Summary of “Stakeholder Engagement in Sustainability Reporting: Evidence of Reputation Risk Management in Large Australian Companies” (Ardiana, 2019, Australian Accounting Review)
This paper investigates whether stakeholder engagement in sustainability reporting functions primarily as a process of reputation risk management (RRM) rather than as a genuine mechanism of stakeholder accountability. The study applies Shrives and Brennan’s (2017) framework of rhetorical strategies of non-compliance—an integration of Benoit’s (1995) image restoration strategies and Bolino and Turnley’s (2003) impression management profiles—to analyse how large Australian companies use rhetorical language in their sustainability disclosures to protect or enhance their reputation.
The study aims to answer three questions:
(1) How do large Australian companies communicate sustainability issues?
(2) Do their disclosures reflect a process of managing reputation risk?
(3) How can sustainability reporting shift from reputation management to stakeholder accountability?
By connecting stakeholder engagement with rhetorical reputation management, the paper contributes new insight into how sustainability reporting operates as both a communication and defence mechanism for corporate legitimacy and reputation.
The concept of Reputation Risk Management (RRM) builds upon the idea that corporate sustainability reporting serves not only as a communication tool but also as a protective mechanism to preserve corporate image and trust. Earlier works by Bebbington et al. (2008a) and Unerman (2008) argued that reputation provides a complementary explanation to legitimacy theory, focusing on immediate perceptions and stakeholder evaluations rather than long-term conformity to norms.
While legitimacy refers to societal approval of corporate behaviour, reputation concerns stakeholder judgments and comparisons with competitors—making it a “bankable asset” for companies. Hence, RRM can be seen as both reactive (responding to crises) and proactive (anticipating potential threats).
Shrives and Brennan’s (2017) typology expands on this by combining rhetorical and impression management strategies to classify how companies justify, deny, or soften responsibility in their communications. This paper extends that typology to study stakeholder engagement rhetoric in non-crisis contexts.
The study analysed 154 sustainability-related disclosures (both annual reports and stand-alone sustainability reports) produced by 40 large Australian companies across five sectors—energy utilities, mining, forest and paper products, energy, and chemicals—covering the period 1999–2018.
Data source: Reports were obtained from the Global Reporting Initiative (GRI) database. Both GRI and non-GRI reports were included to capture variations in reporting frameworks.
Analytical approach:
(a) Reporting Medium and Stakeholder Focus
Most large Australian companies used stand-alone sustainability reports—particularly those based on GRI guidelines—as their main reporting medium. These reports contained twice as many references to “stakeholders” and “engagement” as annual reports, reflecting an effort to demonstrate inclusiveness and responsiveness.
The most frequently mentioned stakeholder groups were communities, employees, and customers, followed by government, suppliers, and Indigenous peoples. Sustainability reports emphasised non-capital providers (social and community stakeholders), while annual reports focused more on capital providers (shareholders and creditors).
(b) Engagement Approaches and Communication Channels
Three main engagement methods were identified:
While these approaches suggest inclusivity, most were one-way communications, collecting stakeholder feedback rather than facilitating dialogue.
The most common communication channels were websites (140 cases), email (131), and postal addresses (131). Social media platforms like Twitter and Facebook were rarely used (20 cases each), indicating cautious digital engagement due to concerns about reputational risks from misinformation.
(c) Motivations for Sustainability Reporting
Analysis of key terms revealed that the three most cited motives for sustainability disclosure were:
These findings show that companies use stakeholder engagement and sustainability disclosure as tools to build trust, secure operational legitimacy, and strengthen market positioning, rather than solely to enhance accountability.
GRI-based reports contained significantly more references to “reputation” and “licence to operate,” suggesting that even formal reporting frameworks reinforce reputation management imperatives.
(d) Rhetorical Strategies of Reputation Risk Management
Applying Shrives and Brennan’s (2017) framework, the study found that companies used 10 rhetorical strategies to manage reputation risk through stakeholder engagement narratives, including:
No evidence was found for mortification (admitting fault or seeking forgiveness), suggesting that companies avoided vulnerability and accountability, preferring symbolic corrections instead.
The findings reveal that stakeholder engagement in sustainability reporting functions as a reputational safeguard rather than a mechanism for mutual accountability. Large Australian firms manage perceptions proactively—using disclosure to shape narratives, not to admit or address failures.
This behaviour aligns with legitimacy and impression management theories, confirming that sustainability reporting remains a strategic communication tool. While companies claim to “engage” stakeholders, engagement is often instrumental and controlled, designed to preserve reputation, maintain legitimacy, and pre-empt criticism.
To transform this into genuine accountability, stakeholder engagement must be embedded throughout the reporting process, including the materiality assessment, issue prioritisation, and response evaluation phases.
The study is limited to large Australian firms in five industries and focuses on archived PDF reports, excluding digital or social media content. Future studies could: