Sustainability and Accountability in Public Sector: A Legitimacy Perspective

Connolly, C. and Kelly, M., 2020. Annual reporting by social enterprise organizations: “legitimacy surplus” or reporting deficit? Accounting, Auditing and Accountability Journal, 33(8), pp. 1997-2025.

Crucke, S., Kluijtmans, T., Meyfroodt, K. and Desmidt, S., 2021. How does organizational sustainability foster public service motivation and job satisfaction? The mediating role of organizational support and societal impact potential. Public Management Review, DOI:10.1080/14719037.2021.1893801.

Da Ponte, M., Foley, M. and Cho, C.H., 2020. Assessing the degree of sustainability integration in Canadian public sector procurement. Sustainability, 12(14), 5550; DOI: 10.3390/su12145550.

Park, A.Y. and Krause, R.M., 2021. Exploring the landscape of sustainability performance management systems in US local governments. Journal of Environmental Management, 279, 111764; DOI: 10.1016/j.jenvman.2020.111764.

For most nations, the public sector (in contrast to private and third sectors) has an enormous impact on the economy, society, and environment (CIPFA, 2021). It is widely acknowledged that public sector organisations (PSOs)¹ have the responsibility and potential to advance sustainable development given the dual role of the public sector (as both a public service provider and a regulator) and the urgency of global environmental and social challenges. The landscape of sustainability integration, performance management, and disclosure in the public sector has attracted the attention of academics, policymakers, and practitioners worldwide, in recognising that PSOs need to be publicly accountable to a wide range of stakeholders. Moreover, legitimacy theory has long been applied within the sustainability and accountability literature to explain organisations’ motivations for sustainability strategies and accountability disclosures. Legitimacy is viewed as a resource necessary to the survival of an organisation (Deegan, 2014), which generates pressures regarding expected organisational behaviour (Connolly and Kelly, 2020). Further, this perspective can be invoked to understand organisations’ sustainability practices in the public sector where legitimacy is conferred by a complex set of stakeholder groups.

This article reviews four recent papers exploring the landscape in different national contexts, aiming at identifying future research opportunities to investigate the manifestations of sustainability and accountability in the public sector. Moreover, Patten (2020) highlights a recent tendency to ignore legitimacy theory in the social and environmental accounting body of work and its negative impacts on emerging scholars, society, and the environment. Inspired by Patten (2020)’s reflection, this article draws on a dyadic model² for operationalising legitimacy³ proposed by Schoon (2022). This dyadic model consists of an object, an audience, a relationship between the two, and three necessary conditions for legitimacy. This represents a concise and generalisable approach to conceptualise, measure, and understand legitimacy across the social sciences (Schoon, 2022). In this thematic review, the analysis of the four papers is in the light of Schoon (2022), as an early attempt to employ the novel dyadic model to further interpret the research findings and understand PSOs’ behaviour. This review highlights ample opportunity for future research to investigate the manifestations of sustainability and accountability in public sector.

Park and Krause (2021) systematically investigate US local governments’ sustainability performance management systems, exploring how they collect, track, and assess data and to what extent they benefit from the performance assessment. The findings show that many local governments are involved in sustainability performance management and use the performance data to communicate with elected leaders, top management, and the public. In some locales, performance reporting is primarily used as a communication tool which helps legitimise government actions and secure external support. The findings also show that the level of institutional support in many local governments is inadequate to facilitate effective sustainability performance monitoring. Drawing on Schoon (2022)’s dyadic model, the object of legitimacy is US local governments and the source of evaluation (i.e. the audience) refers to stakeholders, including elected leaders, top management, and the public. The criteria for legitimacy (i.e. expectations) refer to systematic sustainability performance management, which provide the basis for evaluating the presence of assent and conformity and define the relationship between the local governments and the stakeholders. The findings further indicate that sustainability performance management is no longer an expectation but becoming a norm, while still having significant room for improvement. Park and Krause (2021) recommend an administrative and technological infrastructure that enables the development of quality indicators and supports the analysis of information, which contributes to better communications about the local governments’ sustainability efforts.

Focusing on the Canadian context, Da Ponte et al. (2020) investigate the current state of sustainability integration into public sector procurement. Fifty publicly available Requests for Proposals (RFPs) issued between 2016 and 2019 were evaluated regarding the significance of sustainability integration and the expanse of considerations. Through the lens of operationalising legitimacy (Schoon, 2022), the object of legitimacy refers to Canadian governments (municipal, provincial, and federal) and the audience is the Canadian society (highlighting the role of taxpayers). The expectations refer to a deeper integration of sustainability into the public procurement process. The analysis shows that sustainability integration into RFPs is currently superficial (with limited integration into the evaluation process) and narrow (with limited consideration for material environmental and social impact areas). Given the results, Da Ponte et al. (2020) identify recommendations to improve public sector procurement and thus help advance sustainability-related government commitments and policy objectives. Their proposals include ensuring an in-depth understanding of the scope of environmental and social impacts relevant to purchasing decisions; establishing specific goals, processes, and systems to manage and monitor sustainability integration in procurement; and restructuring RFP standards to effectively incorporate sustainability into the evaluation process and to require critical sustainability-related information.

Based on survey data of 781 employees of 41 Flemish local governments, Crucke et al. (2021) investigate whether managerial attention to organisational sustainability in PSOs impacts job satisfaction through public service motivation (PSM) and explain the role of organisational support and societal impact. The results reveal that organisational sustainability is positively related to job satisfaction, through perceived organisational support and societal impact. This study highlights that attention to sustainability fosters an organisational socialisation process, during which employees’ psychological needs are assured and public institutional logics are internalised. Consequently, “prosocial values are sown into the identity of public employees” (Crucke et al., 2021: 18), leading to heightened PSM, increased job satisfaction, and better work outcomes. Based on Schoon (2022), the object of legitimacy refers to Flemish local governments. The audience includes public employees (i.e. internal stakeholders), external stakeholders, and society at large. The expectations refer to more managerial attention to organisational sustainability in PSOs. Crucke et al. (2021) call for future research investigating the impact of sustainability in the public sector on organisational and individual outcomes and stress that PSOs have no alternative but to address sustainability issues if they are to serve the public interest.

In the United Kingdom (UK), social enterprise organisations (SEOs)⁴ have become an important part of the economy, with their increasing participation in the delivery of services traditionally provided by the public sector (Villeneuve-Smith, 2011). Connolly and Kelly (2020) investigate the types of accountabilities disclosed by SEOs and the extent to which they discharge accountability through their annual reporting process. Drawing on an accountability framework (distinguishing between legal, constructive, and voluntary accountability)⁵ developed specifically for SEOs, the authors examined the annual reports of 129 UK SEOs. The results indicate that many SEOs do not disclose constructive and voluntary accountability information in their annual reports. Instead, they focus on complying with legal disclosures to maintain legitimacy and gain credibility with key resource providers. From the legitimacy perspective (Schoon, 2022), the audience includes upward stakeholders (i.e. funders and supporters), downward stakeholders (i.e. beneficiary groups and service users), the government, and the public. The object of legitimacy refers to SEOs that are expected to balance multiple accountability’ demands while remaining true to their mission. The authors contend that accountability is not merely about legal compliance but more profoundly connected to organisational purpose and public trust. From an external reporting perspective, the focus on legal accountability is problematic because it skews organisational attention towards key resource providers’ interests, quick and tangible impacts, and short-term rewards, while neglecting longer-term strategies/innovations that facilitate social change. They further highlight that “SEOs face multiple, and sometimes competing, accountability demands” which “cannot be handled separately, but require integration and alignment throughout the organisation” (Connolly and Kelly, 2020: 2016). Accountants could actively engage in the process and contribute to educating key stakeholders and providing more structured and understandable information.

Overall, the review of the four papers indicates that in different national contexts, PSOs have recognised their responsibility to address global challenges and advance sustainability. They integrate sustainability into government policies and develop performance management systems to assess outcomes. Meanwhile, PSOs are expected to convey their sustainability efforts to various stakeholders, thus legitimating their actions and retaining external support. The four papers indicate significant room for improvement in terms of sustainability and accountability in the public sector from a practical perspective. Moreover, this review has implications for future research on sustainability performance, reporting, and accountability in the public sector. For example, it is worth examining specific sustainability policies/programs and their outputs/outcomes, either at an organisational, local, or national level. In particular, efforts to evaluate the progress and effectiveness of the policies/ programs are significant for building sustainable communities (Park and Krause, 2021). Future studies can explore the viability of establishing standards for public monitors that evaluate the sustainability performance of PSOs. Such monitors are “critically needed to assess and create accountability” for progress on sustainable development (Da Ponte et al., 2020: 16).

Sustainability reporting is also an important means to legitimate actions and convey accountability to stakeholders. However, PSOs lag behind their private sector counterparts in sustainability reporting due to challenges, including the divergence of definitions and scope of sustainability reports and the lack of reporting standards directly referring to the public sector context (CIPFA, 2021). This points to opportunities for future research to explore what constitutes public sector sustainability reporting, which reporting standard(s)/framework(s) are appropriate, and which factors facilitate the maturation and evolution of reporting. Scholars may consider using surveys or observation to collect rich datasets within specific PSOs. In addition, semi-structured interviews with policymakers, funders, public servants, and other stakeholders could be conducted to contribute to a more nuanced understanding of the manifestations of sustainability, accountability, and legitimacy in the public sector. Furthermore, future research can employ, test, and improve Schoon (2022)’s dyadic model, thus advancing theoretical debates over the applicability of legitimacy to explain organisational sustainable activities.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 In general, PSOs are owned by the government and funded through taxation. They are concerned with social purposes and providing goods and services for the public efficiently, effectively, and with good value for money (ACCA, 2022). Typical PSOs include government departments (working within the executive, legislative, or judicial branches), police, military, public transit, public education, healthcare, and so on.

2 Schoon (2022) synthesises existing approaches to conceptualising legitimacy across the social sciences and develops a generalisable approach to operationalising legitimacy. Specifically, the appropriate unit of analysis for research on legitimacy is a dyad consisting of three empirical elements: “an object of legitimacy (the thing being evaluated), an audience (the source of evaluation), and a relationship that connects the two” (Schoon, 2022: 2). Expectations, assent, and conformity are identified as three necessary conditions for legitimacy that specify how the three empirical elements interact. Schoon (2022) contends that we cannot meaningfully analyse the legitimacy of an object itself, since legitimacy always exists in a specific dyad.

3 Operationalising legitimacy, or the operationalisation of legitimacy, refers to “the process of defining criteria to empirically measure” legitimacy (Schoon, 2022: 3). Schoon (2022) compares published review articles about legitimacy in criminology, law and society, organizational studies, psychology, political science, social psychology, and sociology; synthesises existing approaches to operationalisation; and identifies common properties of legitimacy across these areas of study.

4 Connolly and Kelly (2020) point out that the definition of social enterprise is debatable, given increasing changes in public-service delivery and questions about whether the boundaries between the for-profit, not-for-profit, and public sectors are becoming blurred. Generally, SEOs are distinguished from other organisations due to the primacy of their social/environmental objectives, being more aligned to not-for-profit values. They generate most of their income through trade and retain profits to further fund their objectives.

5 According to the accountability framework (Connolly and Kelly, 2020: 1999-2000), legal accountability is “based on compliance with contractual, regulatory and/or statutory obligations”; constructive accountability is “driven by moral, competitive or market expectations rather than legal obligations and is reactive (rather than proactive)”; Voluntary accountability “has a purer or more idealistic objective … and may set standards for the sector”.