Overall, Australian Companies Need to Do Better
Signalling and legitimacy theories assert that companies achieving strong performance in sustainable practices are motivated to signal this to the market through disclosure, as it helps them obtain the social license to operate. Additionally, stakeholder theory suggests that disclosing sustainable practices can serve as a means for companies to communicate and enhance stakeholder confidence. However, the fact that only 19 out of 182 (11%) companies have reported 80% or more of the 32 GRI disclosure items clearly indicates a misalignment between theory and practice in the Australian context. This suggests either (i) there is a low level of awareness regarding GRI items in Australia, and/or (ii) implementing and monitoring sustainable procurement practices is low, as this type of reporting is not mandatory.
SPDI Benefits: Shifting the Dial
By reflecting the transparency and quality of disclosure, the proposed RMIT SPDI empowers sustainability-conscious consumers to exert pressure on corporations, encouraging them to choose socially and environmentally responsible suppliers. Consequently, the index can influence consumer purchasing behaviour, potentially impacting a company’s competitiveness or even its survival. Moreover, the index can bring significant benefits to various stakeholders. It serves as a valuable risk management tool, contributes to reducing business operating costs, as well as social and environmental costs. Furthermore, it functions as a mechanism to promote adherence to national regulatory guidelines, build trust among stakeholders, raise public awareness, and foster the adoption of sustainable practices throughout society.
Ethical and Moral Considerations
The disclosure framework we have proposed for benchmarking the transparency of SP practices is firmly rooted in ethical and moral philosophical principles. These principles encompass key concepts such as stewardship, justice, legitimacy, and deontology. We carefully selected indicators based on their potential to reflect an organisation’s value system, aspects of social justice, and the responsibility to care for and preserve the environment and its resources for future generations. The framework also encompasses the actions undertaken by organisations, which are evaluated against a clear set of moral rules and principles that prioritise the well-being of both people and the planet. The SPDI approach considers the deontological dimension of moral theory, which implicitly or explicitly incorporates intrinsic morality, the duty of care, and the moral consequences of actions
Catalyst for policy shift in disclosure
Long-term, the project team hope the Index has the potential to catalyse a policy shift in procurement practice disclosure by fostering cultural transformation and a paradigm shift. As a planning tool aimed at supporting the achievement of the UN’s Sustainable Development Goal No. 12 on Responsible Consumption and Production, it is hoped that the SPDI will receive a positive reception from the Australian Government and major companies across various industries. It is hoped that the SPDI will expand perspectives beyond solely reporting financial and economic performance. The comprehensive structure of the framework offers organisations a systematic and universally guided framework to improve organisational governance, and review and reassess their reporting and disclosure practices against a set of sustainability indicators and established standards.
