reasons were insufficientresources (42.5% of responses), which included insufficient time, funding, data and/or manpower and no current mandatedrequirement for such reporting (27.6% of responses). Other minor reasons included the local authority was planning tocommence reporting in the near future (8% of responses), reporting not being seen as a priority (6.9% of responses) or notrequested by the community (5.8% of responses).

With over 60% of non-reporting respondents coming from rural authorities, further analysis was conducted to determinewhether rural authorities favored certain reasons in comparison to urban authorities in explaining why they did not reportany sustainability information (Table 3 – columns 3–6). The results indicated that a greater number of rural authorities citedinsufficient resources (23) and no current mandated requirements (17) in comparison to urban respondents. However, whenthe results were examined based on the proportion of responses in each category, the major highlighted difference was theabsence of mandated requirements, with a higher proportion of rural authorities citing this reason in comparison to urbanauthorities (32.69% vs. 20%).

It had been expected that, while sustainability reporting in the local government sector may be minimal, local govern-ments in Australia do, in fact, report on sustainability. The results from the survey do support this expectation, in that 50%of survey respondents report on at least one area of sustainability.

5.2.2. Reporting media used to report sustainability informationThe second question examined where sustainability information is being reported by those local authorities who had

indicated that they were reporting. Previous research studies have found sustainability information in a mixture of reports,including SoE reports, stand-alone sustainability reports, annual reports, strategy documents, council minutes, communityreports and budget statements (Farneti & Guthrie, 2009; Herbohn & Griffiths, 2008; Jones et al., 2005). Accordingly, it wasanticipated that this reporting trend would continue, thereby providing no consistency in where sustainability informationis being reported.

6 Being the areas of environmental, social and/or economic reporting.

182 B. Williams et al. / Accounting Forum 35 (2011) 176– 186

Table 4Where voluntary sustainability information is being reported.

Reporting medium Respondentsreportingenvironmental(1)

Respondentsreporting social(2)

Respondentsreportingeconomic(3)

Respondentsreporting on 1area(4)

Respondentsreporting on 2areas(5)

Respondentsreporting on 3areas(6)

Total(7)

Most utilizedAnnual report 65 73 77 21 13 56 90

22.1% 13.7% 58.9% 94.7%Corporate/strategic report 53 56 59 14 9 45 68

14.7% 9.5% 47.4% 71.6%Website 59 59 57 8 8 50 66

8.4% 8.4% 52.7% 69.5%Council minutes 47 54 52 10 10 41 61

10.5% 10.5% 43.2% 64.2%Operational plans 47 50 53 16 8 39 63

16.8% 8.4% 41.1% 66.3%Least utilizedStand-alone sustainability report 37 29 25 13 7 21 41

13.7% 7.4% 22.1% 43.2%Key performance indicator reports 36 36 36 - - 36 36

.0% .0% 37.9% 37.9%SoE report 37 20 20 17 4 17 38

17.9% 4.2% 17.9% 40.0%Staff training manuals 22 26 27 13 4 18 35

13.7% 4.2% 18.9% 36.8%

Note: the reporting areas are environmental, social and/or economic reporting.

Survey respondents were asked to identify, from a listing of 13 internally and externally focused reporting media, whichmedia were currently being utilized by their organization to report voluntary sustainability information. The listing includedstand-alone sustainability reports, annual reports, corporate/strategic reports, operational plans, SoE reports, communityreports, budget statements, KPI reports, council minutes, staff training manuals, policy documents, management reportsand web sites. Respondents were also given an opportunity to indicate any reporting media that were being utilized otherthan those listed; however, this opportunity did not bring to light any major issues.

The major findings (the most and least utilized reports) are reported in Table 4, including the type of reporting and whetherrespondents were reporting on one, two or three areas of sustainability. Sustainability information was found to be reportedin an array of reports, with the most utilized external reporting medium found to be annual reports (94.7% of reportingrespondents – column 7), with voluntary economic reporting being the most utilized form of reporting in annual reports(77 reporting respondents – column 3). The annual report was also the most utilized reporting mechanism in reporting onall three areas of sustainability reporting (with 58.9% of respondents reporting from an integrated sustainability reportingperspective – column 6).

Other frequently utilized reporting media included corporate/strategic reports (71.6% of respondents – column 7) andweb sites (69.5% of respondents). Respondents favored the integrated reporting perspective for both these forms of reporting,with 47.4% and 52.7% of respondents, respectively (column 6), indicating that they reported on all three areas of reporting.For reports with an internal reporting focus, operational plans were most utilized in reporting sustainability information(66.3%), with council minutes also being utilized by 64.2% of reporting respondents.

The stand-alone sustainability report was found to be one of the least used reports for sustainability reporting, with 41respondents (43.2%) indicating that they reported sustainability information in stand-alone reports. Of these respondents,21 indicated that they reported from an integrated sustainability reporting perspective, while seven respondents reportedon two areas of sustainability, and 13 respondents reported on one area. Of the 13 respondents that reported on one areausing stand-alone reports, 10 reported solely on environmental reporting, while for those respondents that reported on twoareas of sustainability, the two most reported areas were environmental and social reporting. Thus, as indicated in Table 4(column 1), environmental reporting is the most utilized form of reporting in stand-alone sustainability reports.

Other reporting media used infrequently for voluntary sustainability reporting included key performance indicatorreports (with only 37.9% of respondents reporting sustainability information), SoE reports (40%)7 and staff training manuals(36.8%). A possible explanation for the low reporting rate is that these reports may simply not be produced by all localgovernment authorities. This fact would be particularly relevant for SoE reports, as such reports are only mandatory in onestate of Australia. However, it was interesting in a state by state analysis to find that, while 53% of respondents who producedvoluntary information through an SoE report were from NSW, the remaining 47% were from states other than NSW.

7 The survey asked respondents to indicate in which reports voluntary sustainability information was being reported. Thus, while SoE reports aremandatory in NSW, by the inclusion of this report in the mail survey, it attempted to highlight those respondents who reported beyond the mandatedrequirements providing additional voluntary reporting and to highlight respondents in states other than NSW who report using SoE reports.

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Table 5Focus of sustainability reporting.

Area Number Minimum Maximum Mean Std. dev.

Environmental 88 1 5 3.97 .88Social 87 2 5 4.06 .83Economic 87 2 5 4.18 .74Integrated 86 1 5 3.94 .91

With the results highlighting sustainability information being reported in a mixture of reports, further analysis wasconducted to determine whether the type of reporter helped to determine which reports are being utilized in report-ing sustainability information, thereby creating a certain level of consistency in where sustainability information is beingreported.

Reporters were separated into two groups – those local authorities that report on all three areas of sustainability, environ-mental, social and economic (integrated reporters) and those authorities that do not (hereafter known as “non-integratedreporters”). Independent group t-testing was conducted by type of reporter, with results providing a number of significantdifferences. Such differences were found for seven of the reporting media,8 these being stand-alone sustainability reports(t = 2.12, p < .05), annual reports (t = 2.50, p < .05), SoE reports (t = 3.96, p < .001), budget statements (t = 2.53, p < .05), keyperformance indicator reports (t = 2.76, p < .01), web sites (t = 3.45, p < .01) and management reports (t = 3.02, p < .01). On fur-ther examination, the results indicated that, for these seven reporting media, there was a higher uptake of these reportingtypes for integrated reporters in comparison to non-integrated reporters, thereby providing a certain level of consistency inreporting.

Thus, these results indicate that voluntary sustainability information is being reported across a range of local governmentreports in Australia, with the most utilized being the annual report. However, with the results highlighting that integratedreporters favor certain reporting media in comparison to non-integrated reporters, consistency in sustainability reportingmay be achieved to a small degree across reporters. This issue requires further research.

5.2.3. Focus of sustainability informationThe third research question examined the focus of sustainability reporting. In general, prior research has suggested that

reporting has tended to focus on one area of sustainability in local government, the environment (GRI, 2004; ICLEI, undated;Lewis, 2000; Whittaker, 1996). There is one known exception, Guthrie and Farneti (2008), who found social disclosures to bemost common among a group of seven Australian public sector organizations. However, with their research focusing acrossthe three tiers of government and not providing specific disclosure details for local authorities, it was anticipated that thefocus of sustainability reporting within local government would be environmental, and in doing so, local authorities werebeing selective in addressing the sustainability reporting agenda.

Survey respondents were asked to consider four approaches to reporting and to determine the importance of eachapproach to their organization (using a 5-point scaled response from very unimportant [1] to very important [5]). Theapproaches were a focus on environmental reporting, a focus on social reporting, a focus on economic reporting and a focuson the integrated reporting approach. The results are provided in Table 5.

Respondents indicated that the traditional economic focus was considered slightly more important than the other sus-tainability reporting types, with a mean score of 4.18. Social reporting was considered the next most important, recording amean score of 4.06. Environmental reporting provided a mean score of 3.97, with the integrated reporting approach beingviewed the least important (mean score of 3.94). The results were mixed when compared to the type of sustainability report-ing that respondents actually engage in, as previously provided (Table 2), which indicated that the highest level of reportingwas social reporting (90.5% of respondents), with reporting on all three areas (integrated reporting) ranking the highest ofthe three reporting areas. While the respondents may have been engaging in more social reporting than other reportingapproaches, the results indicate that respondents still considered economic reporting as the most important focus of theirorganizations, with social and environmental reporting receiving a slightly lesser focus.

5.2.4. Reporting on sustainability information in the futureThe fourth research question examined whether local authorities would report on sustainability information in the future.

It was anticipated that there would be an increased level of reporting on sustainability for local government in the future assustainability accounting and reporting grow in importance (Lamberton, 2005).

All survey respondents were asked to indicate the likelihood that their organization would report voluntary sustainabilityinformation to their stakeholders in the future (using a 5-point scaled response from not at all likely [1] to extremely likely[5]). The summarized results indicate (Table 6) that 82.1% (78 respondents) of current reporters will be likely to extremelylikely to continue reporting on sustainability in the future, while for current non-reporters, 37.9% (36 respondents) indicatedthat, in the future, they would be likely to extremely likely to report on sustainability. Of the non-reporting respondents

8 From a total of 13 internally and externally focused reporting media.

184 B. Williams et al. / Accounting Forum 35 (2011) 176– 186

Table 6Future reporting on sustainability.

Currently reporting onsustainability

Number unlikely ornot at all likely

Percentunlikely or notat all likely

Numberextremelylikely or likely

Percentextremelylikely or likely

Mean Std. dev.

Yes 3 3.2 78 82.1 4.11 .916No 34 34.8 36 37.9 3.07 1.142

that had indicated they were extremely likely to report sustainability information in the future (11 respondents),9 sevenwere in the planning stages of reporting in the near future (see Table 3 results). These results therefore highlight of currentnon-reporters, 19% are planning to commence reporting shortly, a further 11% are extremely likely to report with 70% likelyto commence sustainability reporting in the future.

Independent t-testing was conducted to determine whether these differences between reporters and non-reporters wereconsidered significant. The t-test result of 6.87 was significant at the .001 level, highlighting that current reporters were morelikely to report on sustainability information in the future in comparison to current non-reporters.

To provide an indication of the type of sustainability reporting that will likely be conducted in the future, future sustain-ability reporters were asked to indicate for each type of voluntary reporting (environmental, social, economic or integratedreporting) whether reporting would be more restricted, similar or expanded in comparison to previous years. For the currentreporters on sustainability, the area most likely to expand in the future was found to be environmental reporting, with 59% ofrespondents considering that their environmental sustainability information would be expanded. Both social and economicinformation was likely to be expanded by 50% of respondents, with integrated reporting the least favored reporting approachfor expansion (42.3%).

Of the non-reporters, respondents would most likely commence sustainability reporting in the areas of environmentaland/or social reporting (86.1%). The area next most likely was economic reporting (77.8%), with the least most likely area ofthe four reporting types being integrated sustainability reporting (75%). These results indicate the potential for sustainabilityreporting in local government, for both current reporters and non-reporters, with the most favored reporting areas beingeither environmental or social reporting.

6. Discussion and conclusion

This study has contributed toward addressing a research gap in public sector sustainability reporting by providing aninitial understanding of current and future sustainability reporting practices in the local government sector in Australia. Indoing so, this study provides a platform for further research to be conducted in the local government sector.

Findings from this study indicate that local authorities are reporting, with the highest level of reporting being in the areaof social reporting (90.5%), concurring with the findings of Guthrie and Farneti (2008). However, the study also indicatesthat there is room for improvement, with 50% of respondents highlighting that they are not reporting any sustainabilityinformation at the current time and the most commonly cited reason being insufficient resources. For current reporters, anarray of reporting media is utilized. Encouraging results were found in analyzing future sustainability reporting practices, asboth current reporters and non-reporters are looking to commence or move further into sustainability reporting. However,an integrated approach to sustainability reporting, focusing on environmental, social and economic reporting, may be someway off, with results indicating this approach to be the least favored.

There is great potential for utilizing sustainability reporting as a tool toward the goal of sustainable development. Withlocal government reporting practices in their infancy, careful planning and consideration need to be undertaken now towardthe progression and development of such reporting. In doing so, with local government’s close proximity and links to thecommunity, the sector could play a critical role in all aspects of the economic, social and environmental sustainability agenda.However, these results highlight the lack of a widespread and consistent reporting approach to the uptake and developmentof sustainability reporting in the sector. With increasing concern about sustainable development and sustainability reporting,it is now time for action if local government is to foster and pursue the sustainability reporting agenda as leaders in thepublic sector.

This paper adds to the limited available knowledge in an emerging field of accounting, specifically focusing on sustain-ability reporting practices within the local government sector. Due to the exploratory and quantitative nature of the study,further research is recommended to verify, strengthen and complement these results. Doing so can assist in the developmentof a more complete picture of the state of sustainability reporting in the local government sector today in an effort to movethe agenda forward toward a more sustainable future.

9 Of the respondents currently not reporting on sustainability, 11 respondents were extremely likely, and 25 respondents likely to commence reportingin the future.

B. Williams et al. / Accounting Forum 35 (2011) 176– 186 185

Acknowledgements

The authors wish to thank the two anonymous reviewers and the co-editors for their constructive comments on thispaper. Thanks also to participants and reviewers at the 8th Australasian Conference on Social and Environmental AccountingResearch (CSEAR) (New Zealand 2009), at which an earlier version of this paper was presented.

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