From Tuscany to Victoria: Some Determinants of Sustainability Reporting by Local Councils

Abstract

This paper seeks to respond to recent calls by the academic community for studies investigating sustainability reporting by the public sector, as well as for more engagement-based studies of this issue by examining the views of managers within local councils (LC). The objective of this project is to provide insights as to the possible reasons and explanations for the types of sustainability disclosures among a group of local councils operating in Italy and Australia. In particular, an international comparison is undertaken to ascertain the effect of culture on the adoption of sustainability reporting (SR). Evidence is collected from semi-structured interviews with managers and accountants from ten local councils consisting of five from Italy (Tuscany) and five from Australia (Victoria). The findings suggest that although there are available some general policy documents relating to sustainability reporting, councils are left to their own discretion as to what they consider fit under the definition of sustainability and therefore, determine to a large extent, what to report to stakeholders. Moreover, there was a range of legitimacy type behaviours displayed by a number of councils while others were influenced by notions of public sector accountability and transparency. Adopting Hofstede's cultural framework, the research also highlights the relevance of the Italian and Australian cultural settings in shaping the SR practices used by LCs. The findings suggest that differences regarding cultural dimensions, such as ‘power distance’ and ‘uncertainty avoidance’, influence key aspects of SR.

Key Words:

• Sustainability reporting
• local councils
• public sector
• culture

Notes

1. Local Agenda 21 (LA 21) sets out environmental strategies for the management of coasts, oceans and water, the monitoring and reduction of chemical waste, the eradication of radioactive waste, and the conservation of natural vegetation and soils.

2. The social report is issued on a voluntary basis with the aim of providing for “the transparent disclosure of the public administrators decisions taken, actions performed, resources spent, results achieved”, with the aim “of allowing to the citizen to judge the activity of the public administration and its accountability in fulfilling the commitments” (Prime Minister's Office of Public Affairs 2006).

3. LCs are at the centre of such a debate since the construction of new buildings is a major source of financial resources through real estate taxes.

4. The GBS model was developed in Italy in 2001 (Gruppo di Studio sul Bilancio Sociale 2001).

5. Some Italian LCs (outside our LC sample) had already commenced programmes aimed at involving groups of stakeholders in the decisions of how to spend a small portion of the annual budget.