Is sustainable finance more based on values or on value?
Koen van Bommel, Andreas Rasche, and André Spicer argue sustainability reporting has evolved from a moral values-based practice to a financialised value-based one.
Their article From Values to Value: The Commensuration of Sustainability Reporting and the Crowding Out of Morality shows that:
- The original emphasis on morality and values in sustainability reporting has been overshadowed over time by a focus on financial value creation.
- The transition of sustainability reporting can be seen as a commensuration project, i.e., the process of expressing two issues relative to each other, with ethical values being translated into strategic value creation for firms.
- An increasingly rigid cognitive framing of social and environmental issues and the monetisation of relevant social interactions by financial markets objectified sustainability reporting and led to a crowding out of morality.
- The authors define the concept of proto-commensuration as the work of overcoming the cognitive distance that prevented the discussion of monetising seemingly incommensurable concepts such as human rights.
- After this phase, technical, value, and cognitive commensuration processes led to the current state of sustainability reporting based on the quantitative value of extra-financial practices and performances.
The authors outline the implications of their analysis for the scholarly debates on the institutionalisation of sustainability reporting and commensuration.
This critical analysis of the evolution of sustainability reporting also outlines the benefits of exploring alternative approaches to sustainability reporting that better balance the need for financial value creation with ethical considerations.