The Quality of Information of GRI Standards in An Emerging Economy: Evidence from Green Accounting Practices in Argentina

Sustainable development set businesses in the face of climate change, shifting their purpose to economic, social and environmental value creation. In order to meet the needs of the present without compromising the ability of future generations to meet their own needs, business performance reports must be prepared to capture, organize and reveal the contribution of a company to the triple bottom line framework. In terms of accounting for nature, economic and financial consequences of climate change linked to business activities and transactions must be measured to balance costs and benefits of economic growth . GRI standards had gone through a large pathway regarding sustainability reporting to be stated as an independent and generally accepted standard known worldwide, addressing this topic in particular within its indicators. Emerging economies are often characterised by complex political structure and unstable economic context where businesses of all sizes are struggling to survive. In many of these countries sustainability reporting is not compulsory. However, for developing countries fostering integral human development reducing social inequalities, raising the standard of living with the limit of a correct usage of resources and balancing environmental impact are public and urgent matters. If the final aim of accounting is giving useful information to make right decisions serving, in addition, as a tool to enable equity control, green accounting, as a segment concerned about the environment, is a crucial instrument for a careful assessment of monetary and non monetary factors involved in companies value creation. International standards, as GRI, provide values of transparency in accountability concerning all stakeholders and building in addition strategic and operational management tools. The GRI indicator that concerns economic performance and measures the environment aspects previously stated is 201-2 titled “Financial implications and other risks and opportunities due to climate change”. The content of the indicator includes, among other items, a description of the risks and opportunities posed by climate change that have the potential to generate substantive changes in company’s operations, revenues or expenditures; the methods used to manage them and the costs incurred to take action in this matter. Using GRI guidelines as a quality information standard, it is possible to analyse the application of green accounting in the field of an emerging economy. This chapter aims to address the topic of GRI indicators’ employment in Argentina focusing on GRI indicator 201-2. Locally sustainability reporting is not mandatory, however, there are several regulations regarding social and environmental risks that have equity implications and there is even a professional resolution concerning “Social Balance Sheet”. We are going to investigate what information is revealed by companies regarding financial and non financial consequences of climate change in Argentina. Our sample is composed of 53 companies operating in Argentina and included in the GRI database. Our work show the evolution of the exposure of this indicator in the periods 2017-2018-2019 benchmarking with a selected company of a developed economy as the United States . The aim of the study is to highlight the quality of the information regarding the selected indicator. In particular, if local companies analysed reveal or not financial implications and other risks and opportunities due to climate change and, if they do, if they state consequences arising from their actions and how they perform it according to recommendations of the GRI indicator guidelines. The final aim of this chapter is to set new guidelines to study GRI indicators and reporting standards in the light of quality of information disclosed taking into account local peculiar circumstances of emerging economies. Results of our study reveals the necessity of a commitment of sinergetic work among society, public sector and companies to promote local and regional action towards sustainable development in terms of transparency and quality of information. Conclusions from our analysis also point out companies’ need to be supported to better preparing their reports, acknowledging that valuable information is a fundamental key to make good decisions to achieve triple value creation business objectives.