The adoption of international sustainability and integrated reporting guidelines within a mandatory reporting framework: lessons from South Africa

Purpose - This study aims to explore factors influencing voluntary adoption of international sustainability and integrated reporting guidelines within a mandatory reporting framework. Given South Africa’s political history, the authors argue that accounting practice can be used to secure the legitimacy and transparency of businesses. Design/methodology/approach - Two logistic regression equations are used to predict the likelihood of firms’ subscribing to either Global Reporting Initiative (GRI) or the Integrated Reporting ( ) framework, respectively. The authors consider annual, sustainability and integrated reports issued for the financial year ended 2014. Findings - The results show a statistically and significant positive association between the adoption of the GRI’s guidelines and the level of transparency of non-financial disclosures and environmental sensitiveness. The application of the framework is also associated with the level of a firm’s transparency score and with its respective analyst following, which acts as a measure for capital markets requiring a high information environment. Originality/value - This paper illustrates the development of integrated and sustainability reporting (SR) practices within an emerging market. By drawing distinctions between locally developed South African codes of corporate governance, namely, King I-III and international guidelines proxied by the GRI’s guidelines for SR, and the framework, the authors show that South African firms still adopt international guidelines despite the mandatory framework in place.