The mandatory sustainability reporting assessment of the Swedish state-owned companies-LKAB, Vattenfall, Akademiska Hus

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Linköping University | Department of Management and Engineering (IEI) Master’s Thesis, 30 credits | Master’s Program in Sustainability Engineering & Management Autumn term 2020 | LIU-IEI-TEK-A--20/03916—SE

The mandatory sustainability

reporting assessment of the Swedish

state-owned companies-LKAB,

Vattenfall, Akademiska Hus

Tazrin Hassan

Supervisor: Pontus Cerin Examiner: Yang Liu

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Abstract

Sustainability reporting is a great way to show a company's attitude, approach, and responsibility towards sustainability, which includes environmental, social, and economic aspects of the company's operations. All the biggest, well-established, and renowned companies, along with the medium and small companies and even the new companies around the world, make sustainability reports to show how responsible they are towards sustainability. The Swedish state-owned companies are obliged to report on their sustainability information following the GRI framework, and these companies are meant to be a role model regarding sustainability reporting for other companies. This is a timely due study in looking at the governmental guidelines initiated and implemented over ten years ago. Therefore, the thesis is done with the motivation to explore how the state-owned companies handle sustainability reporting individually and then comparing their approaches among themselves. The thesis conducts a case study research method with three Swedish state-owned companies, LKAB, Vattenfall, and Akademiska Hus' sustainability reporting regarding 15 selected GRI indexes for a specific timeframe, that are taken from the GRI database. Apart from being Swedish state-owned companies, these three companies are selected to study because they are reporting their sustainability reports since more than a decade and has a good sustainability reporting quality. The timeframes chosen for analyzing the sustainability reporting for LKAB, Vattenfall, and Akademiska Hus are five years (2014-2018), seven years (2012-2018), and five years (2014-2018), respectively. The 15 GRI indexes of the sustainability reports of those companies, and how the companies follow the eight guidelines for external reporting provided by the government, are analyzed separately and compared with one another. It is observed that LKAB's sustainability reporting being better with the sustainability information, then comes Vattenfall, and at the end comes Akademiska Hus, though all of them have their own positive and negative aspects. The thesis concludes that the state-owned companies need to pay more attention and concern to improve their sustainability reporting by making it more explicit, transparent, understandable, and easy to follow with all the required sustainability information. Hence, they truly can set an example for other companies regarding sustainability reporting.

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Acknowledgments

Authoring the thesis was a learning experience with an instructive process. In my whole journey of doing my master's program at Linköping University and authoring the thesis, I would like to thank my teachers, friends, and family.

I want to thank my thesis supervisor, Pontus Cerin, for accepting me as his student and always guiding me in the right direction. Pontus has always encouraged me to do my best and showed his belief in me and supported me always whenever I needed it.

I also want to thank my thesis examiner, Yang Liu, for giving his constructive and valuable feedback to improve the thesis.

Finally, I am grateful to my family and friends for their constant support and belief in me during this journey.

Thank you all!

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List of Tables

Table 1 Articles reviewed for literature review ... 7

Table 2 Energy Consumption, LKAB ... 22

Table 3 Energy Intensity, LKAB ... 22

Table 4 Carbon Dioxide Emission, LKAB ... 23

Table 5 Carbon Dioxide Emissions Intensity, LKAB ... 24

Table 6 Other Emissions, LKAB ... 24

Table 7 Waste Management, LKAB ... 25

Table 8 Discrimination incidents ... 27

Table 9 Energy Consumption, Vattenfall ... 32

Table 10 Other Emissions, Vattenfall ... 33

Table 11 Water Management, Vattenfall ... 35

Table 12 Waste Management, Vattenfall ... 36

Table 13 Radioactive Waste, Vattenfall ... 36

Table 14 The share of women, Vattenfall ... 37

Table 15 Energy Consumption, Akademiska Hus ... 42

Table 16 Carbon Dioxide Emissions, Akademiska Hus ... 43

Table 17 Comparisons in the approach of the three state-owned companies to the guidelines of GRI ... 56

Table 18 Comparison among the state-owned companies on external reporting guidelines, based on the analyses in their sustainability reports ... 63

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List of Figures

Figure 1 Research Process ... 16

Figure 2 Carbon Dioxide Emissions, LKAB ... 23

Figure 3 The Proportion of Women, LKAB ... 26

Figure 4 The Proportion of Foreign Employees, LKAB ... 27

Figure 5 Carbon Dioxide Emissions, Vattenfall ... 33

Figure 6 Other Emissions, Vattenfall ... 34

Figure 7 The Proportion of Women, Vattenfall ... 37

Figure 8 The Proportion of Women, Akademiska Hus ... 44

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1. Introduction

1.1 Background

Sustainability is of great concern of today's time and age. Sweden has always given priority and been proactive to sustainability and has incorporated it into its businesses as well. Swedish companies are now viewed as a role model for other countries. Recently, Sweden was ranked number 1 out of 65 countries in terms of environmental, social, and governance (ESG) indicators in the RobecoSAM Country Sustainability Ranking of 2019 ("Sustainable business in Sweden", 2020).

In the late 1990s, the Swedish Accounting Committee suggested to improve the reporting by including the environmental impact of a company's operations, just like other activities and financial situation of the company are reported. The Committee also suggested passing legislation that would have environmental information disclosed in the annual report to spread more awareness for other companies on environmental issues (Ljungdahl, F., 1997). Both the Swedish government and the Swedish companies are paying more attention to sustainable business and sustainability reporting since then and have been quite successful. Most of the companies now have specific sustainability targets for their company to achieve, which shows the company's approach towards sustainability and presents a good image of the company. The Swedish government has had guidelines for reporting from the late 90s till early 2000 for the state-owned companies. Later in 2007 November, the government revised guidelines for external reporting reported by state-owned companies, with more explicit and expanded requirements on sustainability information ("Guidelines for external", 2007). Also, all Swedish state-owned companies are required to make sustainability report with the GRI framework since 2007, and they must report it annually ("Sustainable Business", 2014). The sustainability report should be transparent according to the report of guidelines provided by the government. The state-owned companies should be at the forefront and be the role model for other companies regarding reporting the sustainability report clearly and following up appropriately. The board members of the state-owned companies are responsible for presenting the companies' sustainability reports according to the Global Reporting Initiative (GRI) 's guidelines, along with their financial reports, making assessments, and following up their sustainability reports ("Guidelines for external", 2007). The sustainability report can be reported in two ways, either integrating it with the annual report of the company or as a separate document.

The ownership (public/ private) and size (large, medium, or small) of a company affects significantly on its sustainability disclosures. It is found from previous researches that the wholly state-owned companies reveal their sustainability information less than the partially state-owned companies, and the large state-owned companies present more information on sustainability than the small ones, although it is not always necessary that state-ownership and control cause to more disclosure of sustainability information (Argento, D. et al., 2019).

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The thesis incorporates all the mentioned information within its boundaries. As the state-owned companies are obliged to do sustainability reporting based on GRI guidelines, and the report should disclose most of the sustainability information with transparency and set an example for other companies regarding sustainability reporting, so there is already a high expectation and high stake on those companies because the reporting represents their behavior and approach towards sustainability which leads to the reputation of the company. Therefore, nowadays, sustainability and sustainability reporting significantly affect a company's development. Due to its importance, the research area for sustainability reporting has been quite vast with different avenues, so the author is trying to delve into a new, narrow, and specific avenue in the thesis, focusing mainly on the most prominent and well-established state-owned companies and their approach in sustainability reporting, which has not been explored much yet, with the hope to have an expansion of that area in future, as this will help the companies to have an outsider's perspective on their reporting and improve on their lacking without any biases.

The thesis is structured in seven sections. In the first section, Introduction, presents the background of the thesis, later with the aims and proposed research questions, and provides brief presentation of the studied guidelines and companies for the thesis. The second section, Literature Review, demonstrates the contribution of previous research work on different concepts related to the thesis work and presents the theories related to the scope of the thesis work in the theoretical framework. The third section, Methodology, depicts the steps and methods taken to obtain the results and acquire the key findings. The fourth section, Results, presents the collected data by using the research methodology. Then the fifth section, Discussions, analyses and interprets the data. Finally, the sixth and last section, Conclusions, presents the main findings of the thesis, along with the future work.

1.2 Aim

The thesis aims to analyze the approach of sustainability reports by the three state-owned companies, which are LKAB, Vattenfall, and Akademiska Hus, and to see the consistency of the information reported in the reports in consecutive years separately and then comparing those aspects among themselves. The thesis also addresses, analyses, and discusses how the selected companies follow the eight guidelines provided by the government for the state-owned companies on external reporting.

Some research questions arose to achieve the aim of the thesis. The thesis aim is fulfilled by answering and discussing the following questions:

1. What approaches do the three selected state-owned companies have when reporting on sustainability based on GRI guidelines? For this purpose, 15 GRI indicators have been chosen.

a) What is the consistency of the reports, and is it easy to follow the reporting contents throughout the years (selected timeframe for each company)?

b) What are the similarities/differences among the three state-owned companies in approaching the sustainability reporting based on the selected 15 GRI indicators?

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2. To what extent are the guidelines given by the government on external reporting, followed by the selected state-owned companies?

a) How much do the companies approaches resemble and/or differ from each other regarding this matter?

1.3 The Studied Guidelines

1.3.1 Guidelines for External Reporting

by State-Owned Companies

The Swedish state plays an important role as a company owner in Sweden. There are 40 wholly state-owned companies in Sweden (Regeringskansliet, 2007). The Swedish government adopted the external reporting guidelines from 29 November 2007 (Regeringskansliet, 2007). One of the external reports of the state-owned companies is the sustainability report. The owners should take responsibility for sustainable development. The state-owned companies are there to set an example for other companies regarding sustainability reporting (Regeringskansliet, 2007). Also, the board members of the state-owned companies have the responsibility of sustainability reports according to the GRI guidelines (Regeringskansliet, 2007).

The sustainability report should have clear reporting and proper follow-up on the sustainable development of the company. A sustainability report should be published on the website of the respective company. According to the Swedish government, the sustainability report can be documented either separately or by integrating with the annual report (Regeringskansliet, 2007). Regerinskansliet, a Swedish government official, has been providing the guidelines on external reporting for the state-owned companies. Therefore, all the state-owned companies must oblige by these guidelines and follow them correctly. There are eight guidelines for sustainability reporting, which are later addressed and discussed in the Discussion section.

1.3.2 Global Reporting Initiative (GRI)

Global Reporting Initiative (GRI) is the most adopted and popular sustainability reporting standards around the world. According to the KPMG Survey of Corporate Responsibility 2017, 93% of the world's biggest 250 companies do sustainability reporting ("About GRI", n.d.). GRI standards helps companies to protect the environment and improve the society, along with making economic choices by developing a good relationship with the stakeholders.

GRI was founded in 1997, Boston, USA, to develop the framework for environmental reporting. It was started by US non-profit organizations, the Coalition for Environmentally Responsible Economies (CERES), the Tellus Institute, and The United Nations Environment Programme (UNEP) ("GRI's History", n.d.).

In 2000, GRI launched the first version of guidelines for Sustainability Reporting, GRI-G1. Then in 2002, the second generation of the guidelines, GRI-G2, was unveiled. Later, the third generation of Guidelines, GRI-G3, was released in 2006. An update of G3, GRI-G3.1, was released in 2011 by including guidance on human rights, community, and gender ("GRI’s History”, n.d.). In the same year, the Sustainability Disclosure Database of GRI was launched

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with all GRI and non-GRI based sustainability reports, and there are more than 62,000 total reports available and 37,000 are GRI based reports (“Sustainability Disclosure Database”, 2016). In 2013, the fourth generation of GRI-G4 was released.

The first global standards for sustainability reporting was launched by GRI in October 2016, that allows the companies to show their environmental, economic, and social impacts in the public domain, which is developed by the Global Sustainability Standards Board (GSSB) (“GRI’s History”, n.d.). The main ideas and disclosures from GRI-G4 are included in the GRI Standards, with a more straightforward language, clearer requirements, and flexible structure.

1.4 The Studied Swedish State-Owned Companies

1.4.1 LKAB

LKAB (Luossavaara-Kiirunavaara Aktiebolag) is one of the biggest Swedish state-owned companies, which is a mining company that is a 100% state-owned company since the 1950s (LKAB, 2020). It was established in 1890 (LKAB, 2018b). LKAB is also Europe’s largest iron ore producer and one of Sweden’s largest export companies. It produces iron ore products such as pellets and fines, and minerals also. It has about 4300 employees in 12 countries (LKAB, 2020). The studied period in this thesis for LKAB was from 2014-2018, and there are two CEO and President within this period. Lars-Eric Aaro was the CEO and President of LKAB from 2010 till 2014, then Jan Moström has been the CEO and President of LKAB since 2015. LKAB has seen a world market crisis from 2014, as there has been an oversupply of the iron ore compared to the demand and a significant fall in steel prices, especially in the Chinese market (LKAB, 2014). Thus, LKAB went through those challenges by standing firm and optimistic. The previous CEO, Lars-Eric Aaro faced that market challenges actively with great leadership quality. The next and present CEO and President, Jan Moström, has been continuing his work by taking some critical, yet risky decisions and implementing them correctly, which resulted in positive and improved earnings for the company (LKAB, 2014-2018).

LKAB started to present its sustainability report annually from 2008. It had a separate sustainability report in 2008, and it began to integrate that with its annual report, which is named annual and sustainability report from 2009 till now. LKAB followed GRI G3 from 2008 till 2013 in their reporting, then from 2014 till 2017, LKAB applied GRI G4, and LKAB started reporting per GRI Standards from 2018.

1.4.2 Vattenfall

Vattenfall is a multinational power company of Sweden founded in 1909 (Vattenfall, 2020b). Its primary markets are Sweden, Germany, Denmark, the Netherlands, and the United Kingdom. Vattenfall is owned by the Swedish state wholly and is one of Europe's largest producers and resellers of electricity and heat (Vattenfall, 2020a). It has around 20,000 employees (Vattenfall, 2020a). There has been two President and CEO of Vattenfall in the studied period of this thesis, 2012-2018. Øystein Løseth was the President and CEO from 2010 to 2013, then Magnus Hall became the next President and CEO from 2014 till now.

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Vattenfall faced a big problem in that period due to the economic recession. The demand became low, and the price of electricity had a great fall due to the generation of renewable energy, which leads to the market condition changing and transforming towards renewable energy (Vattenfall, 2012). They started divesting on their fossil-based plants and investing more in renewable production, which resulted well environmentally and economically (Vattenfall, 2016). They have been getting a good result from hydro, wind, solar, and nuclear power plants. Now they aim to achieve a fossil-free life within one generation (Vattenfall, 2017). The CEO of Vattenfall tackled the market challenges well by making decisions sensibly for the future and adapting and evolving according to the need for the market change (Vattenfall, 2012-2018). Vattenfall has been reporting following GRI guidelines for a long time. Vattenfall started to make a sustainability report since 2003 annually. They followed GRI G2 from 2003 to 2006, then they applied GRI G3 from 2007 to 2012, later they reported according to GRI G4 from 2013 to 2016, and since 2017 till now, they are reporting according to GRI Standards (Vattenfall, 2012-2018). Vattenfall had a separate sustainability report from 2003 till 2011, and then they started to integrate that with their annual report from 2012 till present.

1.4.3 Akademiska Hus

Akademiska Hus is one of the largest real estate Swedish state-owned companies. It was established in 1993. It aims to make Sweden as a nation of knowledge and is taking measures to do that (Akademiska Hus, 2020a). It has around 500 employees (Akademiska Hus, 2020b). The studied period for this thesis for Akademiska Hus was 2014-2018, and there has been only one person as the President in that period. Kerstin Lindberg Göransson has been the President of Akademiska Hus since 2011 till now. The property market has seen substantial growth in past years, so financially, they have been quite strong (Akademiska Hus, 2017). Thus, they are investing more in new and innovative projects to provide sustainable learning environments. Akademiska Hus started having a sustainability report since 2008. It has a separate sustainability report from 2008 to 2013, and then they integrated it with its annual report since 2014. It began to report according to GRI G3 from 2008 till 2013, then it transformed to GRI G4 from 2014 to 2017, and it made the transition from GRI G4 to GRI Standards in 2018 till the present (Akademiska Hus, 2014-2018).

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2. Literature Review

2.1 Academic Research Work

There have been many types of research regarding sustainability reporting or GRI reporting in the past. Previous research papers and other articles have been studied while doing the literature review for the thesis to make the research questions worthwhile and identifies the research gap. The research questions, research terms and database were first determined to perform the literature review of academic research work. Then practical screening criteria of the most relevant and cited research work was used to select the studies to review. Later, a checklist screening criterion with relevant keywords related to the thesis was developed to evaluate the contents of the studies to determine and identify the research gap of this thesis from previous research work. The literature review of academic research work is mainly performed to see what kinds of researches are done regarding sustainability reporting. The reason for identifying the purpose of the academic research work is to establish the necessity and significance of the thesis work. What are the most used research themes for sustainability reporting? Is there enough research work conducted for assessing sustainability reporting of an organization? Why is it important to evaluate the sustainability reports of organizations? In order to answer these questions, a literature review of academic research work is conducted by identifying the research contents of sustainability reporting that occurred from 2004 till 2009, which also shows the significance of this thesis to contribute to the research gap.

The thesis uses Scopus database for the source of the literature review. Literature review is used to identify the research gap of the studied research area and the contribution of the thesis. The reviewed articles focus on sustainability information and sustainability reporting to identify the research gap through Scopus database. Scopus database is accessed via Linköping University’s library gateway. The key search words to identify the relevant articles in Scopus database are, ‘sustainability reporting’’, ‘reporting’ and ‘GRI’, which resulted in 735 number of articles. Among them, 21 articles are selected which are the most relevant articles to the thesis topic with highest citation. These articles are reviewed to identify the research gap, which is, the absence of an assessment of sustainability reporting of the Swedish state-owned companies. The articles are demonstrated in Table 1 with the information of their author/s and title. Also, a checklist is developed to review the articles to fulfil the purpose of identifying the research gap, provided in Table 1, where the key information is checked out if that information is included in that article which also shows the key issues that the articles focus on to study.

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Table 1 Articles reviewed for literature review

# Author (s) Title Checklist for literature review

1 (Jorge et al., 2018)

An analysis of university sustainability reports from the GRI database: an examination of inﬂuential variables

 GRI Reporting/ Sustainability/ Environmental Reporting  Organizations (State-owned/Public companies, SMEs)  Assessment of Sustainability Reporting

 Determinants → Sustainability Reporting

 Stakeholders/ Board of directors/ Femininity → Sustainability Reporting  Environmental Reporting → Company Performance

2 (Yang et al., 2019)

Does GRI Sustainability Reporting Pay Off? An Empirical Investigation of Publicly Listed Firms in China

 GRI Reporting/ Sustainability/ Environmental Reporting   Organizations (State-owned/Public companies, SMEs)  Assessment of Sustainability Reporting

3 (Dissanayake et al., 2019)

Factors influencing sustainability reporting by Sri Lankan companies

 GRI Reporting/ Sustainability/ Environmental Reporting   Sustainability/ Environmental Reporting

 Organizations (State-owned/Public companies, SMEs)  Assessment of Sustainability Reporting

4 (Argento et al., 2019) Sustainability disclosures of hybrid organizations: Swedish state-owned enterprises

 GRI Reporting/ Sustainability/ Environmental Reporting   Organizations (State-owned/Public companies, SMEs)  Assessment of Sustainability Reporting

5 (Steinhöfel et al., 2019)

Sustainability Reporting in German Manufacturing SMEs

 GRI Reporting/ Sustainability Reporting 

 Determinants → Sustainability Reporting

6 (Laskar, N., 2018) Impact of corporate sustainability reporting on ﬁrm performance: an empirical examination in Asia

 GRI Reporting// Sustainability Reporting 

 Stakeholders/ Board of directors/ Femininity → Sustainability Reporting  Environmental Reporting → Company Performance

7 (Maj, J., 2018)

Environmental Reporting in Polish Organizations

 GRI Reporting// Sustainability Reporting 

8 (Cardoni et al., 2019)

Evaluating the Intra-Industry Comparability of Sustainability Reports: The Case of the Oil and Gas Industry

 Stakeholders/ Board of directors/ Femininity → Sustainability Reporting  Environmental Reporting → Company Performance

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# Author (s) Title Checklist for literature review

9 (Chen et al., 2015)

Applying GRI reports for the investigation of environmental

management practices and company performance in Sweden, China, and India

 Stakeholders/ Board of directors/ Femininity → Sustainability Reporting  Environmental Reporting → Company Performance

10 (Bednárová et al., 2019) From Environmental Reporting to Environmental Performance

 Stakeholders/ Board of directors/ Femininity → Sustainability Reporting  Environmental Reporting → Company Performance

11 (Moratis, L., & Brandt, S., 2017)

Corporate stakeholder responsiveness? Exploring the state and quality of GRI-based stakeholder engagement disclosures of European firms

12 (Gallén, M. L., & Peraita, C., 2017)

The relationship between femininity and sustainability reporting

 Organizations (State-owned/Public companies, SMEs)  Determinants → Sustainability Reporting

13 (Fuente et al., 2017)

The role of the board of directors in the adoption of GRI guidelines for the disclosure of CSR information

14 (Kolk, A, 2008) Sustainability, accountability, and corporate governance: Exploring multinationals' reporting practices

15 (Cooper, S. M. & Owen, D. L., 2007)

Corporate social reporting and stakeholder accountability: The missing link

16 (Adams, C. A., 2004)

The ethical, social, and environmental reporting-performance portrayal gap

17 (Odwyer, B., & Owen, D. L., 2005)

Assurance statement practice in environmental, social, and sustainability reporting: a critical evaluation. The British Accounting Review

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# Author (s) Title Checklist for literature review 18 (Hahn, R., &

Kühnen, M., 2013)

Determinants of sustainability reporting: a review of results, trends, theory, and opportunities in an expanding field of research

GRI Reporting/ Sustainability Reporting 

19 (Antoni, M., & Hurt, Q., 2006)

Applying the Global Reporting Initiative (GRI) for public bodies in the South African context: the eThekwini experience

20 KPMG (2013) The KPMG International Survey of Corporate Responsibility Reporting 2013

21 KPMG (2017)

The road ahead, The KPMG International Survey of Corporate Responsibility Reporting 2017

The articles reviewed and analyzed in Table 1 examine various fields, such as factors influencing sustainability reporting, relationship between sustainability reporting and company performance, and the influence/role of stakeholders, femininity, and/or board of directors in sustainability reporting etc. From the analyses of the articles by the checklist methodology, the thesis identifies the research gap, which is research in assessment of sustainability reporting lacks much and by conducting this thesis research , it can contribute to this research area and mitigate the indicated research gap.

The thesis shrinks the research gap, as there is not much research work done in assessing sustainability reporting of companies and the thesis assesses sustainability reporting based on GRI guidelines of selected companies, which clearly shows the contribution of this thesis in the research area.

2.2 Theoretical Framework

Sustainability reporting (SR) is now a trend for companies to sustain in the business. The theories related with SR are briefly discussed and explained in this section with their usage and purpose in companies, such as institutional, agent, and stakeholder theory, alongside legitimacy theory, which is a correlation between institutional and stakeholder theories regarding environmental reporting. To understand the companies behavior towards sustainability reporting, it is important to know the relevant and influential theories on sustainability reporting that the thesis has utilized. Therefore, these four theories are chosen and used in the Discussion

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(Section 5) and Conclusions (Section 6) sections which bridge these theories to the practical results achieved from the selected state-owned companies. These theories help in understanding the rationality of the companies regarding their behavior towards sustainability information and sustainability reporting from the attained findings from their sustainability reports.

2.2.1 Institutional Theory

Institutional theory shows different aspects of the social structure. Rules, regulations, norms, etc. are established as social behavioral guidelines by institutional theory. Institutional theory has various components that explain the creation, elimination, adoption, and adaption of these elements over time.

Many companies believe that environmental reports are just a new phenomenon that will pass by, so they produce corporate environmental reports separated from the annual report; they feel that without having those individual reports, they will not get institutional legitimacy in the present time (Ljungdahl, 1999), therefore, for example, in annual reports, the agents can’t act according to their ability, and the strategies of legitimacy are at secondary importance. It shows that companies already use the conventional, and generally the acknowledged structures and procedures of the institutional process (Suchman, 1995). In Ljungdahl’s (1999) study, he observes that environmental reporting has become a necessity amongst the agents, but they were unable to give the reasons for that; on top of that, their answers were like they do because others do it as well, which is in a similar context with institutional theory. The companies may have found this way easier and helpful for environmental reporting so that they can avoid legitimacy threats and follow the legitimacy (DiMaggio & Powell, 1983).

2.2.2 Agent Theory

Agent theory explains the relationship issues between business owners and their agents. The company management and their self-interests are on display in agent theory. Agent theory focuses on company management and their self-interest, not like other theories such as stakeholder, legitimacy, and institutional theories (Gray et al., 1995). Agent theory explains the control problems relating to company owners and company management/agents appointed by them only (Jensen and Meckling, 1976). According to Barney and Ouchi (1986), this control problem starts due to asymmetric information. The agents have more advantages than the owners if they are more informed. The owners keep control over the agents so that they do not act for their self-interest, this is known as agent costs, and the costs for structuring, bounding, and monitoring contracts between agents etc. are comprised in agent costs (Jensen, 1983). The company management agents generally show what is suitable for them using the agent theory on voluntary reporting. Watts and Zimmerman (1986) state that environmental reporting works as a tool for diversion in the political field also. The agents attempt to cheat the owners and take advantage of it when the owners and investors are not fully informed, which happens in the pure world of neo-classical economics (Hendriksen and van Breda, 1992).

Agent theory needs attention as it states that company environmental reporting works as a diversion tool for political interest and signals in the stock market also (Ljungdahl, 1999).

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Besides, the organizations alter their reports according to the preferences of the stakeholders (Brignall and Modell, 2000). As these reports are manipulated, so those reports may be legit for the targeted stakeholders, but not for other reports; Meyer and Rowan (1977) named this paradox de-coupling.

2.2.3 Stakeholder Theory

Stakeholder Theory focuses on the interconnected relationships between a business and its customers, consumers, employees, suppliers, communities, investors, and those who have a stake in the organization.

Enterprises control the alliance of stakeholders (Lowe, 1971). According to Freeman (1984), stakeholder is an actor who is influenced/ influences the activities of a company. Donaldson and Preston (1995) take an approach of stakeholder theory that moralizes good stakeholder management with a societal perspective. There may be subdivisions of these stakeholders; one distinctive aspect is ownership. This ownership is for those who have a stake in the company and can influence on environmental issues with their opinions (Donaldson and Preston, 1995). Clarkson (1995) characterizes them as primary and secondary stakeholders. Freeman (1984) also says that primary and secondary stakeholders are useful for a company because the management can evaluate the after-effects of the taken actions and can determine the probable effects from the deciding decisions and can make strategies to resolve them.

The top management of the company only see it useful in environmental reporting if it can boost the company’s reputation (Jaggi and Zhao, 1996); however, others support that it is the companies’ responsibility to report on the effect on the environment with their activities (DTTI, 1993). In an empirical study, Roberts (1992) shows data of a company regarding social reporting, that reports from various stakeholder powers. However, this study does not establish any relationship between the occurrence of social reporting and stakeholder power.

It is vital to decrease the information asymmetries (Akerlof, 1970) between the stakeholders and the company when there is a conflicting interest in resource use, or there exist information asymmetries between the actors. This may lead to opportunistic behavior among the agents, where they intend to gain benefits for themselves from their responsibility. It is difficult to make an outside-in evaluation of a company (Cerin and Dobers, 2001), so there is a need for an act as an information bridge to decrease this opportunistic behavior.

In one of Cerin’s (2000) studies, he revealed the data preferences of various analysts in environmental reports and how the miscellaneous stakeholders receive this information in the financial community. General Fund analysts preferably work with financially linked data, Ethical Fund analysts like to work with information related to environmental performance and risk & compliance data, Credit and Insurance Risk analysts seem to work with fancy finance data and risk & compliance data (Pettersson and Earl, 1998), but no analyst has paid much attention for environmental opportunities and stakeholder involvement.

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2.2.4 Legitimacy Theory

Legitimacy may not be a stand-alone theory; Staying within the framework of institutional theory, it explains the behavior of organizations in searching their stakeholders and what they look for and how they do it. However, legitimacy plays a vital role in environmental reporting. It is easier to find resources and support if the company gains more legitimacy, for example, investors. However, according to Schwartz (1997), legitimacy is independent and does not depend on the company’s success. Despite that, large companies engage more with legitimizing behavior than small companies (Wolff, 1986). Sometimes the demands of the environment and society conflict with each other; therefore, Wolf (1986) suggests that the companies can solve it if they can distinguish between legitimizing and operative activities.

Stakeholder support is vital in terms of providing resource benefits (Clarkson, 1995). Clarkson continues by saying that secondary stakeholders that also give resource benefits may not be material resources, but they provide social legitimacy with their support. Hence, it becomes imperative for the companies to make sure with the influencers so that they can influence the primary stakeholders.

Legitimacy is a correlation between the company's perception of itself and its stakeholders' perceptions (Ljungdahl, 1999). The difference between legitimacy and legality is studied by Pfeffer and Salancik (1978); so, legitimacy can be acted/ received by a company amongst its stakeholders. However, it may not behave legally in every aspect. A company dealing with many problems can try to do few things to improve its performance, such as letting the stakeholders know about the intentions of the company, changing stakeholders' perceptions of the problems, changing external expectations of the performance etc. (Gray et al., 1996); institutional concepts like Brignall and Modell (2000) and Oliver (1991), support this strategic view on legitimacy.

Patten (1991) found out a relationship between social reporting and the size of the company and its line of business while researching social disclosures in American corporations. He found an interesting finding that the oil companies started environmental reporting in the 1990s, due to a disaster in Alaska in 1989, that occurred because of one of the oil companies to protect their legitimacy and safeguard their image. Patten's findings were then verified later by Walden and Schwartz (1997) and found that the oil industry was reporting most voluntary environmental reports. Similarly, due to a bad P.R. activity, Norwegian state-owned oil company Norsk Hydro started having environmental reporting so that it can regain its image.

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3. Methodology

3.1 Research Methodology

The research methodology for the thesis consists of some approaches, which are literature review, case studies, secondary data analysis and content analysis. Literature review of academic research work is conducted to support the thesis research and identify the research gap to help the thesis, which are explained in Sub-Section 2.1 elaborately. Other methods taken for this thesis are described below in the following sub-sections in detail.

3.1.1 Case Studies

Case studies means analysis of an entity, an event, or an individual by gathering data from different sources of evidences for investigating a contemporary phenomenon (Yin, 1989). There can be different sources of evidences, such as methodical interviewing of public/ private records, collecting data by observation etc. Case studies has two types, single case studies and multiple case studies. Single case studies can be performed if the case has atypical research opportunities and extreme models (Yin, 1994). On the contrary, multiple case studies provides more reliable, accurate, generalized and a stronger basis to support the research work (Eisenhardt and Graebner, 2007).

This thesis analyzes multiple case studies by assessing the sustainability reports of three Swedish state-owned companies, LKAB, Vattenfall and Akademiska Hus. These three companies are selected because Swedish government has made it mandatory for the state-owned companies to do sustainability reporting with some guidelines to follow. As sustainability reporting is obligatory for these companies, so the assessment of their sustainability reports would provide an overview of how well they are conducting work. Another major reason for selecting these companies are that their sustainability reporting profile and history is very good, and they are having sustainability reports for over 10 years. After assessing their annual sustainability reports in Discussion (Section 5) extensively, the main findings are presented in Conclusions (Section 6). Thus, the thesis analyzes the sustainability reports of the case study companies to determine their approaches and behavior towards this report to show whether these companies are the governmental reporting guidelines properly or not. Despite the selected companies are from different sectors, they can be representative for other companies also because reporting standards and guidelines are not sector specific, moreover, they are same for every company. Thus, the results and conclusions obtained from the case study companies can be generalized for other companies.

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3.1.2 Secondary Data Analysis

Secondary data analysis means that any data that are examined for a research question other than the origin question/s for which the data were collected initially (Vartanian, 2010). In sustainability reporting research, this analysis is widely used. There are advantages using secondary data analysis (Cowton, 1998), which are:

• It reduces the time, energy, resources, and money investment. • It allows researchers to perform longitudinal analysis.

• Data collection process maintains professionalism and expertise, so the external validity of data is high.

Secondary data analysis also has some disadvantages (Cowton, 1998), they are:

• Although secondary data analysis allows to collect large samples of data, the data may not contain the required information of a researcher, for that researchers often need to alter their research questions or limit the study.

• Despite secondary data usage is cheaper, as the researcher is not involved in gathering the data and does not have the exact knowledge about the data collection process, so sometimes the researcher has to interpret the data to mitigate the limitation.

• Sometimes acquiring secondary data can be expensive, especially the official data. In this thesis, the data has been collected from the management tool named GRI, that provides information on sustainability information on the sustainability reports, which is not collected by any researcher in those reports, and that data is collected for some other purpose, such as presenting a report to another receiver (e.g., stakeholders of the company), thus, in that case, it is a primary data study. However, the methodology performs like a secondary data study, because the actual data is collected for some other purpose and is used in this thesis research for another purpose. Therefore, to evaluate the sustainability reports of the selected Swedish state-owned companies, the sustainability reports based on GRI guidelines, have been analysed and the information provided in the GRI indexes are used as secondary data sets. The data is generated annually by the companies. Additionally, the thesis presents the consistency of the data provided in their sustainability reports during the selected timeframe and analyses the continuity and/or discontinuity of the provided data for each year.

3.1.3 Content Analysis

Content analysis is a research method for collecting data by classifying quantitative and/or qualitative information into pre-defined categories (Guthrie and Abeysekera, 2006). The data can be gathered from surveys, literature reviews or other sources. Content analysis is conducted to obtain the data from case study companies’ sustainability reports, and the sustainability information are already segmented into the GRI indicators/ indexes, which are presented in detail in Results (Section 4). The information provided in those GRI indicators are evaluated later to establish the contribution of the thesis research provided in Sub-Section 2.1.

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3.1.4 Validity & Reliability

Validity means that the intended measures are measured accurately in the research methodology measures (Saunders et. al., 2012). The thesis obtains validity by correlating each step of research methodology described in Section 3.1. The central of a case study method is triangulation (Shoaib & Mujtaba, 2016), which is a combination of different techniques, strategies, and methods for improving the strength of the investigated case studies. This thesis combines various methods such as literature review, secondary data analysis and content analysis to increase the robustness of the case study method. The thesis analyses the information provided in GRI indexes and studies the governmental guidelines for external reporting for state-owned companies for each of the case study companies by using the triangulation of case study method, that enhances its validity while obtaining the results and conclusions.

Firstly, the thesis identifies the research gap by performing a literature review of academic research work (Section 2.1) which is conducted by using Scopus database, which contributes to the validity of the thesis. Also, literature review is conducted to gather scientific evidences to support the motivation behind the thesis and support the analysis of the case study companies regarding their sustainability reports to understand the companies approach towards this reporting. Then to assess the sustainability reports of state-owned companies, significant GRI indexes are chosen, and the case study companies are evaluated with this secondary data acquired from the reports.

Reliability means generating the same results and conclusions repeatedly from the research method (Saunders et al., 2012). The thesis shows its reliability by performing the mentioned approaches taken in research methodology. Moreover, the thesis studies and examines the approach of the case study companies regarding following the guidelines provided by the Swedish government for external reporting. The study is with conducted by the sustainability reports of the case study companies which are available in public domain, which are later put through the mentioned approaches and research methodology for obtaining the results and conclusions. Hence, the thesis fulfills the condition of reliability while showing the case study companies’ improvement areas.

3.2 Thesis Process

The mentioned research questions aim to understand the approach and consistency of state-owned companies towards sustainability reporting by using the secondary data, including both quantitative and qualitative data. The first step was to select the state-owned companies which have been reporting on their sustainability yearly consistently. Hence, some of the state-owned companies were checked out, and three of the biggest, renowned, and well-known state-owned companies were selected to study. The author wanted to choose the companies in the same/ similar area, but due to focusing on government companies and good reporting profile, it was not possible to categorize the companies in that way. Thus, LKAB, Vattenfall, and Akademiska Hus were chosen, because they are the Swedish state-owned companies and have a sustainability reporting profile of over a decade though they are from different sectors.

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The annual and sustainability reports of those companies were collected from the SDD-GRI Database website. GRI Database is owned and operated by GRI, where all types of sustainability reports, GRI-based or otherwise, of companies around the world, are published for the public with free access. This database shows all the reports published by the companies every year. It was important to choose a series of reports within a certain timeframe to fulfill the aim of the research. Therefore, some of the reports were discarded due to unavailability and language barrier as some reports were written in Swedish, so the timeframes for the three companies are not the same.

The chosen period for LKAB and Akademiska Hus is 2014-2018, and Vattenfall is 2012-2018. Thus, LKAB and Akademiska Hus’s timeframe have five consecutive years, and Vattenfall’s timeframe has seven straight years. The focus in selecting these timeframes was to see the continuity and consistency of the reports, without skipping any year in the middle. Therefore, these timeframes serve the purpose of this thesis the best.

Once the companies and their period were selected, then another most essential task was to choose the most significant, crucial, and relevant GRI indexes from the GRI guidelines to evaluate the approach of the companies towards reporting those indexes. 15 GRI indexes are selected (Section 4) to assess how the companies handle these indexes independently, and then comparisons are made in the approaches of the three selected companies. The companies are also compared among themselves regarding the guidelines of external reporting for state-owned companies issued by Regerinskansliet, which is a Swedish government organization. Then, all these findings were analyzed with discussion. Finally, the conclusion was derived from the analysis, which also leads to some suggestions for the companies to consider in the future. Figure 1 shows the steps followed through the thesis work.

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4. Results

This section presents an idea of the sustainability information provided by the three state-owned companies, LKAB, Vattenfall, and Akademiska Hus, in accordance with the GRI guidelines in the selected timeframes. As the GRI framework consists of various indexes representing different kinds of aspects of a company, such as aspects on general information, stakeholder engagement, economic, environmental, emissions, human rights etc., thus it was important for the author to include the crucial and essential GRI indexes that cover most of the aspects of a company, to understand how the companies handle these diverse indexes. The selected 15 GRI indexes come from different aspects of the GRI guidelines, they are from Strategy, Stakeholder engagement, Reporting practice, Energy, Emissions, Effluents and waste, Diversity and equal opportunity, Non-discrimination, and Human rights assessment, and these GRI indexes are:

• Comments from the CEO

• Significant changes compared with previous years’ reports • Stakeholder groups

• Identiﬁcation and selection of stakeholders • Methods for working with stakeholders

• Key issues raised through stakeholder dialogue • Energy consumption within the organization • Direct carbon dioxide emissions

• Indirect carbon dioxide emissions

• NOx, SOx and other significant air emissions • Total number and volume of significant spills

• Total amounts of overburden, rock, tailings, and sludges and their associated risks • Diversity of governance bodies and employees

• Incidents of discrimination and corrective actions taken

• Operations that have been subject to human rights reviews or impact assessments The information provided in each index in the sustainability reports of the companies is briefly presented in the following parts of this section for each company separately for a better understanding of each company’s approach towards their sustainability information.

4.1 LKAB

The sustainability information provided in the selected GRI indexes of LKAB’s sustainability reports from 2014 to 2018 are elaborately presented under the heading of each GRI index. Comments from the CEO

In the Annual and Sustainability Report 2014, the President and CEO of LKAB, Lars-Eric Aaro believed that LKAB has an edge in competition regarding their products as they are high in quality and climate-smart (LKAB, 2014). He also emphasized on their objective to be an innovative, responsible, and resource-efficient mining company in the world. The year 2014 had some difficult market situation, and LKAB had to take cost-cutting measures because of a

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decline in iron ore prices, production disruption, and a great investment in urban transformation, for which they have had to lay off 400 employees. The president then talked on the positives of LKAB, such as ranked as Sweden’s one of the best employers in Universum’s annual survey for 2014 (LKAB, 2014). He also addressed some social aspects, such as about women proportion and accident rate in the company, and the Code of Conduct is based on the UN Global Compact. He had full confidence in LKAB strongly facing the coming year 2015 by being secured financially and looked forward to the return of the investments.

In the Annual and Sustainability Report 2015, the new President and CEO of LKAB, Jan Moström, said that LKAB held a strong position in terms of processed iron ore products and pellet production got maximized, despite having a difficult time in the iron ore industry globally due to less steel demand (LKAB, 2015). Due to the ongoing crisis, they again had to lay off more employees, but by implementing a new program that uses retirement, natural attrition, and lowering the number of temporary staff. LKAB planned for the coming year 2016 to have three units in the business, where each unit would be responsible for their core business, which would lead them to be more focused on their production and profit. Along with this, the Board of Directors decided that LKAB should be more proactive regarding having better control over time and cost in March 2015 (LKAB, 2015). Despite the market situation, LKAB still ranked high on an attractive employer’s list and ranked Sweden’s one of 100 attractive employers in the FöretagsBarometern student survey (LKAB, 2015). He said that LKAB aims for a sustainable workplace regarding safety and health.

Jan Moström quoted in the Annual and Sustainability Report 2016 that LKAB has increased the focus on its core business in 2016 (LKAB, 2016). In January 2016, the three-unit structure was introduced, the Northern, the Southern, and the Special Products Division; it specified the responsibility of each business, and it provided proper direction to each employee starting from the management, that would help in continuous improvement and increase cost efficiency (LKAB, 2016). LKAB increased the volumes and reduced the cost, though it was reported a loss for LKAB in 2016 due to the loss in open pit mine and costs of urban transformation. LKAB also started to develop and implement three areas, growth, employeeship and leadership, and excellence for a better system. LKAB introduced the environmental goals by per tonne produced from 2016 (LKAB, 2016).

The President and CEO of LKAB said in the Annual and Sustainability Report 2017 that LKAB had a positive result in 2017 due to a better market condition and increased in the volumes, which made LKAB stronger. LKAB started working on its sustainability aspects more and planning on the logistic and processing of its next-generation (LKAB, 2017). LKAB also joined with SSAB and Vattenfall for an initiative named HYBRIT (Hydrogen Breakthrough Ironmaking Technology) in 2015, which aimed to achieve fossil-free steel by 2035, which will help in achieving the UN climate goals for Sweden. The “next-generation LKAB” aims to increase productivity by 40%–50% and to make carbon-free LKAB by 2045 (LKAB, 2017). The President and CEO of LKAB said in the Annual and Sustainability Report 2018 that they have been improving their production structure’s efficiency, alongside preparing for the future (LKAB, 2018a). The keywords for their strategy are operational excellence and sustainability.

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LKAB also got involved in a development program with four other leading companies, Volvo Group, Epiroc, ABB, and Combitech, called The Sustainable Underground Mining (SUM), which aims to achieve an autonomous, carbon-free, and digitalized new world standard for large-scale mining (LKAB, 2018a). Other than that, LKAB has been investing in new innovative technology and developing on strategic minerals production, along with the HYBRIT initiative. Jan Moström emphasized increasing its focus on environmental goals, climate challenges, and resource efficiency to build a position in the iron ore market globally. Significant changes compared with previous years’ reports

There has been a transition in GRI reporting in 2014, from G3 to G4, and an assessment of materiality analysis was performed (LKAB, 2014). The responsibility for human rights, anti-corruption, and supply chain assessments are explained in the report. Yet there is no report on industrial waste and sorting grade. As rail transport is included in the reporting on carbon and energy for 2014, the boundaries have been changed for energy and carbon reporting; emissions from operation places like Narvik and Luleå are included in this reporting too as of 2014 (LKAB, 2014). The changed calculation method of the volume of tailings has been applied in Kiruna, and Svappavaara’s calculation method has been the same (LKAB, 2014).

There has been a new process for sulfur in Svappavaara’s pelletizing plants in 2015 (LKAB, 2015). Earlier, Sulphur emissions were measured by mass balances at the plants, whereas a direct measurement can be taken due to the increased purification of Sulphur. Therefore, there are changes in the data because of the purification expansion in 2015 (LKAB, 2015).

LKAB has reported all types of cases in previous reports; those are called corruption and arbitrary conduct from 2016 (LKAB, 2016). Bribes, favoritism, and sponsorship etc. come under corruption, and arbitrary conduct comprises activities like false time tracking, to sleep at work or not doing work assignments etc. The mined amount of magnetite, crude ore, and hematite are reported from the annual and sustainability report from 2015 on page 11 with waste/ barren rock and on page 39 without waste/ barren rock (LKAB, 2016).

LKAB included the data for accidents per million hours worked in 2017 to provide the contractors with an honest picture of the accidents that occur in the operations (LKAB, 2017). Hours worked by suppliers was used by a standard figure, which is based on the numbers from 2015 to 2017 (LKAB, 2017).

A new water balance was generated for Kiruna operations in 2017, which led to a massive change in overflow water volumes. This change has affected the trace metals and nitrogen levels in the water. Therefore, to obtain approximate data, corrections for total emissions and target values have been made between 2015 and 2021 (LKAB, 2018a). In 2017, adjustment of the target for nitrogen emissions to air had been made from the main cause of emissions, which is the pelletizing plants, and it balanced out the production sites target also. There have been no other significant changes regarding scope, measurement methods, or boundary compared to the past reports in 2018 (LKAB, 2018a).

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20 Stakeholder groups

Identiﬁcation and selection of stakeholders Methods for working with stakeholders

Key issues raised through stakeholder dialogue

LKAB describes its stakeholders as those who are directly/ indirectly influence or get influenced by LKAB’s decisions. The prioritized stakeholders of LKAB are the customers, owners, municipalities, authorities and legislators, neighbors/ local communities, suppliers, and contractors, interested groups such as the tourism and reindeer herding industry, Sami villages, trade associates, and employees (LKAB, 2018a). As the business works in a long-term approach and with collaboration, LKAB wants to be more accessible, interactive, transparent, and responsive with its stakeholders. LKAB engages with different stakeholders through various dialogues for a better understanding of their expectations from LKAB.

LKAB engages with the customers through various conferences, collaborative projects, and regular meetings on stimulating partnerships, research and development, resource efficiency in the use of raw materials, greenhouse gas emissions, energy use, climate-smart products, quality and price, urban transformation, and environment (LKAB, 2015). The results from the dialogues show that the customers want them to improve the quality of the pellet and to develop more collaborative projects on energy-efficient processes (LKAB, 2015). LKAB has highly upgraded its iron ore products to reduce CO2 emissions and reduce landfilled waste.

The Swedish Stare is the owner of LKAB, and LKAB present quarterly reports and have continual discussion through various meetings and visits, Board representation, and Annual General Meeting (LKAB, 2014). The state expects LKAB to comply and follow the UN’s global goals and the other required guidelines. The major issues discussed in these dialogues are sustainable products, financial return, customer and supplier management, and ethics and anti-corruption (LKAB, 2017).

LKAB holds both public and private meetings with relevant domestic and international authorities, municipalities, and the County Administrative Board, regularly focusing issues on compliance with laws, regulations, and permits, environmental and climate change responsibility, local emissions, and impact on air, water, and land, urban transformation interaction with the local community, land and planning issues and conflicts of interest with other industries (LKAB, 2015). To fulfill their expectations, LKAB presents annual and sustainability reports, and they inspect, consult, monitor, and improve the operations daily. For the employees, they conduct meetings at the workplace, strategy days, employee surveys, performance reviews, and safety officer meetings to focus on issues such as occupational health and safety, professional development, remuneration, cooperation with trade unions, non-discrimination, diversity, and equality, and competence management (LKAB, 2014).

LKAB has around 4,300 suppliers and contractors. LKAB conducts supplier days and meetings with them regularly on major issues such as supplier management, occupational health, and

The mandatory sustainability reporting assessment of the Swedish state-owned companies-LKAB, Vattenfall, Akademiska Hus