Non-Financial Disclosure and Intra-Industry Comparability: A Macro, Meso and Micro Analysis

Abstract

The inadequacy of financial reports for meeting the information needs of stakeholders has prompted companies to adopt non-financial communication systems (also called non-financial disclosure—NFD). Comparability of NFD is an issue as it allows making sense of the information. Nevertheless, while some argue that comparability is particularly difficult to pursue in practice on a general level, it can be achieved among companies belonging to the same industry. This study aims to understand whether, at the empirical level, the comparability of NFD is achieved and to what extent (macro, meso or micro). To achieve this aim, a text analysis of the NFD was performed. The object of analysis is represented by the NFD published by the listed companies belonging to the energy and banking industries, and that is part of the Dow Jones sustainability index. The main results are the following. First, there is a de facto comparability in terms of adopted standards, but not in terms of how the standards are applied. Second, the phenomenon of label creativity represents a relevant barrier. Third, although content standardization is lacking, common information dimensions in the reports seem to emerge. This appears to be an invitation to policymakers to transpose virtuous behavior and to implement the desired harmonization of jure.

Comparing the uncomparable? An investigation of car manufacturers' climate performance

“…According to the functionalist perspective, the problems of comparison can be explained primarily by technical issues that can be solved by improved standardization and more rigorous application of existing standards. This perspective postulates that performance measurement and comparison are possible as long as the same measurable indicators are used by comparable companies (Cerioni et al, 2021; Gibassier & Schaltegger, 2015; Krajnc & Glavič, 2005; Velte et al, 2020; Zsóka & Vajkai, 2018). The analysis of the results clearly shows that, as far as the automotive sector is concerned, this is not really the case.…”

“…From this critical perspective, it is reasonable to assume that the carbon reporting of polluting companies with high GHG emissions, such as car manufacturers, is highly likely to be greenwashed due to institutional pressures 1 regarding these issues and impression management strategies put in place to improve the companies' image with stakeholders (Cong et al, 2020;Talbot & Boiral, 2018;Tang & Demeritt, 2018). However, in line with the literature on comparability, one can also assume that because climate data are highly standardized, quantifiable, and scrutinized by stakeholders, the quality of the disclosed data is improved and thus facilitates the establishment of rankings even if the data's reliability remains questionable (Avram et al, 2018;Cerioni et al, 2021;Krajnc & Glavič, 2005;Luo & Tang, 2016;Zs oka & Vajkai, 2018).…”

“…The comparability of reported indicators is essential to the use of SRs by stakeholders, and it is a basic principle of sustainability standards as well as of accounting practices in general (Cardoni et al, 2019; Cerioni et al, 2021; Lobo et al, 2018). According to the GRI, “the reported information should be presented in a manner that enables stakeholders to analyze changes in the organization's performance over time, and that could support analysis relative to other organizations” (GRI, 2013a, p. 14).…”

“…Most of the studies that have analyzed the comparability of sustainability performance are based on this functionalist perspective. Some studies have emphasized the importance of using an identical standard in order to harmonize practices, and the relevance of using the GRI to facilitate meaningful comparisons based on data from the same framework (Avram et al, 2018; Cerioni et al, 2021; Luo & Tang, 2016; Marimon et al, 2012; Venturelli et al, 2020; Willis, 2003). Studies also mention the need to make comparisons of companies from the same activity sector in order to improve the homogeneity of information rather than comparing apples and oranges (Amaeshi & Grayson, 2009; Avram et al, 2018; Cardoni et al, 2019).…”

“…Studies also mention the need to make comparisons of companies from the same activity sector in order to improve the homogeneity of information rather than comparing apples and oranges (Amaeshi & Grayson, 2009; Avram et al, 2018; Cardoni et al, 2019). Other external variables, such as stakeholder pressures, geographical region, regulatory framework, or organizations' size may make comparisons more difficult (Amaeshi & Grayson, 2009; Cerioni et al, 2021; Krajnc & Glavič, 2005; Zsóka & Vajkai, 2018). According to some authors, when SRs are conducted by external auditors, this tends to improve the quality of the data and therefore their comparability (Alazzani & Wan‐Hussin, 2013; Del Giudice & Rigamonti, 2020; Hodge et al, 2009; Martínez‐Ferrero & García‐Sánchez, 2018).…”