0
Transparency and
Disclosure – Are
We Doing
Enough?
The NFRD’s effect on transparency and its benefits for
actors in the Swedish food industry
BACHELOR THESIS WITHIN: Business Administration NUMBER OF CREDITS: 15hp
PROGRAMME OF STUDY: Sustainable Enterprise
Development
AUTHOR: Emma Landén, Lukas Berntsson & Maja Törnqvist JÖNKÖPING May 2021
Acknowledgements
When producing this paper, we have received great help from numerous people from beginning to end. Without all of you, none of this would have been possible.
We would like to express our deepest appreciation to our tutor, MaxMikael, who has helped us immensely throughout this whole project. You have always made sure to set aside time to answer our many various questions, and our meetings with you have always been worthwhile and very valuable. We wish you the best.
We would also like to extend our sincere thanks to the representatives for your participation in our study. It was a pleasure getting to know you, and each one of you has been of great
importance to our findings.
In addition, we would like to thank our thesis seminar group for the insightful oppositions that we received. Your amazing feedback has helped improve the structure and content of this paper remarkably.
An extra thank you to Konny, Daniel, Bernt, Marie, Artur, and Elin for the unwavering support you have shown us during this process.
Lastly, we would like to give our gratitude to Sheldon for the many laughs and memories that he has given us that kept us motivated to never stop going forward.
Bachelor Thesis in Business Administration
Title: Transparency and Disclosure – Are We Doing Enough?: The NFRD’s effect on
transparency and its benefits for actors in the Swedish food industry
Authors: Landén, E., Berntsson, L., & Törnqvist, M. Tutor: MaxMikael Wilde Björling
Date: 2021-05-24
Key terms: Corporate Social Responsibility (CSR), Greenwashing, Non-financial Reporting
(NFR), Sustainability, Transparency
Abstract
Problem: As sustainability grows larger in importance for consumers, so does the demand for
information on companies’ sustainability work. In this situation, greenwashing has become a viable strategy for companies to use as a competitive advantage. Therefore, the EU came with a new directive in order to counteract this type of misleading behavior, the non-financial reporting directive (NFRD). Although many positive outcomes have come from non-financial reporting, the aspect of transparency remains uncharted.
Purpose: The purpose of this study is twofold. Firstly, it investigates how the non-financial
reporting EU directive has impacted the transparency towards business partners active within the Swedish food industry. Secondly, the purpose is to explore how the Swedish non-financial reporting law benefits actors within the food industry. This paper embraces stakeholder theory. For the purpose of researching the topic of this paper, food production companies in Sweden were specifically chosen to narrow down the sample.
Aim: This study aims to investigate the impacts of the NFRD on transparency and external
communication, and through this, evaluate the efficiency of the directive and Swedish national law, which derives from the multi-national legislation, on transparency.
Method: In this research, interpretivism was used as the guiding research approach. Being a
qualitative study, semi-structured interviews were used as the primary source of data collection. Interviews were transcribed, and then coded and analyzed according to standard procedures.
Result and Conclusion: The results of the empirical findings were that the directive does not
impact the transparency on Swedish partners at any significant level. It was also found that the primary benefits of the national non-financial reporting law of Sweden are not directed towards
customers or partners, but rather the focal business, investors, and competitors. The main benefits were that the reports raised awareness for sustainability within the firm, they are of great use for benchmarking, as well as that the reports serve as useful information for green investors.
Table of content
1. Introduction ... 1
1.1 Background ... 1
1.1.1 The food industry ... 1
1.1.2 Non-Financial Reporting ... 2
1.1.3 The EU Directive ... 2
1.1.4 Transparency and Greenwashing ... 3
1.1.5 The Swedish law ... 3
1.1.6 Other EU regulations ... 4
1.1.6.1 EU Taxonomy ... 4
1.1.6.2 Sustainable Finance Disclosure Regulation (SFDR) ... 4
1.1.6.3 The difference between the NFRD, SFDR, and EU Taxonomy ... 4
1.2 Problem ... 5
1.3 Purpose ... 6
1.4 Delimitation ... 6
1.5 Definitions ... 7
2 Frame of Reference ... 8
2.1 Method for frame of reference ... 8
2.2 Food Industry ... 9
2.2.1 Swedish food industry ... 9
2.2.2 Procurement in the food industry ... 9
2.3 Non-Financial Reporting (NFR) ... 10
2.3.1 Regulating NFR ... 10
2.3.2 Internal benefits from NFR ... 12
2.3.3 Communication of the report ... 12
2.3.4 Swedish reporting law ... 13
2.3.5 Science-based targets ... 13
2.4 Non-financial reporting within the food industry ... 14
2.4.1 CSR ... 14
2.5 Transparency ... 15
2.5.1 Transparency in NFR ... 16
2.6 Greenwashing ... 16
2.7 Stakeholder theory ... 18
3 Method and Methodology ... 19
3.2 Research approach ... 19 3.3 Research Design ... 20 3.4 Research sample ... 20 3.5 Data collection ... 21 3.6 Data analysis ... 22 3.7 Trustworthiness ... 23 3.8 Ethical considerations ... 23
4 Results and analysis ... 24
4.1 Internal benefits ... 24
4.1.1 The value of reports ... 24
4.1.2 The most important components in reports ... 26
4.2 Direct communication ... 27
4.2.1 Communicating non-financial information ... 27
4.2.2 Evaluation of partner companies ... 29
4.3 Transparency ... 31
4.3.1 The meaning of Transparency ... 31
4.3.2 Swedish NRF law effect on transparency ... 32
4.3.3 Resources on transparency ... 34
4.3.4 Greenwashing ... 35
4.4 Legislation ... 37
4.4.1 NFR in the food industry ... 37
4.4.2 Voluntary vs. mandatory reporting ... 38
4.4.3 The EU taxonomy ... 39 5 Conclusion ... 41 5.1 Thesis statement 1 ... 41 5.2 Thesis statement 2 ... 42 6 Discussion ... 44 6.1 Limitations ... 44 6.2 Future research ... 44 6.3 Practical implications ... 45 6.4 Contributions ... 45 References ... 47 Appendix ... 54
List of abbreviations
Corporate Social responsibility (CSR)
Eco-Management and Audit Scheme (EMAS) European Union (EU)
Global Reporting Initiative (GRI) Integrated Reporting (IR)
Non-financial reporting (NFR)
Non-financial reporting directive (NFRD) Non-profit organization (NPO)
Science Based Targets (SBT)
Sustainable Finance Disclosure Regulation (SFDR)
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1. Introduction
This section will start by introducing the reader to a brief background of the non-financial reporting directive and its relevance to the ongoing climate crisis. It will go further on to explain what directives are and how this directive is integrated into Swedish national law. The problem is going to be described, and the purpose is to be presented as two leading thesis statements.
1.1 Background
With the trend of sustainability expanding dramatically across the globe, companies in various industries and sectors realized the advantages of sharing sustainable achievements with their stakeholders for both financial and non-financial benefits (Schreck & Raithel, 2018). These data could be presented through independent reports, integrated into the annual report, or simply published through their social media channels. However, it was not until recently that non-financial reporting (NFR) became mandatory for companies based inside the borders of the European Union (EU). Through the Directive (2014/95/EU), also known as the Non-Financial Reporting Directive (NFRD), these companies were now obligated to share their non-financial data to stakeholders as part of either their annual report or through a separate, independent non-financial report. The aim of the report is primarily to increase transparency and assist stakeholders in retrieving information of this nature.
Although this seemingly, for the bio- and sociosphere alike, great directive came into force, it is still uncertain what impacts the directive has had on companies’ work on sustainability, and not least the transparency and integrity in the report itself. Albeit the companies in question are required to display their shortcomings in terms of sustainability, there might still be room for these companies to perform greenwashing, to mislead stakeholders for profitable purposes. Greenwashing can occur when there is a lack of transparency. This negative relationship further shows the importance of ensuring transparency in companies (Delmas & Cuerel Burbano, 2011). Nevertheless, companies who follow the NFRD and produce high-quality, honest reports might see a positive effect on their financial and non-financial performance (Dumitru et al., 2017). This study will further explore the effects of the NFRD in the Swedish market among companies in the food industry.
1.1.1 The food industry
In 2019 the food industry in Sweden’s turnover was 195 billion SEK, making it the third largest industry in the nation (Livsmedelsföretagen, n.d.). Since the industry is big, and Swedish
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consumers spend annually 280 billion SEK on food and beverages (Wikström, 2020), it is important that the industry remains sustainable in all three dimensions. There is a trend in the Swedish food industry of increasing consumption of imported goods. This can damage the profitability and competitiveness of the Swedish food industry. The Swedish parliament implemented a food strategy that aims to make the Swedish food industry sustainable, globally competitive, and innovative by 2030 (Sweden Food Arena, 2020).
1.1.2 Non-Financial Reporting
Traditionally, businesses present their financial performance of each fiscal year in their yearly financial statements. NFR differs from financial reporting as it shifts focus from financial performance to other significant aspects when measuring businesses’ performance and competitiveness. According to the EU, NFR should include environmental protection, social responsibility, diversity on company boards, amongst other aspects (Directive 2014/95/EU). Measuring and presenting these factors can provide useful insight both externally and internally.
1.1.3 The EU Directive
The EU has the authority to enforce regulations and laws onto its member states. These are called EU treaties. There are several different kinds of legal acts that the EU can implement, which include regulations, directives, decisions, recommendations, and opinions (European Union, n.d.). Each of these different legal acts applies differently to the member states. This thesis focuses on the NFRD, which is, as the name suggests, a directive.
A directive is a legislative act which the member states must enforce. However, each member state can decide on their own how they prefer to implement it (European Commission, n.d.c). The desired outcome is stated in the directive while the states are free to choose the method of achieving the goal, as long as they follow the minimum requirements of the directive.
The NFRD came into force in December 2014 (Directive 2014/95/EU), obliging member states of the EU to convert the directive into national law within two years, by December 2016 (Directive 2014/95/EU). The directive made it mandatory for companies with over 500 employees to include NFR in their statements at the end of the fiscal year, this includes listed companies, banks, and insurance companies along with public entities (European Commission, n.d.a).
To support the companies with their NFR, the European Commission has provided optional guidelines for environmental and social information disclosure. There are some requirements
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submitted by the EU that ought to be included in the non-financial report, however, companies are free to select which guidelines they want to conduct their report by as long as it meets the mentioned requirements (European Commission, n.d.a).
1.1.4 Transparency and Greenwashing
Being transparent is a key factor in the sustainability discussion (Wognum et al., 2011). For an organization to be transparent it needs to be able to provide relevant information without difficulty to stakeholders. The information presented also needs to be comprehensible by the reader, therefore the communication of non-financial data is of great importance in order to be transparent. Being transparent and comparatively sustainable often correlates, nevertheless the two often relate to increased short-term costs, as switching to a sustainable and transparent approach requires resources. However, research shows that consumers do care about their products being sustainably produced which makes the switch a competitive advantage (Wognum et al., 2011).
As organizations realize the market for sustainable products, the threat of greenwashing also enters the discussion. Greenwashing occurs when a company provides stakeholders with misleading, or false information about their sustainability practices or performance (Delmas & Cuerel Burbano, 2011). Naturally, greenwashing can be counteracted through transparency as it eliminates the space where organizations can lie or mislead about their performance.
1.1.5 The Swedish law
As previously mentioned, EU directives are received by each member state and then further integrated into their own national legislation. In the case of Sweden, the decision in the parliament was made including the scope of the directive to encompass companies that fulfill certain criteria, and was enforced from the fiscal year of 2017 (Svenskt Näringsliv, n.d.; Prop. 2015/16:193). These criteria will be presented further in the frame of reference.
Furthermore, the non-financial reports need to contain information about the sustainability work of the company in question concerning four areas of interest. These areas are environment,
social relations and employees, respect towards human rights, and counteracts of corruption.
The report should, additionally, mention the company’s business model, its policy concerning sustainability issues, the result of the implementation of the policy, and the essential risks that concern these issues and how the company manages the risks (Svenskt Näringsliv, n.d.; Prop. 2015/16:193).
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Moreover, just as the NFRD suggests, there are also no specific guidelines mentioned in the Swedish NFR law that the companies are obliged to follow. However, Svenskt Näringsliv (n.d.) mentions five non-binding frameworks that companies can use in order to help structure their report, which are Eco-Management and Audit Scheme (EMAS), The UN Global Compact
Initiative, ISO 26000, Integrated Reporting (IR), and Global Reporting Initiative (GRI).
1.1.6 Other EU regulations
1.1.6.1 EU Taxonomy
The EU taxonomy (2020/852) is a new regulation that was enforced in the summer of 2020 (European Commission, n.d.b). As sustainability is, to some extent an indistinct term, the EU taxonomy aims at classifying environmental sustainability activities in order to prevent greenwashing and aid sustainable investments. The EU taxonomy classifies environmental sustainability into the objectives: (1) Climate change mitigation, (2) Climate change adaptation, (3) The sustainable use and protection of water and marine resources, (4) The transition to a circular economy, (5) Pollution prevention and control, and (6) The protection and restoration of biodiversity and ecosystems. Each of the objectives is evaluated by specific measures to the objective in question. By doing so, it prevents companies from claiming to enable environmentally sustainable activities without having data to back them up. An activity is considered to be sustainable if it can be classified as one of the objectives without causing harm to the other objectives.
1.1.6.2 Sustainable Finance Disclosure Regulation (SFDR)
Sustainable Finance Disclosure Regulation (SFDR) (2019/2088) is another relatively new regulation enforced by the EU in March 2021. This regulation targets the financial market in order to support customers and investors with information regarding non-financial factors such as environmental, social, and governance impacts. The regulation includes for actors active in the financial market to share how they account for risks related to sustainability. Similar to the EU taxonomy, the SFDR aims at enabling sustainable investments (Regulation (EU) 2019/2088 of the European Parliament and of the Council).
1.1.6.3 The difference between the NFRD, SFDR, and EU Taxonomy
The EU taxonomy and the SFDR are both regulations, meaning that they are implemented from the EU to all of its member states as direct law (European Union, n.d.). For the NFRD, however, each individual member state needs to legislate and adopt the directive into national law however they choose as long as the minimum requirements established in the directive are
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accounted for. The NFRD affects all industries while the SFDR only targets the financial market. The EU taxonomy might have a future impact on both of the previously mentioned requirements by its classifications. Regardless, this thesis will have a focus on NFR in Sweden within the food industry, therefore the focus will lie on the NFRD and the Swedish law it has resulted in while noting the opportunity for future research regarding the EU taxonomy’s impact on NFR once it has been properly established into the industry.
1.2 Problem
The chosen subject is of relevance for several reasons, one of these being that the directive is relatively new. Contrasted to financial reporting, NFR is a recent phenomenon. This provides the opportunity of exploring how the directive has been adopted into Sweden and its consequences, as there is inadequate existing knowledge of the topic due to the brief period of existence.
Furthermore, sustainability has come to grow more prominent as the reality of climate change becomes more evident. The interest in sustainability expands increasingly and the demand for information regarding the topic has never been as vast (Zrnić et al., 2020). As trends show a clear inclination for social and environmental sustainability, claiming to be sustainable is a profitable approach for organizations. Without regulations, any organization could claim to be sustainable to harvest benefits from the status without living up to its claims. Greenwashing refers to businesses providing misleading information regarding their business (Delmas & Cuerel Burbano, 2011). Companies that do not contemplate ethical aspects in their supply chain will presumably have a cheaper production process than companies that do. Basic economic assumptions declare consumers’ preference towards maximizing utility while minimizing costs (Manski, 2004). Hence, if the option is presented, consumers will have a preference for the low-cost option if they believe the options to be of the same quality and ethical standards. With proper information, the customer might have preferred the more ethical alternative. Consequently, companies that use greenwashing as a marketing strategy will have a competitive advantage over the companies that legitimately deliver sustainable outputs.
One way of being able to uncover and counteract greenwashing is through transparency, which is the aim of the NFRD (Directive 2014/95/EU). By requiring larger companies to calculate and present their data concerning non-financial components, stakeholders are provided with the opportunity of revising data and making educated determinations regarding which brands to utilize. Additionally, it places pressure on the companies to improve as well as aids companies
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in comprehending their impact and noticing areas that require progress. Notwithstanding numerous distinctly positive outcomes of NFR, the aspect of transparency remains uncharted.
1.3 Purpose
As transparency has been declared as an effective counteract against greenwashing, it also poses the question of how the NFRD has affected the performance in question. Since non-financial performance often affects stakeholders such as customers, partners, and the environment (Stranieri, 2019), this thesis embraces stakeholder theory. For the purpose of researching this topic, food production companies in Sweden were chosen to visualize how the industry has been impacted by the NFRD in terms of their transparency to their stakeholders.
Since stakeholders can be any party affected by the performance of the company, this thesis has chosen business partners to be the stakeholders of the main focus. Hence, this thesis is written from the perspective of partners of businesses that are obliged to conduct NFR. Business partners can be both downstream as well as upstream partners to the focal firm. Thus, the following are the selected thesis statements that will be researched:
“To investigate how the non-financial reporting EU directive has influenced the transparency towards business partners active within the Swedish food industry.”
“To explore how the Swedish non-financial reporting law benefits actors within the Swedish food industry.”
1.4 Delimitation
Due to the extensive scope that is included in the thesis statement, some delimitations are needed to ensure a focused and concise study. It is therefore decided upon that this study solely targets companies in the Swedish food industry, specifically food production companies. Although the thesis statement includes the entire Swedish food industry the data is collected from six relevant larger organizations active within the industry. This is considered to be sufficient as small organizations are not included in the targeted legislations which will be researched upon. Furthermore, the study explores the food producers’ transparency through the perspective of their business partners, a delimitation for this study is that when interviewing partners, none of these partners were upstream partners. The reason for this is that in many cases the upstream partners to food producers are farmers who are not obliged to report according to the NFRD guidelines and assumed to be less affected by the reports.
7 1.5 Definitions
Corporate Social Responsibility (CSR):
The definition for CSR as explained by European Commission (2001) “a concept whereby
companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (p. 7).
Greenwashing:
Greenwashing is described by Delmas & Cuerel Burbano (2011) as “the act of misleading
consumers regarding the environmental practices of a company (firm-level greenwashing) or the environmental benefits of a product or service (product-level greenwashing)” (p. 66).
Greenwashing can be done through several misleading ways. Examples of greenwashing include, but is not limited to, making statements about being sustainable without proof, neglect sharing hidden trade-offs and only present the positive aspects, or making vague statements indicating sustainability when in reality there is more to it.
Non-financial reporting (NFR):
NFR is a formal disclosure of a business’ non-financial performance, which includes how the business manages social and environmental issues in their operations (European Commission n.d.).
Sustainability:
Sustainability or Sustainable development was defined in the UN Brundtland Commission (1987) as “development that meets the needs of the present without compromising the needs of
future generations to meet their own needs” (p. 41). This definition has been generally adopted
as a standard definition of sustainability.
Transparency:
The definition used in this thesis will be as follows: “a situation in which business and financial
activities are done in an open way without secrets, so that people can trust that they are fair and honest” (Cambridge University Press, n.d.).
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Frame of Reference
Here, the method used for finding articles will be described first. The literature review of articles is then used to describe the current situation and procurement in the food industry. Further on, the researchers will define NFR and relate this to CSR. Additionally, transparency and greenwashing are being looked upon separately. Stakeholder theory is, lastly, going to be described and how it can have a positive effect on transparency when used thoroughly in the company.
2.1 Method for frame of reference
To collect the necessary references and get a broad understanding of the topic based on previous literature, Jönköping University’s library website Primo was used along with Google Scholar. The selection criteria for the articles were peer-reviewed only and no sources older than 10 years (2011), with a few exceptions, such as laws or references for historical reasonings. The search words used were as follows:
Word Alternative Search Words
Sustainability
Sustainable, Non-harmful, Corporate social responsibility (CSR), Green, Embedded view
Non-financial reporting
Sustainability reporting, Environmental reporting, Social reporting, CSR reporting, Triple Bottom Line (TBL)
Business partners Partners, Downstream/upstream partners, Stakeholders Procurement
Food industry Agriculture, Grocery, Food producers, Transparency Greenwashing, Disclosure, Traceability Supply chain Value chain, suppliers,
Communication Distribution, Indirect/direct communication NFRD
EU taxonomy
9 2.2 Food Industry
Environmental sustainability is becoming of greater importance within the food industry (Kim, 2017). This is due to the industry’s large environmental impact, which critics no longer stay quiet about. Stranieri et al. (2019) second this claiming, as the environmental degradation exacerbates, the consciousness amongst stakeholders grows.
2.2.1 Swedish food industry
Concerns about the future for the Swedish food industry has been voiced years ago by the Swedish Ministry of Industry (SOU, 1997), who has been expressing worries about the disappearance of the Swedish food sector similarly to the vanishment of the textile sector back in the 1970s due to rough international competition (McKelvey & Ljungberg, 2017). Through earlier governmental policies and regulations, most parts of the Swedish food industry have been thoroughly protected from international competitional impact to prevent the extinction of the national food sector and promote the products to the native population (Anell & Bonnedahl, 2004).
Prior to joining the European Union, the Swedish food industry, amongst other areas of the Swedish market, was expected to receive beneficial results from joining the union (SOU 1997: 25). Furthermore, preceding the Swedish entry into the European Union, agreements with the former union, the European Community, were signed to help blossom the industry in question in order to aid in the future impacts through what would become an international competition. The signed agreements turned out to have an effective outcome, as the consequences from the settlement led to Swedish food prices remaining robust in the international market, which otherwise had been expected to be subject to decrease (Swedish Competition Authority, 2000; The National Board of Trade, 2000).
2.2.2 Procurement in the food industry
Food production is one of the industries which contributes the most to the degradation of the environment. It affects environmental issues in multiple ways, such as the use of land, water availability, energy usage, and emissions (Notarnicola et al., 2017). With growing public awareness of these concerns, consumers are increasingly putting pressure on food producers to become more environmentally friendly. In addition, consumers have shown an increasing interest in healthy food and food safety (Matopoulos et al., 2007). This indicates that
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procurement in the food industry is a factor that is progressively becoming important for producers to meet customer demands.
It can be challenging to procure the produce locally and sustainably for reasons such as lack of availability, higher prices due to small-scale production, and competing with other local producers for the same supplier (Harrison et al., 2019). However, there are benefits from local sourcing, other than meeting the demand for local products, including fresh produce, transparency in the supply chain, more environmentally friendly activities due to less transport distance (Harrison et al., 2019).
2.3 Non-Financial Reporting (NFR)
2.3.1 Regulating NFR
Regulated NFR, as opposed to voluntary, tends to provide better quality reports. This claim is made by Dumitru et al. (2017) in an article discussing how NFR is being adapted by organizations. It is supported by Hoffmann et al. (2018), who argues that regulated NFR incentivizes companies to share their non-financial information and follow reporting guidelines. Moreover, Hoffmann et al. (2018) agree that clear guidelines and regulations of NFR do correlate to higher quality in the reports.
Nevertheless, regulating NFR can cause negative outcomes. One concern with regulated NFR addresses the tendency for organizations to exclusively follow the regulations and not delve deeper than required. These results were found when comparing how the NFRD was implemented in Poland and Romania, which are two arguably similar countries in terms of culture, social characteristics, and economic activity, where Poland has a voluntary approach while regulations are stricter in Romania (Dumitru et al., 2017). Furthermore, Mion and Loza Adaui (2019) find a negative effect voluntary NFR to be that the reports themselves are not of high quality, as companies have a hard time knowing exactly what to include in the reports. Connecting this back to Dumitru et al. (2017), one could argue that a shorter regulated report in good quality is better than a broader voluntary report. Tsagas and Villiers (2020) agree with this statement and strengthen the declaration by arguing that, when it comes to NFR, “less is
more” (p. 5).
Although voluntary reporting could create more genuine reports, varied and broad reporting systems do not encourage sustainable corporate behavior as it does not provide the company with a clear insight of the matter. In line with these contentions Zsóka and Vajkai (2018)
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maintain that by not setting stricter guidelines, large parts of the data presented do not carry an effect for the company’s comprehension of their impacts.
The NFRD does not regulate what specific indicators need to be presented which makes benchmarking challenging. Benchmarking is defined by Dubey et al. (2017) as “the process of
comparing and assessing operations - including services - with respect to the best practices adopted in the domain” (p. 4). Roca and Searcy (2012), who analyzed the non-financial reports
of 94 different corporations, found 585 different indicators in these reports. Zrnić et al. (2020) also support the idea of regulated NFR, as it makes it remarkably easier to compare different companies’ reports than if they were composed on a voluntary basis. Being able to compare across companies is a factor that could motivate and challenge companies to do better, and putting the data into context makes it more understandable for the company itself (Nazari et al., 2015).
The NFRD does not have requirements to which guidelines the reporting companies have to follow, or what must be included in the non-financial reports (Svenskt Näringsliv, n.d.). This compromises the reliability of the reports since it gives the companies more freedom to what they choose to include, or perhaps exclude, from the reports. Smeuninx et al. (2020) also found that the overall readability in non-financial reports is inadequate which makes it hard for stakeholders to comprehend the data. This could point towards the reports being targeted towards professionals rather than customers.
The EU Directive (2014/95/EU) mentions a few guidelines that the companies can use. These include the UN Global Compact, the OECD guidelines for multinational enterprises, and ISO 26000. The European Commission has also published its own guidelines to help companies disclose environmental and social information and guidelines on reporting climate-related information. These guidelines, however, like the previously mentioned, are not mandatory to follow and can instead be seen as suggestions (Directive 2014/95/EU).
Huefner and Tschopp (2015) mention the importance of comparability and consistency of the reports and how this is difficult to achieve with several different reporting standards. The companies will also have incentives to misrepresent the information of their performance when they have too much freedom and flexibility with their reporting. This, in turn, may lead to greenwashing and a lack of transparency from the companies to their stakeholders.
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2.3.2 Internal benefits from NFR
NFR could arguably be resource-demanding since companies need to spend time and money on collecting all the information to present in the reports, as well as actually writing and constructing the reports. Although the organizations potentially devote plenty of resources on the reports, they do generate benefits in addition to complying with the requirements (Petrescu et al., 2020). This section will focus on the internal benefits potentially occurring from conducting non-financial reports.
Petrescu et al. (2020) found several internal benefits for organizations in their study of NFR. The central finding was that by engaging in NFR the organizations gain knowledge about their operations. This knowledge can, if used properly, generate benefits for the focal firm. One of the benefits presented included higher efficiency due to cost and waste reductions in the business operations. By gaining important knowledge about the operations, it gives the organization the chance to see what part of the processes are worthy and useful, along with the power to make cuts where the processes do not add value. Furthermore, to be more sustainable, the organizations can cut both costs and waste through actions such as recycling. Other internal benefits from NFR presented were facilitation to finding and managing opportunities and risks in the company. This once again comes as an effect of the organization having systemized data and information about their operations. Lastly, according to Petrescu et al. (2020), the act of NFR also aids companies in finding long-term strategies and visions.
Thus, even though the law requirements on NFR forces the companies to spend resources on conducting the reports, these resources also generate benefits for the company itself. While the companies are complying with their obligations, they are creating value for their own company as well (Petrescu et al., 2020).
2.3.3 Communication of the report
According to a study conducted by Searcy and Buslovich (2014), the majority of organizations consider stakeholders’ thoughts and views when conducting their non-financial reports. The data collected in the report can be communicated both internally and externally. Searcy and Buslovich (2014) found that, in many cases, the reports were used internally within the focal firm to ease sustainability communication and create internal consciousness. Haffar and Searcy (2018) second this while arguing the report is a great way of communicating sustainability data both internally and externally. However, indicators that can be used for benchmarking or other internally favorable measures, might be left out of the public reports and only presented in
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internal reports. This is to communicate sustainability data to managers and employees while still not sharing personal or sensitive data with outsiders to not lose competitive advantage. Fritz et al. (2017) also claim that it is of great importance of collecting and communicating non-financial data along the supply chain. By having good communication along the supply chain one can prevent future non-financial issues from occurring. It also helps the different firms along the supply chain to align their business to meet stakeholder demands.
2.3.4 Swedish reporting law
As a member state in the European Union, Sweden needs to adopt a national law in accordance with the NFRD. According to Svenskt Näringsliv (n.d.) as well as the governmental proposition (2015/16:193), there are three criteria, at least two of which need to be fulfilled in order for Swedish companies to be subject to the obligation of producing a non-financial report. These are: (1) the mean amount of employees during the last two years has exceeded 250, (2) the balance sheet total during the last two years has reached an amount of over 175 million SEK, and (3) the net sales during the last two years have reached an amount over 250 million SEK. According to Svenskt Näringsliv (n.d.), there is no decided-upon framework that companies and organizations need to abide by when producing their non-financial report.
2.3.5 Science-based targets
One increasingly popular way of identifying sustainability goals within an organization is through Science-based targets (SBT) (Ayoub et al., 2020). Ayoub et al. (2020) describe that SBT is targets aimed at providing a sustainable pathway for organizations through calculations on the amount of greenhouse gas emissions an organization needs to cut out of their emissions in order to keep global warming from rising above 2°C pre-industrial levels.
Giesekam et al. (2021) researched organizations’ achievements after setting SBT. The researchers found that although 21% of all the targets set were already achieved, a total of 23% of all organizations tested have not reached any of their set targets. It was argued that in order to make the targets truly effective and increase the number of achieved targets, mandatory reporting might be necessary for organizations that have adopted SBT. Mandatory reporting is believed to create a higher ambition amongst the companies but also improve transparency and trust for the results. Giesekam et al. (2021) touches upon the issue of discouraging organizations by making the SBT mandatory to report but argues that most organizations most likely already collect the relevant data and therefore would not significantly increase the workload for the organizations.
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2.4 Non-financial reporting within the food industry
2.4.1 CSR
Kim (2017) sheds light on the issue of costs and vast efforts connected to properly implementing CSR practices. This is supported by Stranieri et al. (2019) who found special investments and greater transaction costs to be inevitable to conduct CSR reports. This has managers hesitating, despite the ever-growing societal insistence, as these costs might lead to lower returns for the company's shareholders (Kim, 2017). Based on this, large numbers of shareholders are found to be unsupportive of the idea of implementing CSR with the claim of failing to fulfill shareholder interest. Companies that deal with this issue by listening to shareholders tend to simply oblige to minimal requirements regarding CSR enforced by law. This approach is referred to as passive CSR. Nonetheless, plenty of companies go beyond minimal requirements to ensure their corporate impact is properly measured and presented; this approach is referred to as proactive CSR (Kim, 2017).
However, other stakeholders in the supply chain also have the ability to push companies within the food industry towards a more sustainable praxis (Stranieri, 2019). Nevertheless, for stakeholders to be able to use this power, they need to be presented with reliable data to be aware of what the companies do and do not do. Without this, customers are unable to make informed choices and are sensitive towards greenwashing, hence the importance of dependable CSR reports. According to Stranieri et al. (2019), CSR has become a central pursuit for firms active within the food industry as the act of conducting voluntary CSR reports spreads wider among the industry. Larger publicly traded firms were found to be more likely to conduct these reports, this is believed to be as they might be obliged by law to report CSR, along with other aspects, such as economic, or to be able to provide information to stakeholders to attract shareholders. Consequently, the reports seem to present facts reflecting closer to what regulators and stakeholders want to see rather than presenting a complete picture, arguably engaging in greenwashing. This was not found to be as extensive in private or family-owned organizations. Mądra-Sawicka and Paliszkiewicz (2020) also found a larger contribution of CSR actions from larger organizations and goes on to explain that this could be due to the fact that smaller companies simply do not have the resources nor see sufficient benefits for the investment.
Kim (2017) finds that companies with a proactive CSR approach tend to receive more positive engagement from customers. The results show that consumers within the food industry still enjoy cheaper products, however, the preference for environmental responsibility overshines
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the price. In other words, customers were found to rather buy an ethically sustainable product than the cheaper option. The article goes as far as claiming the perception that consumers’ main concern while purchasing goods is solely economic is a myth, as evidence show customers deem aspects such as CSR, quality, brand, etc., to be crucial. This arguably leads to a competitive advantage for CSR active organizations, however, Dumitrescu and Simionescu (2016) found no difference in financial performance between companies approaching CSR versus companies that do not, when comparing mainly Romanian companies via the Stock Exchange. One reason for this, as presented by Mądra-Sawicka and Paliszkiewicz (2020), could be that different organizations present CSR material for different reasons. It was found that less successful organizations are prone to present their CSR data more vigorously in an attempt to attract investors. Another possible explanation for the lack of correlation between CSR and financial benefits is suggested to be that the benefits received from conducting and presenting a CSR report are long-term, hence, might not be visible in early studies. One long-term benefit from CSR was a superior readiness for handling emergencies. However, some companies in the food industry might choose to not invest in a CSR strategy as there are not enough visible short-term income improvements (Mądra-Sawicka & Paliszkiewicz, 2020).
2.5 Transparency
The engagement and interest in the topic of business transparency have increased in recent years and are discussed by researchers in several different contexts. Schnackenberg and Tomilson (2014) provide a review of the different definitions of transparency that have been introduced in the past. Transparency is described differently in the various study areas, however, the common idea remains the same: transparency is about sharing business information with stakeholders in a truthful and trustworthy manner.
In their study, Schnackenberg and Tomilson (2014) discuss how information-sharing, in turn, leads to higher levels of trustworthiness among companies. This shows that trustworthiness is a consequence of transparency. Disclosure, clarity, and accuracy are important factors that determine the transparency and trustworthiness of a company. The quality of these factors should be assessed to determine the level of transparency in a company (Schnackenberg & Tomilson, 2014).
Tsagas and Villiers (2020) discuss the evident parallel between low transparency and negative sustainable corporate behavior. Hence, proper non-financial reports are crucial for transparency. The term “transparency” and “sustainability” among others are relatively
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imprecise terms. To produce high-quality non-financial reports, key concepts need to be clearly specified, yet the literature remains vague about the terms. Nevertheless, companies with more transparency tend to enjoy greater economic benefits along with better reputation and success in general (Dumitru et al., 2017), such as stronger economic viability and financial utility (Zrnić et al., 2020).
2.5.1 Transparency in NFR
Corporate transparency in NFR is important for the reports to be effective. It also aids sustainability action among companies (Zakaria et al., 2021). It can be argued how transparent the non-financial reports actually are. In their study, Higgings et al. (2020) show that how the information in the non-financial reports is presented affects the viewed transparency of it. In their study, they found how inconsistencies and irregularities in the reports make the readers question the transparency of it. Another example of reduced perceived transparency is when there is a lack of context to the presented information since this also reduces the clarity of the information. They concluded by presenting the components which a report should include to be transparent. This was to present clear comparator data, as well as a clear description of changes in the report’s content and changes from one year to another. This would help the readers understand the lack of consistency in the reports and thereby increase the perceived transparency.
To increase transparency in non-financial reports, Zsóka and Vajkai (2018) argued for disclosure of methodology in the reports. Hence, by making the companies present how they retrieved and measured the data, less room is left for greenwashing. It would also help stakeholders that read the report to understand the measures and contextualize them.
2.6 Greenwashing
As previously mentioned, greenwashing refers to the misleading or false usage of information regarding one's sustainability performance. To assure transparency and trustworthiness among companies, greenwashing has to be eliminated. In their study, Delmas and Cuerel Burbano (2011) present their recommendations for how to reduce greenwashing. The authors describe a negative relationship between transparency of environmental performance and greenwashing. In other words, an increase in transparency will reduce companies’ incentive to greenwash. This claim is also supported by Grewal et al. (2018), who mentions that the environmental performance of a company is related to its environmental disclosure. Transparency could be achieved by mandating environmental performance disclosure. Furthermore, the mandated
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disclosure should also be monitored to ensure that the information is truthful and reliable. If the mandated disclosure is not verified, companies can still engage in greenwashing practices (Delmas & Cuerel Burbano, 2011). Since such mandatory environmental performance disclosure policies are absent in the NFRD, the directive cannot eliminate the risk of greenwashing in the reports.
In an explorative study, Jones et al. (2016) examined companies' use of materiality and assurance on their non-financial reports. In their findings, they discovered that only about half of the companies included some measures of materiality or assurance in their reports, which suggests that the companies not using these measures have less reliability or credibility. According to Zsóka and Vajkai (2018) NFR aims to provide “comprehensive, relevant,
balanced, comparable, accurate, timely, clear and reliable information for society about the corporation’s sustainability performance” (p. 20). In their report, they evaluated sustainability
reports based on the aspects of content and quality, which stems from the GRI voluntary reporting guidelines. Content is then assessed by 4 variables: (1) sustainability context, (2) stakeholder inclusiveness, (3) materiality, and (4) completeness, while quality was measured by (1) balance, (2) comparability, (3) accuracy, (4) timeliness, (5) clarity and (6) reliability. It was found that the majority of companies did not outsource analytics to view the report and its accuracy or relevance, but chose to self-assess. Naturally, this could have negative consequences for the aspect of terminating greenwashing through NFR. Similarly, the article found that most reports only contained the positive sustainability data, and those who presented negative data as well did not provide further discussions regarding the data. Thus, the companies examined were appearing as if they did not accept their sustainability responsibility nor fully grasping their impacts along their supply chain (Zsóka & Vajkai, 2018). This suggests that greenwashing is being used in companies’ reports.
Arguably, reliability in non-financial reports goes hand in hand with greenwashing. By companies’ self-assessments it is hard to determine potential bias or misleadings. However, as argued by Zsóka and Vajkai (2018), assessing reliability by outstanding firms might not increase transparency as the outstanding firms will simply confirm the report but cannot judge the organization's level of sustainability. Thus, the need for a solution to reduce companies’ use of greenwashing remains.
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2.7 Stakeholder theory
Any party that is affected by a company in any way is a stakeholder to the company in question (Hörisch et al., 2014). This includes parties such as shareholders, investors, employees, the relevant city, and the environment, as they are all affected by the performance and actions of the company. Stakeholder theory is often explained as a theory that supports the idea that the relationship between a company and its stakeholders has a positive correlation to its performance (Bridoux & Stoelhorst, 2014; Jones et al., 2018). Additionally, it is also shown by Carroll and Buchholtz (2014) that abiding by and realizing the essentiality of stakeholder theory has a positive impact on the sustainability progress of a firm.
Hess (2007) claims that sharing the company’s non-financial performance through reports to stakeholders will ultimately lead to reduced costs when it comes to stakeholder engagement in the company, and simultaneously increase the probability of stakeholders becoming more engaged in the performance of the company. This is explained through that when stakeholders attain this amount of additional information, these stakeholders can make the company accountable for their actions and demand changes in their business to realize solutions that benefit both parts in this relationship. Hörisch et al. (2014) add to this by mentioning that a common mindset amongst the company and its stakeholders is important, especially when looking from a sustainability perspective. In this sense, it is also important that companies are transparent with how their progress in sustainability looks like, especially since as Hess (2007) brings up, stakeholders need to be able to access such information to help create change in the company in question.
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3
Method and Methodology
The method and methodology section will start off with explaining the research philosophy, approach, and design. Afterward, the sample used for this research and the way data was collected will be presented. Lastly, the analysis will be explained, and the trustworthiness and ethical considerations are taken into account as separate subheadings.
3.1 Research philosophy
A paradigm is a framework that helps the researchers decide on how the research should be conducted (Collis & Hussey, 2014), and the two main research paradigms are positivism and interpretivism. In positivism, the assumption is that social phenomena are measurable. Therefore, research using a positivist paradigm usually aims to observe and experiment using quantitative methods. The second main paradigm is interpretivism. Research conducted using interpretivism is more about investigating and exploring. To gain an understanding of the perceptions and subjective opinions about the subject matter, an interpretive study will use qualitative methods to collect and analyze data (Collis & Hussey, 2014).
The thesis statements in this study involve exploring and investigating social phenomena. To collect and understand the information needed to provide answers to these statements, qualitative methods will be used. The information will be gathered through analyzing people’s perceptions and opinions rather than through statistical data and observations. Therefore, when considering the characteristics of the different paradigms, the more appropriate research paradigm used in this study is interpretivism.
3.2 Research approach
The research approach is connected to how to use the theory and connect it to the research (Saunders et al., 2016). There are three main approaches, which are deductive, inductive, and abductive. In a deductive approach, the theory is developed beforehand by investigating previous data, and from that develop a theory. Afterward, the research is conducted to test this theory. This is usually done using quantitative methods. In an inductive approach, a knowledge gap is identified, and the research is conducted to fill this research gap. Hence, the result develops the theory. This is usually done with qualitative methods. Lastly, the abductive approach could be seen as a mix of the two (Saunders et al., 2016).
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In this thesis, the previous literature was reviewed to create a frame of reference. This information was used when creating the interview questions, and when analyzing the result from the data collection. This provided knowledge and information to answer the thesis statements. Hence, in this study, a deductive approach was used, since the theory was developed early in the study from previous literature. However, the study used some inductive methods, as the collected interviews were interpreted to try to develop or support the conducted theory further, and also possibly gain new knowledge.
3.3 Research Design
The two major forms of research are qualitative and quantitative research. One important difference between these two is the way of collecting data, as well as analyzing and presenting it. Quantitative research focuses mainly on hypotheses- and theory testing and aims to find data that can be interpreted in a statistical manner. Therefore, the research and data collection methods often include questionnaires and surveys to obtain numbers to interpret. Qualitative research is used in another sense, to explore or discover a topic further. The collected data needs to be interpreted more in-depth. It concerns exploring phenomena and gaining deeper knowledge. This is usually achieved through interviews or focus groups (Collis & Hussey, 2014).
This study follows a qualitative research design. The purpose of the research is to investigate and explore the relationship between transparency and NFR. To gain knowledge of this, the study includes qualitative research methods in the form of interviews with participants from a selected population. This was the main form of primary data collection. The qualitative research was selected instead of the quantitative since it enables for more explorative approaches and gives deeper knowledge about the selected topic, which is beneficial to answer the thesis statements.
3.4 Research sample
When searching for relevant people, three criteria were kept in mind in order to ensure efficient interviews for the research: (1) the person should be a corporate representative, (2) the person should have some knowledge within NFR, (3) the company in which the person works in should be in, or closely related to, the food production industry in Sweden. The representatives that fit into the criteria were then contacted through email. Furthermore, there was no specific sample size chosen for this research. Instead, interviews were carried out until data saturation was
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achieved, i.e. when new information relevant to the research has ceased to be discovered. In the case of this study, 6 representatives were interviewed until the point of data saturation.
Table 1 below contains information regarding the respondents in this study.
Table 1
Respondent Information
Name Role Type of company Date Duration
Respondent A SUSTAINABILITY STRATEGIST GROCERY RETAILER 18-3-2021 45 min Respondent B SUSTAINABILITY MANAGER FOOD INDUSTRY NPO 7-4-2021 35 min Respondent C
TOP MANAGEMENT CERTIFICATION
14-4-2021
30 min
Respondent D
TOP MANAGEMENT FOOD INDUSTRY
NPO 15-4-2021 40 min Respondent E SUSTAINABILITY MANAGER FOOD PROCESSING 22-4-2021 35 min Respondent F SUSTAINABILITY MANAGER FOOD PRODUCER 3-5-2021 50 min 3.5 Data collection
For the purpose of collecting the data, semi-structured interviews were used as primary data. This was believed to be the best source of data as the study is qualitative, where deep insights into the topic are sought after and elaborative answers are needed. Although interviews as a data collection method were used for this specific study, surveys were also an option. However, using surveys for this research would have come with risks that could lead to insufficient data resources. When sending out surveys, respondents are more likely to finish the survey if the questions are simple and easy to answer. In this research, in-depth thoughts are required, meaning that questions will be complex and elaborative.
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Moreover, because of the ongoing COVID-19 pandemic when this paper was written, interviews were conducted online through video calls. When conducting these interviews, a language that the interviewee felt more comfortable with using was chosen, which often was their mother tongue. By not using a restricted common language for all interviews, the risks of errors in the results are minimized, as interviewees can more freely express their views and standpoints.
The interviews started off with the interviewers introducing themselves and reminding the interviewee about the subject of the research and its purpose. The interviewee was asked again, as through email prior to the interview, if they felt comfortable with the interview being recorded for making the analysis easier. Next, the interview questions were asked, as well as some follow-up questions where the interviewers felt it was adequate or when the interviewee did not give a sufficient amount of information. After all questions were asked, the interviewee was asked if they felt like an opportunity was given to answer all questions sufficiently, as well as if the interviewee had any questions for the interviewers about the research. Finally, the interviewee was asked whether or not they had any contacts in other companies that they could share in order to help ease the sampling process.
3.6 Data analysis
Following the data collection, the interview recordings were then reviewed for a proper transcript to be documented. When analyzing the data, a thematic analysis method was chosen as it more accurately fits a qualitative study such as this one. Nowell et al. (2017) raise advantages of thematic analysis in their paper, as it is “a useful method for examining the
perspectives of different research participants, highlighting similarities and differences, and generating unanticipated insights” (p. 2).
The first stage of the analysis was to start coding the interview transcripts. During this phase, the most relevant and interesting quotes from interviewees were highlighted. The relevancy of quotes was decided upon simultaneous to the review of the interview recordings, and the rest of the transcript would work as context to these quotes in order to have a deeper understanding to what was said by the interviewee. These quotes were then compiled into their own document to find common categories amongst them. When common categories were found, four themes were then identified, which are presented later on in the Results and analysis part of the paper.
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3.7 Trustworthiness
This research can be considered reliable as all interviewees were knowledgeable within the field and in most cases claimed the same things to be true. There was repeatability in all of the interviews, which points towards the results found in this thesis to be true for large parts of the industry rather than simply specific individuals. The topics were thoroughly discussed as follow-up questions based on the interviewee’s answers were used to fully grasp the interviewees’ thoughts and understandings. Due to the interviewees testifying towards the same realities, despite having varying positions in the supply chain and various positions within their organization, the results can be generalized for the Swedish food industry. Additionally, the fact that the interviewees held different positions in the market while being knowledgeable within the area of sustainability reporting, increases triangularity which makes the result more trustworthy. Trustworthiness was also increased as all interviewees were anonymous. This means that they could open up more in their answers and respond in a more truthful way as they do not have to be held accountable if the information given is sensitive. Several of the interviewees claimed that the answers they gave would not have been the same if they were not anonymous as they would feel the need to present their organization in the best light while not admitting flaws in reporting systems along with transparency.
3.8 Ethical considerations
In order to conduct ethical research all of the interviewees have been informed, prior to the set interview, with sufficient information regarding the research. When setting up the time for the interview all interviewees have through email been informed what the study is about, what the aim is, and what their answers will be used for. They have also been asked several days before through email if they give their consent to be recorded to ensure enough time for a thought trough answer, and the question has been repeated again during the interview before starting the recording. The interviewees have been informed properly that the recording solely will be used by the authors to analyze and will be deleted once the research is done. To make the interviewees feel safe and to prevent insincere answers due to there being a record of their answers, all interviewees have been given the option of being anonymous.
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4
Results and analysis
This section is going to present the results and analyze them simultaneously. This will be done through categorizing the collected data from interviews, presenting the data, and doing an analysis of the answers while comparing the findings to the frame of reference theoretical framework to find similarities and deviations. The analyses made from the results will be used to provide answers to the thesis statements.
4.1 Internal benefits
Through the data collection, the theme of internal benefits from NFR was visible. The result from the interviews shows numerous benefits of these types of reports with the main benefits being internal for the organizations which are conducting the report. Furthermore, the interviews produced noteworthy information about which components in the reports bring value to the readers. From this theme, conclusions can be drawn that organizations recognize the internal benefits of reporting to a large extent, compared to external benefits between business partners. In the following sections, this theme will be discussed further.
4.1.1 The value of reports
The interviewees were asked whether they read the non-financial reports of their business partners or not. This was asked to gain an understanding of the reports’ value in business relations. The most frequent response was that the interviewees do not read the non-financial reports of their partners. Respondent A, which is responsible for their company’s sustainability communication said:
“Non-financial reports are important for some target groups, such as investors, whereas
another sustainability communication is important for other target groups, such as partners and purchasers.” – Respondent A
This statement was supported further by other interviewees, with similar beliefs on to whom the reports are targeted. The interviewees agreed that the reports were not directed towards partners, but instead other stakeholders, such as investors, and internally within the company. A sustainability manager declared:
“The reports are most beneficial for the sustainability managers within the company, but also for more or less anyone internal in the company.” – Respondent E
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Delving deeper into the benefits of the reports another interviewee stated:
“… there are benefits to reporting as it leads to people talking about sustainability issues. […] The reports are contributing to communication regarding sustainability.” – Respondent
C
This was a commonly discussed aspect of the reports. All interviewees agreed that conducting a non-financial report also starts an internal communication of sustainability aspects. According to them, when enterprises are obligated to conduct a non-financial report, it automatically forces the company to consider their sustainability performance. Since the report will be read by many stakeholders, it brings an incentive to the company to work on improving their sustainability effort.
Given the responses, the reports are more beneficial to the internal stakeholders of the company rather than external. Previous literature claims that reporting creates an internal awareness of sustainability issues and aids for an internal understanding amongst the employees of the organizations’ impact (Searcy & Buslovich, 2014). Organizationally this could indicate that the focal firm might benefit from making sure that the report is comprehensible and distributed amongst employees. This might not only aid employee awareness but also give employees a chance to contribute to the discussion organizational-wide. Petrescu et al. (2020) declared that employees recognize numerous internal benefits from the reporting of non-financial measures. The report can be seen both as a display of an organization’s sustainability work, however, in line with the answers from the interview as well as previous literature, the reports could also be used as a tool to improve and develop the sustainability strategy or performance. The reports can have positive effects internally at all levels, however, as respondent E mentioned, the reports can be assumed to be most internally beneficial for sustainability managers. The interviewee discussed how helpful the reports can be for those managers in being able to comprehend the firm’s non-financial impacts and make calculated sustainable choices.
In other words, the report can be viewed as a tool for internal stakeholders to review the current sustainability performance of the company and to discover challenges, opportunities, and further goals to work with. Moreover, it can contribute to more transparency towards external stakeholders such as investors which were found both through the interview and by Fritz et al. (2017).
