sustainability reporting research paper

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Sustainability reporting scholarly research: a bibliometric review and a future research agenda

Kameleddine b. benameur.

1 Gulf University for Science and Technology, Kuwait City, Kuwait

Mohamed M. Mostafa

Ahmed hassanein.

2 Faculty of Commerce, Mansoura University, Mansoura, Egypt

Mohammed Z. Shariff

3 Livingstone College, Salisbury, NC USA

Wasim Al-Shattarat

Associated data.

All data generated or analyzed during this study are included in this published article and its supplementary information, including Tables and Figures.

Despite the substantial increase in sustainability reporting scholarly research, the comprehensive evaluation of scientific production in this area is scarce. This study combines the bibliometric and content analyses of sustainability reporting research to fill this gap. We map the development, conceptual structure, and thematic evolution of sustainability reporting scholarly research based on 1,053 Scopus peer-reviewed articles written by 2,071 scholars comprising 69 countries and published from 2000 to 2022. The findings suggest that sustainability reporting has witnessed exponential growth, moved from a “paucity” stage in 2000 to the “saturation” stage in 2022, and is still ongoing. The collaboration among institutions producing sustainability reporting research reflects “locally-centralized-globally-discrete” cooperation. The collaboration between developed and developing world research organizations can be termed the “North-South” divide. Authors have disciplinary or thematic similarities in their research interests (i.e., homophily impact). The study has explained the thematic categories and topics of interest in sustainability reporting. Based on our findings, we provide an agenda for future research directions. The study’s findings are of interest to scholars and practitioners in business, finance, and accounting.

Introduction

Sustainability reporting (henceforward, SR) evolved with critical events such as the publishing of the United Nations Brundtland Report in 1987. In the late 1990s, introducing the Global Reporting Initiative (GRI) promoted sustainability to balance economic and environmental issues (Clarkson et al. 2008 ; Milne and Gray 2013 ). SR is an essential communication tool that can help firms signal their commitment to sustainable development to numerous stakeholders (Ali et al. 2021 ). It provides useful financial and non-financial information to stakeholders more transparently and reliably (Al-Shaer 2020 ). Moreover, financial markets seek sustainability reports as sustainable investment increases, and shareholders are interested in having more information on the impact of sustainable practices on their investments (Livsey 2021 ). Although only a few countries mandate companies to issue a report in which companies disclose their social, environmental, and governance (ESG) performance, SR is becoming an integral part of the reports issued by major companies. Likewise, the recent COVID-19 pandemic has encouraged companies to focus on a much wider group of stakeholders. For example, listed companies nowadays are required in the European Union (EU), the USA, and China to disclose information related to their ESG performance. Such reports result from government pressure through the mandatory requirement for such reports and pressure from stakeholders who want to see more responsible corporations accountable for their social and environmental impacts (Boiral 2013 ). Recent statistics reveal that approximately 96% of the largest 250 companies produce sustainability reports compared to 80% of all companies (KPMG, 2020 , p. 4). Besides, the Governance and Accountability Institute reveals that 39% of even small and medium-sized enterprises (SMEs) published sustainability reports in 2019.

Scholarly research on SR is vast and focuses on various research dimensions, including theoretical underpinnings of SR (e.g., Ali et al. 2021 ), antecedents (e.g., Ong and Djajadikerta 2020 ), consequences (e.g., Nguyen 2020 ; Shahzad and Sharfman 2017 ), Triple-bottom-line and GRI (Burritt, 2010 ; O’Dwyer and Unerman 2020 ; Perkiss et al. 2021 ), investor and stakeholders’ perceptions (e.g., Diouf and Boiral 2017 ), and assurance (e.g., García-Sánchez et al. 2021 ; Buica et al. 2021 ) of sustainability reports. Prior research has also focused on different reporting dimensions of sustainability, such as reporting environmental damages (e.g., Denedo et al., 2017 ), carbon emission (e.g., Le Breton and Aggeri 2019 ), integrated thinking (e.g., Oliver et al., 2016 ), integrated reporting (e.g., Zinsou 2018 ), and stakeholder engagement (e.g., Kaur and Lodhia 2019 ; Alda 2019 ).

The evolution of a particular research area induces academic scholars to quantitatively evaluate its scientific production to recognize its “intellectual structure” (Rivera and Pizam, 2015 ). Thus, when a field of research matures, scholars should “periodically seek some sense of the knowledge produced and accumulated, to identify novel contributions, detect trends and research traditions, understand which topics are addressed, the theories and methods employed, delve into the intellectual structure of the discipline and its knowledge base, and prospect areas of future inquiry” (Ferreira et al., 2014 ). Bibliometric analyses use data visualization technology through sophisticated digital databases to track disciplinary development, research hotspots, and research frontiers in a particular research area (Zou et al. 2018 ). This method has been applied to investigate the knowledge structure in several research areas, including social responsibility of SMEs (Guillén et al. 2022 ), cash holding (Khatib et al. 2021 ), religion and entrepreneurship (Block et al. 2020 ), corporate governance (Zheng and Kouwenberg 2019 ) and Islamic banking and finance (Hassanein and Mostafa 2022 ). Limited research concentrated on the assurance of SR (e.g., Hazaea et al. 2021 ). Our study comprehensively evaluates SR scholarly research from different thematic dimensions, including theoretical underpinnings, antecedents, consequences, quality, assurance, and stakeholders’ engagement. Hence, this study fills this gap by combining bibliometric and content analyses to explore the status of SR research.

The current study aims to quantify, visualize, and analyze the contents of the scientific production of SR. It seeks answers to the following research questions. First, how has SR research evolved? Second, who are the most productive authors in the SR research? Third, what are the “core” academic journals of SR? Fourth, what are the research themes and topics of interest in SR? Fifth, how do the links between the authors and the institutions evolve into a collaborative research network? Finally, what are the future research directions in SR?

The study adds and contributes to the extent of literature as follows. First, it provides a comprehensive evaluation of SR scholarly research and presents interesting insights and avenues for future research. Specifically, this study is the first to provide a combination of bibliometric citation analysis and content analysis for SR scholarly research, offering a complementary approach going beyond the traditional literature review. This adds an innovative way of helping to build knowledge, gain an understanding, and show the future directions in this research area. Second, the study is based on a large sample of 1,053 Scopus peer-reviewed research articles related to SR published between 2000 and 2022 and written by 2,207 authors representing 69 countries. This large sample of research articles helps map the scientific production, identify the research themes and topics of interest, and outline potential avenues for future research in the SR area. Finally, unlike prior research focusing only on SR assurance (Hazaea et al. 2021 ), this study goes beyond the assurance of sustainability reporting. It identifies more comprehensive thematic categories and topics of interest in SR research (i.e., theoretical underpinnings, antecedents, consequences, quality, Greenium, assurance, and stakeholders’ engagement), adding to the theoretical development in this field. Scholars can consider our findings when researching SR and discover potential opportunities and themes for future research.

The study proceeds as follows. Section  2 describes the research methodology. Section  3 presents the scientific production of SR. It describes the evolution of research, identifies the core journals and productive authors, and discusses the top-cited articles in SR. Section  4 presents the network analyses. It explains the authors’ co-citations, the collaboration, and keywords co-occurrence networks. Section  5 explains the thematic categories and topics of interest in SR. Section  6 discusses the results and provides an agenda for future research directions. Section  7 presents the concluding remarks and limitations of the study.

Methodology

In this study, we use bibliometric analyses to explore SR scholarly research. W analyze different aspects of SR research, mainly journals and their impacts, productive authors, research institutions, and thematic research categories in SR. It develops “bibliometric networks” to identify the various networks, including authors’ co-citations, collaboration, and keywords co-occurrence. It also assesses the evolution, structure, and trends in SR scholarly research. The bibliometric analysis is more advantageous than the most advanced traditional review because it can examine more essential themes and provides an additional point of reference (Argoubi et al., 2020). Block and Fisch ( 2020 ) indicate that a study analyzing only factors such as productive authors, journals, and countries is not considered a bibliographic analysis study. The bibliometric study should go beyond mere descriptive reporting on prior research, elaborate on the interpretation and discussion of the findings, and evaluate the advances made and the thematic structure of the research area (Block and Fisch 2020 ). Consequently, the current study followed the tips suggested by Block and Fisch ( 2020 ) for bibliometric analyses to assess the development and thematic structure and show future research directions in SR.

The current study goes beyond the traditional review studies and conducts two analyses. First, it utilizes the bibliometric analysis to present various aspects of SR research, including the evolution of research, the core journals, the productive authors, and the top-cited articles. The bibliometric analysis helps identify the thematic evolution and trending topics in SR. Besides, we have developed co-citations, collaboration, and keyword co-occurrence networks using the VoSViewer. Second, following Paltrinieri et al. ( 2019 ), we conduct a content analysis review for the most relevant streams in SR research. The findings of bibliometric and content analyses have guided us in identifying the potential avenues for future research in sustainability reporting. This method ensures a comprehensive evaluation of the SR research scholarly research.

We used the R version 4.1 software (R Development Core Team, 2021) and several libraries, including the bibliometrix, world cloud, and ggplot2. We have used the VoSviewer software to perform citation and co-citation analyses. We identified the most productive SR authors based on their number of articles and total citations. The citation analysis categorizes the highly cited articles in the SR research. The VoSviewer software visualizes chronological SR citations through network maps. It is a leading software instrument for building visualized maps for objects of interest and is commonly used in bibliometric studies such as cash holding (Khatib et al. 2021 ) and Islamic banking and finance (Hassanein and Mostafa 2022 ). We have followed the subsequent steps to conduct thorough bibliometric and content analyses. First, we selected the database, defined the search terms, and conducted a preliminary statistical analysis. Second, we performed the bibliometric network analysis. Finally, we identified the thematic and conceptual structure of SR.

Database and documents extraction

The Scopus database was the source for this study’s retrieved published documents on SR. Scopus is a leading peer-reviewed journal database and is considered the most extensive (Norris and Oppenheim, 2007 ), and researchers frequently rely on it to perform bibliometric analyses (Cunill et al., 2019 ; Khatib et al. 2021 ; Hassan et al., 2021 ). The advantage of Scopus is that it allows scholars to access a downloadable database containing the bibliographic information of a particular research field, such as journals, affiliations, citations, and references. We have studied publications, definitions, and categories of SR to develop a central theme search string. We have examined all journal articles that include the following terms, “Sustainability Reporting,” “Sustainability Disclosure,” “Corporate Social Responsibility Reporting,” “Corporate Social Responsibility Disclosure,” “CSR Reporting,” “CSR Disclosure,” and all possible variants in the titles, keywords, and abstracts of the journal articles. We have removed the duplicate documents, resulting in 2,096 non-duplicate research articles. We then narrowed our search to include only scholarly research papers written in English, excluding 73 documents written in non-English. The choice of the document type for analysis is debatable. For example, certain studies included exclusively peer-reviewed research articles (e.g., Block et al. 2020 ), while others included, in addition to journal articles, books, and book chapters (e.g., Mostafa 2020 ). Many other studies excluded abstracts, corrections, and editorials (e.g., Al-Khalifa 2014 ). Our study included only peer-reviewed articles because these articles “usually undergo a thorough peer-review process and are of high quality” (Chen et al. 2021 , p. 206). We include only research articles published in peer-reviewed journals in business and economics. This led to the exclusion of 970 documents from the sample. We retrieved the bibliographic records of the selected articles, including the authors, titles, and keywords. The extracted papers were then converted to text to facilitate advanced analyses. We show in Fig.  1 the search strategy followed in this research.

Sustainability reporting search Flowchart

Table  1 presents the primary SR research data. The Table shows that 1,053 peer-reviewed research articles published from 2000 to 2022 met the search criteria. These articles were authored by 2,071 scholars and included 59,255 references. The average number of citations per extracted research paper is 36.03, with an annual citation of 4.75. The Table also reveals that only 147 peer-reviewed articles were single-author articles, whereas multi-authors wrote 1,924 articles. The collaboration index is 2.17, indicating the non-dominance of a single-authored research article, as reported in prior research.

Bibliometric network analysis

A network is “ a structure composed of a set of actors, some of whose members are connected by a set of one or more relationship s” (Knoke and Yang 2010 , p. 8). In social network analysis (SNA), the network relationship is represented by the connection of two nodes. It is indicated that “ when used to synthesize the existing literature from a network perspective, the SNA technique can reveal valuable invisible patterns that can certainly facilitate theory development and uncover areas for future research ” (Khan and Wood 2016 , p. 388). Moreover, the network analysis was used extensively in prior research to explore authors’ collaborations networks (Zou et al. 2018 ; Chen and Liu 2020 ), institutional collaboration among research entities (Ding 2011 ), and keywords co-occurrence networks (Blanckendorff, 2009), which would be developed in this study.

Conceptual and thematic structure

We used the keywords co-occurrence analyses to identify the clusters of thematic structure in sustainability reporting. The thematic cluster of research themes is used in the bibliometric analysis in several studies (Hassanein and Mostafa 2022 ; Khasseh et al. 2017 ). It can be used to study a research field’s theoretical structure by segmenting it through drivers considered “knowledge clusters” (Wetzstein et al. 2019 ). Once the conceptual and thematic structure was identified, we used content analysis to identify the essential research streams in sustainability reporting.

The scientific production

Evolution of sustainability reporting research.

In Fig.  2 , we find the research tendencies in the SR field. The Figure indicates a rapid exponential annual growth rate but is not evenly distributed. For example, there was limited research on SR in the first decade (2000–2009), with only a handful of published research articles annually. This early decade could be considered “the initial” stage in SR research. However, the next five years (2010–2014) did see substantial growth in research dealing with SR. This period could be considered the “rapid growth” stage. It represents a high progression level in SR publications. The final period under consideration (2015–2022) could be labeled the “consolidation and stabilization” period since the SR research reached the “saturation” stage. Notably, research on SR was highly productive from 2016 to 2022 and is still ongoing. The Figure shows a drop in SR publications in 2021. This may be due to the delays in the review process of submitted manuscripts to journals as a result of the COVID-19 pandemic. Notably, our dataset includes peer-reviewed articles published by October 2022.

Sustainability reporting research annual scientific production (2000–2022)

The core journals

In Table  2 , we show the core Scopus-indexed journals publishing SR research. The Table indicates that six publishers owned the top 20 productive journals in SR. Emerald Group Publishing Ltd published eight of these journals. While Taylor and Francis Ltd published four journals, and Wiley-Blackwell published three. The rest of these publications were published by Elsevier [2 journals], Springer [2 journals], and Sage publications [1 journal]. The most productive journal is the “Journal of Cleaner Production,“ with 89 articles representing approximately 17.2% of the total publications in the core journals cited in Table  2 . The second productive journal is “Corporate Social Responsibility and Environmental Management,“ with 56 [10.9%] articles in the SR field. The third journal is the “Accounting Auditing and Accountability Journal,“ which published 51 [9.9%] articles. The fourth productive journal is “Sustainability Accounting Management and Policy,“ which published 50 articles [9.7%], followed by the “Business Strategy and the Environment” journal [49, 9.5%], the “Meditari Accountancy Research” journal [39, 7.6%], the “Journal of Business Ethics” [34, 6.6%], and the “Social Responsibility Journal” [31, 6%]. The rest of the 20 productive journals (12 journals) counted for approximately 23% of the total publication in sustainability reporting; each journal counts for less than 5% of the total published articles. The Table also shows the H Index, the Scimago Journal Rankings (SJR), Impact Factor (IF), and the Academic Journal Guide (AJG) rankings to evaluate the quality of the top 20 productive journals. The H index is based on google scholar citations. The SJR and the IF are based on the Scimago Journal Rank and the Clarivate Analytics of 2021, respectively. The AJG is based on the Academic Journal Guide of 2021, which categorize journals into five groups (i.e., 4*, 4, 3, 2, & 1).

Core journals

SJR = Scimago Journal Rank; IF = Impact Factor; AJG = Academic Journal Guide

The productive authors

The substantial growth in SR research is noticeable, as indicated by the significant number of authors involved in SR research. A total of 2,071 authors contributed to our sample’s 1,053 peer-reviewed research articles in SR. The top influential authors in SR research are shown in Table  3 . The Table also presents the H indices of the authors based on Google Scholar citations and the Scopus database alongside their current affiliations. Although Google Scholar maintains a comprehensive source of research articles, it does not exclude self-citations from the list of citations of the author. Scopus has consistently provided broad coverage of peer-reviewed journal articles with international and specialized disciplinary coverage but less than Google Scholar. Besides, Scopus has the option to exclude the self-citations of particular authors. Therefore, the citation count in Google Scholar is higher than the Scopus count. Given the advantage of Scopus, we will focus on the Scopus H index in our discussion. From the Table, the most productive author in this field is Maroun, Warren [Maroun, W], with 23 SR research publications and a 21 Scopus H index. Likewise, Lodhia, Sumit [Lodhia, S], with a Scopus H index of 23, and Schaltegger, Stefan [Schaltegger, S], with a Scopus H index of 52, have contributed 20 SR publications each. Besides, Jones, Peter [Jones, P], with a 39 Scopus H index, and Boiral, Olivier [Boiral, O], with a Scopus H index of 44, contributed 19 SR articles each. Lozano, Rodrigo [Lozano, R] from Sweden and Comfort, Daphne [Comfort, D] from the UK have contributed 17 SR publications each. The Scopus H indices of Lozano and Comfort are 41 and 28, respectively. Furthermore, Hillier, David [Hiller, D] from the UK has a Scopus H index of 35 and has contributed 16 SR publications. Moreover, Adams, Carol [Adams, C] from the UK [Scopus H index = 30] and Buallay, Amina [Buallay, A] from Bahrain [Scopus H index = 15] have each contributed 15 articles to SR research. Amran, Azlan [Amran, A] from Malaysia has a Scopus H index of 28 and has contributed 14 SR publications. Other productive authors include Uyar, Ali [Uyar, A] from France [Scopus H index = 23], Villiers, Charl De [de Villiers, C] from New Zealand [Scopus H index = 32] and Greiling, Dorothea [Greiling, D] from Austria [Scopus H index = 12]. These authors have contributed 13, 13, and 12 SR articles, respectively.

Productive authors

The H indices (Google & Scopus) were extracted in October 2022

Figure  3 shows the most influential authors in SR research over time. The authors’ dominance is a bibliometric measure frequently used in prior studies (Hassanein and Mostafa 2022 ). For any given author, if considered the first author, the ratio is calculated as the number of first-author multi-authored peer-reviewed articles to the total number of multi-authored peer-reviewed articles. The Figure indicates that the dominance of the influential authors in SR varied over time. It reveals that the dominance of authors was absent before 2006. Adams, Carol was the most dominant author from 2006 to 2022. Likewise, Schaltegger, Stefan was seen as a dominant author from 2006 to 2020. Besides, Lodhia, Sumit was dominant from 2011 to 2021, Amran, Azlan from 2011 to 2022, and Villiers, Charl De from 2012 to 2022. Nevertheless, new authors in the SR field have also achieved some influence. Examples include Maroun, Warren (2015–2022), Uyar, Ali (2017–2022), and Buallay, Amina (2019–2022).

Sustainability reporting authors’ dominance over the time

Top cited articles

Table  4 elaborates on the objectives and the main findings of the most-cited peer-reviewed articles in SR. The first most-cited article was written by Clarkson et al. in 2008 and was published in “Accounting, Organization, and Society.“ This article has been cited 1,454 times from 2008 to 2022. It develops a content analysis index for discretionary environmental disclosure based on the GRIs guidelines to examine the association between environmental performance and environmental disclosure. It found that firms with good environmental performance disseminated high environmental disclosures. Likewise, the socio-political theories were the basis for explaining patterns in the data “legitimization” that economics disclosure theories could not explain. The second most-cited article was conducted by Rob Gray in 2010. It has 620 citations and was published in the “Accounting, Organization, and Society.“ It initiated an auto-critique for sustainability accounting and investigated how accounting for sustainability might advance by exploring sustainable development’s meanings and contradictions. It highlighted that examinations of meanings and contradictions in sustainable developments are required and provided suggestions for developing multiple and conditional narrative reporting. Milne and Gray published the third most cited article in 2013 in the “Journal of Business Ethics,“ with 563 citations till 2022. It provided a critique of the modern disconnect between the practice of SR and the urgent issue of sustaining life-supporting ecological systems. Graham Hubbard performed the fourth most cited SR article in 2009. It has been published in the “Business Strategy and the Environment” and has 487 citations. It developed an organizational measure for SR and performance. In particular, it proposed a stakeholders-based, sustainable, balanced scorecard and single-measure organizational sustainable performance index. Bos-Brouwers conducted the fifth most-cited research article in SR in 2010. It was published in the “Business Strategy and Environment” journal and had 427 citations from 2010 to 2022. This article identified the factors that influence the implementation of sustainable innovation within SMEs. It indicated that SMEs create value when sustainability is integrated into their orientation and innovation processes.

The total citations were extracted in October 2022

The sixth-most cited article, which has 406 citations, was written by Ans Kolk and published in the “Business Strategy and the Environment” journal. This paper examined how the SR of the Fortune Global 250 firms incorporates corporate governance aspects. It found that multinational enterprises show interest in aspects including supervision of the board, structuring responsibilities of sustainability, compliance, ethics, and external verification of SR. In 2014, De Villiers published the seventh most-cited article in the “Accounting, Auditing, and Accountability” journal. This article has been cited 395 times from 2014 to 2022. It combined insights from research in accounting and accountability into the field of integrated reporting. The eighth most-cited article was written by Gray in 2006. It has 370 citations and was published in the “Accounting, Auditing, and Accountability” journal. Gray ( 2006 ) examined how social, environmental, and sustainability accounting and reporting (SEA) contribute to shareholder value. The paper found that modern international financial capitalism is intended to maximize environmental destruction and annihilate the realistic notion of social justice, which is reflected and confirmed through sustainability reporting. The ninth most-cited article has total citations of 366 and was published in the “Accounting, Organization, and Society” by Cho et al. in 2015. Cho et al. ( 2015 ) illustrated the societal and institutional pressures pushing organizations to be hypocritical and develop fake facades. The authors reported that sustainability disclosure literature would benefit from the notions of organized hypocrisy and organizational façade.

The tenth most-cited article was conducted by Roca and Searcy in 2012 and was published in the “Journal of Cleaner Production.“ This article has 363 citations from 2012 to 2022. It detected the factors disclosed in corporate sustainability reports and found that a significant portion, 33%, relied on GRI indicators. The eleventh most-cited article has total citations of 324 and was published in the “Business Strategy and Environment” by Kolk in 2003. Kolk ( 2003 ) analyzed how and in what form the trend toward non-financial reporting. The author reported a continued and significant rise in sustainability disclosure. Besides, the traditional topics on the environment, corporate philanthropy, and employees receive much more attention than the broader external societal issues. O’dwyer and Owen conducted the twelfth most-cited article. It was published in the “British Accounting Review” in 2005, counting 308 citations till 2022. This article assessed how current assurance practice enhances SR transparency to organizational stakeholders. It found that auditors are cautious in providing assurance services for transparency and sustainability issues. Besides, reviewers opt more for an evaluative approach that may lead to increased assurance. More details about the purpose and findings of the most-cited articles in SR can be found in Table  4 .

Network analyses

Authors’ co-citation network.

The authors’ co-citation network is made when two scholars are mentioned together in a third reference. This helps to identify the flow of knowledge in a field of study. Figure  4 presents the SR research co-cited authors’ network. The Figure is built using the VoSViewer based on 567 journal articles with minimum citations of 5 times per author. Several significant insights are evident from the Figure. The line thickness between authors indicates the strength of the connection between them. A larger node size would indicate that the author occupies a pivotal position in the cluster. Such authors might be seen as influential and dominant scholars in the field as they impact information diffusion in the network (Hassanein and Mostafa 2022 ). The Figure shows that authors such as Gray, Guthrie, Deegan, Kolk, Schaltegger, Bebbington, De Villiers, and Patten are highly cited by other authors.

Sustainability reporting authors co-citation network

Four distinct clusters are identified in the Figure. The red cluster is the biggest, comprising authors such as Schaltegger, Burritt, Kouhy, Lozano, Wanger, Elkington, Hahn, and Kolk. From the graph, we can also perceive that some nodes are very close, whereas others are distant. The reduced distance indicated a significant “homophily effect.“ This effect is explained by McPherson et al. ( 2001 ) in Sociology, which may occur when authors, for example, in a virtual-room-like setting, discuss and debate research topics and common interests (Findlay and van Rensburg 2018 ). In bibliometric analysis, “homophily” indicates “disciplinary or research field similarity” (Jiang et al. 2019 ). For instance, Schaltegger and Hahn’s nodes are very close, indicating a possible “homophily effect.“ The blue cluster comprises 46 authors, such as Adams, Bebbington, Deegan, Gray, and Owen. In addition, authors such as Patten, Roberts, Cho, Perego, and Simnett are included in the green cluster. Finally, minor connections are indicated in a yellow cluster and include authors such as de Villiers, Durnay, Maroun, and Stubbs. The authors in the center of each cluster are considered influential authors.

Collaboration networks

The collaboration network among authors identifies the frequency of their joint publications in SR. Figure  5 depicts the collaboration network among authors of SR. The node size is based on the author’s number of publications, whereas the thickness of the link is based on the number of co-authored articles. The graph shows eight different clusters of collaborations between authors. However, the thin network indicates limited cooperation among authors in SR research. The thinness of the network infers that influential researchers in the SR area are more likely than not to work in isolated “silos.“

Sustainability reporting authors’ collaboration network

Figure  6 depicts the collaboration network of SR research at the institutional level. The link thickness is proportionate to the institution’s collaboration; however, the node size is based on each institution’s publications. The graph shows that most collaboration in SR research occurs among universities in Eastern Europe, such as Slovakia, Latvia, Poland, Estonia, Lithuania, Poland, Hungary, Czech Republic, Romania, and Croatia. Few remarkable exceptions are reflected in collaborations among universities in Western Europe, such as the UK and Germany. Countries like the US and African countries are absent from the institutional collaboration network. Thus, the collaboration network between institutions generating SR research can be called “locally-centralized-globally-discrete” cooperation (Zou et al. 2018 ). There is also an apparent weakness in the collaboration and cooperation between developed and developing world research organizations, which can be termed as “North-South” divide,

Collaboration network among institutions producing sustainability reporting research

4.3 Keywords and co-occurrence network analysis .

A word cloud graph is an interesting plotting tool that summarizes textual data and visualizes a particular word’s frequency in published research articles. The size assigned to each word and its distance from the cloud center indicate its importance (Liao et al. 2019 ). Words with more significant frequency are expected to be prominently present in the word cloud and vice versa. Figure  7 presents the word cloud of the keywords in the abstracts of the SR research. It reveals that the most frequent keywords used in SR research are “sustainability,“ “global reporting initiative,“ “corporate social responsibility,“ “CSR,“ “stakeholders,“ “corporate strategy,“ “economic and social effects,“ “corporate sustainability,“ “economic and social effects,“ “environmental impacts,“ “environmental management,“ and “environmental protection.“

Word cloud of the most frequent sustainability reporting terms

The keyword co-occurrence analysis recognizes the main domains, topics, thematic structure, and contents in a field of research on the assumption that keywords are a potentially coherent proxy of the content of the research paper (Su and Lee, 2010). The link thickness between two keywords is a function of the frequency of these keywords appearing in a given research article. The number of links indicates the total frequency that these keywords occur together. Following Block et al. ( 2020 ), we have identified a minimum frequency of occurrence of a keyword to be three. This means that keywords will appear on the co-occurrence map only if the two keywords occurred at least three times in the research article. The keyword co-occurrence map has been conducted using 632 research articles. Figure  8 shows the resulting keywords co-occurrence network of SR research. It reveals four main clusters which are relatively interrelated and connected.

Co-occurrence network for sustainability reporting keywords

The first cluster (green-colored) includes words like “sustainability,“ “disclosure,“ “reporting,“ and “corporate governance.“ This cluster is likely to report on issues related to the disclosure of sustainability information (e.g., Hubbard 2009 ) and the impact of corporate governance mechanisms on such disclosure (e.g., Amidjaya and Widagdo 2020 ; Cucari et al. 2018 ; Ong and Djajadikerta 2020 ; Furlotti et al. 2019 ). The second cluster (blue-colored) includes words such as “sustainability reporting,“ “sustainability accounting,“ “financial performance,“ and “impression management.“ This cluster may include, but is not limited to, research articles that explore the relationship between firm performance and SR (e.g., Nguyen 2020 ) or the association between impression management and SR (e.g., Sandberg and Holmlund 2015 ; Diouf and Boiral 2017 ). The third cluster (yellow-colored) includes keywords such as “institutional theory,“ “legitimacy theory,“ and “stakeholders’ theory. This cluster is likely to focus on the theoretical underpinnings of SR (e.g., Diouf and Boiral 2017 ; Hahn and Kühnen 2013 ; Hahn and Kühnen 2013 ; Hörisch et al. 2020 ). Finally, the red-colored cluster includes keywords such as “stakeholders,“ “stakeholders’ engagement,“ “sustainability assurance,“ global reporting initiatives,“ and ‘corporate sustainability.“ This cluster is likely to explore research related to quality, assurance, and stakeholders engagement in SR (e.g., Boiral et al. 2019 ; Simoni et al. 2020 ; O’dwyer et al., 2011 ; Bellucci et al. 2019 ; Stocker et al. 2020 ; Koh et al. 2022 ).

We used the Sankey diagram, known as the three-field plot, to study the trend linking the flow of keywords (left), authors (middle), and sources (right). The size of the boxes is proportionate to the associated quantity (keyword, author, or source). Figure  9 shows the Sankey diagram of the SR scholarly research, displaying the flow among keywords, authors, and journals. The edge widths flowing from keywords such as “sustainability reporting,“ “corporate sustainability,“ “integrated reporting,“ “assurance,“ “stakeholders engagement,“ and “materiality” are the largest, signifying that many authors used these keywords. We also see that some authors have used a long list of keywords reflecting the diversity of their research (e.g., G Manetti), and others used a single keyword (e.g., C Cho). This infers that their research covered numerous themes and topics of interest in SR, which is evidenced by their publications in diversifiable and high-quality academic journals such as the “Journal of Cleaner Production,“ “Accounting, Auditing, and Accountability Journal,“ and “Journal of Business Ethics.“

Sankey diagram for sustainability reporting research flow (keyword-author-source)

Trending topics

Figure  10 shows the major trending topics in SR. We detect a move from established SR topics such as “industrial practice,“ “social aspects,“ and “societies and institutions” (2005–2008) and “corporate social responsibility,“ and “reporting initiatives” (2014–2018) to new topics such as “ESG disclosure” and “sustainable development goals” of the United Nations (2020 onwards). It also shows that the most frequent terms are “corporate sustainability,“ “sustainability reporting,“ and “sustainable development.“ These thematic clusters might be considered “trending research topics” in SR research. The trending topics often indicate evolving themes in a specific research field or hotspots (van Eck and Waltman 2014 ), suggesting that future research is promising on these topics.

Sustainability reporting research trending topics

Themes and topics of interest

Table  5 exhibits the most frequently thematic categories and topics of focus in SR scholarly research. We have identified four broad thematic categories of SR research; (i) theoretical underpinnings, (ii) antecedents, (iii) consequences, and (iv) quality, assurance, and stakeholders’ engagement. Besides, we have highlighted the topic of “Greenium.“ The following subsections discuss the related topics of SR in each of these thematic categories.

Thematic categories

The theoretical underpinning of sustainability reporting

Over the last two decades, many articles have been published, and academic scholars used several theories to explain the practices of reporting sustainability information. The stakeholders’ theory is the most popular theory for SR. It suggests that a firm is not accountable only to its shareholders; it should have some accountability to a broad group of stakeholders such as debtors, creditors, consumers, government, media, human rights groups, and environmentalists (Dumay and Hossain 2019 ). In response, firms disclose sustainability information to meet the different needs of various stakeholders. This theory is extensively applied in SR research (e.g., Hahn and Kühnen 2013 ; Skouloudis and Evangelinos 2009 ; Hörisch et al. 2020 ). The legitimacy theory is also one of the most applied theories in SR research. It assumes that various activities of a firm are “legitimate” by society (Dowling and Pfeffer 1975 ). It is based on social contact between the firm and society; consequently, a firm should act within the constraints and norms of the society within which it operates (Hahn and Kühnen 2013 ). Thus, SR conveys social and environmental performance to society to meet its expectations (Diouf and Boiral 2017 ; Ali et al., 2020). Remarkably, the legitimacy theory considers society as a whole; however, the stockholders’ theory focuses only on a specific power group within this society.

The institutional theory is another popular theory in SR research. It explains the reporting of sustainability information due to isomorphism (Meyer and Rowan 1977 ). It links firm practices to the values and norms of the society within which it operates in order to drive the firm to maintain its legitimacy (Smith et al. 2011 ), and the reporting of sustainability information can be considered a part of the institutional practices of a firm (Amran and Haniffa 2011 ). Research has examined how different firm and country characteristics can affect the reporting of sustainability information (e.g., De Villiers and Marques 2016 ; Orazalin and Mahmood 2020 ; Ong and Djajadikerta 2020 ; Herold 2018 ; Amran and Haniffa 2011 ; Smith et al. 2011 ). The resource Constraint theory can also explain the SR practice. It argues that the availability of resources promotes disclosure and the lack of resources restricts it (Luo et al., 2013). Thus, SR is a function of the availability of resources at the company level (De Villiers and Marques 2016 ; Orazalin and Mahmood 2020 ). It is found that SR is a positive function of firm size because large firms are affordable on the costs of disclosure (Hassanein and Hussainey 2015 ). Conversely, a high debt level may reduce the ability of a firm to bear the disclosure costs. Finally, the impression management perspective may explain the practice of reporting sustainability performance. It claims that sustainability information is a soft-talk discussion, and there is no regulatory framework for this information. Thus, firm managers can use this discretionary nature of sustainability information to form a positive impression in the stakeholder’s minds (Sandberg and Holmlund 2015 ; Diouf and Boiral 2017 ). Firms may use sustainability reports to highlight the positive aspects of their sustainability performance, and they are used to obfuscate the negative features of their sustainability actions (Diouf and Boiral 2017 ).

Antecedents of sustainability reporting

Scholarly research has examined whether the firm that reports sustainability information behaves differently from other firms. Table  6 illustrates research on the antecedents of sustainability reporting. Kim et al. ( 2012 ) find that firms with an SR orientation are less willing to manage their earnings, suggesting that they provide more transparent and reliable information to investors than other firms. Qian et al. ( 2020 ) reveal that SR is affected by stakeholders’ pressure. A stream of research has explored the characteristics of firms disseminating sustainability information. It is found that SR is a positive function of firm size, suggesting that larger firms disclose more sustainability information. This is because large firms are more visible and face pressure from stakeholders (Orazalin and Mahmood, 2020 ; Bhatia and Tuli 2017 ; Kouloukoui et al. 2019 ). Likewise, they are affordable on the costs of disclosure (Hassanein and Hussainey 2015 ). Firm profitability also enhances the firm capability to bear the disclosure costs. Subsequently, empirical research finds that profit-making firms report substantial sustainability information (Orazalin and Mahmood 2020 ; Kouloukoui et al. 2019 ). Besides, empirical research finds that older firms disseminate sustainability information more than new firms, suggesting that SR is driven by firm age (Bhatia and Tuli 2017 ; De Villiers and Marques 2016 ) find that SR is positively associated with firm size, age, profitability, leverage, a book to market ratios, and firms operating in environmentally sensitive industries. Apart from firm characteristics, other studies explored how country characteristics can affect the reporting of sustainability information. Kouloukoui et al. ( 2019 ) indicate that the country of origin significantly influences corporate climate risk disclosure. Holland and Foo ( 2003 ) reveal that each country’s legal and regulatory framework affects the type of information disclosed in the sustainability reports. Besides, De Villiers and Marques ( 2016 ) find that SR is high when the firm operates in countries with a high degree of investor protection, democracy, government effectiveness, regulation quality, high level of press freedom, and low obligation to environmental rules. Conversely, a high-level debt may reduce a firm’s capability to bear the disclosure costs. Recently, Uyar et al. ( 2021 ) found that sustainability disclosure is a positive function of the sustainable development level of a country, as measured by governance, social and environmental indicators. Nevertheless, it is more affected by governance indicators than social indicators.

Scholarly research investigates how corporate governance promotes SR. Corporate governance ensures that corporate managers act in stakeholders’ best interests and enhance firm transparency (Hassanein, 2022 ; Alm El-Din et al. 2022 ; Benameur et al. 2022 ; Hassanein and Kokel 2022 ; Hassanein and Elsayed 2021 ; Hassanein et al. 2021 ; Alazzani et al. 2017 ). Research has examined the relationship between SR and various corporate governance attributes, including board of directors (Furlotti et al. 2019 ; Ong and Djajadikerta 2020 ; Maroun and Prinsloo 2020 ), gender diversity (Cucari et al. 2018 ; Furlotti et al. 2019 ; Ong and Djajadikerta 2020 ) and ownership structure (Amidjaya et al., 2020). The independent board members control the opportunistic behavior of other board members and mitigate the information asymmetry issue (Benameur et al. 2022 ). In support, Ong and Djajadikerta ( 2020 ) find that firms with more independent board members provide high SR. Gender diversity is also a beneficial corporate governance mechanism enhancing SR. Furlotti et al. ( 2019 ) find that a female in the top chairperson positively affects all types of SR. Cucari et al. ( 2018 ) find that a female on the board of directors is inversely correlated with SR. Research has also addressed the role of foreign ownership in SR. It is argued that foreign investors may find it difficult to obtain information, inducing firms to reduce the information asymmetry and disclose more information. Empirically, SR is positively associated with foreign ownership (e.g., Amidjaya and Widagdo 2020 ). Besides, the firm disseminates more sustainability information when it is a client of a big auditing firm (Orazalin and Mahmood 2020 ).

Few studies have considered the discretionary soft talk nature of the SR section (e.g., Sandberg and Holmlund 2015 ). They find that firms use sustainability reports as an impression management strategy. Firms may use sustainability reports to highlight the positive facets of their performance, and they are used to obfuscate the negative features of their sustainability performance (Diouf and Boiral 2017 ). However, Swarnapali ( 2020 ) indicates that sustainability disclosure and discretionary accruals are inversely associated, suggesting the quality of sustainability information. Little attention has been paid to the firm visibility in the market as a driver for firm sustainability reporting. Haddock and Fraser ( 2008 ) argue that sustainability disclosure is based on the closeness of the firm in the market. They empirically find that close-to-market firms and brand-name-firm disseminate several forms of sustainability information, such as product life cycle and supply chain information. Overall, the shreds of evidence from the research on the antecedents of SR are inconclusive, suggesting potential avenues for future research.

Consequences of sustainability reporting

Reporting sustainability information provides investors with the information they need, helping them assess the firm risk and future cash flow, reducing information asymmetry, and leading to positive economic outcomes. Research has explored the consequences of SR. The consequences of SR are elaborated on in Table  7 . Qian et al. ( 2020 ) survey the perceptions of management toward SR. They find that SR enhances investors’ confidence and increases customer satisfaction. Besides, Zimon et al. ( 2022 ) reveal that sustainability disclosure enhances corporate reputation. Therefore, management believes that they receive a win-win outcome through SR. Research is extensive on how SR enhances firm performance and value. Corporate managers should consider only activities to increase the shareholders’ value, and sustainable activities lead to this objective. Prior research explores the association between SR and firm performance. This research tests whether firms “do well by doing good.“ Herbohn et al. ( 2014 ) find that firm performance is a positive function of its SR. In support, Nguyen ( 2020 ) conducts cross-country analyses using a sample from Japan, India, South Korea, and Indonesia from 2009 to 2014. They find that SR positively enhances the performances of all firms. Nevertheless, this effect is more observable in developed than in developing economies. Consistently, other studies examine how SR affects the value of a firm. Schadéwitz and Niskala ( 2010 ) use a sample from Finland from 2002 to 2005 to find that sustainability information decreases the asymmetric information issue between corporate managers and investors and improves the firm’s value. Likewise, De Klerk and De Villiers ( 2012 ) investigate the top 100 firms in South Africa to reveal that the value of a firm is higher for firms with higher SR. Consistently, De Klerk et al. ( 2015 ) find that the value of the top UK firms is higher for companies with higher SR. Yu et al. ( 2018 ) conducted cross-sectional analyses for the top 1996 firms across 47 developed and developing countries. They find that sustainability information enhances the value of firms in developed and developing economies. Overall, literature confirmed the positive effect of SR on the market value of a firm in different contexts, including Finald (Schadéwitz and Niskala 2010 ), South Africa (De Klerk and De Villiers 2012 ), and the UK (De Klerk et al. 2015 ).

Other studies examine whether SR enhances the corporate share price. For instance, De Villiers and Marques ( 2016 ) examine the SR of the 500 largest European firms and reveal that SR provides value-relevant content to existing and potential investors leading to a positive effect on the share prices. However, Hassel et al. ( 2005 ) indicate a contradictory result: firms reporting higher environmental disclosure exhibit lower share prices. Other research stream reports some other economic consequences of reporting sustainability information. For instance, firms trying to raise funds may consider SR to mitigate the issue of information asymmetry to reduce capital costs. Empirically, Dhaliwal et al. ( 2011 ) used a sample of US firms from 1993 to 2007 to find that reporting corporate social responsibility information led to a decrease in the cost of equity capital. In support, Gholami et al. ( 2022 ) find that sustainability disclosure reduces the cost of capital and the firm idiosyncratic risk. Besides, Dhaliwal et al. ( 2012 ) examined firm-level data from 31 countries, and the results suggest that analyst forecast accuracy was higher for firms disclosing a separate sustainability report. Moreover, Xie et al. ( 2019 ) examined firms from 74 countries in 2005 to explore how SR affects corporate efficiency. They find that high disclosure of environmental, social, and governance information is associated with higher corporate efficiency. Besides, this link between disclosure and corporate efficiency is higher for governance information, followed by environmental and social information.

Quality, assurance, and stakeholders engagement

Sustainability reports inform numerous stakeholders about the firm sustainable performance and development (GRI, 2013 ). Nonetheless, to be credible for stakeholders, it should be reliable and follow defined rules (Boiral 2013 ). To achieve this objective, the GRI (2013) suggests that sustainability reports should have the principles for report quality. Boiral et al. ( 2019 ) analyzed the sustainability reports of firms operating in the mining and energy industries from 2006 to 2013. They report that sustainability reports lack significant misstatements, errors, or inaccuracies. These reports are accurate, balanced, clear, and reliable. In support, Romero et al. ( 2019 ) developed a quality index for sustainability and integrated reports of Spain firms. They conclude that the quality of sustainability reports is higher than that of integrated reports. Besides, the quality of information is better when a firm produces separate sustainability reports or integrated reports than when sustainability information is disclosed in the annual reports. Furthermore, Koh et al. ( 2022 ) reveal that the quality of the sustainability report of a firm is a positive function of its sustainability performance. Academic scholars highlight the issue of assurance of sustainability reports. Firms seek assurance for their SR to enhance their credibility, accountability, and stakeholders’ confidence (Simoni et al. 2020 ; Bellucci et al. 2019 ; O’dwyer et al., 2011 ). Likewise, companies assure their sustainability reports to inform stakeholders of the actions taken in response to sustainability issues (Stocker et al. 2020 ; Maroun and Prinsloo 2020 ) identify different firm characteristics associated with using sophisticated assurance models to ensure the reliability of sustainability reports. They find that large-sized and profit-marking firms are not essentially using extensive mutual assurance models. However, some governance features, such size of the board and its independence, lead to a more substantial obligation to implement codes of best practice of assurance. Simoni et al. ( 2020 ) claim that assurance of SR is motivated by the necessity to keep relationships with various stakeholders.

Nonetheless, O’dwyer and Owen ( 2005 ) argue that accountant assurors adopt cautious and inadequate methods, leading to inadequate assurance of SR. However, consultant assurors are better and provide a substantial level of assurance. Similarly, Haider and Nishitani ( 2020 ) use semi-structured interviews and a questionnaire survey to identify the perceptions of corporate managers about “formal assurance” and the use of “third-party commitment” in the assurance of SR in Japan. They reveal that “third-party commitment” enhances the credibility of sustainability reports. Besides, they identify the primary obstacles to the assurance of SR, including substantial assurance fees, a lengthy assurance process, and less demand for sustainability assurance from the side of stakeholders. Therefore, scholars suggest the engagement of stakeholders in the process of assurance of SR. Bepari and Mollik ( 2016 ) claim that assurance of SR practice cannot be considered an accountability enabler in case of the absence of stakeholders’ engagement in the assurance process. Manetti ( 2011 ) highlights the importance of stakeholders’ engagement in the assurance of SR. They argue that stakeholders help discover the materiality and relevance of SR and are effective instruments in SR decisions. In support, Bellucci et al. ( 2019 ) argue that SR is a vehicle for stakeholders to express their opinions, and through the effective engagement of numerous stakeholders, SR can become a platform for dialogic accounting systems. Torelli et al. ( 2020 ) examined the association between applying the materiality principle in sustainability reports of Italian firms in 2017 and stakeholder engagement. They find that applying the GRI standards and engagement of various stakeholders in the reporting process is necessary to achieve good SR quality for stakeholders. Scholarly SR research on quality, assurance, and stakeholders’ engagement is elaborated in Table  8 .

Quality, assurance, and stakeholders’ engagement

The Greenium

The “Greenium,“ the “Green Yield Discount,“ or the “Green Premium” has been debated since the introduction of “green” bonds. It refers to pricing benefits investors are likely to pay more or agree to take lower yields in exchange for sustainable impact (Alessi et al. 2021 ). The idea is that investors in green bonds would accept lower yields because of their social and environmental convictions. The yield differential between “traditional” and “green” investments is a consequence of an investor’s decision to allocate capital to greener options. The greenium considerations in investment decisions and reporting issues are relatively new, coming to the fore recently due to the concern over sustainability information considerations when making investment decisions. As the markets incorporate green companies’ information, assuming it is material, an adjustment period would be observed where discount rates fluctuate to reach an equilibrium. Zerbib ( 2019 ) finds a small significant yield differential when comparing investments based on their sustainability performance. Investments with positive sustainability performance had a yield somewhat lower than that of non-green investments. In the same vein, Baker et al. ( 2018 ) found that green bonds were priced at a slight premium. Outside the USA, Bauer et al. ( 2021 ) undertook an experimental study to find that 68% of the participants favored investing their savings in sustainable assets, even if that could result in lower returns. Alessi et al. ( 2021 ) go beyond the green bonds to assess market reaction to green information, including greenhouse gas emissions disclosure. They find that greenium is not, or only mildly, significantly different from zero when the factors are taken individually. This finding concurs with certain assumptions with the findings of Larcker and Watts ( 2020 ). However, when combining “greenness” and “environmental transparency,“ they did find that investors invest in green and transparent companies while expecting a decreased return on investment. In an extensive study, Löffler et al. ( 2021 ) of over 180,000 bonds split between green and non-green bonds did find that the return of the green bonds was lower than that of conventional bonds, indicating a presence of greenium in the analyzed sample.

Cornell ( 2020 ) indicates that a warning is warranted regarding SR studies because of the relatively short period of sustainability-related observations that can be extracted from existing databases dating back to 2009. Moreover, Cornell ( 2020 ) states that the premium associated with investing in highly rated companies has nothing to do with sustainability. Larcker and Watts ( 2020 ) go beyond prior studies (e.g., Cornell, 2020 ) to reveal that investors forego financial benefits to invest in environment-friendly assets. They argue that “even in states with preferences for environmental sustainability, the greenium is zero.“ This contradicts Pástor et al. ( 2021 ) conclusion that investors in green companies expected returns to be less in equilibrium perpetrating the ambiguity and confounding results of studies on the subject.

Future research directions

The findings of the bibliometric analysis along with the content analysis of SR research, have guided us to identify several gaps and future research directions. This section discusses our main findings and provides a future research agenda, as in Table  9 .

Main findings and future research directions

First, our findings reveal an evolution of SR research that enriched our knowledge of its theoretical underpinnings, antecedents, consequences, quality, assurance, and stakeholders’ engagement. Specifically, the key literature foci have addressed SR in large firms (e.g., Orazalin and Mahmood 2020 ; Furlotti et al. 2019 ; Kim et al. 2012 ; Sandberg and Holmlund 2015 ; Diouf and Boiral 2017 ; Qian et al. 2020 ; Nguyen 2020 ; Dhaliwal et al. 2011 ; Xie et al. 2019 ; Dhaliwal et al. 2012 ; De Villiers and Marques 2016 ; Yu et al. 2018 ). This may imply that SR has reached its saturation stage. Nevertheless, this may raise a question about whether saturation equally affects all sustainability dimensions. Some sustainability aspects receive little attention that may pave the way for future research, including environmental management accounting (e.g., Essid and Berland 2018 ; Sheldon and Jenkins, 2020 ), environmental damages (e.g., Denedo et al., 2017 ), carbon accounting (e.g., Le Breton and Aggeri 2019 ; Revellino 2019 ), integrated thinking (e.g., Oliver et al., 2016 ), and stakeholder engagement (e.g., Stocker et al. 2020 ). Besides, research on SR has primarily been carried out on large firms, with growing attention to SMEs (Guillén et al. 2022 ). SMEs play a substantial role in the economy. Given the limited research on sustainability in SMEs (e.g., Bos-Brouwers 2010 ), future research should be conducted to scrutinize the SR practices in SMEs. This research stream can examine different perspectives of SR in SMEs, such as their reporting for environmental damages, carbon reporting, and integrated reporting. Besides, future research can identify the appropriate form of SR for SMEs.

Second, the findings from the bibliometric analysis reveal that the collaboration in SR research occurred among institutions in Eastern Europe, with limited exceptions among universities in Western Europe. This type of collaborative work could be termed “locally-centralized-globally-discrete” cooperation. Besides, there is an apparent absence of cooperation between developed and developing world institutions, termed the “North-South” divide. Furthermore, authors in this area have a “homophily impact,“ meaning they have disciplinary or thematic similarities in their research interests. Future research on SR should boost collaboration among different authors and institutions to share experiences and gain more insights from different perspectives (authors/ regions) in this research field. Authors should encourage interdisciplinary research on SR to understand the research questions from different perspectives. Besides, examining country-level factors that affect SR can help increase cooperation among authors in different countries. Furthermore, comparative analysis of SR practices between developed and developing countries can help increase collaboration among these economies, thus gaining more insights into SR practices.

Third, SR has been explored from different theoretical perspectives. The stakeholders, legitimacy, institutional, and resource constraints theories are popular and have received particular attention and applied heavily in SR (Dowling and Pfeffer 1975 ; Meyer and Rowan 1977 ; Skouloudis and Evangelinos 2009 ; Diouf and Boiral 2017 ; Orazalin and Mahmood 2020 ; Ong and Djajadikerta, 2020 ). Other theories receive less attention, such as the media agenda-setting theory, which argues that media is powerful to different stakeholders and reveals issues that get the public’s attention, such as environmental pollution, climate change, and social inequality. Thus, firms may disclose their sustainability performance to meet the public expectation and reduce any legitimacy gap. Future research can utilize the media agenda-setting theory to explore whether and how media can affect public expectations about firms’ sustainable performance. Besides, examining the role of social media in transforming sustainability information would be an interesting research prospect. Future research can also examine the reporting of sustainability information from other theoretical perspectives, such as a behavioral finance theory (e.g., Sedliačiková et al. 2020 ). It would be interesting to examine the cognitive, psychological, and emotional factors that affect the decisions in terms of sustainability reports. The behavioral finance perspective’s insights can improve sustainability reports’ accuracy and efficiency.

Fourth, there is growing research examining the association between SR and corporate governance attributes such as independence of the boards, board gender diversity, foreign ownership, and family ownership (e.g., Orazalin and Mahmood 2020 ; Amidjaya and Widagdo 2020 ; Furlotti et al. 2019 ). However, other attributes have received little attention, demanding a future investigation. For instance, research investigating the impact of managerial attitudes on SR is scarce, warranting future investigation. Besides, the upper echelons theory suggests that managers’ demographic and psychological characteristics influence accounting outcomes (Alazzani et al. 2017 ; Pavlatos and Kostakis 2018 ). Therefore, future research can explore how the demographic (e.g., age, gender, education, functional track, tenure, and financial experience) and psychological (e.g., overconfidence, narcissism, Machiavellianism, and integrity) characteristics of CEOs affect SR practices. Likewise, the limited research on sustainable CEO compensation (Winschel and Stawinoga 2019 ) may induce scholars to identify the determinants and consequences of this research area. Furthermore, Zhang et al. ( 2021 ) find that the entrepreneurial orientation of a firm CEO affects its CSR activities. Thus, an interesting area for future research is examining the role of entrepreneurship and innovation as contributors to SR. Furthermore, future research can also examine the impact of some economic conditions, such as financial distress and the Covid-19 pandemic, on SR.

Fifth, the consequences of SR have been investigated from the perspective of the stock market, including its impact on the stock price and market value of a firm (Hassel et al. 2005 ; Schadéwitz and Niskala 2010 ; De Klerk and De Villiers 2012 ; De Klerk et al. 2015 ; Yu et al. 2018 ). However, the pieces of evidence are not conclusive. Future research can go beyond the stock price and examine the contributions of SR to the abnormal return of a firm (Hassanein, 2022 ) and whether it enhances the stock liquidity of the firm. Besides, future studies can conduct cross-country analyses for the effects of different country characteristics, such as investor protection, democracy, government effectiveness, and environmental regulations, on the value-relevance of SR. Furthermore, SR research is rare in terms of information intermediaries. It would be interesting to explore the effect of SR on analysts’ accuracy and the number of analysts following the firm.

Sixth, the assurance of SR is still an emerging practice. There are variations in the standard used in assurance for SR, including the GRI, the AA1000AS, and the ISAE 3000 standards (Bepari and Mollik 2016 ). Future research can examine the role of policy setters and regulators in identifying and developing common standards for the assurance of SR. It is unclear whether assurance differs among countries, industries, and companies. Therefore, future research can investigate the perceived value of SR assurance across countries, industries, and firms. Proposed research may explore the skills needed and educational background of external assurers of sustainability reports. Besides, it can investigate the roles of the external auditor and stakeholders’ engagement in the assurance of sustainability reports. Future research also can explore the institutional factors (e.g., country characteristics & institutional investors) that can affect the assurance of sustainability reports.

Finally, little is known about the role of SR in promoting investment in green companies. Future research is promising in this area and can examine the contributions of SR to enhance investment in green bonds or environment-friendly assets. Besides, it may explore whether reporting sustainability information enhances the liquidity of green bond markets.

Concluding Remarks and Limitations

Sustainability reporting is a crucial communication tool helping firms signal their sustainable development commitment to numerous stakeholders. Research on sustainability reporting has witnessed exponential growth annually during the last two decades and moved from a “paucity” stage in 2000 to the “saturation” stage in 2022 and is still ongoing. Likewise, scholars have recently shown interest in exploring how the COVID-19 pandemic influences firm sustainability (Adams and Abhayawansa 2022 ), suggesting potential research avenues in this area.

The current study is motivated by an interest in exploring sustainability reporting scholarly research over the last two decades. It adds to the literature by utilizing bibliometric and content analyses–an innovative way to map the scientific production, gain an understanding and provide agenda for future research in the sustainability reporting area. The study analyzes 1,053 research articles published from 2000 to 2022, written by 2,071 authors and containing 59,255 references. It presents a “big picture” of sustainability reporting scientific production, describes the evolution of research, identifies the core journals and productive authors, and discusses the top-cited articles in sustainability reporting. It also explains the authors’ co-citations, the collaboration, and keywords co-occurrence networks and identifies the thematic evolution and trending topics in sustainability reporting. Furthermore, it discusses the thematic categories and topics of interest in sustainability reporting scholarly research. Finally, the study provides an agenda for future research directions.

Our research results reveal a phenomenal growth in sustainability reporting scholarly research, evidenced by the number of peer-reviewed publications, authors, and institutions. Results also indicate that the most productive author in this field is Maroun, Warren [Maroun, W], followed by Lodhia, Sumit [Lodhia, S] and Schaltegger, Stefan [Schaltegger, S]. Yet, the dominance of authors was absent before 2006. Adams, Carol was the most dominant author from 2006 to 2022. Likewise, Schaltegger, Stefan was seen as a dominant author from 2006 to 2020, Lodhia, Sumit from 2011 to 2021, Amran, Azlan from 2011 to 2022, and Villiers, Charl De from 2012 to 2022. Nevertheless, new authors in the sustainability reporting field have also achieved some dominance, such as Uyar, Ali (2017–2022), and Buallay, Amina (2019–2022). The most-cited article was written by Clarkson et al. in 2008 and was published in “Accounting, Organization, and Society.“ This article has been cited 1,454 times from 2008 to 2022.

The network analyses indicate “homophily impact” among the productive authors meaning that they share a disciplinary or thematic similarity in their research interests, leading to a high coordination level among themselves. Besides, there is limited cooperation among authors in sustainability reporting research. The thin network implies that influential researchers in the sustainability reporting area are more likely than not to work in isolated “silos.“ Furthermore, most collaboration in sustainability reporting research occurs among universities in Eastern Europe, with few notable exceptions reflected in collaborations among universities in Western Europe. Thus, the collaboration network between institutions generating sustainability reporting research can be called “locally-centralized-globally-discrete”. There is also an apparent weakness in the collaboration between developed and developing world research organizations, termed the “North-South” divide. The sustainability reporting research trending topics moved from established sustainability reporting topics such as “industrial practice,“ “social aspects,“ and “societies and institutions” (2005–2008) to new topics such as “ESG disclosure” and “sustainable development goals” of the United Nations and “Greenium” (2022 onwards). These research topics can be considered “trending research topics” in sustainability reporting.

Finally, we have identified four broad thematic categories of sustainability reporting research; (i) theoretical underpinnings, (ii) antecedents, (iii) consequences, and (iv) quality, assurance, and stakeholders’ engagement. Besides, we have highlighted the topic of “Greenium”. The related topics in each of these thematic categories have been explained. Based on our study findings, we have developed an agenda for future research directions, as discussed in Sect.  7 and elaborated in Table  9 .

The study has some limitations. First, data of the current study have been collected only from the Scopus database, covering only peer-reviewed research publications. Hence, the analyses may not capture all scientific output on sustainability reporting. Using the same research methodology and utilizing publications from multiple data sets such as Scopus and the Web of Science may be an avenue for future research. Second, our analyses focus only on English peer-reviewed research articles, restraining the scope of research coverage. Future studies can analyze research articles in different languages, such as Arabic, German, and French, to generalize the results. Finally, we have employed the co-citations networks. Using self-organization- maps and continuous space is a methodological future research avenue.

Acknowledgements

We would like to thank Professor Joern Block [The Editor-in-Chief of Management Review Quarterly] and the anonymous reviewers for their valuable comments and suggestions, which have helped us improve our paper.

There is no funding for this project

Data availability

Declarations.

All authors declare that they have no conflict of interest.

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Contributor Information

Kameleddine B. Benameur, Email: [email protected] .

Mohamed M. Mostafa, Email: [email protected] .

Ahmed Hassanein, Email: [email protected] .

Mohammed Z. Shariff, Email: ude.enotsgnivil@ffirahSM .

Wasim Al-Shattarat, Email: [email protected] .

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The institutionalisation of sustainability reporting in management practice: evidence through action research

Sustainability Accounting, Management and Policy Journal

ISSN : 2040-8021

Article publication date: 19 January 2022

Issue publication date: 17 February 2022

This paper aims to explore why a company voluntarily engages in the sustainability reporting process, how this process becomes institutionalised and the resulting effects.

Design/methodology/approach

The research focusses on a single case study, conducted following an action research approach and interpreted through the lens of institutional work. According to the institutional work theoretical perspective, the individual or organisation is responsible for creating, maintaining or disrupting institutions.

The case company, Deco S.p.A., undertook sustainability reporting to clarify the values that the company was founded upon and how those values translate into management practice. By institutionalising the sustainability reporting process, Deco S.p.A. found its corporate climate improved, various aspects of its operations could be rationalised and the information gathered to produce the report was valuable for decision support.

Practical implications

This research project contributes to understanding why and how a company institutionalises its sustainability reporting. It also provides a better understanding of the internal forces that drive the voluntary reporting of sustainability issues and sheds light on the stages of the institutionalisation process.

Social implications

The authors find that universities have a role to play in promoting the sustainability of companies, as they can transform the knowledge produced from research into useful knowledge for managing and reporting sustainability issues.

Originality/value

This four-year action research project contributes to the literature on both engagement research and the institutionalisation of sustainability reporting practices. The authors also expose some of the drivers affecting a company’s approach to sustainability reporting.

• Action research
• Institutional work
• Sustainability reporting

Tarquinio, L. and Xhindole, C. (2022), "The institutionalisation of sustainability reporting in management practice: evidence through action research", Sustainability Accounting, Management and Policy Journal , Vol. 13 No. 2, pp. 362-386. https://doi.org/10.1108/SAMPJ-07-2020-0249

Emerald Publishing Limited

Copyright © 2021, Lara Tarquinio and Chiara Xhindole.

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

In recent decades, accounting for and reporting on corporate social responsibility (CSR) has gained salience in the academic literature. Scholars have analysed CSR reports from various perspectives and using different theoretical frameworks and methodological approaches. Several studies have tried to explain what motivates people to act in certain ways and why they take part in the sustainability reporting process ( Adams, 2002 ; O’Dwyer, 2002 ; Adams and Whelan, 2009 ; Bebbington et al. , 2009 ; Bellringer et al. , 2011 ). Generally, what is revealed is that the process of initiating and developing sustainability reporting depends on several factors. According to Adams (2002) , these factors span everything from corporate characteristics to general contextual factors to internal influences. For Bellringer et al. (2011) , the motivations range from reasons of leadership to accountability to financial incentives. Managerial perceptions ( O’Dwyer, 2002 ) and individual motivations ( Adams and Whelan, 2009 ) have also been touted as drivers. Less explored, however, is how these various factors combine in a company to impact managerial thinking in such a way as to create a push for publishing a report.

There have also been studies on the ways in which the sustainability reporting process becomes embedded in organisational routines and the effects that has on corporate behaviour. Studies have been undertaken on: internal reporting processes generally; their impact on organisations; the integration of sustainable practices; and report drafting ( Adams and McNicholas, 2007 ; Larrinaga-González et al. , 2001 ; Vigneau et al. , 2015 ; Narayanan and Adams, 2017 ; Lee and Hageman, 2018 ; Colucci et al. , 2020 ). Previous research has found different results. For instance, Gray et al. (1995 , p. 232) suggest that from a “business-centred point of view”, effectively integrating sustainability issues into day-to-day management decisions has a bearing on a company’s competitive advantage and future success ( Lee and Hageman, 2018 ; United Nations Global Compact-Accenture, 2019 ). However, truly reorienting a business cannot be achieved in the short term, despite whatever significant, but isolated, changes might be possible ( Gray et al. , 1995 ; Larrinaga-González et al. , 2001 ), while, according to Narayanan and Adams (2017 , p. 363), there are no “instances of morphogenetic change” in organisations.

Some, such as Hess (2019 , p. 38), go so far as to say that sustainability reporting has “little relationship to how companies actually manage the issues behind the disclosures”. Yet, if the emphasis is only on disclosing what companies have done, not on what they can do to improve their sustainability, then organisational change is unlikely ( Buhmann, 2018 ). By contrast, Adams and McNicholas (2007) highlight the capacity of sustainability reporting to be an instigator of change. This they found from a study examining the obstacles to implementing sustainability reporting faced by a state-owned enterprise. Despite these previous studies, the issue of “how” the institutionalisation of sustainability reporting may occur in a company and of “what” effects this institutionalisation has on practices and routines “has not been fully explored” ( Farooq and de Villiers, 2019 , p. 1241). As Lawrence et al. (2011) put it, companies are naught but the results are a collection of daily practices carried out by individuals, so it is practices that make it possible to maintain or transform institutions. From this standpoint, verifying the work involved in sustainability reporting is very worthwhile.

How is the sustainability reporting process institutionalised within a company?

What effects does institutionalising the sustainability reporting process have on a company?

We answered these questions through a single case study, conducted following the action research approach. Action research is useful for understanding the corporate processes and issues faced by an organisation that, for the first time, decides to report on sustainability issues (Adams and Larrinaga‐González, 2007; Bebbington and Gray, 2001 ). Working within a company allows the researchers to be directly involved in the process of change and even become agents of that change ( Taïbi et al. , 2020 ). They can collect and explore data first-hand, which improves their understanding of the motivations and effects behind the phenomenon being studied. Laughlin (1987) suggests that the most profound changes generally originate from inside organisations. Hence, at a theoretical level, following an action research approach expands our knowledge of the internal determinants that motivate people to adopt sustainability reporting ( Adams, 2002 ; O’Dwyer, 2002 ; Adams and Whelan, 2009 ; Bebbington et al. , 2009 ; Bellringer et al. , 2011 ).

Here, we analyse the lived experiences of a four-year research project over the period 2016–2020. The company is an Italian operator in the waste management sector, Deco S.p.A. One of the authors was originally engaged by Deco S.p.A. to consult on sustainability accounting and so has been involved in the project, as the Deco S.p.A. first decided to implement sustainability reporting. The other author joined the research project in 2018. Over the course of the research project, there has been a strong collaboration between the researchers and the company, with the dual aim of, one, solving an immediate problem and two, enriching theory with new knowledge ( Adams and McNicholas, 2007 ; Eden and Huxham, 1996 ). By participating in, planning, performing and evaluating the activities under study together with the subject organisation, research becomes concurrent with action. This two-way partnership is the basis of action research.

Unlike other studies on similar topics that have used the action research approach ( Adams and McNicholas, 2007 ; Taïbi et al. , 2020 ), we find that Deco S.p.A. chose corporate sustainability as a way to make visible the values and principles that inspired them to start the company in the first place. The founder’s moral beliefs and values have influenced and shaped many of the organisation’s practices and reporting on them was a means to translate and instil these personal and moral values into the organisation. As such, this study contributes to the ongoing research on how sustainability reporting can be institutionalised and on effects produced within a company ( Farooq and de Villiers, 2019 ). To make sense of these findings, we draw on the concept of institutional work proposed by Lawrence and Suddaby (2006) . In turn, this enriches our understanding of how personal motivation and beliefs can produce and shape organisational change ( Adams and McNicholas, 2007 ). At a practical level, this collaboration highlights the critical role that researchers and universities can play in supporting companies on the path towards institutionalising sustainability reporting.

The remainder of this paper is structured as follows. Section 2 contains a literature review, followed by a theoretical perspective on institutional work in Section 3. Section 4 describes the research design and Section 5 is dedicated to the findings. Finally, Section 6 offers a discussion and draws conclusions.

2. Literature review

Academic research has explored the factors influencing the decision to produce a sustainability report, how this report is drawn up and institutionalised and the effects produced within companies. Adams’ (2002) three factors span the gamut, from a company’s “demographics” at the top, i.e. its size, age and industry, general contextual factors like the country of origin and the social and political environment in the middle and a company’s internal factors – its governance processes, reporting processes and the attitude of those who work there, at the bottom. This base layer of factors is closely related to institutional work and the sphere of our research. Several studies have highlighted the role that management attitudes and organisational dynamics play in the decision to implement sustainability reporting and this applies to both private and public companies alike ( Adams, 2002 ; O’Dwyer, 2002 ; Bebbington et al. , 2009 ; Bellringer et al. , 2011 ). More specifically, personal values and how managers perceive corporate responsibility can play an essential role in operationalising CSR ( Duarte, 2010 ; Pedersen, 2010 ). Board committees, CSR or sustainability committees and CSR managers can also have an important influence in increasing awareness of CSR issues, raising performance and supporting the reporting process ( Velte and Stawinoga, 2020 ).

Another topic that has attracted researchers’ attention is related to the “how” of sustainability reporting institutionalisation. Battaglia et al. (2015) explained how sustainability accounting was implemented and enhanced over time within an Italian consumer cooperative. These authors documented a five-year action research project highlighting that the management and measurement of sustainability could support the engagement of employees, cooperative members and other stakeholders. In their action research, Usmani et al. (2020) documented a symbolic and superficial approach to producing sustainability reports – one that was more oriented towards serving the organisation’s financial interests than offering real accountability to stakeholders. Using semi-structured interviews, Farooq and de Villiers (2019) analysed how sustainability reporting managers institutionalise sustainability reporting and make it a routine part of an organisation’s daily life. They find sustainability reporting managers need more training and professional development, concluding the article with a call for more research examining how sustainability reports are prepared.

Closely linked with how sustainability reports are prepared and embedded in a company’s activities are the effects of organisational practices and organisational change. Extending Laughlin and Gray’s model of organisational change, Larrinaga-González et al. (2001) show, with a sample of Spanish companies, that instituting environmental accounting failed to trigger real organisational change, although some of the discussions surrounding these issues did become a little more transparent. Conversely, Adams and McNicholas (2007) show the opposite via an action research project on accountability conducted with a water authority, where developing a sustainability reporting framework led to significant organisational changes. Importantly, sustainability issues were integrated into the strategic planning process and there was an increased focus on key performance indicators (KPIs). Lee and Hageman (2018) also note the importance of explicitly incorporating sustainability performance into a firm’s strategic objectives. Their support for this notion comes from a study documenting the factors that impact decision-making in managers. For Narayanan and Adams (2017) , theirs was a longitudinal attempt to examine how an organisation embeds sustainability into its practices. The results show that a radical and transformational shift towards sustainability requires a fundamental shift in the logic of organisations. Companies must not be solely focussed on the financial bottom line; they must consider multiple types of capital, including natural, relational and human capital. Moreover, as underlined by Vigneau et al. (2015) , preparing a sustainability report based on an internationally-recognised set of standards, such as those set out by the global reporting initiative (GRI), can do much to shape the practices within an organisation.

3. Institutional work and sustainability reports

Lawrence et al. ’s (2011) theoretical perspective of institutional work holds that institutions are governed by the daily practices within them and that an organisation’s people are the ones that can, in Lawrence and Suddaby’s (2006) words, create, maintain or disrupt the institution. People and companies do not merely adapt to institutional pressure; they possess the skills and the knowledge required to lead change ( Lawrence et al. , 2011 ; Hwang and Colyvas, 2011 ; Suddaby and Viale, 2011 ). From this standpoint, if we are to examine the dynamics of sustainability reporting, we must first examine the people involved in the process. Lawrence and Suddaby (2006) adopted an institutional work perspective to highlight the relationship between institutions and social actors – a perspective that “attends more closely to practice and processes than to outcomes” ( Lawrence et al. , 2011 , p. 57). In this way, the approach provides a useful tool for understanding how sustainability reporting practices become institutionalised ( Farooq and de Villiers, 2019 , 2020 ).

Within the theory, each of the three categories of activities – creating, maintaining and disrupting – has meaning. Creating an institution requires involving social actors in such actions. Maintaining institutions is about engagement, supporting and repairing – all of which engenders compliance. Disrupting is a tearing down where the activities are intended to disconnect rewards or sanctions from a set of practices, rules or technologies. Likewise, those practices, rules and technologies can be dissociated from their moral foundations. Core assumptions and beliefs can be undermined and so on ( Lawrence and Suddaby, 2006 ). In our case, practices in the creating category include advocacy, defining, education, mimicry, constructing normative networks and transforming normative associations. Maintaining-type activities include embedding, routinising and enabling work. As Lawrence and Suddaby (2006) underlined, it is difficult to document practices through which actors disrupt institutions. In our case study, we cannot associate disruption with a particular actor or the company’s behaviour.

According to Lawrence and Suddaby (2006 , p. 222), advocacy is “a powerful form of institutional work” that allows actors to create and legitimise new institutional structures and practices. Farooq and de Villiers (2020) illustrate this type of institutional work using the example of how sustainability assurance providers promote sustainability assurance.

Defining means constructing rules of membership and practice standards that enable institutional action, sometimes referred to as “constitutive rules” ( Scott, 2001 ; Hindriks, 2009 ). Rules and accreditations can engage personnel in defining or re-defining institutions ( Lawrence and Suddaby, 2006 ). For example, one of the primary forms of defining work is a quality certification (ISO 9000). Moreover, organisational practices spread by adopting these standards ( Guler et al. , 2002 ).

Educating work means equipping people with the “skills and knowledge necessary to support the new institution” ( Lawrence and Suddaby, 2006 , p. 221). This is an important form of institutional work because educated people tend to lead to the development of new practices and routines. Sharma et al. (2014) highlight how the managers of a telecommunications company implemented a training programme designed to help staff replace engineering routines with business and accounting routines. In terms of institutionalising corporate sustainability practices, Farooq and de Villiers (2019) take care to note the importance of equipping inexperienced managers with the skills necessary to help implement new institutional practices.

Mimicry emphasises the association between new and taken-for-granted practices, technologies and rules to make adopting new practices easier ( Lawrence and Suddaby, 2006 ). For example, Etzion and Ferraro (2010) highlighted the GRI’s work to institutionalise sustainability reporting using analogies. Farooq and de Villiers’ (2018) example of mimicry concerns sustainability assurance providers, who merely slightly adjust their existing financial audit methodologies but suddenly begin providing sustainability assurance services.

Constructing networks and changes in normative associations are both focussed on the normative structure of institutions. They involve actions in which “actors’ belief systems are reconfigured” ( Lawrence and Suddaby, 2006 , p. 221). Constructing normative networks describes a form of institutional work that changes the relationships between people, whereas changes in normative associations involve remaking the connections between practices and their moral and cultural foundations. For example, introducing a new certification system ( Guler et al. , 2002 ) or establishing a product recycling system ( Orsato et al. , 2002 ) are both examples of constructing normative networks because both require people to cooperate with new standards or practices. A pertinent example of changing normative associations would be that companies no longer produce reports solely as an external communications/impression management tool. Rather, the report becomes a way of providing both internal and external stakeholders with information ( Farooq and de Villiers, 2019 ).

Embedding and routinising are expressions of institutionalising structures, processes and practices. The normative foundations of an institution are infused in day-to-day routines and organisational practices, becoming habits of “thought and action” ( Burns and Scapens, 2000 , p. 6) and the taken-for-granted assumptions of an organisation. Yet, as Farooq and de Villiers (2019 , 2020 ) note, embedding practices and procedures and making them routine takes time and for it to be possible, the systems and processes must have reached a certain level of maturity.

Enabling work ensures adherence to rule systems to maintain an institution. An example of this type of institutional work would be establishing a supervisory management team to monitor and guide the sustainability reporting process ( Farooq and de Villiers, 2019 ).

4. Research design

4.1 methodology.

This paper presents a case of “reporting in action”. The data were drawn from an action research project conducted by the authors that commenced in February 2016. Although the project is still ongoing, the work in this paper was formulated as of the project’s status in April 2020. Action research also referred to as interventionist research, engagement, constructive research and action science, combines research with action to create knowledge about that action for the ultimate purpose of change ( Adams and McNicholas, 2007 ; Bradbury, 2015 ). It is a participatory process where the researcher engages in the organisation and cooperates with the managers to share information ( Adams and McNicholas, 2007 ) and more importantly, to directly introduce possible new solutions ( Eden and Huxham, 1996 ; Jönsson and Lukka, 2005 ). As such, the researcher is just as responsible for achieving the project’s objectives as those working within the organisation ( Chiucchi, 2013 ). Moreover, it is an approach that demands the researcher grasps both theory and practice. Good action research will see a contribution to both and a narrowing of the gap between the two ( Rybnicek and Königsgruber, 2019 ).

To date, only a few studies on sustainability reporting have adopted an action research approach ( Adams and McNicholas, 2007 ; Battaglia et al. , 2015 ; Adams and Larrinaga, 2019 ; Taïbi et al. , 2020 ). But this empirical perspective does make it possible to study organisational phenomena inside an organisation, i.e. it is in vivo research ( Jönsson and Lukka, 2005 ). Non-interventionist research, by contrast, is ex-post research that explores what has happened in the past ( Jönsson and Lukka, 2005 ). From this standpoint, action research can be thought of as a pragmatic approach to problem-solving because it addresses an existing issue and in doing so, contributes to theoretical knowledge ( Adams and McNicholas, 2007 ; Dumay, 2010 ; O’Brien, 1998 ).

According to O’Brien (1998) , action research can be conducted through questionnaires, document analysis, surveys, interviews, case studies, participant observations and search conferences. In general, organisations are the subjects of action research and most action research studies are case studies ( Adams and McNicholas, 2007 ; Bessire and Onnée, 2010 ; Chiucchi, 2013 ; Battaglia et al. , 2015 ; Taïbi et al. , 2020 ).

We drew on multiple sources of evidence to triangulate our observations, to increase confidence in our conclusions and to ensure the validity of the data ( Hoque, 2018 ; Sridharan, 2021 ). These included observations of corporate meetings, examining annual reports and other documents and later, interactions with participants, including attending meetings, emails and phone calls and semi-structured interviews both face-to-face ( Cassell, 2015 ) and by phone ( Farooq and de Villiers, 2017a ). All these communications channels allowed many voices to be heard and many insights into how the company approached sustainability to be considered. In qualitative research, interviews are useful because they offer information on the participants’ views on the issue under study ( Narayanan and Adams, 2017 ).

From a practical perspective, action research is a cyclical process consisting of several steps ( Battaglia et al. , 2015 ; Bradbury, 2015 ). The first step is to identify the organisation to be studied. This choice was significant and depended heavily on how the company engaged with sustainability activities. For these reasons, we chose an Italian waste management company with 30 years of expertise in the environmental sector.

The next steps are to identify the problem, define the research questions and develop an interview protocol. The interview questions were open-ended and the same for both the telephone and face-to-face interviews. They covered the following central issues: the drivers motivating sustainability reporting, the factors affecting the reporting process, stakeholder engagement, gaining competitive advantage, the changes occurring in the organisation, activities, performance improvements and the working environment. The interviews were carried out between January and March 2020.

With the interview protocols in place, it remains to select the interviewees. Based on our research objective, it was appropriate to involve both managers and members of the sustainability team, who were explicitly appointed to support the sustainability reporting process. All interviewees are listed in Table 1 .

The last step in the process is to analyse the findings. To this end, interviewee responses were recorded and transcribed. The transcripts were verified by the interviewees, who were given the option of providing written comments and feedback on the questions.

A thematic analysis of all collected qualitative data was then conducted ( Braun and Clarke, 2006 ; Nowell et al. , 2017 ). The two authors re-read the interviews and the other official documents such as financial reports and the minutes of company meetings. The data obtained from interviews were verified against the other documentary evidence to evaluate whether the responses were consistent across the different sources ( Sridharan, 2021 ). Indeed, to corroborate evidence, we have verified whether the interview’s responses matched with another source, for example, with the content of minutes of company meetings. Consistent responses increased credibility in the answers and our confidence in the research outcomes. Further, interesting features of the data were coded, sorted into themes capturing data important in relation to the research questions and then analysed ( Braun and Clarke, 2006 ).

4.2 Company profile

The subject of the study is a medium-sized Italian company, referred to as Deco S.p.A. for the purposes of this paper. Deco S.p.A. operates in the waste management sector, both in Italy and abroad. With 30 years of expertise in the environmental sector, it was founded in 1989 by an industrial group. Activities such as waste treatment and management are certainly environmentally sensitive and sustainability reporting can help companies such as Deco S.p.A. legitimise their management strategies by proving that they comply with the required regulations ( Mazzi et al. , 2020 ). Sophisticated technologies and a constant need to adapt to an evolving regulatory environment have bestowed this company with the professionalism and competence needed to build an entire integrated waste system.

The main activities of the company include: design and environmental assessment; waste treatment with mechanical biological treatment (MBT); the energy valorisation of residual waste; producing secondary solid fuel; constructing and managing energy recovery plants; generating landfill and gas power; constructing and managing photovoltaic systems for producing energy; and waste intermediation and trading. Additionally, Deco S.p.A. pays attention to innovation in its business processes and it manages its activities and services based on quality criteria, environmental protection, respect for human rights and worker safety. In this regard, Deco S.p.A. is committed to reducing its resource consumption, increasing its energy efficiency, reducing its emissions, promoting sustainable lifestyles and greening its procurements. The company’s ongoing efforts focus on protecting the environment and human health, the efficient and rational use of natural resources, strengthening its use of renewable resources and recognising waste as a resource. This last aspect, in particular, is already part of the company’s core operations as a producer of secondary solid fuels and photovoltaic energy. Moreover, the company is engaged in social activities in the local community. Deco S.p.A. runs communications and education programmes on the environment, offers guided tours of its facilities, sponsors a wheelchair basketball team, donates to several institutions, has established distance and street libraries and hosts a website for reusing objects. The company’s attention to all these ancillary activities, which are not directly related to its core waste management business, shows that Deco S.p.A. firmly believes in investing in social policy and recognises the value of such investments to the community. It is also for these reasons that Deco S.p.A. voluntarily decided to start producing sustainability reports.

5. Reporting in action: Observations and findings

Formal cooperations between Deco S.p.A. and University were established in 2015 when the company decided to embark on its first sustainability report. Promoted by Deco S.p.A.’s VP, the idea to produce a sustainability report was born out of the company’s commitment to social responsibility and its desire to show all its stakeholders the results of its performance in economic, social and environmental fields.

To date, the overall project has developed over three main phases, each coinciding with the production of one sustainability report. As shown in Figure 1 , the time periods are 2015–2017, 2018 and 2019–2020.

5.1 Phase 1: Implementing sustainability reporting (2016–2017)

The first contact between the company and the researchers took place at the end of 2015 when Deco S.p.A.’s VP sent an email requesting an appointment with the first author. During the meeting, the VP expressed interest in drafting a sustainability report as a way to show Deco S.p.A.’s stakeholders its desire and commitment to sustainability. In the VP’s words:

The company has decided to voluntarily draw up a sustainability report to disclose its economic, environmental and social performance to all internal and external stakeholders to describe not only its activities but also how they are carried out.

Deco S.p.A. already had a long track record of CSR. It had been certified in ISO9001 (quality management), ISO14001 (environmental management) and OHSAS 18001 (occupational health and safety management) and in 2008, it was certified in SA8000 (social accountability accreditation services). In 2010, the company had published an environmental statement in accordance with the Eco-Management and Audit Scheme (EMAS) and in March 2017, the company won the “EMAS Italia 2017” award for the “most effective environmental statement in terms of communication” and for “having better interpreted and applied the inspiring principles of the European scheme and having achieved the best results in communication with stakeholders”. Certifications are a clear expression of a company’s voluntary commitment to sustainability issues and the primary form of “defining work” in the institutional work sense. Certifications enable to construction of a rule system that is useful for institutional strategy ( Lawrence and Suddaby, 2006 ). Moreover, certifications typically require a company to create a monitoring system to manage the activity that is being certified in an ongoing capacity. In Deco S.p.A.’s case, internalising the practices pertaining to its sustainability-conscious certifications was a step towards sustainability reporting ( Testa et al. , 2018 ).

The VP underlined that Deco S.p.A. also paid attention to the health of its employees and its local community. The company has established supplementary health care for its workers and those living near the waste treatment plant are actively encouraged to take part in Deco S.p.A.’s projects and activities. For example, the company has created a travelling library to encourage people to read and exchange books. It finances and supports conferences about the relationship between health and the environment and it sponsors a wheelchair basketball team.

Environmental issues are another arm of Deco S.p.A.’s CSR. As just two examples, it launched a special environmental education project aimed at protecting natural heritage and offers guided tours of its plants.

In this light, Deco S.p.A. saw sustainability reporting as an effective programme for promoting transparency in its activities. Deco S.p.A.’s management also felt that stakeholders would consider the information disclosed to be useful. As stated by the FM, the GM and the VP, the main reason behind the decision to report on sustainability was to communicate more effectively with stakeholders and to strengthen Deco S.p.A.’s relationship with them:

Through the nonfinancial report, we want to communicate and share our values. (GM)

There is a willingness to expose in a transparent way the attention paid to environmental protection and to the social community that the company relates to. (A)

Therefore, at the beginning of 2016, the first project meeting was organised with the company’s CEO, the VP and some senior managers. The VP presented the idea of producing a sustainability report, while the researchers illustrated the likely steps that would be involved in preparing the company’s first report. Here, the VP’s prior advocacy work on sustainability was significant in garnering a commitment to the project from all present. Lawrence and Suddaby (2006 , p. 221) contend that this type of work is “important for the creation of institutions” because it is a key element in obtaining the legitimacy necessary to support new institutional practices. All interviewees recognised the role of the VP in proposing the idea, highlighting the following:

The VP, on several occasions, stressed the importance of drafting a sustainability report, which is necessary to make third parties aware of the company’s commitment to various areas. (A)

The VP said we are good at sustainability but must communicate it; we need a sustainability report. (QM)

Importantly, these comments provide evidence to support findings from other studies, such as Adams and McNicholas (2007) and Farooq and de Villiers (2019) , that senior managers play an essential role in driving organisations towards greater accountability. However, unlike prior studies, we observed that respect and admiration for the VP, coupled with her reputation were the driving forces for Deco S.p.A. fully accepting the idea. Producing this report was considered by all managers to be a further step in the journey towards greater sustainability for the company.

So, although it was a new project for Deco S.p.A., the interviewees let the VP guide them without showing much resistance beyond a few initial concerns. Adams and McNicholas (2007 , p. 396) on the contrary observed a “lack of experience and knowledge on the part of the managers involved in the process”. In the Deco S.p.A. case, we suffered no such significant impediments to developing a sustainability report. Deco S.p.A.’s adoption of meta-standards, like EMAS ( Testa et al. , 2018 ) and the fact that they wanted to embed new mechanisms for stakeholder engagement into their organisation, most likely made it easier to accept sustainability reporting as a positive step. Several follow-up activities were planned during that meeting, these being to define a stakeholder engagement approach, to construct the materiality matrix and to identify performance indicators.

A significant element of sustainability reporting is engagement and dialogue with stakeholders, for it is this that determines what information is reported ( Gray, 2000 ) and helps to construct the materiality matrix ( Global Reporting Initiative, 2016b ). The researchers suggested using GRI standards to prepare the report, as they are the most used in Italy and abroad ( Diouf and Boiral, 2017 ; KPMG, 2011 , 2017 ). Thus, ensued a period of setting up the information systems needed to support the project. During this time, discussions, focus groups and meetings took place frequently. All the people involved need to be equipped with the knowledge and skills necessary to understand what a sustainability report is and what information they would need to prepare to include in it ( Adams and McNicholas, 2007 ). The researchers played the role of “educators” ( Lawrence and Suddaby, 2006 ), which was necessary to institutionalise new practices. The need to educate inexperienced managers about sustainability reporting has also been underlined in other research ( Adams and McNicholas, 2007 ; Farooq and de Villiers, 2019 ) and it confirms the essential role universities can play in disseminating knowledge about sustainability issues.

It is worth noting that Deco S.p.A. already had many structured procedures and rules in place, particularly ones aimed at monitoring environmental issues. These needed to be understood before adopting new accounting and reporting practices. Further, they allowed the people involved in the project to engage in mimicry through the following concept: “the new with the old in some way that eases adoption” ( Lawrence and Suddaby, 2006 , p. 225). As the QM stated:

EMAS certification calls for an effective environmental management system, which helped us to construct the sustainability report’s environmental indicators.

An inter-functional interaction oriented towards harmonising all procedures and functions within the company was gradually created. Sustainability data began to flow between the leaders of key functions through numerous connections – from quality management and compliance to human resources, from purchasing and supply chain management to communications and legal. All this data were collected and synthesised. Developing these new internal collaborations altered the relationships between the staff. One of the issues that most interviewees confirmed regarding the sustainability report was that it had undoubtedly changed the working environment. These collaborative dynamics “lead to the unfreezing of individual views, and hence to change” ( Adams and McNicholas, 2007 , p. 385). Through the reporting process, internal collaborations increased to the point where everyone felt as though they were playing an active role in achieving the objectives:

The company climate is more positive. The sharing of values, objectives and results is beneficial. (GM)

The company climate has changed considerably; the team feels involved in meetings and always tries to promote improvements. (HR)

These emerging interactions between actors provided a foundation for a new form of institutional work, characterised by remaking the connections among actors, practices and their moral foundation (changing normative associations) and by reconfiguring actors’ belief systems (constructing normative networks) ( Lawrence and Suddaby, 2006 ). The researchers guided these interactions, providing all managers with an opportunity to share their doubts and ideas. Such interventions by the researchers were an important part of implementing sustainability reporting processes. As Dumay (2010 , p. 62) states, this guidance “needs to be both understood and applied by the researcher and those inside the organisation who are jointly responsible for the outcomes of the project”.

Collaborations between the researchers and Deco S.p.A. staff led to the first set of shared documents useful to the report. Among these, we had: the materiality matrix identifying all information considered to be material, which resulted from internal consultations ( Unerman and Zappettini, 2014 ; Global Reporting Initiative, 2016a ); an Excel spreadsheet showing the social, environmental and economic performance indicators built based on the topics of the materiality matrix and the outcomes of a meeting where all these performance indicators were discussed.

The materiality matrix lists topics based on their most significant impacts on the organisation and those aspects considered relevant by internal stakeholders (i.e. the president, senior managers, directors, employees and shareholders). Materiality is then judged by considering the potential effects of such information on user decisions ( Global Reporting Initiative, 2016a ). However, considering that this year was the first reporting year and that time was limited, it was decided the matrix should only be internal for the moment and that it could be reviewed in the subsequent years ( Figure 2 ). Farooq and de Villiers (2019 , p. 1263) claim that the materiality assessment is a “formal process” that must be continuously updated considering inputs from internal and external sources. So even though Deco S.p.A. decided to drop the external component, they did undertake an internal assessment process. A six-point Likert scale was developed to “score” each topic. This scale offers 6 different answer options related to each person interviewed for each topic (from 1 to 26). A point value was assigned to each response, from 1 (not relevant) to 6 (strongly relevant). The scores were then loaded into an Excel spreadsheet showing the counts out of 26 topics and the average value of responses for each topic.

The spreadsheet of performance indicators was built based on the topics of the materiality matrix. As the QM officer explained at the meeting to discuss these indicators:

Performance indicators are useful tools for managerial decision making; […] constructing these indicators allowed me to discover inefficiencies that we must work on.

These considerations confirm what has been highlighted in the literature on the role and value of sustainability indicators ( Raucci and Tarquinio, 2020 ; Tarquinio et al. , 2018 ).

The researchers and the CSR manager were responsible for editing the report and its collation into a draft of a sustainability report, prepared in accordance with GRI G4 “core”. The draft was subsequently discussed among all those involved in preparing the data and a final version of the report was shared. A meeting with the company’s president and managers was organised for an initial analysis and interpretation of the results and to verify their coherence with the company’s strategy. The report was then published and presented to the annual assemblies of members and published online on the company’s website. Notably, sustainability reporting was only institutionalised to a limited degree in this first phase; Deco S.p.A. was not yet practiced enough to call this exercise routine.

5.2 Phase 2: Upgrading the reporting process (2018)

The project’s second phase focussed on strengthening engagement in the reporting process and updating the report itself. Attention shifted to embedding the processes in Deco S.p.A.’s daily routines. Staff was “actively infusing the normative foundations of an institution into the participants’ day-to-day routines and organizational practices” ( Lawrence and Suddaby, 2006 , p. 233). At the same time, we researchers were discussing how to improve the reporting processes to make them more formal and robust. One of the significant innovations in the reporting process was the adoption of the new GRI standards, published by the GRI in 2016 ( Global Reporting Initiative, 2016b ). It also gave Deco S.p.A. the opportunity to report on its contributions to achieving sustainability development goals (SDGs). All these updates required the support of the researchers in explaining to organisational members the main features of the new framework.

reviewing the materiality analysis;

designating a CSR manager and establishing a sustainability team;

enhancing stakeholder engagement;

creating a website section dedicated to sustainability; and

identifying the SDGs embraced by the company.

5.2.1 Reviewing the materiality analysis.

Having opted not to complete the external assessment of the materiality matrix in the first year, it was now time to get this done. Deco S.p.A. prepared a questionnaire and distributed it to their main external stakeholders, including clients, suppliers, residents living near the treatment plant and public administrators. The purpose of the questionnaire was to determine the value each group placed on a range of economic, social and environmental issues. Their rankings combined with the internal scores would result in the final assessments of materiality ( Global Reporting Initiative, 2016a ). Constructing a materiality matrix is often described as a process of synthesising conflicting visions of what is material to some and not to others ( Calabrese et al. , 2016 ; Fasan and Mio, 2017 ). However, in the case of Deco S.p.A., determining materiality was a cooperative process. The stakeholders raised social and environmental questions related to the local community and climate change – the very issues at the forefront of Deco S.p.A.’s concerns, and hence, aligned with its values. The VP provides an example:

Those who live near our waste management plants are concerned about the environmental impact of our activities. Our company organises guided tours of our plants for anyone interested in learning what we do.

Further, similar to Farooq and de Villiers’s (2019) approach, identifying material issues was combined with selecting the indicators to be disclosed in the report. The most suitable and relevant indicators for measuring economic, environmental and social performance were chosen from all those provided by the GRI’s standards.

5.2.2 Designating a corporate social responsibility manager and establishing a sustainability team.

To help institutionalise the reporting process, Deco S.p.A. decided to appoint a CSR manager. The VP was nominated for the role, which she accepted, taking responsibility for coordinating the entire reporting process. In addition, a new sustainability team was established to improve both the reporting process and communication among staff. The members of the sustainability team were representative of each corporate function involved in the reporting process. Building these structures is an example of “enabling work” ( Lawrence and Suddaby, 2006 , p. 230), that is, creating “new roles needed to carry on institutional routines”. The project engaged not only the sustainability team but also managers and the board of directors, who had the important role of approving the report. Developing and strengthening human relations both across the organisation and within the sustainability team promoted cohesion and collaboration for Deco S.p.A. ( Linnenluecke and Griffiths, 2010 ). As the HR manager states:

The ongoing drafting of the sustainability report has led to a wider sharing of ideas and projects between different business areas.

5.2.3 Enhancing stakeholder engagement.

Stakeholder engagement was also strengthened by giving residents living near the MBT plant the opportunity to complete an annual survey about Deco S.p.A. They were queried on their satisfaction levels and could respond with feedback or complaints about any critical aspect of Deco S.p.A.’s business activity:

People living near the MBT plant generally express concerns about the emissions produced by the plant. However, we can reassure them because our mechanical biological treatment of solid waste. Complies with the recent European regulations implemented at the national level. (PM)

In our company, there is staff dedicated to the daily communication of all the initiatives carried out in favour of stakeholders […] For us, communicating with stakeholders means establishing a relationship of loyalty, trust and transparency. (ER)

Deco S.p.A. sees the stakeholder engagement process as a useful tool, not just for understanding the interests and needs of stakeholders but also for establishing a dialogue between them and the organisation ( Adams and McNicholas, 2007 ; Rinaldi et al. , 2014 ; Global Reporting Initiative, 2016b ). To improve engagement and reinforce Deco S.p.A.’s focus on people as the most important component of their CSR strategy, the VP decided to publish pictures of some stakeholders in conversation with the company in the report:

The use of pictures is considered useful for creating a sense of belonging and highlights the importance of people to our company. (VP)

5.2.4 Creating a website section dedicated to sustainability.

In 2018, Deco S.p.A. added a new section to its website dedicated entirely to sustainability. Here, they posted several documents useful for understanding the company’s sustainability policy, such as the sustainability reports, Deco S.p.A.’s ethical code, mission and values, its environmental statement and a list of its stakeholder engagement activities:

The website gives immediate visibility to corporate well-being and to the strong commitment to environmental, social and safety aspects. (SO)

5.2.5 Identifying the sustainability development goals embraced by the company.

The sustainability team and the researchers had an in-depth discussion of the most relevant SDGs to the company. Of the 17 SDGs, eight were deemed relevant and aligned with Deco S.p.A.’s policies and practices. These eight spanned economic, social and environmental issues and were incorporated into the company’s second sustainability report.

Interestingly, as Phase 2 progressed, it became increasingly clear to us as researchers that Deco S.p.A. was not seeing their sustainability report as a “problem” to be handled by the sustainability team but, rather, as an essential part of the company’s responsibilities:

Each of us thinks that sustainability is an important value of our company. We have to all work together to be responsible for our local communities and other stakeholders. (FM)

[Our] corporate vision [is] aligned with the principles of social responsibility […] Everyone’s collaboration is needed. (PM)

The activities involved in preparing the sustainability report became routines embedded within the organisation. The result of this collaboration was publishing Deco S.p.A.’s second sustainability report, drawn up based on GRI 2016 standards. The report was presented at a public event, open to all the company’s stakeholders and was published on the company’s website.

5.3 Phase 3: Improving and rationalising the reporting process (2019–2020)

The third phase of the overall research project is still in progress. It represents the maturing of the reporting process and the setting of new objectives to improve the reporting process based on the experiences of previous years.

In 2019, everyone’s focus was on drafting the third sustainability report. The priorities here were to rationalise the reporting process, streamline the indicators and update the materiality matrix. For more focus on disclosing material issues, another materiality assessment was conducted. Questionnaires were distributed to both internal and external stakeholders. Although the evaluation did not identify any new issues, it was useful for reflecting on the GRI’s indicators and how relevant they were to the sustainability report. We, together with the sustainability team changed the normative associations ( Lawrence and Suddaby, 2006 ), selecting only those indicators that were relevant for and significant to disclosing the core activities of the company. Consequently, the number of indicators in the 2018 sustainability report decreased slightly. The materiality matrix was also redesigned graphically to make it more understandable to readers, although the content was not substantially changed.

As researchers, we undertook education and advocacy work to implement changes in the reporting process. We also spent several days at Deco S.p.A., helping the staff construct the sustainability indicators and to define the structure of the report. This was in addition to several meetings and many emails and phone calls regarding other sundry matters.

The third sustainability report (2018) was released in 2019 to coincide with Deco S.p.A.’s 30th anniversary. A big celebration event was held that was open to all stakeholders. It was a moment of reflection on what the company had accomplished during its tenure and proof of its commitment to social and environmental issues. At the same time, it emerged that every activity was often reported as doing less than what was actually being done in reality:

During the events to present the sustainability report to the public, the company received profound expressions of appreciation for adhering to the values that inspired it, both from internal staff and more generally, from the civil community. (ETD)

This finding highlights how organising such an event links the company to its stakeholders and the above statement clarifies that sustainability principles are implemented by aligning employees with more ethical and responsible values ( Linnenluecke and Griffiths, 2010 ).

Another important decision Deco S.p.A. made during this period was to increase its use of social networks by publishing its main activities and events occurring over time and the communication of its sustainability projects and policy. It was felt this use of social media would help Deco S.p.A. strengthen its interactions with the local community in Italy and also with foreign experts. This is a form of advocacy work that allows companies to actively gain legitimacy ( Lawrence and Suddaby, 2006 ). In this regard, all the interviewees agreed that social media was a useful tool for them. It gave the company visibility, allowing it to reach many people with important information on how it was addressing known environmental and social issues:

The main advantage of social networks is to establish a direct and transparent relationship with stakeholders. In this sense, they make it possible to confirm the corporate reputation through publishing and disclosing the company’s commitment to sustainability. (VP)

Some surveys have been done on sustainability reporting and the responses support these sentiments. For example, Manetti and Bellucci (2016 , p. 986) state that social media networks are “powerful mechanisms for reaching and keeping in touch with a large number of stakeholders, thus guaranteeing an interactive dialogue with them at very low costs”. As Deco S.p.A. is aware of the communication benefits of social networks, it will not overlook this aspect:

The company has already reached an excellent level of its “own” use of social networks. It remains focused on this subject and careful in identifying areas for improvement or new tools. (GM)

In addition, the third sustainability report was added to the GRI disclosure database, thereby embedding the company into a global network of organisations engaged in sustainability.

The company’s commitment to drawing up sustainability reports has also been recognised at the national level. This recognition has allowed the organisation to compete in two contests for the best sustainability report promoted by the University of Pavia and the Social Report Library. In both cases, the company was among the finalists. Participation in these competitions did not provide the company with an opinion on each part of the report. However, expressing a judgement presupposes a third-party review based on reading the sustainability reports that can be conceived as a verification process attributed to competent external stakeholders, such as academics, opinion leaders and civil organisations ( Zadek et al. , 2004 ; Forstater et al. , 2007 ). This verification is undoubtedly different from the more formal third-party assurance carried out by accounting and non-accounting assurance providers ( Farooq and de Villiers, 2017b for a review). But it can add to the credibility of the sustainability information disclosed, which adds value. Moreover, such recognition is an incentive to refine the reporting activity. Therefore, Deco S.p.A. will continue to produce sustainability reports in future:

The company will continue the reporting process to draw up an integrated and assured report. (VP)

The progress that has defined the reporting process over the past four years has highlighted Deco S.p.A.’s strengths and weaknesses. In this regard, implementing sustainability indicators has made it possible to monitor Deco S.p.A.’s economic, environmental and social performance over time. In turn, this has revealed trends in the data and exposed some critical issues. Adams and Frost (2008) point out that KPIs are not only a measurement tool for different aspects of a company’s past performance but they also affect the process of risk assessment and how action plans are defined. In fact, according to the opinions of employees who have been involved in data collection, negative trends act as a stimulus for improvements and make it possible to promptly intervene in the most critical concerns:

Indicators often speak for themselves. Therefore, non-positive trends encourage us to do better. The constant monitoring of indicator trends leads to decision making, prompt action and the strengthening of possible weaknesses. (QM)

These considerations highlight changes in the normative associations that underly sustainability reporting – from sustainability reporting as a predominantly external communication tool to sustainability reporting as a tool to support decision-making and company improvement. As part of the analysis of the effects of reporting activity, adopting a sustainability strategy helped Deco S.p.A. strengthen its corporate image and achieve a competitive advantage. According to the company’s CEO, the sustainability report has been a useful tool for improving the reputation of all stakeholders:

A reputational improvement has been achieved among all stakeholders because adopting a sustainability strategy has enabled the company to make the quality of the services it produces known as well as the attention paid to the environmental dimension. (CEO)

The decision to expose ourselves voluntarily by providing non-mandatory data has decisively led to a further reputational improvement that further underlines the company’s commitment to sustainability. (PO)

This statement was further confirmed by the GM and some members of the sustainability team. It is also reflected in the literature, as the definition of an objective aligned with sustainability “can become an important contributor to a company’s competitive advantage that will, in turn, impact the company’s long-term business drivers and strategic initiatives” ( Lee and Hageman, 2018 , p. 725).

In 2020, work on the fourth sustainability report began. For Deco S.p.A., the processes of improving upon what came before will surely continue for the foreseeable future.

Table 2 provides a summary of the main findings arising from this study.

6. Discussion and conclusions

This in-depth analysis is the result of a four-year case study following an action research approach. Through the lens of institutional work, we verified the mechanisms used by actors to implement a sustainability reporting process. Our two aims with this project were to investigate how sustainability reporting was institutionalised and what the effects of this institutionalisation were.

The initial motivation that led the company to draft its first sustainability report was a combination of the company’s desire to be more accountable to all stakeholders and the personal characteristics and the values of the VP. The VP played a key role in adopting sustainability reporting and its institutionalisation within Deco S.p.A. The socially-oriented personality of the VP and the company’s adoption of voluntary environmental and social standards contributed to Deco S.p.A. fully accepting the notion of sustainability reporting as a company responsibility to be honoured not as a company problem to be solved. From this standpoint, staff had little need to change their current approach to sustainability precisely because sustainability is already in the company’s DNA ( Wickert and de Bakker, 2018 ; Aragon-Correa et al. , 2020 ). As Aguinis and Glavas (2012 , p. 953) state, “although CSR takes place at the organizational level, individual actors are those who actually strategize, make decisions and execute CSR initiatives”.

We used the lens of institutional work to analyse “the purposive action of individuals and organizations aimed at creating, maintaining and disrupting institutions” ( Lawrence and Suddaby, 2006 , p. 215). The institutional work approach focusses on the routines and practices through which institutions are established and transformed. Adopting this approach helps individuals pay greater attention to their roles and practices in changing institutions ( Lawrence et al. , 2011 , p. 53).

This work is categorised into three phases, each of which underlines how the sustainability reporting process was implemented, also unveiling the role of those involved in the project plus the researchers in institutionalising sustainability reporting and what effects were produced within the company. The transition from phase one to phase three reflects a progressive maturity and makes the sustainability reporting process routine. In each phase, the researchers provide relevant support to educate inexperienced organisational members in terms of the skills and knowledge necessary for institutionalising sustainability reports (i.e. educating work). Certifications and the company’s widespread engagement with environmental and social issues bred familiarity with the new practice of sustainability reporting (i.e. mimicry). During phase two, a CSR manager was appointed and a sustainability team was established to ensure greater coordination between all the activities and organisational members involved in drawing up the sustainability reports. This further institutionalised the process. These two changes further improved the business climate and cohesion among employees, making them more actively involved in the sustainability reporting process. It also worked to support the daily activities of staff (i.e. enabling and embedding). Phase three is a rationalisation phase, where embedded processes, like the materiality matrix and selecting the performance indicators, were rationalised and improved. Over time sustainability reporting was embedded into the organisational members’ day-to-day routines and practices. The process of institutionalisation of sustainability reporting has changed the relationship among actors strengthening their collaboration and reconfiguring their belief systems (i.e. changing normative associations, constructing normative networks).

Further, our use of the action research approach contributes to more in-depth knowledge of the endogenous and company-specific factors and processes that internalise sustainability reports. As noted by Adams and McNicholas (2007 , p. 382), “The action research approach contributes to knowledge and theorising in a way which could not have been achieved through interviews alone”. Action research provides benefits for both researchers and organisations ( Dumay, 2010 ). Researchers can test management innovations in a real company and they can collect more data ( Jönsson and Lukka, 2005 ) compared to traditional research methods due to the empirical perspective of interventionist research. At the same time, organisations may take the opportunity to gain the knowledge and support of academics and make changes in their organisational structures, information systems and strategies ( Kaplan, 1998 ).

However, taking an action research approach involves some limitations, some of which arose during this research project. The first is that knowledge created in a particular context cannot be generalised. The investigation conducted by this paper is related to a single case study. Therefore, it would be difficult for the findings to lead to a large-scale social change ( Brydon-Miller et al. , 2003 ). In future research, investigating the reporting process of companies operating in the waste management sector through a more general approach might be interesting.

In the case study analysed, the benefits of applying the action research approach certainly outweigh the limitations linked to the generalisability of the results. Even from the interviews carried out, it emerged that the drafting of the sustainability report undoubtedly provided advantages to the company. According to Adams and McNicholas (2007) , researchers can support a company in improving its reporting process and simultaneously contribute to the literature based on the findings obtained by the research project. In this scenario, the action research approach enabled the company to report its sustainability performance. Moreover, this research makes several contributions at the theoretical and practical levels.

At the theoretical level, our study extends previous research and contribute to theory in three ways. Firstly, we extend previous literature, with both theory and empirical data, responding to calls for more interventionist research on the role that sustainability reporting plays in companies ( Adams and McNicholas, 2007 ; Adams and Larrinaga‐González, 2007; Battaglia et al. , 2015 ; Taïbi et al. , 2020 ). Our study also serves to answer calls for research on how the sustainability reporting process becomes institutionalised ( Farooq and de Villiers, 2019 ) and on what effects are produced on the company. We contribute to demonstrate the importance of ethical values in corporate leaders and of inspiring entrepreneurial action to institutionalise sustainability reporting within an organisation ( Adams and McNicholas, 2007 ; Adams and Larrinaga‐González, 2007; Battaglia et al. , 2015 ; Taïbi et al. , 2020 ). Moral beliefs and values in entrepreneurs influence and shape the corporate sustainability approach. Accordingly, for Deco S.p.A., adopting sustainability reporting was a means to translate and instil these moral values within the organisation. Thus, the importance of the personal values guiding an organisation’s ethical conduct provides novel insights into the literature about the factors that drive companies to adopt and institutionalise sustainability reporting ( Larrinaga-González et al. , 2001 ; Adams, 2002 ; Adams and McNicholas, 2007 ; Narayanan and Adams, 2017 ). The widespread belief that sustainability reporting can be a key pillar of all company activities gives rise to organisational and managerial benefits. For example, sustainability reporting might engender more cohesion between employees or a sense of belonging and collaboration or, perhaps, inter-functional interaction. It might offer support for decision-making, information on areas for improvement or yield insights into how to update or revise one’s business strategies. For Deco S.p.A., it did all these things. Thus, a positive view of sustainability, when held by managers and entrepreneurs, might overcome any resistance to drafting a new report ( Adams and McNicholas, 2007 ; Farooq and de Villiers, 2019 ) and bring a compelling force towards institutionalising sustainability reporting.

Secondly, using Lawrence and Suddaby’s (2006) approach provided insights into the use of institutional work in sustainability reporting, enriching our understanding of the internal factors behind why a company chooses to produce sustainability reports. Moreover, focussing on the purposive actions of organisational members to create, maintain and change institutions, this study contributes to theory by explaining how the different forms of institutional work and their combination support the institutionalisation of the sustainability reporting practices and routines.

Thirdly, by adopting action research, this research contributes to understanding how the researcher's knowledge and experience can be applied in “real world situations” ( Eden and Huxham, 1996 , p. 76) to assist the institutionalisation process of sustainability reporting within a company. Moreover, action research provides new insights into how a company embeds the practice of sustainability reporting and on institutional work performed.

At the practical level, this study highlights the important role that researchers and universities can play in supporting companies in the sustainability reporting process. Moreover, our results support the relevance of sustainability reporting for internal use, particularly for planning and decision-making. Our findings emphasise how important it is that the values and vision of management widely align with the guiding principles of sustainability. We can also confirm the idea of managers being “key change agents” ( Pedersen, 2010 , p. 164). This alignment adds value to the decision to introduce sustainability reports into a company and at the same time, integrates sustainability issues into strategy, activities and business processes. Therefore, these findings are useful for practitioners, regulators and other stakeholders interested in understanding the relevance of corporate sustainability reporting.

Future studies might adopt the action research approach to extend our analysis to other companies belonging to different sectors and located in different countries, thus enhancing our understanding of how the sustainability reporting process becomes institutionalised and the effects produced on a company. Focussing on the dynamics and relationships among organisational members engaged in the sustainability reporting process to help organisations adopt sustainable approaches may also be interesting.

Timeline of the project

Materiality matrix of the first sustainability report

Summary of the findings

The interviewees and interview methods

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Acknowledgements

The authors would like to thank Professor Carol Adams, as editor-in-chief, for her suggestions and support during the publication process and three anonymous reviewers for their helpful comments on previous versions of the paper.

The authors received no financial support for the research, authorship and/or publication of this article.

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• Original article
• Open access
• Published: 05 July 2016

Corporate social responsibility research: the importance of context

• Carol A. Tilt 1  

International Journal of Corporate Social Responsibility volume  1 , Article number:  2 ( 2016 ) Cite this article

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There has, in recent times, been an increasing interest in understanding corporate social (and environmental) responsibility (CSR) and, in particular, CSR reporting in developing countries. However, many of these studies fail to investigate fully the contextual factors that influence CSR and reporting in those countries, preferring to rely on theories and hypotheses developed from studies undertaken in the West, particularly the US, UK and Australasia.

It may be argued that this is appropriate as many emerging economies are experiencing growth and moving towards having a more market-based orientation. Notwithstanding this, a large number of these countries have an entirely different socio-political environment, with different political regimes, legal systems and cultural influences. These factors have a significant effect on the applicability of theories such as stakeholder theory, legitimacy theory and accountability theory, which are commonly used to explain the phenomenon of reporting.

In State Capitalist countries, such as China, an important influence on companies is the political ideology that underpins the nation’s government. The nature and impact of ideology and hegemony in China has been under-studied and, therefore, investigating how the ideology, and competing forces that may mitigate its influence, manifest themselves in Chinese reporting are essential. In the Middle East, countries such as Saudi Arabia have no free press, are ruled by a royal family, have a market dominated by the oil industry, and potential religious influences. Such socio-cultural differences mean societies develop different understandings of concepts such as sustainability and social responsibility. Finally, countries such as Sri Lanka have some similarities to other developing countries, but their economy is set against a background of a recent civil war – operating in a post-conflict economy is a factor rarely considered in social and environmental disclosure, yet has important influence on policy in these areas.

This paper discusses three contextual issues that warrant more and improved consideration in CSR research, with particular emphasis on CSR reporting research.

More and more corporations worldwide are involved in corporate social responsibility activities, and as a result are providing more social and environmental information to the public. Following from this, CSR disclosure, or reporting, has become one of the major fields of investigation by accounting scholars (Deegan 2009 ; Mathews 1997 ; Tilt 2001 ). Research that considers both CSR activity and CSR reporting has traditionally focused on companies in more developed economies, predominantly the US, UK, Australia and New Zealand (Burritt and Schaltegger 2010 ; Frost et al. 2005 ; Gray 2006 ; Gurvitsh and Sidorova 2012 ; Othman and Ameer 2009 ; Patten 2002 ; Sahay 2004 ), but recently there has been increasing interest in understanding the phenomenon in developing countries particularly as they experience growth and move towards a more capitalist orientation (Sumiani et al. 2007 ). Of the research that does exist, a number of papers suggest that ‘country’ is a determinant for CSR involvement and for the level of disclosure, but do not go much further.

Many of the studies of developing countries however, choose a framework for their investigation based on those shown to be meaningful for explaining disclosure in developed, capitalist economies. That is, they fail to investigate fully the contextual factors that influence firms and their reporting in those countries that have a different social, political, legal and/or cultural context.

It may be argued that this is appropriate as many emerging economies are experiencing growth and moving towards having a more market-based orientation. However, this is rarely acknowledged or questioned in these papers. Yet, it is reasonable to suggest that these factors have a significant effect on the applicability of theories such as stakeholder theory, legitimacy theory and accountability theory, which are commonly used to explain the phenomenon of reporting.

The majority of the world’s population lives in developing countries and each country experiences its own unique social, political and environmental issues (United Nations 2013 ). These countries are in the process of industrialisation and are often characterised by unstable governments, higher levels of unemployment, limited technological capacity, unequal distribution of income, unreliable water supplies and underutilised factors of production. As a result of rapid industrial development, policies are pursued that aim to attract greater foreign investment, and the investors are often keen to start benefitting from fiscal incentives and cheap labour. While these strategies make economic sense, they have adverse social and environmental effects, including the use of child labour, low or unpaid wages, unequal career opportunities, occupational health and safety concerns, and increased pollution.

In a review of the literature on determinants of CSR reporting (Morhardt 2010 ), reports that research on the impact of different variables in different regions is inconclusive due to the lack of enough studies. Factors that may influence CSR disclosure practices fall broadly into internal and external (Fifka 2013 ; Morhardt 2010 ), but are commonly classified further as (Adams 2002 : p224):

Corporate characteristics, such as size, industry group, financial/economic performance and share trading volume, price and risk;

General contextual factors, such as country of origin, time, specific events, media pressure, stakeholders and social, political, cultural and economic context; and

Internal contextual factors, including different aspects of corporate governance.

While CSR reporting has been studied by a large number of scholars, only a few fall into the second of the categories above, and consider context in detail. This is particularly relevant when considering developing countries. A few papers have specifically reviewed studies on developing countries. For example, (Belal and Momin 2009 ) categorise the work on developing countries into three groups: studies of the volume or extent of reporting; studies of the perceptions of CSR reporting by managers; and studies of the perception of CSR reporting by stakeholders. In all the studies reviewed there is little discussion of the context, other than a description of the country, and no real thought about the theoretical assumptions being made.

This paper presents a discussion of the different contextual issues or factors that show some evidence or potential to influence CSR and reporting in developing countries. It focusses on three specific issues and provides a research agenda for future consideration of the influence of context in CSR reporting research. The paper is structured as follows. The next section introduces some broad contextual factors that warrant consideration in the literature on CSR reporting. Next, three specific contextual issues are examined: the role of political ideology and hegemony; the influence of cultural understandings; and the impact of historical economic context. Finally, by way of conclusion, some recommended areas for further research are suggested.

Contextual considerations

Adams ( 2002 ) talks about the social, political, cultural and economic context, so some consideration of what this might mean is needed as each of these concepts themselves cover a variety of aspects, and indeed overlap. While papers may talk about the ‘social context’ in which the companies being examined operate, this is not well defined and little consideration is given to what this means. Some things that could be more explicitly considered include, inter alia : the role of the press; the status of women; the legal/justice system; the level of corruption; the level of government control, cultural understandings; and so on. This paper chooses to highlight three of these areas, and these are discussed briefly below in broad terms, followed by a discussion of some specific aspects of each identified as providing fertile grounds for future research.

Political system

Assumptions are often made about capitalist systems, whether explicit or implicit, as the vast majority of work on CSR reporting has been done in the Western context. However, there is little research looking at CSR reporting in socialist or communist countries. Some work has been undertaken on China (Dong et al. 2014 ; Gao 2011 ; Situ and Tilt 2012 ), but this work often applies the same conceptual frameworks as Western studies. What about the influence of ideology, and hegemony?

Sociocultural environment

Human beings have “distinctive cultural (learned) characteristics, histories and responses to their environment” and the term ‘sociocultural’ is commonly used in anthropological research to describe these and the “interactions and processes” that this involves (Garbarino 1983 : p1). Some general studies of culture and CSR using Hofstede exist (Silvia and Belen 2013 ), but an in-depth analysis of different understandings and conceptions of terms such as CSR as a result of sociocultural influences is lacking. The work that does examine specific factors often suggests that the Western concept of CSR does not fit these contexts (Wang and Juslin 2009 ).

The majority of work that considers sociocultural factors has looked mainly at religious aspects of CSR, most commonly by reviewing reporting by Islamic organisation, such as Islamic banks (Maali et al. 2006 ; Siwar and Hossain 2009 ; Sudarma et al. 2010 ). The teachings of many religions focus on social responsibility, the relationship with the natural environment, treatment of others, fairness, justice, etc., so there is a natural expectation that religion-based organisations may be more likely to engage in CSR and CSR reporting. A more nuanced consideration of how this manifests itself in different societies would improve understanding of the drivers and motivations of these activities. Similarly, other sociocultural factors, such as national identity, values, social organisation and language, could be incorporated.

Stage of development

The emerging literature on CSR reporting outside the Western world examines countries that are ‘developing’ (Belal and Momin 2009 ; Momin and Parker 2013 ), but little depth is included about where they are in their development journey and how the potential conflict between economic and social goals impacts CSR or CSR reporting. Rostow’s ( 1962 ) Stages of Economic Growth model suggests there are five stages (traditional society, preconditions for take-off, take-off, drive to maturity, and age of high or mass consumption), yet most literature on CSR classifies countries only into developed or developing. The ‘developing’ classification potentially includes countries that are in Rostow’s first, second or third stage which may have an impact on their response to CSR issues. In addition to economic variables however, the United Nations also produces a Human Development Index (HDI) which considers life expectancy, education and income to measure how social, as well as economic, development (UNDP 2015 ). Both these concepts are important for consideration of CSR.

Importantly, consideration of just one or two aspects of these three broader contextual issues may result in misinterpretation of the results. Often these things interact, for example, social issues often cross over with cultural and religious impacts, or even with political influence where the regime is more hegemonic. It is thus important to consider, or at least acknowledge, the holistic nature of the context of the phenomenon being examined.

It is beyond the scope of this paper to discuss all of the issues raised here although this would be an important part of a larger research program. Therefore, three particular contextual issues, and three specific contexts, are the focus of this paper: the role of political ideology and hegemony (China); the influence of cultural understandings (Middle East); and the impact of historical economic context (Sri Lanka).

Politics, ideology and state control

Ideology is a set of common beliefs that are shared by a group of people, and is “the fundamental social beliefs that organize and control the social representations of groups and their members” (Van Dijk 2009 : p78). Countries such as China provide a fertile research setting to examine the influence of ideology, and hegemonic approaches of influencing CSR, which have been missing from most CSR research in the region.

The Chinese political model has some unique characteristics. Among these is the dominance of ‘the party state’, which exercises control in different forms over most aspects of the economy that is unmatched when compared to other state capitalist economies. Political leaders use a variety of tools (Bremmer 2010 ) and it is the combination of three particular tools that sets apart the Chinese system: the exercise of control as a dominant shareholder, the ability to appoint key positions in major firms, and the means to influence decision-making via ideology. First, the party exerts shareholder power over state-owned enterprises (SOEs). Chinese SOEs play an instrumental role in society (Du and Wang 2013 ) and make up around 80 % of the stock market (Economist T 2012 ). As protecting the environment is a major part of the guiding ideology and the nation’s policy, SOEs are likely to be keen to provide CER. Second, the party exercises power over the appointment of the senior leadership in SOEs (Landry 2008 ). This has resulted in control as they are “cadres first and company men second. They care more about pleasing their party bosses than about the global market” (Economist T 2012 : p6). Third, party control is exercised through ideology. The party has cells in most larger firms, whether private or state-owned, which influence business decisions made at board meetings. Given that China considers the Marxist-Leninist-Maoist ideology as crucial this distinguishes it most significantly from other varieties of state capitalism that have a more liberal-democratic flavour.

There is some evidence that the first form of party control has been declining in recent times with the number of SOEs under the SASAC’s control halving over the last decade (Mattlin 2009 ). Similarly, since 1999, the share of SOEs in the economy has declined from 37 % to less than 5 %. This results in greater use of regulation and ideological hegemony to achieve its aims, yet most CSR research still uses state-ownership as a proxy for all types of state control.

Even after economic reform, ideology in China was still pervasive (Lieber 2013 ). Lieber ( 2013 ) argues that ideology is widely used to signal loyalty and the government is good at using ideology to “control and direct key vocabularies… (and) vague ideological language can create a climate of uncertainty thus increasing the range of a control regime” (Lieber 2013 : p346). However, the prevailing ideological themes in China are dynamic. In particular, most recently, new ideological themes have developed to respond to the changes in society. When economic reform began, “building up a socialist market economy with specific Chinese characteristics” was the guiding ideology (Zhang 2012 : p25). As such, economic growth was the country’s priority, but in 2005, “building up a harmonious society became the prevailing ideology” (and CSR is a key element of this resolution).

Ideology is used by the Chinese government to exert control over businesses. Traditionally, the government has “been considered a source of moral authority, official legitimacy and political stability…and …political language has been vested with an intrinsic instrumental value: its control represents the most suitable and effective way first to codify, and then widely convey, the orthodox state ideology” (Marinellin 2012 : p26). The language “developed and used by party officials … consists of ‘correct’ formulation, aims to teach the ‘enlarged masses’ how to speak and, how to think” (Marinellin 2012 : p26). The idea of the importance of a ‘Harmonious Society’ is the “re-contextualized discourse in response to the emergent issues in the changing social stratification order” (Zhang 2012 : p33). As a result, Chinese companies have been noticeably adopting the language of social concern and environmental protection.

It may therefore be suggested that CSR reporting in China is directly a response to the government’s ideological hegemony. However, the story is not as straightforward as it may first appear, for two reasons. First, despite a great deal of commitment to social and environmental regulation in China, implementation of these regulations has been limited. Second, as China enters a phase of continued economic development, Western influences may begin to have a moderating effect on the strength of the ideology.

The Chinese economy has grown rapidly in terms of gross domestic product (GDP) (World Bank 2016 ). The economic reforms that took place over the past decades were motivated substantially by the Chinese central government, and recent scholars have noted the positive role that ideology played in driving those reforms, notwithstanding that economists historically view ideology as “distorting… knowledge, judgment and decision making” (Lieber 2013 : p344).

With economic reform however, has come substantial environmental degradation which in turn has led to poor health outcomes for much of society generally. This led to a high level of commitment to environmental regulation in particular from as early as the 1990, followed by the release of even more rigorous regulations on environmental protection in the 2000s. However, despite the high commitment made by the Chinese central government, implementation of these policies is quite poor (Bina 2010 ). In terms of environmental regulation, for example, the implementation problems stem from a number of areas, including: the position of environmental protection agencies in the political framework; conflict between central and local governments; and supervision issues. The system of supervision of local environmental departments is a key problem (Bina 2010 ). When an environmental department is set up in the central government, corresponding environmental departments are set up in local governments. Ideally, these local departments should be agencies of the central department, deliver the central environmental department’s strategies, and supervise local environmental protection implementation. In reality, the local environmental departments are subservient to the local rather than central governments. All their financial support and staff appointments come from local governments. Therefore, rather than supervising local environmental protection implementation, the local environmental departments become “rubber stamps” for local governments (Zheng 2010 ). Therefore, it is unlikely that there will be efficient enforcement of environmental laws, regulations and policies at the local level (Bina 2010 ; Zheng 2010 ).

Finally, as China heads towards a market economy, government intervention becomes a policy choice, and markets function as a tool of national interest (Zhao 2011 ). However, as Chinese firms become more involved with foreign trading partners and markets, their reporting activity is also influenced by foreign and global organisations, leading to potential tension between demonstrating commitment to state ideological goals and meeting the requirements of global stakeholders.

Given the complexity of the context, research into CSR reporting in China needs to take into account the specific aspects of Chinese politics and culture in order to provide a nuanced understanding, and ultimately an improvement, of CSR reporting activities. However, a review done of the literature on CSR in by Chinese showed that it is very descriptive with little depth and much of the CSR literature is conceptual, descriptive, or argumentative in nature (Guan and Noronha 2013 ). The authors noted proper research methodologies are not systematically applied in some studies, and supporting theories are lacking. In the non-Chinese studies on China, there is also a predominance of papers on determinants and volume of reporting (Situ and Tilt 2012 ), with very few considering broader contextual factors, other than a few that look at specific cultural attributes (e.g., Rowe & Guthrie 2009 ).

Sociocultural understandings

Notwithstanding a move towards a market orientation of many developing countries, such as in China as outlined above, conceptions of CSR by management of companies in these countries may be quite different to those in the West (Wang and Juslin 2009 ). These differing conceptions may be a result of differing values and attitudes, language, religion or identity. Even specific elements of CSR are conceived of differently, for example in China, the main understanding of sustainability is in terms of environmental protection (Situ et al. 2013 , 2015 ). These socioculturally derived understandings are inevitably reflected in their reporting.

In another example, in the Middle East, the predominant perception of CSR is that it simply means philanthropic donations. In this region, the issue of social responsibility is relatively new, and as such the number of studies of CSR and CSR reporting in the Gulf region is growing (Al-Khatar and Naser 2003 ; AlNaimi et al. 2012 ; Emtairah et al. 2009 ; Mandurah et al. 2012 ; Marios and Tor 2007 ; Minnee et al. 2013 ; Nalband and Al-Amri 2013 ; Naser et al. 2006 ; Naser and Hassan 2013 ; Qasim et al. 2011 ; Sangeetha and Pria 2012 ). Many of these studies do not consider the cultural context to a very great extent as the research is emerging and focusses on perceptions. For example, Mandurah et al. ( 2012 ) and Emtairah et al. ( 2009 ) explored managerial perceptions of the concept of CSR in Saudi Arabia and found that managers are aware of the concept, but there is little connection between the managerial level perceptions and firms’ workforce. The authors describe CSR as being in its infancy phase, which limits the understanding of the concept to the view that CSR simply means being philanthropic. This indicates a different, and perhaps less developed, understanding of the concept in the region compared with the West, but the reasons for this, and the consequences for CSR reporting, are under-explored. Some authors suggest the narrow use of the term is because of the religious obligations towards society, (Visser 2008 ). There is only minimal evidence of any CSR practices other than philanthropy-based or any strategic approaches to CSR for long-term benefits (Visser 2008 ), but the trend is increasing and the forms that philanthropy takes is expanding.

It has also been argued that politics plays a significant role in increasing the awareness of CSR in the Arab world. Avina ( 2013 ) suggests that the perception of CSR in the Middle East changed after the Arab spring event, for both local and international firms. The term CSR more than a decade ago had little meaning to the public (Visser 2008 ) but since the Arab spring, the sense of social responsibility among civil society and the corporate sector has increased Avina 2013 ). Firms realised that they play a role in social responsibility, not just governments, and recognised that CSR should go beyond just donations to charitable causes (Avina 2013 ). Ronnegard ( 2013 ), however, predicts that CSR in the Middle East will not mimic the Western concept because of the strong influence of culture and religion in the region. Moreover, the influence of stakeholders in the Middle East is considered to be limited due to there being a lack of free press, few lobby groups and the different cultural attributes of employees and consumers. Some studies in Gulf countries have however, suggested that stakeholders, such as government and charitable organisations, may have an impact on firms’ behaviour (Emtairah et al. 2009 ; Naser et al. 2006 ). Others suggest that CSR may have developed as a concept due to the increase of foreign direct investment into Arab countries, the trend of shifting family and government owned firms into the public domain, and the globalisation of the region’s large national firms.

From the limited studies that have been undertaken, there is evidence of CSR reporting by Gulf country companies, with human resources and community involvement being the dominant themes in may reports Abu-Baker and Naser 2000 ). Thus, understanding of motivations for CSR reporting is not yet well developed and few existing studies consider the different level of stakeholder pressure in the region. This suggests that more research is needed on the formation of notions of CSR within specific contexts. This region is of particular interest because, according to the Human Development Report (HDI 2013 ), countries in the region are classified as high, or very high, in human development. That is, they are not only trying to develop and improve their economy, but are also trying to improve the quality of life of their citizens (Ramady 2010 ). The overall outlook of these countries indicates that they are performing well, however, Fadaak ( 2010 ) notes that identifying poverty lines is a challenge because of a lack of a clear definition of poverty in the region. There are no official reports considering poverty or other social problems and no GCC (Gulf Cooperation Council) countries were found in the list of the World Bank Database in relation to the poverty rate.

Similarly, in other developing countries the importance of local economic, cultural, and religious factors that shape the business environment, and understandings of charity and philanthropy, need to be taken into account. Empirical work in this area is lacking (Lund-Thomsen et al. 2016 ). In Sri Lanka, for example, “the most common arguments used to ‘sell’ the business case for CSR and CP [Corporate Philanthropy], for example an improved brand image, increased market or customer share, employee retention, mitigated regulatory risks, and reduced tax burden, are considered mostly irrelevant” (Global Insights 2013 : p1). Business leaders engage in CSR for a range of business, humanitarian, social, religious, and political reasons. Key amongst them is a belief that ‘giving back’ to society discharges religious obligations to the poor, and an awareness that being seen to contribute to national development goals is important (Global Insights 2013 ). Hence, the conception of CSR in this region is culturally determined, but also shaped by the economic environment.

• Economic development

As well as government control, culture and political factors, the stage of economic development a country is in is also an important contextual factor that may impact CSR reporting. In China, as discussed above, the drive for economic reform led directly to environmental impacts which needed to be addressed. A number of other developing countries have been examined for their reporting on CSR issues, particularly from the Asian region (Andrew et al. 1989 ; Elijido-Ten et al. 2010 ), India (Mishra and Suar 2010 ; Raman 2006 ; Sahay 2004 ), and Bangladesh (Belal and Owen 2007 ; Belal and Roberts 2010 ; Khan 2010 ; Muttakin et al. 2015 ).

While these countries are classified as developing (IMF 2015 ), Bangladesh and India score only medium for human development. Another country in the region, Sri Lanka, has a high rating on the HDI, and has been exhibiting extensive growth since the end of a 30-year war (WPR 2015 ). Thus, exhibiting both economic and social growth aspects makes it an interesting case for studying CSR.

Sri Lanka has a population of over 20 million and foreign companies have increased their investments with one billion US dollars in direct foreign investments in 2013 alone ( BOI ). Classified as a middle income developing country, the challenge for Sri Lanka is to achieve high economic growth without causing irreversible damage to the environment and while continuing to eliminating social issues such as poverty, malnutrition and poor workplace ethics (Goger 2013 ). In addition, Sri Lanka also has a long history of corporate philanthropy, largely led by individuals whose values and actions stem from religious and cultural views (Beddewela and Herzig 2013 ) but has recently seen an increase in private firms offering development-related initiatives. Public infrastructure projects have been the main element of post-war economic planning, but there still remains rural poverty in the country. Thus, the primary motivation for CSR and philanthropy in Sri Lanka is poverty reduction, particularly for children and youth, social welfare organisations like orphanages and elderly homes, hospitals and health services, and veterans’ charities (Global Insights 2013 ). Thus, the economic, cultural, and political context means that these poverty rates have fallen (data indicates that the rate went from approximately 20 % in 2000 to under 9 % in 2013) and that inflation has slowed (Wijesinha 2014 ), so opportunities for private businesses to contribute to infrastructure abound. However, these private, development-orientated, CSR initiatives have often failed to deliver their aims and there is considered to be a danger that they may in fact perpetuate the causes of poverty and ethnic and religious conflict given their ties to particular ethnic groups (Global Insights 2013 ).

Notwithstanding this environment, the topic of CSR reporting in Sri Lanka has received relatively little research attention compared to other parts of the world (see Belal and Momin 2009 , for a review). In terms of motivations for CSR, there is some evidence that firms in which senior management have a positive outlook towards social and environmental practices tend to disclose more on these aspects, as compared to other firms (Fernando and Pandey 2012 ). However, reporting on CSR initiatives is not mandatory thus it is likely that any voluntary reporting by Sri Lankan firms will vary significantly. One study of reporting was conducted by Senaratne and Liyanagedara ( 2012 ) who examined the level of compliance with Global Reporting Initiative (GRI) guidelines in the disclosures of publicly listed companies, selected from seven business sectors. The authors conclude that the level of compliance with the GRI is low and that disclosures vary significantly amongst the companies, potentially reflecting varying commitment to CSR. Similarly, a longitudinal study across five years (2005–2010) was carried out by Wijesinghe ( 2012 ) to identify trends in CSR reporting in Sri Lanka and the study identified an increasingly positive trend, predicting similar levels of disclosures provided by companies in developed countries. The few studies that have been conducted examining the predominance of reporting in Sri Lanka, mostly examining multinational companies, conclude that CSR reporting is gaining momentum in Sri Lanka but is still emerging as the concept of CSR itself emerges (Beddewela and Herzig 2012 ; Hunter and Van Wassenhove 2011 ).

Conclusion and a future research agenda

As more and more research on CSR in developing countries emerges in the academic literature, it is important to ensure that appropriate consideration is given to the context in which the research takes place. Examination of CSR and CSR reporting practices without contextualisation could perpetuate flawed understandings that are based on evidence from research in the developed world. Different political, social, cultural and economic environments impact on the both the development of, and reporting of, CSR activities and consequently impact on the value of these activities to benefit society and the natural environment.

A suggested agenda for future research, that considers context in more depth, includes:

Consideration of ideological and hegemonic regimes and their attitude towards CSR. This research would consider potential positive and negative impacts of the political and governance system. In China, for example, the potential for Communist Party ideology to increase environmental protection and improve social conditions is vast, and is starting to be seen to have a strong impact on firm behaviour. Examination of this over time will provide an important contribution to understanding the role of government beyond the more common analysis of environmental protection regulation.

Greater examination of sociocultural variables in different countries, beyond analysis of religious influence, and beyond the use of Hofstede. Understandings of concepts such as CSR in countries in Asia, the Middle East and the Asian sub-continent, are known to differ from those in the West, so understanding their potential to lead to better (worse) CSR outcomes is important. The variety of variables that could be included is vast, but some clearly important issues include: language, secularism, freedom of the press, access to information, homogeneity of values and attitudes, and the existence of a national figurehead or identity.

Longitudinal examination of the process of economic development. Countries where the economy is developing rapidly, such as China and the Middle East; and countries where the historical economic context differs dramatically, such as in Sri Lanka where the need for development is borne out of conflict, provide rich backgrounds to consider how CSR is developing alongside economic developments.

A comprehensive framework for examining these, and other, potential factors that influence CSR and CSR reporting in developing countries does not exist, but Table  1 attempts to provide a preliminary outline of some factors that could comprise such a framework, and be used to guide future research. As mentioned earlier, it is important to note, however, that these variables are not discreet and are likely to interact with each other. This is noted in the table as a reminder that the classifications are somewhat artificial and that acknowledgement of a more holistic consideration is important.

These are clearly only a selection of opportunities for CSR research on developing nations and emerging economies. Calls for more work on these factors have continued since Adams’ ( 2002 ) original call, but there is still vast scope to improve our understanding of CSR practice throughout the world (Fifka 2013 ), where much of the social and environmental damage is taking place.

Importantly, research of this kind must be transdisciplinary as perspectives from areas such as political science, philosophy and economics are essential. Only with in-depth, contextualised understandings can improvements to the nature of CSR activity be implemented.

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Acknowledgements

It is important to acknowledge that this paper provides an overview of a larger research program currently being undertaken by a team of doctoral students at Flinders University and the University of South Australia. Credit must be given to Ms Hui Situ (Flinders University) who is researching environmental reporting in China, Mr Abdullah Silawi (Flinders University) who is researching social responsibility reporting in the Gulf region, and Ms Dinithi Dissanayake (University of SA), who is researching environmental disclosure in Sri Lanka.

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Sustainable finance is an area of study that looks beyond the simple number of risk and return. It looks over the impact of investment on ESG, i.e., environment, society, and governance factors. This paper conducts a comprehensive review of research works on ESG and its disclosures using the TCCM framework and thematic analysis, specifically in the Indian context, to determine future research priorities and research gaps in India. The search parameters identified 50 research papers, 44 of which were accepted for analysis. The study identified a gap in the available literature that allows for future observation. The study agenda in this review may help researchers to construct specific research fields around the discovered gaps. ESG investment has emerged as a critical problem for businesses. As a result, a considerable study in this sector is required to grow this topic as an operational investment area.

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Poornima, S., Gopalakrishna, B.V. (2023). ESG Investment and Sustainability Reporting: A Systematic Review for Future Research. In: Mishra, P., Sharma, A., Khanra, S., Kundu, S.K., Mishra, S.K. (eds) Digital Economy Post COVID-19 Era. INDAM 2023. Springer Proceedings in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-99-0197-5_31

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The green IT revolution: A blueprint for CIOs to combat climate change

Companies and governments looking to combat climate change are turning to tech for help. AI, new technologies, and some promising tech-driven business models have raised hopes for dramatic progress.

About the authors

This article is a collaborative effort by Gerrit Becker, Luca Bennici, Anamika Bhargava, Andrea Del Miglio , Jeffrey Lewis , and Pankaj Sachdeva, representing views from McKinsey Technology.

While many organizations’ climate goals are lofty, enterprise technology leaders—CIOs, chief digital innovation officers (CDIOs), and chief technology officers (CTOs), among others—have not always succeeded at turning climate ambitions into reality. One of the biggest reasons is that hard facts and clear paths of action are scarce. Misconceptions and misinformation have clouded the picture of what CIOs and tech leaders should do.

We have done extensive analysis of where technology can have the biggest impact on reducing emissions. To start, we divided technology’s role into two primary types of activities:

• offense—the use of technology and analytics to cut emissions by reducing (improving operational efficiency), replacing (shifting emission-generating activities to cleaner alternatives), and reusing (recycling material)
• defense—the actions IT can take to reduce emissions from the enterprise’s technology estate

Scope of the McKinsey analysis

McKinsey’s emissions analysis for this report focuses on enterprise technology emissions, which are the business IT emissions from the hardware, software, IT services, enterprise communications equipment, mobile devices, fixed and mobile network services, and internal technology teams that a company uses for its own operations and that a CIO has control over. These include the emissions related to the full life cycles of the products and services that an enterprise IT function uses, including their development, delivery, usage, and end of life (exhibit). Our internal services emissions' analysis assumes around 40 percent of IT workers are working from home.

The analysis does not include the emissions from the technology products and services that a company is selling (such as data center capacity sold by hyperscalers), operational technology devices (such as sensors and point-of-sale systems), and cryptocurrency mining.

The defense activities are where the CIO, as the head of IT, can act independently and quickly. This article focuses on defense, specifically the IT elements over which a CIO has direct control. We examined emissions from use of electricity for owned enterprise IT operations, such as the running of on-premises data centers and devices (classified as scope 2 by the Greenhouse Gas Protocol 1 Greenhouse Gas Protocol: Technical Guidance for Calculating Scope 3 Emissions: Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard , World Resources Institute & World Business Council for Sustainable Development, 2013. Scope 1 emissions are direct emissions from the activities of an organization or under their control, including fuel combustion on site such as gas boilers, fleet vehicles, and air-conditioning leaks; scope 2 emissions are from electricity purchased and used by the organization; and scope 3 emissions are all indirect emissions not included in scope 2 that occur in the value chain of the reporting company, including both upstream and downstream emissions. ), and indirect emissions from technology devices that the CIO buys and disposes of (scope 3). 2 These calculations do not include emissions from technology-driven services sold, such as cloud capacity. (See sidebar, “Scope of the McKinsey analysis.”)

What the facts say

Our analysis has uncovered several facts that contravene some commonly held views about enterprise technology emissions. These facts involve the significant amount of tech-related emissions, the share of emissions from end-user devices, the variety of mitigation options available, and the favorable impact of shifting to cloud computing.

Enterprise technology generates significant emissions

Enterprise technology is responsible for emitting about 350 to 400 megatons of carbon dioxide equivalent gases (CO 2 e), accounting for about 1 percent of total global greenhouse gas (GHG) emissions. At first blush, this might not seem like a lot, but it equals about half of the emissions from aviation or shipping and is the equivalent of the total carbon emitted by the United Kingdom.

The industry sector that contributes the largest share of technology-related scope 2 and scope 3 GHG emissions is communications, media, and services (Exhibit 1). Enterprise technology’s contribution to total emissions is especially high for insurance (45 percent of total scope 2 emissions) and for banking and investment services (36 percent).

This amount of carbon dioxide and equivalent gases is a significant prize for companies under increasing pressure to cut emissions. Progress on climate change requires action on many fronts, and enterprise technology offers an important option that CIOs and companies can act on quickly.

You’re invited

To a McKinsey Technology webinar on the critical role of technology in building a sustainable enterprise on October 25, 9:30–10:30am ET.

The biggest carbon culprit is end-user devices, not on-premises data centers

End-user devices—laptops, tablets, smartphones, and printers—generate 1.5 to 2.0 times more carbon globally than data centers (Exhibit 2). 3 On-premises and co-located data centers used by enterprises, not including data center capacity sold by hyperscalers. One reason is that companies have significantly more end-user devices than servers in on-premises data centers. In addition, the devices typically are replaced much more often: smartphones have an average refresh cycle of two years, laptops four years, and printers five years. On average, servers are replaced every five years, though 19 percent of organizations wait longer. 4 Rhona Ascierto and Andy Lawrence, Uptime Institute global data center survey 2020 , Uptime Institute, July 2020.

More worrisome, emissions from end-user devices are on track to increase at a CAGR of 12.8 percent per year. 5 End-user computing market: Growth, trends, COVID-19 impact, and forecasts (2022–2027) , Mordor Intelligence, January 2022. Efforts to address this could target the major causes of emissions from these devices. About three-fourths of the emissions comes from manufacturing, upstream transportation, and disposal. A significant source of these emissions is the semiconductors that power the devices.

Plenty of low-cost/high-impact options exist, starting with improved sourcing

We have found that when it comes to going green, many CIOs think in terms of investments needed to replace items or upgrade facilities. Our analysis, however, finds that CIOs can capture significant carbon benefits without making a significant investment—and in some cases can even save money (Exhibit 3).

Overall, for example, 50 to 60 percent of emissions related to end-user devices can be addressed through sourcing changes, primarily by procuring fewer devices per person and extending the life cycle of each device through recycling. These options will not require any investment and will lower costs, though companies may want to evaluate the impact on employee experience.

In addition, companies can more aggressively recycle their devices; 89 percent of organizations recycle less than 10 percent of their hardware overall. 6 Sustainable IT: Why it’s time for a green revolution for your organization’s IT , Capgemini Research Institute, 2021. CIOs can put pressure on suppliers to use greener devices, especially as companies in the semiconductor sector are already increasing their commitments to emission reduction. Further low-cost, high-impact actions include optimizing business travel and data center computing needs, as well as increasing the use of cloud to manage workloads.

Moving to cloud has more impact than optimizing data centers

Optimizing an on-premises data center’s power usage effectiveness (PUE) 7 PUE describes how efficiently a computer data center uses energy, expressed as the ratio of total facility energy to IT equipment energy. is expensive and results in limited carbon abatement. If a company were to double what it spends on infrastructure and cloud to reduce PUE, it would cut carbon emissions by only 15 to 20 percent. Structural improvements in data centers and optimized layout can help, but the impact is limited, and many companies have already implemented them. More aggressive measures, such as moving data centers to cooler locations or investing in new cooling tech, are prohibitively expensive.

A more effective approach is to migrate workloads to the cloud. Hyperscalers (also known as cloud service providers) and co-locators are investing significantly to become greener through measures such as buying green energy themselves and investing in ultra-efficient data centers with a PUE equal to or less than 1.10, compared with the average PUE of 1.57 for an on-premises data center. 8 “Uptime Institute 11th annual Global Data Center Survey shows sustainability, outage, and efficiency challenges amid capacity growth,” Uptime Institute, September 14, 2021. (We estimate that companies could achieve just a 1.3 PUE score for their data center if they invested nearly 250 percent more, on average, over what they currently spend for their data centers and cloud presence.)

With thoughtful migration to and optimized usage of the cloud, companies could reduce the carbon emissions from their data centers by more than 55 percent—about 40 megatons of CO 2 e worldwide, the equivalent of the total carbon emissions from Switzerland.

Three steps to take now

With companies and governments under intensifying pressure to cut carbon emissions and with technology playing a key role in delivering on those goals, CIOs will find themselves on the front lines. The challenge will be to reduce IT’s carbon footprint while delivering high-quality, low-cost technology services to customers and employees.

On average, completion of the defensive steps might take three to four years. However, CIOs who act decisively and precisely can achieve 15 to 20 percent of carbon reduction potential in the first year with minimal investment.

CIOs can choose from among a wide array responses, particularly in conjunction with the CEO and the board. However, three measures they can take right now will prepare the organization for longer-term efforts. These measures involve sourcing strategies, key metrics, and a performance management system.

The net-zero transition: What it would cost, what it could bring

Move now on sourcing strategies.

Far and away the fastest and most effective defensive measure for reducing IT carbon emissions is to revise policies for technology sourcing. Optimizing the number of devices in line with standards followed by companies in the top quartile 9 Top quartile in terms of the ratio of devices to people is derived from the number of devices per person. Our analysis uses McKinsey Digital’s Ignite solutions and 2020 data. would reduce about 30 percent of end-user-device emissions, the amount of carbon emitted by Hong Kong. For example, top-quartile companies have one printer for every 16 people in the workplace; the overall average is one printer per eight people.

This sourcing shift does not necessarily lead to a degradation in user experience, because the rollout of 5G and increasingly advanced processing and compute power allow the main processing function to happen at the server. Therefore, devices can be less powerful and consume much less energy. Essentially, this is a software-as-a-service (SaaS) model where high-end and user-friendly experiences happen on the server, not the device. The effectiveness of this approach will depend on having stable networks, less resource-intensive coding at the device level, edge computing capabilities, and shifts of offerings to more efficient platforms (for example, cloud).

As part of this effort, the CIO and the business’s head of procurement will need to collaborate on reviewing and adjusting device refresh timelines and device-to-person ratios, as well as adjusting the basis for purchasing decisions. Procurement generally relies on cost/benefit calculations, and rightly so. That approach will need to expand to account for carbon dioxide emissions. The spirit of collaboration should extend to suppliers as well, with the parties working together to formulate plans that provide the greatest benefits for all.

A more thoughtful sourcing strategy extends beyond end-user devices. CIOs, for example, should look for green sources of the electricity IT uses. When these sources are unavailable, CIOs can direct procurement to power purchase agreements to offset carbon use. CIOs can also set green standards for their vendors and suppliers, requiring GHG emissions disclosures and incorporating them into their criteria for purchase decisions.

Establish a green ROI metric for technology costs

Any real progress on green technology can happen only when companies measure their “green returns.” But today, most green metrics omit cost and savings, which ultimately makes them impractical. A better metric focuses on cost per ton of carbon saved (accounting for costs saved as well). Sophisticated models calculate emissions throughout the full life cycle, including production, transportation, and disposal.

CIOs can further assess suppliers, manufacturers, and service providers based on how advanced they are in recycling and refurbishing electronics; designing circular components; extending product life cycles with better design, higher-quality manufacturing, and more robust materials; offering repair services; and reselling to consumers.

Decisions about IT spending need to consider a range of factors, including technical debt abatement and business strategy. Along with these factors, companies should institutionalize a green ROI metric that is transparent to everybody in the business as an element in IT decision making, including in requests for proposals (RFPs). Doing so will enable companies to better understand the true impact their technology is having on carbon emissions.

Put in place green measurement systems

Establishing a green ROI metric is only a start. CIOs need to establish a baseline of performance, measure progress against the baseline, and track impact in near real time, much as companies track real-time computer and network usage for applications in the cloud. This kind of measuring system ensures that CIOs know what’s working and what isn’t, so they can adjust quickly.

In practice, implementing green measurement can be challenging. Some companies have spent a year measuring their carbon footprint, ending up with an outdated analysis. This tends to happen when companies are determined to measure every bit of carbon emitted, a praiseworthy but time-consuming effort. CIOs can make substantial progress by instead prioritizing measurement where the impact is highest, such as tracking the number of end-user devices purchased and in use, the current duration of use for each device, and the ratio of devices per user. Another way CIOs can make quick progress is to embed emissions- and power-monitoring capabilities into large technology assets and work with external providers, such as electricity companies, to track usage in real time.

Effectively combating climate change won’t happen through one or two big wins; those don’t exist yet. To have real impact, companies and governments will need to act in many areas. Technology has a huge role to play in many of these areas, but CIOs and tech leaders need to act quickly and decisively.

This article is the first in a series about how CIOs can reduce emissions. The next article will explore how CIOs can drive the business’s sustainability agenda by playing offense and implementing reduce, replace, and reuse levers to decarbonize.

Gerrit Becker is an associate partner in McKinsey’s Frankfurt office, Luca Bennici is an associate partner in the Dubai office, Anamika Bhargava is a consultant in the Toronto office, Andrea Del Miglio is a senior partner in the Milan office, Jeffrey Lewis is a senior partner in the New Jersey office, and Pankaj Sachdeva is a partner in the Philadelphia office.

The authors wish to thank Bernardo Betley, Arjita Bhan, Raghuvar Choppakatla, Sebastian Hoffmann, Abdelrahman Mahfouz, Tom Pütz, Jürgen Sailer, Tim Vroman, Alice Yu, and Gisella Zapata for their contributions to this article.

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