Sustainability reporting and management control system: A structured literature review

Rahi, ABM Fazle; Johansson, Jeaneth; Fagerström, Arne; Blomkvist, Marita Article Sustainability reporting and management control system: A structured literature review Journal of Risk and Financial Management Provided in Cooperation with: MDPI – Multidisciplinary Digital Publishing Institute, Basel Suggested Citation: Rahi, ABM Fazle; Johansson, Jeaneth; Fagerström, Arne; Blomkvist, Marita (2022) : Sustainability reporting and management control system: A structured literature review, Journal of Risk and Financial Management, ISSN 1911-8074, MDPI, Basel, Vol. 15, Iss. 12, pp. 1-31, https://doi.org/10.3390/jrfm15120562 This Version is available at: https://hdl.handle.net/10419/275039 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Citation: Rahi, ABM Fazle, Jeaneth Johansson, Arne Fagerström, and Marita Blomkvist. 2022. Sustainability Reporting and Management Control System: A Structured Literature Review. Journal of Risk and Financial Management 15: 562. https://doi.org/10.3390/ jrfm15120562 Academic Editor: Khaled Hussainey Received: 12 October 2022 Accepted: 25 November 2022 Published: 29 November 2022 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). Journal of Risk and Financial Management Review Sustainability Reporting and Management Control System: A Structured Literature Review ABM Fazle Rahi 1,2,* , Jeaneth Johansson 2,3 , Arne Fagerström 1and Marita Blomkvist 4 1Department of Business and Economics Studies, University of Gävle, 801 76 Gävle, Sweden 2School of Business, Innovation and Sustainability, Halmstad University, 301 18 Halmstad, Sweden 3Department of Entrepreneurship and Innovation, Luleå University of Technology, 971 87 Luleå, Sweden 4Department of Business Administration, University of Gothenburg, 405 30 Gothenburg, Sweden *Correspondence: [email protected] Abstract: The purpose of this paper is to contribute to the management accounting literature by reviewing how previous studies conceptualised the relationship between sustainability reporting and management control systems, analysing the main themes and discussing potential future developments of the sustainability reporting and management control systems (SRMCS) research agenda. This study builds on the structured literature review method by categorising and synthesising 15 years of research into the topic “sustainability reporting and management control”. Approximately 500 relevant articles were identified in the first round of searching Google Scholar and Scopus with the selected keywords, but after filtering and manual assessment, 45 articles were selected for the full review. Coding reliability was maintained with the K-alpha test. Our findings divulge that the researcher looks at the management control and the sustainability reporting agenda with just one eye. They either focus on management control or sustainability reporting. Very little research focuses on relationships. In addition, from the methodological point of view, we found that qualitative case studies and interviews dominate the field, together with commentary papers. We proposed a framework showing a complex and multifaceted relationship (a spider diagram) to conceptualise the synthesis of the literature. This framework is intended as a blueprint for the relationship between sustainability reporting and management control in order to design and redesign a company’s internal strategies on management control systems (MCS). Keywords: sustainability report; integrated report; management control system; structured literature review; management accounting 1. Introduction The movement for corporate sustainability reporting (SR) came into the spotlight in the middle of the 1990s when the South African first king code of corporate governance, widely known as the “King I” report, was published (Dumay et al. 2016;Gleeson-White 2014) 1 . The stakeholder notion grabbed quick attention in the business world for its durable business growth without compromising stakeholders’ interests. Later, in 2002, the King II report introduced the concept of integrated reporting as a means of non-financial reporting in addition to financial reporting. This integrated reporting underpinned frameworks, such as the current Global Reporting Initiative (GRI), the Sustainability Accounting Standard Board (SASB), and the triple bottom line (Dumay et al. 2016;Gleeson-White 2014). Since then, organisations have been progressively motivated to report in line with such standards. The SR aims to increase transparency in companies and their contribution to sustainable development (Elkington 1997;Herzig and Schaltegger 2006;Traxler et al. 2020). However, there are many reasons beyond transparency, pointing to the demands of the sustainability report, such as performance improvement, legitimacy, accountability, control, and stakeholder management (WBCSD 2015;Maas et al. 2016a,2016b;Gond et al. 2012; J. Risk Financial Manag. 2022,15, 562. https://doi.org/10.3390/jrfm15120562 https://www.mdpi.com/journal/jrfm J. Risk Financial Manag. 2022,15, 562 2 of 31 Joseph 2012;Nigri and Del Baldo 2018). Direct and indirect pressure from stakeholders has sped up the disclosure process (Gleeson-White 2014;Jollands et al. 2018). For the sake of protecting shareholders and other stakeholders’ interests, the European Parliament issued the directive (European Union Directive 2104/95) on non-financial disclosure and diversity (La Torre et al. 2018). This new regulation requires larger companies with more than 500 employees and public interest entities to produce annual corporate reports with information on their social, environmental, human rights and anti-corruption policy, risks, and performance (European Union 2014). Thus, now many European countries, such as Sweden, Denmark, and Germany (Hoffmann et al. 2018), amend their voluntary disclosure, turning to higher degrees of mandatory disclosure. There is a growing recognition that contribution to sustainable development requires organisations to embed considerations of the triple bottom line or ESG along with financial considerations into their managerial decision-making and organisational control process (Bonacchi and Rinaldi 2007;Perego and Hartmann 2009;Rahi et al. 2022b). Meanwhile, accounting scholars diverge in their opinions on whether SR and management control systems (MCS) 2 should or should not be mixed into the same frameworks and clearly reflected in the sustainability report. Some scholars argue that SR is a mirror of managerial decision-making and control processes (Biswas and O’Grady 2016). In line with this, they provide frameworks of sustainability reporting management control systems (SRMCS) for bridging the relationship between them (i.e., Laughlin 1991;Morioka and de Carvalho 2016;Traxler et al. 2020;Tilt 2006). Researchers even warn of the risk of greenwashing if sustainability data solely is integrated into sustainability reports but not embedded in companies’ internal decision-making (Gray and Milne 2004;Milne and Gray 2013; Traxler et al. 2020). In contrast, other scholars see the links between SR and MCS as dangerous, risking direct management focus apart from the sustainability practice involving internal decision and management control processes (Bebbington et al. 2007;Riccaboni and Leone 2010;Maas et al. 2016b). Despite the mixed scholarly views on the integration of sustainability reporting and management control, as well as how it spills over into companies’ sustainability practices, (i.e., what companies do and how they work), there is a growing consensus that SR should reflect the managerial motivations and attitudes within the company, as they respond directly to stakeholders’ demands. The development of sustainability reporting may, in line with this reasoning, be orientated towards improving sustainability practice in terms of management decision-making and work processes. Producing extensive sustainability reports may be considered inconsistent, with companies thereby claiming accountability and transparency while not linking sustainability to the company’s sustainability practice and MCS. Researchers see the effective implementation of successful sustainability strategies as requiring comprehensive MCS to ensure integration of sustainability into an organisation’s core operations and to push it towards transparency, performance improvement, legitimacy, accountability, control, and stakeholder management together (Epstein 1996;Epstein and Wisner 2005;Gond et al. 2012;Moon et al. 2011). In addition, empirical studies further identified that there is a clear linkage between sustainability reporting and financial performance (Oncioiu et al. 2020;Jones et al. 2007), and a proper contract of executive compensation helps in this regard (Al-Shaer and Zaman 2019). This means that sustainability reporting, employee motivation, financial performance, and stakeholder prosperity are endogenously and exogenously related to each other. There is a growing number of literature reviews focusing on sustainability and MCS separately. Their primary focus is performance management (i.e., Morioka and de Carvalho 2016) or MCS for sustainable development in general (i.e., Lueg and Radlach 2016), while neglecting the linkage between SR and MCS. A recent systematic review by Traxler et al. (2020) limits the review to a specific management control (MC) framework known as the Malmi–Brown framework. Given this background, and understanding what we have learned, this paper aims to identify, map, and analyse the important literature in the field of sustainability reporting and management control to answer the following research questions: J. Risk Financial Manag. 2022,15, 562 3 of 31 RQ1—How do research scholars investigate the relationship between sustainability reporting (SR) and management control systems (MCS)? RQ2—What are the emphases, critiques, and gaps in the literature? Obtaining answers to the above questions is important both for academics as well as for practitioners. This is because SR is an outcome of numerous sustainable strategy trajectories rather than just the successful application of management control (MC). The findings of this literature review identified that researchers looked at the management control and the sustainability reporting agenda with just one eye. They either focus on MC or SR, whereas there is a clear linkage between SR and MCS. In this study, we mapped the relevant literature from the two research fields without having a narrow focus on any specific MC framework. Finally, we propose a comprehensive conceptual framework (a spider diagram) outlining a multifaceted relationship between SR and MCS. This framework is considered as a blueprint of the relationship between sustainability reporting and management control system for designing and redesigning a company’s internal strategies on MCS. Structure of the remainder of the paper as follows. Section 2introduces the conceptual background of SR and MCS. The research design, methodology, and findings are illustrated in Section 3. This is followed by a few subsections, where we present a description of the identified literature. Section 4deals with the synthesis in the form of content analysis. At the end of this section, we highlight the limitations of the review and guide researchers towards strands of future research. Finally, in Section 5we outline the conclusion and implications for practice and academia. 2. Conceptual Background of SR and MCS and Their Relationships 2.1. Sustainability Reporting (SR) A combination of financial and non-financial information is critical both for managers and for external stakeholders, such as investors (Koellner et al. 2005;Milne and Chan 1999; Reimsbach et al. 2018). Similar to financial reporting, sustainability reporting plays a crucial role for external decision-makers, such as in investment-related decisions (Bernow et al. 2019;Arvidsson and Johansson 2019). Here, SR refers to a non-financial report aimed at providing stakeholders with high-quality sustainability information in accordance with the three sustainability dimensions, namely governance, social, and environmental (White 2016;Arvidsson and Dumay 2021). Disclosure of SR is a major channel for companies to ensure transparency and legitimacy in front of stakeholders (Ditlevsen et al. 2013; and Beck et al. 2017). Nonetheless, a company’s degree of sustainability depends on the company’s true actions. From the beginning, companies published sustainability reports according to their own frameworks, and these frameworks often changed over the years. The lack of uniformity caused incomparability between organisations and even between years within the same company (Haller et al. 2018). In many countries, SR is still considered a voluntary practice, lacking uniform frameworks (Bhasin 2017). One reason for the lack of attention to SR from the beginning was the difficulty in transforming sustainability actions into accounting terms. However, the Global Reporting Initiative (GRI) and Sustainability Accounting Standard Board’s (SASB) frameworks have been widely practiced by a large number of companies, also aligning sustainability and accounting. Over the years, the focus of SR is now on value creation through intellectual, human, social, and natural capitals as emphasised by Gleeson-White 2014. In order to ensure that sustainable value creation is connected to the different types of capital, companies need to manage and control for such value creation. This point emphasises the link between value creation and MCS (Chenhall et al. 2010; Skoog 2003). 2.2. Management Control Systems (MCS) The term management control was introduced in Anthony’s (1965) theoretical work, where MC was separated from strategic planning and operational control. The concept of management accounting and control was, until this time, limited to cost accounting control, J. Risk Financial Manag. 2022,15, 562 4 of 31 a perspective failing to take technological progression, organisational structure, and environmental changes into account (Otley 1994;Birnberg 2011). However, through Anthony’s work, MCS was theoretically developed into the notion that accounting is an integral part of planning and control. Scholars started to emphasise that design of the management control systems (MCS) needed to be shaped in line with organisational strategies, since the contemporary business environment and acceptance of changes are unavoidable when designing a MCS (Otley 1994). Over the years, researchers followed this framework of management control and developed the notion of contingency approaches in management accounting and control (i.e., Hopewood, Govindarajan, Gordon-Miller, Hayes, and Otley). Accordingly, sustainability strategies, goals, discourse, and mission statements are expected to be reflected within formal management control systems, while also communicated to stakeholders formally through reporting (Gond et al. 2012;Narayanan and Boyce 2019). This is in line with an “inside-out” perspective (Maas et al. 2016b;Schaltegger and Wagner 2006). The inside-out perspective is based on the business strategy and an analysis of issues that are important for the effective implementation for these strategies. 2.3. Relationship between SR and MCS As a first step in our conceptualization, we outline a conceptual interplay of the relationships between sustainability reporting and management control systems, as shown in Figure 1. The conceptualisation is based on the theoretical discussion mentioned above. In this, SR in the middle is surrounded by the MCS, stakeholder’s expectation, and institutional expectations, since SR is the interest of all the stakeholder, internally and externally. The four circles illustrate different parts of an MCS, including (1) informal control, (2) formal control, (3) stakeholders’ expectations, and (4) transparency and legitimacy requirements. J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 5 of 31 used in an integrated manner for performance measurement and the reporting of sustainability issues (Maas et al. 2016b). Figure 1. Conceptual interplay of the relationship between sustainability reporting and management control systems. Sustainability reporting initially came into action for external stakeholder purposes, but there is also increasing awareness of the potential of this communication channel to support managerial decision-making and internal control processes (Chiucchi et al. 2018). The rising attention on internal control through the preparation of sustainability reports has led many researchers to focus on the effects of SR design and implementation on MCSs (Chiucchi et al. 2018). Many authors have argued that SR can improve MCS through the successful implementation of intended strategies; following the assumptions that guiding principles for SR can help and develop control measures, this in line with the company’s strategic directions (Montemari and Chiucchi 2018). As such, SR may improve the capacity of MCSs. The current literature review will continue to dig deeper into previous studies and the conceptual interplay of the relationship between sustainability reporting and management control systems. 3. Research Design, Methodology and Findings While initially searching for work in the literature on the relationships between sustainability reporting and management control systems, a few links between the topics were identified. However, in order to present a comprehensive picture of the relationship, we conducted a structured literature review. Arguably, many of the articles in the field are in the first stage of research, where effort typically focuses on SR or MCSs separately. A small number of researchers have attempted to link the two fields (Kerr et al. 2015; Traxler et al. 2020), thus, ending up with a specific type of control system, either by advocating Simons’ levers of control or Malmi–Brown’s packages of control (i.e., Simons 1994; Malmi and Brown 2008). The current study stretches beyond such links by examining the foundation of the relationships and, as such, contributes to insight that may guide future research. Through this structured literature review, we established a foundation of contemporary research and offered both insights and critiques that may help to evaluate, identify, and address future research itineraries, as guided by Massaro et al. (2016) and Dumay et al. (2016). The SLR enables capturing relationships between the concepts, a strand of research that few researchers have deep and detailed knowledge Figure 1. Conceptual interplay of the relationship between sustainability reporting and management control systems. To meet regulatory and stakeholder requirements, SR is considered a cardinal approach to decision-making based on both an “inside-out” and an “outside-in” perspective (Maas et al. 2016b). The inside-out perspective spans the informal and formal control systems and captures business areas, such as strategy, mission, vision, and analysis of issues that are relevant for the implementation of strategies (Maas et al. 2016b;Chiucchi et al. 2018). Here, the choice of KPIs, performance measurement, as well as what is reported externally, are based on internal decisions from an inside-out perspective (Maas et al. 2016b;Schaltegger and Wagner 2006;Nigri and Del Baldo 2018). That is, internal control and strategy-related information J. Risk Financial Manag. 2022,15, 562 5 of 31 are highly linked to external reporting (Bui and Villiers 2017). This outlines a clear linkage between management accounting control and sustainability reporting. The outside-in perspective derives from external stakeholders’ requirements and expectations of the company’s sustainability impacts and operations (Bebbington et al. 2007;Clarkson et al. 2011;Gray 1992). The link between control and reporting is, thus, strongly influenced by societal expectations, regulatory requirements, and standards. Management control is, as such, guided by the “required” and the “expected.” Therefore, many authors argue that sustainability reporting reduces information asymmetry between organisations and key stakeholders, also facilitating improvement of corporate governance (Riccaboni and Leone 2010;Wulf et al. 2014;Chen et al. 2007;Heflin et al. 2005). The outside-in or inside-out perspectives, or both, can be used in an integrated manner for performance measurement and the reporting of sustainability issues (Maas et al. 2016b). Sustainability reporting initially came into action for external stakeholder purposes, but there is also increasing awareness of the potential of this communication channel to support managerial decision-making and internal control processes (Chiucchi et al. 2018). The rising attention on internal control through the preparation of sustainability reports has led many researchers to focus on the effects of SR design and implementation on MCSs (Chiucchi et al. 2018). Many authors have argued that SR can improve MCS through the successful implementation of intended strategies; following the assumptions that guiding principles for SR can help and develop control measures, this in line with the company’s strategic directions (Montemari and Chiucchi 2018). As such, SR may improve the capacity of MCSs. The current literature review will continue to dig deeper into previous studies and the conceptual interplay of the relationship between sustainability reporting and management control systems. 3. Research Design, Methodology and Findings While initially searching for work in the literature on the relationships between sustainability reporting and management control systems, a few links between the topics were identified. However, in order to present a comprehensive picture of the relationship, we conducted a structured literature review. Arguably, many of the articles in the field are in the first stage of research, where effort typically focuses on SR or MCSs separately. A small number of researchers have attempted to link the two fields (Kerr et al. 2015;Traxler et al. 2020), thus, ending up with a specific type of control system, either by advocating Simons’ levers of control or Malmi–Brown’s packages of control (i.e., Simons 1994;Malmi and Brown 2008). The current study stretches beyond such links by examining the foundation of the relationships and, as such, contributes to insight that may guide future research. Through this structured literature review, we established a foundation of contemporary research and offered both insights and critiques that may help to evaluate, identify, and address future research itineraries, as guided by Massaro et al. (2016) and Dumay et al. (2016). The SLR enables capturing relationships between the concepts, a strand of research that few researchers have deep and detailed knowledge about (Massaro et al. 2016). There are numerous methods available to conduct a literature review, such as a traditional authorship review, systematic review, meta-analysis, bibliometric review, etc. These methods differ from each other, and sometimes the rigidity of the rules of each needs to be followed (Ascani et al. 2021). As with other methods, SLR has some basic rules to follow for transparency and replicability, but at the same time gives more freedom, which helps to accumulate knowledge from a nascent area of study. Furthermore, SLR is suitable for identifying insight, critique and future research agendas (Massaro et al. 2016). Therefore, considering our topic and research questions, we decided to apply SLR. We started the structured literature review (SLR) by establishing a protocol for the review. We discovered that there was no earlier SLR focusing on the relationship between SR and MCS. Obviously, this is not a research gap per se, but it may serve as a starting point, providing a comprehensive insight into that relationship, which could be expected to provide a platform for future research avenues by providing evidence-based jus- J. Risk Financial Manag. 2022,15, 562 6 of 31 tifications for the discovered research gaps in accordance with research questions. For this, we covered research for a period of 15 years (January 2005 through June 2020), expecting to spend a major part of the research on the relationship between sustainability reporting and management control. To capture widespread evidence and cover the literature in the field, we searched through the Google Scholar (GS) and the Scopus database 3 . Scopus and Google scholar were chosen because Scopus has over 20,000 peer-reviewed journals, and Google scholar has coverage of recently published articles, many of which are not covered by Scopus alone (Bretas and Alon 2021; and Bar-Ilan 2008). However, we are completely aware of duplicity and handled those issues very cautiously. 3.1. Literature Search Following the protocol, the second step comprises the selection of data sources for the SLR. For the keyword selection process, the authors had several meetings, and we actively sought inspiration from the previous literature in order not to miss any impactful and relevant keywords. This was performed through a structured keywords search strategy, as guided by previous researchers (e.g., De Bem Machado et al. 2022;Winchester and Salji 2016). While actively conducting the literature search, we kept the research questions in mind and searched through the following combinations of keywords: “sustainability reporting”, “sustainability disclosure”, “integrated reporting”, “sustainability reporting and management control” “management control”, “management control system”, “formal control”, “informal control”, “accounting and control” “balanced scorecard”, “integrated thinking”, “quality management”, “social accounting” “environmental accounting”, “environmental reporting”, “accounting and decision-making”, “corporate social responsibility”, “CSR”, “integrated report”, “International Integrated Reporting Council”, “IIRC”, “Global Reporting Initiative”, “GRI”, “ESG”, and “management accounting and control” in the title, abstract, or keywords of the articles (articles, conference papers, book chapters, etc.). Altogether, there were relevant 517 search results identified in the Scopus and Google Scholar databases, but not all the articles contributed to answering the research questions. Finally, after performing the necessary screening and removal of duplicates, we identified a total of 45 papers based on the panel judgement of authors for further investigation. In the selection process, the primary criterion was that selected articles should articulate the relationship between sustainability reporting and management control. Second, the selected articles should have at least five Google Scholar citations. We were not able to apply more stringent filtering criteria because the chosen field is still nascent, and more filtering would result in an unrealistic and inappropriate number of papers for the literature review. A PRISMA (preferred reporting items for systematic reviews and meta-analyses) article screening diagram is used 3 to ensure the transparency and replicability of the study. The details of the exclusion criteria are further discussed in Section 3.6. We sorted the identified articles as follows. We started by reading the initially considered relevant abstracts, followed by reading the full paper when abstract analyses indicated that the articles were relevant. Finally, we read the full paper and kept it with full referencing details. Figure 2plots the publication trend; notice the zigzag downwards trend in the field of SRMC compared to total publications (n = 337, see Figure 3) identified for further assessment (see also Appendix B). The peak of the graph is in 2016, with a total of nine articles. J. Risk Financial Manag. 2022,15, 562 7 of 31 J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 7 of 31 full referencing details. Figure 2 plots the publication trend; notice the zigzag downwards trend in the field of SRMC compared to total publications (n = 337, see Figure 3) identified for further assessment (see also Appendix B). The peak of the graph is in 2016, with a total of nine articles. Figure 2. Publication years of the 45 articles chosen. Figure 3. PRISMA article screening diagram for the SLR. 0 5 10 Number of publications Years Number of publications over years Figure 2. Publication years of the 45 articles chosen. J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 7 of 31 full referencing details. Figure 2 plots the publication trend; notice the zigzag downwards trend in the field of SRMC compared to total publications (n = 337, see Figure 3) identified for further assessment (see also Appendix B). The peak of the graph is in 2016, with a total of nine articles. Figure 2. Publication years of the 45 articles chosen. Figure 3. PRISMA article screening diagram for the SLR. 0 5 10 Number of publications Years Number of publications over years Figure 3. PRISMA article screening diagram for the SLR. 3.2. Article Impact In the third step, we analyse the articles’ impact following Google Scholar citation numbers as of September 2020. The top 10 articles with their attached journals are ranked by citations (see Table 1). Additional ranking information is provided attached to the J. Risk Financial Manag. 2022,15, 562 8 of 31 articles based on the Australian Business Deans Councils (ABDC) 2019 list. It is obvious that old articles have higher citations (Dumay et al. 2016). To offset this problem, this article provides a separate ranking for the top 10 papers, adding citations per year (CPY) between 2005 to 2020 (Dumay et al. 2016); see Table 2 4 . Nine articles are common to both rankings. The two articles by Maas et al. (2016b) and Epstein et al. (2015) in Table 2are both recent publications in highly ranked journals. This finding helps us to understand the trend of the research community. Scholars have a strong interest in citing the latest articles in the field of sustainability and management accounting and control; therefore, CPY ranking will help readers to compare and contrast the rankings. Table 1. Top 10 articles by Google Scholar (GS) citations and their ranking by Australian Business Deans Councils (ABDC). Title Total Citations as per GS Authors (Year) Journals Type ABDC Ranking Emerging themes in management control: a review of recent literature 599 Berry et al. (2009) The British Accounting Review Article A* Sustainability accounting and reporting: fad or trend? 595 Burritt and Schaltegger (2010) Accounting, Auditing & Accountability Journal Article A* Integrating sustainability reporting into management practices 558 Adams and Frost (2008) Accounting Forum Article B Eco-control: the influence of management control systems on environmental and economic performance 529 Henri and Journeault (2010) Accounting, Organizations and Society Article A* The interrelationship between management control mechanisms and strategy 369 Kober et al. (2007) Management Accounting Research Article A* Configuring management control systems: theorizing the integration of strategy and sustainability 357 Gond et al. (2012) Management Accounting Research Article A* The use of management control systems to manage CSR strategy: a levers of control perspective 308 Arjaliès and Mundy (2013) Management Accounting Research Article A* Towards a socially responsible management control system 231 Durden (2008) Accounting, Auditing & Accountability Journal Article A* Integrating corporate sustainability assessment, management accounting, control, and reporting 189 Maas et al. (2016b) Journal of Cleaner Production Article A Managing social, environmental and financial performance simultaneously 153 Epstein et al. (2015) Long Range Planning Article A J. Risk Financial Manag. 2022,15, 562 15 of 31 J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 14 of 31 Figure 6. Organisational location. We found that 27% of the 45 articles focused on Australia, New Zealand, and Asia, and that 16% focused on the Europe/EU region. Many researchers are active in these geographical locations, especially from the Australia and New Zealand region. The contribution from Asia is more limited in scope. Findings from the European region revealed that after the EU 2014/95 directive, the research on non-financial reporting received more attention (see Figure 2 and Appendix B between 2014 to 2018). Finally, it is worth mentioning that research from the UK and North America only contributed 2% each. This may be related to their capitalist focus, a primary focus on companies’ financial performance from positivistic capital market research traditions (Dumay et al. 2016). 3.7.4. Focus on SRMCS Literature The fourth category, “Focus on SRMCS literature”, departed from the framework by Guthrie et al. (2012) based on the new categories identified through our coding. We outline six subsections as follows: D1. Sustainability/integrated reporting, D2. Sustainability accounting, D3. Management control, D4. Accountability and governance, D5. Management strategy, and D6. Performance measurement (See Table 3 and Figure 7). 9% 16% 27% 2% 2% 44% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Number of Articles C. Location Other/not specified Join collaboration between/among countries United Kingdom Australia, New Zealand and Asia European/ European Union North America 33% 14% 31% 2% 13% 7% 0% 5% 10% 15% 20% 25% 30% 35% Number of Articles D. Focus on SRMCS literature D.6 Performance measurement D.5 Management strategy D.4 Accountability and governance D3. Management control D2. Sustainability accounting D1. Sustainability /Integrated reporting Figure 7. Focus on SRMCS literature. 3.7.5. Research Methods The category “Research method” (E) is adapted from Guthrie et al. (2012). Here we kept all the original subcategories, as follows: E1. Case/field study/interviews, E2. Content analysis/historical analysis, E3. Survey/questionnaire/other empirical, E4. Commentary/normative/policy, and E5. Critical review of the recent literature (critical review) (see Table 3and Figure 8). We modified E5 since we did not include a typical literature review paper for the analysis. Instead, we added four (9%) commentary, reflection, or critical review articles (e.g., Berry et al. 2009;Burritt and Schaltegger 2010;Carenys 2010; Ditillo and Lisi 2014). The commentary articles are quite comprehensive and enabled us to capture the idea in order to identify the arguments and answer the research questions. J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 15 of 31 Figure 7. Focus on SRMCS literature. We found that the majority, i.e., 31%, of the 45 articles, fall under management control, with 33% under the sustainability/integrated reporting field. The sustainability accounting and management strategy fields are each targeted in 14% and 13% of the articles respectively. Which captures sustainability and management control systems, i.e., the combination of sustainability accounting, strategic management, performance management, management control, and governance-related fields. The extended literature relies on the management control and sustainability reporting perspectives. In this, the primary aim of SRMCS is to support integrated thinking, decision-making, and actions enabling firms to plan for and achieve their sustainability objectives. 3.7.5. Research Methods The category “Research method” (E) is adapted from Guthrie et al. (2012). Here we kept all the original subcategories, as follows: E1. Case/field study/interviews, E2. Content analysis/historical analysis, E3. Survey/questionnaire/other empirical, E4. Commentary/normative/policy, and E5. Critical review of the recent literature (critical review) (see Table 3 and Figure 8). We modified E5 since we did not include a typical literature review paper for the analysis. Instead, we added four (9%) commentary, reflection, or critical review articles (e.g., Berry et al. 2009; Burritt and Schaltegger 2010; Carenys 2010; Ditillo and Lisi 2014). The commentary articles are quite comprehensive and enabled us to capture the idea in order to identify the arguments and answer the research questions. Figure 8. Research methods. We found that 47% of the 45 articles applied qualitative methods, such as case/field study/interviews. The results are somewhat expected, since combined SRMCS research is still in a nascent stage (Traxler et al. 2020). From a methodological perspective, this type of method is common in the early stages of research, often also preferred among researchers (Edmondson and McManus 2007). There are also empirical studies of a quantitative character showing empirical evidence. We identified that 18% of the articles applied such methodologies (e.g., Garcia et al. 2016; Miles and Ringham 2019). As an illustrating example, Correa-Garcia et al. (2020) show how some distinct corporate variables of business groups influence the disclosure quality of corporate social responsibility practices. By using a logistic regression model, they found that controlled equity negatively impacted the quality of SR. This study empirically helps us to 47% 4% 18% 22% 9% 0% 10% 20% 30% 40% 50% Number of Articles E. Research methods E5. Review of recent literature E4. Commentary/normative/policy E3. Survey/questionnaire/other empirical E2. Content analysis/historical analysis E1. Case/field study/interviews Figure 8. Research methods. We found that 47% of the 45 articles applied qualitative methods, such as case/field study/interviews. The results are somewhat expected, since combined SRMCS research is still in a nascent stage (Traxler et al. 2020). From a methodological perspective, this type of method is common in the early stages of research, often also preferred among J. Risk Financial Manag. 2022,15, 562 16 of 31 researchers (Edmondson and McManus 2007). There are also empirical studies of a quantitative character showing empirical evidence. We identified that 18% of the articles applied such methodologies (e.g., Garcia et al. 2016;Miles and Ringham 2019). As an illustrating example, Correa-Garcia et al. (2020) show how some distinct corporate variables of business groups influence the disclosure quality of corporate social responsibility practices. By using a logistic regression model, they found that controlled equity negatively impacted the quality of SR. This study empirically helps us to understand the importance (lack) of governance and control to ensure organisational sustainability, which also can be reflected from the sustainability reporting. An additional 22% of the articles are of a commentary/normative/policy character (e.g., Berry et al. 2009;Burritt and Schaltegger 2010). Burritt and Schaltegger (2010) argued that sustainability accounting and reporting should be used as a tool for management decision-making. They comment that a twintrack approach (inside-out and outside-in) plays a communicative role between SR and MCS. In addition to that, Berry et al. (2009) identified a lack of research on management control and sustainability. These commentary papers help us understand the importance of the twin-track approach as well as the research gap in the field of sustainability and management accounting systems. However, the evidence captured from studies revealed that the link between sustainability reporting and management control exists, although there is a lack of any comprehensive framework (Lueg and Radlach 2016;Maas et al. 2016a). Finally, we can conclude that though there is significant empirical evidence to examine the link between SR and MCS (SRMCS), the qualitative case studies/interviews dominate the field together with commentary. 3.7.6. SRMCS Frameworks and Models The category “SRMCS framework and models” (F) is also adopted from Guthrie et al. (2012). In this category, we kept the three original subsections as follows: F1. No model proposed, F2. Applies or considers previous models, F3. Proposes a new model (see Table 3 and Figure 9). First of all, 49% of the 45 articles consider previously adopted models in the MCS. Most of the articles either consider the previous model or proposed no model for SRMCS, which we presumed, as the concept is still in an emerging stage. To create a comprehensive framework for SRMCS, the articles advocating previous models are directly or indirectly attached to Simons’ levers of control, the Malmi–Brown package of controls, part of the packages, or else balanced scorecard or KPIs, but this did not result in any realistic framework that conjoins SR and MCS together (c.f Adams and Frost 2008;Arjaliès and Mundy 2013;Crutzen et al. 2017;De Villiers et al. 2016;De Villiers and Dimes 2020; Kerr et al. 2015, etc.). Only 11% of the 45 articles proposed new models (c.f Durden 2008;Henri and Journeault 2010;Maas et al. 2016a;Sundin and Brown 2017;Thoradeniya et al. 2015). For example, Durden (2008) highlighted internal and micro aspects in relation to stakeholder factors. Maas et al. (2016a,2016b) highlighted the transparency perspective of SRMCS, focusing on the inside-out and outside-in perspectives. Sundin and Brown (2017) added agency theory with Malmi–Brown’s control framework, which helps them to explain how MCS can incorporate environmental considerations and then bond agents’ behaviour at the level of management actions. Thoradeniya et al. (2015) developed a framework that examines the influence of managers’ attitudes and other psychological factors on sustainability reporting. Finally, Henri and Journeault (2010) highlighted a mediation model that reflects the relationships among eco-control, environmental performance, and economic performance. Based on studies applying established models and developing new models, we find that the articles primarily focus on either SR or MC, with very few ties between both concepts. As a result, we identify a research trend of improving normative frameworks of SRMCS. Furthermore, 40% do not propose any model at all. These articles primarily focused on the factors influencing reporting practice and how MCSs could drive an organisation towards sustainability. J. Risk Financial Manag. 2022,15, 562 17 of 31 J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 16 of 31 understand the importance (lack) of governance and control to ensure organisational sustainability, which also can be reflected from the sustainability reporting. An additional 22% of the articles are of a commentary/normative/policy character (e.g., Berry et al. 2009; Burritt and Schaltegger 2010). Burritt and Schaltegger (2010) argued that sustainability accounting and reporting should be used as a tool for management decision-making. They comment that a twin-track approach (inside-out and outside-in) plays a communicative role between SR and MCS. In addition to that, Berry et al. (2009) identified a lack of research on management control and sustainability. These commentary papers help us understand the importance of the twin-track approach as well as the research gap in the field of sustainability and management accounting systems. However, the evidence captured from studies revealed that the link between sustainability reporting and management control exists, although there is a lack of any comprehensive framework (Lueg and Radlach 2016; Maas et al. 2016a,). Finally, we can conclude that though there is significant empirical evidence to examine the link between SR and MCS (SRMCS), the qualitative case studies/interviews dominate the field together with commentary. 3.7.6. SRMCS Frameworks and Models The category “SRMCS framework and models” (F) is also adopted from Guthrie et al. (2012). In this category, we kept the three original subsections as follows: F1. No model proposed, F2. Applies or considers previous models, F3. Proposes a new model (see Table 3 and Figure 9). First of all, 49% of the 45 articles consider previously adopted models in the MCS. Most of the articles either consider the previous model or proposed no model for SRMCS, which we presumed, as the concept is still in an emerging stage. To create a comprehensive framework for SRMCS, the articles advocating previous models are directly or indirectly attached to Simons’ levers of control, the Malmi–Brown package of controls, part of the packages, or else balanced scorecard or KPIs, but this did not result in any realistic framework that conjoins SR and MCS together (c.f Adams and Frost 2008; Arjaliès and Mundy 2013; Crutzen et al. 2017; De Villiers et al. 2016; De Villiers and Dimes 2020; Kerr et al. 2015, etc.). Figure 9. SRMCS frameworks and models. Only 11% of the 45 articles proposed new models (c.f Durden 2008; Henri and Journeault 2010; Maas et al. 2016a; Sundin and Brown 2017; Thoradeniya et al. 2015). For example, Durden (2008) highlighted internal and micro aspects in relation to stakeholder factors. Maas et al. (2016a, 2016b) highlighted the transparency perspective of SRMCS, 40% 49% 11% 0% 10% 20% 30% 40% 50% 60% Number of Articles F. SRMCS frameworks and models F3. Proposes a new model F2. Applies or considers previous models F1. No model proposed Figure 9. SRMCS frameworks and models. 3.7.7. Management Control Approach The category “Management control approach” (G) was developed based on the needs identified while coding, adding to Guthrie et al.’s (2012) underlying framework (see Table 3 and Figure 10). By management control approach, we mean management control tools that have been used widely in the literature. We added this category since we observed that many authors primarily focused on establishing sustainability and management control frameworks by focusing on already famous control tools. The subsections are coded as follows: G1. Simons’ levers of control, G2. Malmi–Brown package of controls of part of the package, G3. Balanced Scorecard/KPI, G4. Combination/other types of controls, G5. Nothing Specified. J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 17 of 31 focusing on the inside-out and outside-in perspectives. Sundin and Brown (2017) added agency theory with Malmi–Brown’s control framework, which helps them to explain how MCS can incorporate environmental considerations and then bond agents’ behaviour at the level of management actions. Thoradeniya et al. (2015) developed a framework that examines the influence of managers’ attitudes and other psychological factors on sustainability reporting. Finally, Henri and Journeault (2010) highlighted a mediation model that reflects the relationships among eco-control, environmental performance, and economic performance. Based on studies applying established models and developing new models, we find that the articles primarily focus on either SR or MC, with very few ties between both concepts. As a result, we identify a research trend of improving normative frameworks of SRMCS. Furthermore, 40% do not propose any model at all. These articles primarily focused on the factors influencing reporting practice and how MCSs could drive an organisation towards sustainability. 3.7.7. Management Control Approach The category “Management control approach” (G) was developed based on the needs identified while coding, adding to Guthrie et al.’s (2012) underlying framework (see Table 3 and Figure 10). By management control approach, we mean management control tools that have been used widely in the literature. We added this category since we observed that many authors primarily focused on establishing sustainability and management control frameworks by focusing on already famous control tools. The subsections are coded as follows: G1. Simons’ levers of control, G2. Malmi–Brown package of controls of part of the package, G3. Balanced Scorecard/KPI, G4. Combination/other types of controls, G5. Nothing Specified. Figure 10. Management control approach. We found that 51% (13 + 18 + 20%) of the articles rely upon Simons’ levers of control, the Malmi–Brown package of controls, or part of the packages, triple bottom line, and balanced scorecard/KPI approaches (e.g., Adams and Frost 2008; Arjaliès and Mundy 2013; Crutzen et al. 2017; De Villiers et al. 2016; Kerr et al. 2015). The remaining 49% either did not mention any approach or support other types of MCS, including a combination of previously discussed control packages, such as cultural control or eco-control, etc. This categorization helped us to identify the focus of SRMCS tools in academia as well as by opening a window to find a gap in the MC tools. This knowledge helped us to draw the conceptual framework shown in Section 3.7.9. 13% 18% 20% 18% 31% 0% 5% 10% 15% 20% 25% 30% 35% Number of Articles G. Management Control Approach G5.Nothing Specified G4.Combination/Other type of controls G3.Balanced Scorecard/ KPI G2.Malmi brown package of controls or part of the package G1.Simons' levers of control Figure 10. Management control approach. We found that 51% (13 + 18 + 20%) of the articles rely upon Simons’ levers of control, the Malmi–Brown package of controls, or part of the packages, triple bottom line, and balanced scorecard/KPI approaches (e.g., Adams and Frost 2008;Arjaliès and Mundy 2013; Crutzen et al. 2017;De Villiers et al. 2016;Kerr et al. 2015). The remaining 49% either did J. Risk Financial Manag. 2022,15, 562 18 of 31 not mention any approach or support other types of MCS, including a combination of previously discussed control packages, such as cultural control or eco-control, etc. This categorization helped us to identify the focus of SRMCS tools in academia as well as by opening a window to find a gap in the MC tools. This knowledge helped us to draw the conceptual framework shown in Section 3.7.9. 3.7.8. Signal of MCS from SR Finally, we added the category “Signal of MCS from SR” (H) to the categories proposed by Guthrie et al. (2012); see Table 3and Figure 11. We identified this as a central category based on the coding and wanted to see how academia regards this, i.e., can SR be a tool to obtain information about MCS or not? The subsections are coded as follows: H1. Sustainability reporting provides information about management control, H2. No information from SR concerning MC, H3. Only control-related information, H4. Other information, H5. Reputation management/greenwashing. J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 18 of 31 3.7.8. Signal of MCS from SR Finally, we added the category “Signal of MCS from SR” (H) to the categories proposed by Guthrie et al. (2012); see Table 3 and Figure 11. We identified this as a central category based on the coding and wanted to see how academia regards this, i.e., can SR be a tool to obtain information about MCS or not? The subsections are coded as follows: H1. Sustainability reporting provides information about management control, H2. No information from SR concerning MC, H3. Only control-related information, H4. Other information, H5. Reputation management/greenwashing. We found that 38% of the articles (17) supported the category in that SR provides information about and value for MCS. As an example of positive relationships between SR and MCS, Adams and Frost (2008) find that sustainability KPIs are utilized and influence management decisions, and that such information helps to improve the external reporting processes. Arjaliès and Mundy (2013) also find that the use of MCS has the potential to contribute to a broader sustainability agenda, including the reporting. However, we also notice contrary insights on negative relationships between SR and MCS. This is outlined in 2% of the articles (one paper). Miles and Ringham’s (2019) findings point out that SR could be used for reputation management or greenwashing. Based on a content analysis of 49 GRI topics found for the largest 100 companies listed on the London Stock Exchange (FTSE100), they found a statistically significant result that companies disclose sustainability information due to stakeholder and legal pressures, which they described as “impression management” or greenwashing. Both the positive and negative relationships between SR and MCS can help to guide future research and researchers in the theoretical and practical knowledge for the development and design of comprehensive SRMCS frameworks. Figure 11. Signal of MCS from sustainability reporting. 3.7.9. Result from the Content Analysis and Towards a Conceptual Framework We now present our developed conceptual framework for SRMCS (Figure 12), based on the general analysis as well as the content analyses of the identified central articles, which are seen as a blueprint for the field. The framework was developed based on the common themes which appeared in the systematic content analysis. The framework is based on seven core themes identified in the analysis process. The core themes are as follows: 1. Role of management accounting for setting sustainability strategies; 2. The importance of management control tools for executing sustainability strategies; 38% 7% 29% 24% 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% Number of Articles H. Signal of MCS from Sustainability Reporting H5. Reputation management/greenwashing H4.Other information H3.Only control-related information H2.No information from SR concerning MC H1.Sustainability Reporting provides information about management control Figure 11. Signal of MCS from sustainability reporting. We found that 38% of the articles (17) supported the category in that SR provides information about and value for MCS. As an example of positive relationships between SR and MCS, Adams and Frost (2008) find that sustainability KPIs are utilized and influence management decisions, and that such information helps to improve the external reporting processes. Arjaliès and Mundy (2013) also find that the use of MCS has the potential to contribute to a broader sustainability agenda, including the reporting. However, we also notice contrary insights on negative relationships between SR and MCS. This is outlined in 2% of the articles (one paper). Miles and Ringham’s (2019) findings point out that SR could be used for reputation management or greenwashing. Based on a content analysis of 49 GRI topics found for the largest 100 companies listed on the London Stock Exchange (FTSE100), they found a statistically significant result that companies disclose sustainability information due to stakeholder and legal pressures, which they described as “impression management” or greenwashing. Both the positive and negative relationships between SR and MCS can help to guide future research and researchers in the theoretical and practical knowledge for the development and design of comprehensive SRMCS frameworks. 3.7.9. Result from the Content Analysis and Towards a Conceptual Framework We now present our developed conceptual framework for SRMCS (Figure 12), based on the general analysis as well as the content analyses of the identified central articles, J. Risk Financial Manag. 2022,15, 562 19 of 31 which are seen as a blueprint for the field. The framework was developed based on the common themes which appeared in the systematic content analysis. The framework is based on seven core themes identified in the analysis process. The core themes are as follows: 1. Role of management accounting for setting sustainability strategies; 2. The importance of management control tools for executing sustainability strategies; 3. The emphasis on sustainability performance in a modern organisation; 4. Sustainability reporting—a mirror of the inside-out perspective; 5. The role of institutional quality and legitimacy in SR; 6. Sustainability reporting being a widely used tool for greenwashing; 7. Taking into consideration stakeholders’ expectations and the success factors. J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 19 of 31 3. The emphasis on sustainability performance in a modern organisation; 4. Sustainability reporting—a mirror of the inside-out perspective; 5. The role of institutional quality and legitimacy in SR; 6. Sustainability reporting being a widely used tool for greenwashing; 7. Taking into consideration stakeholders’ expectations and the success factors. Figure 12. Conceptual framework (a spider diagram) of a sustainability reporting and management control system, which is a complex and multifaceted relationship. Dark black arrows represent sustainability activities within the company (the shapes of the boxes are only for ornamentation and do not provide any extra information). In the figure above, arrow indicators 1–7 are applicable when accountability and legitimacy are the agenda of SRMC; contrarily, 1–6 and 8–10 implies when SRMC serve the greenwashing agenda. 4. Discussion 4.1. Role of Management Accounting for Setting Sustainability Strategies (Arrow Indicator 1) Traditionally, the role of management accounting was structured with strategies to achieve economic goals to satisfy the shareholders’ needs. Management accountants were not even responsible for the reporting (Gond et al. 2012; Lepistö and Ihantola 2018). However, the role of modern management accountants has changed with the response to contemporary stakeholder pressure. Based on this, internal sustainability strategies, techniques, and systems have been established by the management accountants to satisfy stakeholders’ needs and facilitate communication/disclosure in the form of sustainability reporting(Gond et al. 2012; Arjaliès and Mundy 2013; Ditillo and Lisi 2016). In a modern organisation, the manager needs to be creative, target-oriented, and strategic to ensure sustainability, as sustainability is considered a core value that comes from the successful implementation of sustainability strategies into the MCS (Berry et al. 2009; Gond et al. 2012; Gatti et al. 2018). Kober et al. (2007) argue that “MCS both shapes, and is shaped by, Figure 12. Conceptual framework (a spider diagram) of a sustainability reporting and management control system, which is a complex and multifaceted relationship. Dark black arrows represent sustainability activities within the company (the shapes of the boxes are only for ornamentation and do not provide any extra information). In the figure above, arrow indicators 1–7 are applicable when accountability and legitimacy are the agenda of SRMC; contrarily, 1–6 and 8–10 implies when SRMC serve the greenwashing agenda. 4. Discussion 4.1. Role of Management Accounting for Setting Sustainability Strategies (Arrow Indicator 1) Traditionally, the role of management accounting was structured with strategies to achieve economic goals to satisfy the shareholders’ needs. Management accountants were not even responsible for the reporting (Gond et al. 2012;Lepistö and Ihantola 2018). However, the role of modern management accountants has changed with the response to contemporary stakeholder pressure. Based on this, internal sustainability strategies, J. Risk Financial Manag. 2022,15, 562 20 of 31 techniques, and systems have been established by the management accountants to satisfy stakeholders’ needs and facilitate communication/disclosure in the form of sustainability reporting(Gond et al. 2012;Arjaliès and Mundy 2013;Ditillo and Lisi 2016). In a modern organisation, the manager needs to be creative, target-oriented, and strategic to ensure sustainability, as sustainability is considered a core value that comes from the successful implementation of sustainability strategies into the MCS (Berry et al. 2009;Gond et al. 2012; Gatti et al. 2018). Kober et al. (2007) argue that “MCS both shapes, and is shaped by, strategy (p. 425)”. Empirical evidence supports the claim and shows that there is an indirect positive relationship between sustainability strategies and sustainability performance (Nigri and Del Baldo 2018), which leads to better long-run financial performance (Epstein et al. 2015; Joshi and Li 2016;Rahi et al. 2022b). 4.2. The Importance of Management Control Tools for Executing Sustainability Strategies (Arrow Indicator 2) Based on the literature analysis, this study found that the most common theme was “control tools”. While exploring the relationship between sustainability reporting and management control, we identified that many authors widely advocate for a few but effective control tools. These are, primarily, (1) the Malmi and Brown control tools, (2) Simons’ levers of controls, and (3) the balanced scorecard (Ceulemans et al. 2014;Crutzen et al. 2017;Kerr et al. 2015;Narayanan and Boyce 2019;Sundin and Brown 2017). Many authors argue that these three control tools are capable enough to incorporate the sustainability strategies and help to develop managerial motivation into sustainable directions. Managers implement different types of formal and informal control for mitigating risk and measuring performance for the sake of safeguarding internal control (Dkhili and Noubbigh 2013;Bui and Villiers 2017;Jollands et al. 2018;Riccaboni and Leone 2010). Researchers warn that too high a focus on formal control clashes with informal and cultural controls and vice versa. This may either negatively affect agents’ psychological considerations or organisational performance (Thoradeniya et al. 2015). Furthermore, studies reveal that agents do not focus on sustainability questions until or unless their interests align with sustainability outcomes (Sundin and Brown 2017). Therefore, choosing the right control tool in order to create a balance between formal and informal control is highly important for reaching sustainability goals, which in turn influence SR characteristics (Ditillo and Lisi 2014;Herremans and Nazari 2016;Moon et al. 2011). 4.3. The Emphasis on Sustainability Performance in a Modern Organisation (Arrow Indicator 3) Emphasising sustainability performance (SP) in business is the most crucial trend in the modern organisation (Adams and Frost 2008;Berry et al. 2009;Henri and Journeault 2010;Perego and Hartmann 2009). Businesses and strategic managers are increasingly considering ways to incorporate a balance among economic, ecological, social, and cultural value creation via their business models, and it is influencing the long-run SP of companies more than ever and, in turn, satisfying more stakeholders’ needs (Henri and Journeault 2010;Joshi and Li 2016;Neumann et al. 2012;De Villiers and Maroun 2017). The basic definition of organisational sustainability must include long-run planning and retention of fundamental principles or goals, regardless of internal or external changes over time (Gond et al. 2012). The internal context for promoting SP includes integration of sustainability into strategic plans to provide a formal announcement of the importance of sustainability to the firm. Corporate governance consists of formal organisational policy, top management support and commitment to ethics, as well as organisational cultural values (Griffith and Bhutto 2008;Grosvold et al. 2014;Sugita and Takahashi 2015). There are also external factors that affect corporate SP, including legislation concerning the natural environment and social context, as well as industry-specific competitive and technological dynamics (Griffith and Bhutto 2008;Grosvold et al. 2014;Dao et al. 2011). Herremans and Nazari (2016) and Schaltegger (2011) argue that using the appropriate control tools can J. Risk Financial Manag. 2022,15, 562 21 of 31 account for both internal and external factors that can influence business success and links to accounting, assessment, and reporting. 4.4. Sustainability Reporting: A Mirror of the Inside-Out Perspective (Arrow Indicator 4) Nowadays, in addition to the financial report, there is extreme pressure from institutional investors and other external stakeholders for companies to publish non-financial performance reports. Investors and other stakeholders require such information for their decision-making and investment purposes (Maas et al. 2016a;Waddock and Graves 1997; WBCSD 2015). That is why companies disclose strategies, performance evaluation criteria, and other internal considerations to their stakeholders in the sustainability report (Biswas and O’Grady 2016). Not only should companies report the final result, but they must also explain how it was achieved and integrated into the business context (Maas et al. 2016b; WBCSD 2015). As a result, SR also considers the process leading to SP outcomes, as well as the relationship between SP and business strategy, business models, strategic programs, and strategic objectives (Thijssens et al. 2016). This process is considered a mirror of the inside-out perspective (Schaltegger and Wagner 2006). Authors recommend this perspective based on an analysis of what issues are relevant for effective implementation of a successful business strategy (Schaltegger and Wagner 2006). This perspective focuses on SP improvement, which is then reported as a final step from the companies to the stakeholders, using an inside-out approach to developing linkages between management accounting control and reporting (Maas et al. 2016b). Reporting from the inside-out explains not only the non-financial results but also why and how they were achieved (Eccles and Saltzman 2011). Finally, it also considers the companies’ and stakeholders’ future assessment of sustainability performance (Adams 2015). 4.5. The Role of Institutional Quality and Legitimacy in SR (Arrow Indicators 5 and 6) Based on the content analysis, this study found that a number of authors have used institutional and legitimacy theory to describe the organisational responses to external pressures and how such pressures motivate organisations to change and adopt sustainability strategies and reporting practice (e.g., De Villiers and Dimes 2020;Dumay and Dai 2017;Herremans and Nazari 2016;Joshi and Li 2016). The supporters of institutional quality (IQ) argue that firms’ behaviour is governed by their institutional environment, since the institutions shape companies’ values, preferences, and repertoire of actions, as well as their type of rational behaviour towards society (Rahi et al. 2022a;Vatn 2020; and Herremans et al. 2010). Institutional theorists further posit that external pressures act as motivators and internal controls act as facilitators, which significantly links to the improvement of SR practice and report quality (Nazari et al. 2015). Thus, there is a double method for the communication of IQ and the inside-out perspective (see Figure 12, box 4 and 5). As such, the higher the IQ, the better it reflects the strategies and improves report quality. A practical example is the EU directives that made it institutionally possible and legitimate to ensure environmental, social, and governance-related disclosures from the large companies operating within the EU (Kinderman 2020;Mion and Loza Adaui 2019). The directives substantially changed the mindset of managers from the voluntary burden of reporting to serious actions and, thus, had a positive outcome (Mion and Loza Adaui 2019). 4.6. Sustainability Reporting a Widely Used Tool for Greenwashing (Arrow Indicators 8, 9 and 10) Greenwashing is considered to involve engineering corporate disclosure matters to maximize perceptions of legitimacy and improve reputation management in order to hide strategic managerial problems (Laufer 2003;Miles and Ringham 2019). Vatn (2020) and Joshi and Li (2016) argue that institutional quality (IQ) shapes the organisational responsibility and behaviours to oppose greenwashing. Therefore, if the IQ framework is weak and legitimacy obligation is low or voluntary, then managers become more profitoriented and aim to meet periodic performance goals, while satisfying the shareholders by taking unusual business risks that suppress sustainability strategies (Schaltegger and J. Risk Financial Manag. 2022,15, 562 22 of 31 Hörisch 2017). In such scenarios, the reporting only serves the purpose of greenwashing. Montecchia et al. (2016) described this as a selfie-taking approach, where the quantity of unnecessary information is higher than the quality of the sustainability information. In such cases, companies fail to adopt outside-in stakeholder feedback into the internal strategies, as stakeholders are sent wrong or fabricated messages (Maas et al. 2016b). As a result, it becomes one-way communication (follow arrow indicators 6, 9, and 10). When stakeholders realize the difference between the reality and the report, they lose their trust in the company. 4.7. Taking into Consideration Stakeholders’ Expectations and the Success Factors (Arrow Indicator 7) Taking stakeholders’ expectations into consideration is crucial for managers when supporting the formulation of internal sustainability strategies (Joseph 2012); otherwise, there is a great risk of social boycotting or industrial action (Adams and McNicholas 2007; Eliwa et al. 2021;Maas et al. 2016a,2016b). Responding to stakeholders’ feedback is, thus, considered to be an outside-in perspective, where internal actors and external stakeholders work in a way that contributes to performance improvements in a sustainability direction through an iterative process (Baker and Schaltegger 2015;Maas et al. 2016b). When insideout communications are reliable and produce high-quality reports to achieve transparency, then outside-in communication develops that may provide feedback on key sustainability problems and the specific nature of stakeholder expectations, enhancing trust and reliability. If organisations overlook outside-in feedback and are unable to incorporate external suggestions, then it may create a gap between organisational performance and stakeholders’ expectations. We can conclude that the link between sustainability strategies and reporting is, thus, strongly influenced by societal expectations, reporting requirements, and standards (Schaltegger and Wagner 2006). 4.8. Discussion, Limitations, and Future Research Agenda of Management Control and Sustainability Reporting From the above discussion, we have addressed the first two research questions, namely how research investigates the relationship between SR and MCS and what the emphases, critiques, and gaps in the literature are. Through this SLR, we tried to show evidence of how the research community inquired about the relationship between SR and MCS. We proposed a framework to conceptualize the synthesis of the literature (see Figure 12). This framework is intended as a blueprint for sustainability reporting and management control in order to design and redesign a company’s internal strategies on MCS, where adoption of stakeholder feedback is crucial. Notwithstanding, our findings divulge that researcher look at the management control and the sustainability reporting agenda with just one eye. They either focus on MC or SR, whereas many argue that they need to be linked to each other (Lueg and Radlach 2016; Traxler et al. 2020). In addition, we found that the primary focus on SRMCS frameworks relies on the established traditional control tools of either Simons’ levers of control or the Malmi–Brown package of controls, or part of them, and/or balanced scorecard/KPIs. We believe there is a need to rethink the reliance on such established frameworks. These traditional MC tools have widely been used for internal control, whereas SRMCS requires transparency, performance improvement, legitimacy, accountability, control, and stakeholder management together, adding additional dimensions to be considered. A broad notion exists in academia that good progress on corporate sustainability entwines reporting and control together (Traxler et al. 2020). Therefore, sustainability practice (i.e., ESG and GRI practice, etc.) would be a prerequisite for improving MCS and credible SR. To address the future of SR and MC research, we stress the different ontological and epistemological positions of SRMCS research. This leads to a suggestion that well-grounded theoretical frameworks be developed that enable more theory-guided analyses. We find the current link between the conceptual and empirical literature on SRMCS rather weak. Our review discovered that the literature examining the relationship between SR and MCS J. Risk Financial Manag. 2022,15, 562 23 of 31 is still in its early stages, and predominantly concerns in-depth analyses. Future research should strengthen the link between conceptual SRMCS studies through empirical studies. Applying theoretical concepts in empirical studies might support the step from describing the phenomenon toward explaining it and, as such, enforcing transparency, performance improvement, legitimacy, accountability, control, and stakeholder management together. Finally, empirical research on this topic requires the development of some indicators or variables coded manually from qualitative data (such as from sustainability reports or from surveys). Our SLR is not without limitations. During the content analysis, we only focused on widespread findings to build themes and, therefore, missed investigating how appropriate the theories are in the research field. Future SLRs could focus on this question. Based on the analysis, researchers could contribute towards building appropriate new theories. In addition, we recommend blending SLR with bibliometric coupling analysis in order to identify clusters that would enrich the content analysis synthesis and guide future research itineraries. Finally, the findings of this study suggest that further investigation into the following two research questions would be of interest5: 1. How has the evolution of SR and MCS research taken place? 2. How applicable are the theories in the studies on SR and MCS? 5. Concluding Remarks We focused on academic views of SRMCS in this paper. Nevertheless, we should not forget that adoption and implementation of such findings and recommendations are fully dependent on them being acceptable to practitioners. Previously, accounting researchers have long been blamed for carrying out research with limited contributions to practice. This is also one of the major challenges for accounting in general (Dumay et al. 2016; Evans et al. 2011) and the research of SRMCS specifically. Focusing on that argument, our content analysis of articles based on case studies revealed a significant difference between academic research and practice regarding SRMCS. Practitioners handle SR as legitimacy and MCS as an internal perspective, whereas SR is meant to reflect the internal governance from the transparency, legitimacy, accountability, and control perspective, targeting the public, especially the stakeholders. Observing practice through isolated case studies would not change much. Instead, there is a need for performative or interventionist research complementing the strand of research (Dumay 2010;Jönsson and Lukka 2005). The proposed research agenda is not only relevant for academics, but could also be of interest for practitioners as SRMCS increases in importance. Companies can benefit from the emphasis of SRMCS on being resilient, sustainable, transparent, legitimate, and accountable, especially in the time of the global pandemic and war. Funding: Article Processing Charge (APC) was funded by the University of Gävle, Sweden. Data Availability Statement: Data for the literature review is available in Appendix A. Acknowledgments: The authors would like to thank Luis Fernando Irgang from Halmstad University Sweden for his support in arranging quick access to the software relevant to complete this paper. The authors would like to acknowledge the support received from the American Management Institute (AMI). In addition, the authors would like to thank the handling editor and two anonymous reviewers for their suggestions and comments that helped to improve the quality of this article. Conflicts of Interest: The authors declare no conflict of interest. Appendix A. The 45 SRMCS Publications Reviewed (2005–2020) Adams, C. and McNicholas, P. (2007). Making a difference: sustainability reporting, accountability and organisational change. Accounting, Auditing, & Accountability Journal, vol. 20, No. 3, pp. 382–402. https://doi.org/10.1108/09513570710748553. Adams, C.A. and Frost, G.R. (2008). Integrating sustainability reporting into management practices. Accounting Forum, vol. 32, No. 4, pp. 288–302. J. Risk Financial Manag. 2022,15, 562 24 of 31 Arjaliès, D. L. and Mundy, J. (2013). The use of management control systems to manage CSR strategy: a levers of control perspective. Management Accounting Research, vol. 24, No. 4, pp. 284–300. Berry, A.J., Coad, A.F., Harris, E.P., Otley, D.T. and Stringer, C. (2009). Emerging themes in management control: a review of recent literature. The British Accounting Review, vol. 41, No. 1, pp. 2–20. Biswas, S. and O’Grady, W. (2016). Using external environmental reporting to embed sustainability into organizational practices. Accounting Research Journal, vol. 29, No. 2, pp. 218–234 Bui, B., & De Villiers, C. (2017). Management control systems to support sustainability and integrated reporting. Sustainability Accounting and Integrated Reporting, pp. 121–148. Burritt, R.L. and Schaltegger, S. (2010), ”Sustainability accounting and reporting: fad or trend?. Accounting, Auditing & Accountability Journal, vol. 23, No. 7, pp. 829–846. Carenys, J. (2010). Management control systems: a historical perspective. International Bulletin of Business Administration, vol. 7, No. 1, pp. 37–54. Ceulemans, K., Van Caillie, D., Molderez, I. and Van Liedekerke, L. (2014). A management control perspective of sustainability reporting in higher education: in search of a holistic view. Proceedings of the International Research Conference on Finance, Risk and Accounting Perspectives (FRAP), vol. 13, pp. 421–437. Correa-Garcia, J.A., García-Benau, M.A. and García-Meca, E. (2020). Corporate governance and its implications for sustainability reporting quality in Latin American business groups. Journal of Cleaner Production, vol. 260. Crutzen, N., Zvezdov, D. and Schaltegger, S. (2017). Sustainability and management control. Exploring and theorizing control patterns in large European firms. Journal of Cleaner Production, vol. 143, pp. 1291–1301. Dao, V., Langella, I., & Carbo, J. (2011). From green to sustainability: Information Technology and an integrated sustainability framework. The Journal of Strategic Information Systems, vol. 20, No. 1, pp. 63–79. De Villiers, C. and Dimes, R. (2020). How management control systems enable and constrain integrated thinking. Meditari Accountancy Research, vol. 29, No.4, pp. 851–872. De Villiers, C. and Maroun, W. (2017). The future of sustainability accounting and integrated reporting. Sustainability Accounting and Integrated Reporting, pp. 163–170. De Villiers, C., Rouse, P. and Kerr, J. (2016). A new conceptual model of influences driving sustainability based on case evidence of the integration of corporate sustainability management control and reporting. Journal of Cleaner Production, vol. 136, pp. 78–85. Ditillo, A. and Lisi, I.E. (2014). Towards a more comprehensive framework for sustainability control systems research. Accounting for the Environment: More Talk and Little Progress, Emerald Group Publishing, Bingley, UK. Ditillo, A. and Lisi, I.E. (2016). Exploring sustainability control systems’ integration: the relevance of sustainability orientation. Journal of Management Accounting Research, vol. 28, No. 2, pp. 125–148. Dkhili, H. and Noubbigh, H. (2013). Management control system and the case of CSR in the Tunisian industrial companies: what findings by the method of structural equation?. International Review of Management and Marketing, vol. 3, No. 2, p. 86. Dumay, J. and Dai, T. (2017). Integrated thinking as a cultural control? Meditari Accountancy Research, vol. 25, No. 4, pp. 574–604, https://doi.org/10.1108/MEDAR-07-201 6-0067 Durden, C. (2008). Towards a socially responsible management control system. Accounting, Auditing & Accountability Journal. vol. 21, No. 5, pp. 671–694. Epstein, M.J., Buhovac, A.R. and Yuthas, K. (2015). Managing social, environmental and financial performance simultaneously. Long Range Planning, vol. 48, No. 1, pp. 35–45. Garcia, S., Cintra, Y., Rita de Cássia, S.R. and Lima, F.G. (2016). Corporate sustainability management: a proposed multi-criteria model to support balanced decision-making. Journal of Cleaner Production, vol. 136, pp. 181–196. J. Risk Financial Manag. 2022,15, 562 31 of 31 Vatn, Arild. 2020. Institutions for sustainability—Towards an expanded research program for ecological economics. Ecological Economics 168: 106507. [CrossRef] Waddock, Sandra A., and Samuel B. Graves. 1997. The corporate social performance–financial performance link. Strategic Management Journal 18: 303–19. [CrossRef] WBCSD. 2015. Reporting Matters: Redefining Performance and Disclosure. Available online: https://www.wbcsd.org/Programs/ Redefining-Value/External-Disclosure/Reporting-matters/Resources/Reporting-matters-2015 (accessed on 1 November 2021). White, Gwendolen B. 2016. Sustainability Reporting: Getting Started, 2nd ed. Hampton: Business Expert Press. White, Theresa L., and Donald H. McBurney. 2012. Research Methods, 9th ed. Belmont: Wadsworth. Winchester, Catherine L., and Mark Salji. 2016. Writing a literature review. Journal of Clinical Urology 9: 308–12. [CrossRef] Wulf, Inge, Jens Niemöller, and Natalia Rentzsch. 2014. Development toward integrated reporting, and its impact on corporate governance: A two-dimensional approach to accounting with reference to the German two-tier system. Journal of Management Control 25: 135–64. [CrossRef]