The disclosure of the materiality process in sustainability reporting by Spanish state-owned enterprises

Abstract

PurposeThis paper aims to assess the disclosure of the materiality process in the preparation of sustainability reports of state-owned enterprises (SOEs). This paper also explores the effects of regulation mandating that SOEs prepare sustainability reports. In the specific case of port authorities, the study analyses the influence of a sector guideline that determines what should be included and the structure of the report. Another aim of this paper is to delve into SOE's motivations for disclosing information on materiality assessments, using the assumptions of the different theories to explain their reporting practices.Design/methodology/approachUsing a sample of SOEs sustainability reports, a content analysis is undertaken. The methodology involves the analysis of the information disclosed by SOEs in Spain and the development of a materiality disclosure index. This index enables sampled entities to be classified on a scale of 0–5, based on the extent of their disclosures of the materiality determination process. This study also identifies several variables that explain differences in these disclosures.FindingsA low rate of information disclosed about the materiality process can be attributed to the desire of SOEs to create symbolic legitimacy. In a context where the disclosure of sustainability information is mandatory, only few organisations apply the principle of materiality to define the content of their sustainability reports. These results highlight that institutional isomorphism has only had a limited effect on the materiality process.Research limitations/implicationsLimitations associated with the sample size and composition of the sample by sector apply.Practical implicationsThis research shows that generally accepted reporting guidelines constitute a reference framework for sustainability reporting but that the principles underpinning these frameworks are not always implemented.Originality/valueThis study extends the literature on the implementation of the principle of materiality and uses disclosure theories to explain the actual reporting by SOEs of their materiality process.

Stakeholder or Legitimacy Theory? The Rationale behind a Company’s Materiality Analysis: Evidence from Indonesia

“…Although this finding is in line with ref. [56], which stated that larger companies are more likely to increase the extent and quality of their sustainability reporting than smaller ones, based on the Pearson Chi-square at Table 12, this relationship is insignificant (0.124 > 0.05). voluntary reports is to strengthen their legitimacy in society.…”

Sustainability materiality research: a systematic literature review of methods, theories and academic themes

“…There is a lack of a clear link between materiality analysis and strategy and an insufficient forward-looking perspective (Tirado-Valencia et al , 2020). Ruiz-Lozano et al (2021) focused on the materiality process in the preparation of sustainability reports of state-owned enterprises and found a low amount of information disclosed about the materiality process because of the intent to create symbolic legitimacy. This was confirmed by the research of Farooq et al (2021b), which highlighted a decrease in disclosure regarding how companies identify material issues because organisations consider sustainability issues through the use of established lists and materiality analyses following regulatory guidelines (Borgert et al , 2018).…”

“…However, the challenge of transparency and the credibility of the sustainability information disclosed remains a challenge (Ruiz-Lozano et al , 2021). The major risk is that corporate managers can disclose their environmental and social impacts as a mechanism for legitimising organisational actions (Murphy and McGrath, 2013; Sepúlveda-Alzate et al , 2021).…”

Consequences of CSR reporting regulations worldwide: a review and research agenda

“…Studies find changes in the quantity of CSR disclosures, but disclosure quality remains low after the regulations. Several studies conclude that changes in CSR disclosures reflect symbolic rather than substantive response to CSR reporting regulations (Birkey et al, 2018;Schwartz, 2016;Solomon and Maroun, 2012;Marquis and Qian, 2013;Kansal et al, 2018;Ruiz-Lozano et al, 2022;Mobus, 2005). Specifically, the evidence suggests that firms continue to be selective of their CSR disclosures after the regulations; and employ diverse strategies in their CSR reports ranging from use of self-laudatory tone, boilerplate language, dismissal to concealment (Setia et al, 2015;Chauvey et al, 2015;Haji, 2013;Islam et al, 2021;Criado-Jim enez et al, 2008).…”

“…Specifically, early evidence suggests that firms continue to be selective of their CSR disclosures post the regulations, with a continued use of boilerplate language in CSR reports (Setia et al, 2015;Chauvey et al, 2015;Haji, 2013;Islam et al, 2021). Other studies also argue that CSR disclosures reflect symbolic rather than substantive response to CSR reporting regulations (Birkey et al, 2018;Schwartz, 2016;Solomon and Maroun, 2012;Marquis and Qian, 2013;Ruiz-Lozano et al, 2022). The observation that CSR reporting is ceremonial is consistent with the main conclusions in the voluntary CSR reporting literature (for an early exception see, e.g.…”