In Pursuit of Legitimacy: A Decade of Non-Financial Reporting in the European Automotive Industry

Abstract: Non-Financial Reporting (NFR) has grown significantly in importance within corporate reporting, particularly in the automotive industry, which is struggling with substantial inherent environmental challenges. However, at the same time, many argue that the NFR in the automotive industry is lackluster and riddled with inconsistencies and information overload. Hence, this study delves into the evolution of NFR in the automotive industry over the past decade, pinpointing key catalysts of change in sustainability reporting. Employing a mixed methods approach, the data analysis of a sample of 27 non-financial reports from three firms is conducted in two stages: initially, a computer-aided frequency analysis to discern hot-spots, followed by a qualitative content analysis using the CONI method on the chosen reports. Our findings demonstrate a rise in disclosure frequency and a subtle shift towards more quantitative data and specific targets. However, the firms studied displayed significant discrepancies in what their reports highlighted, indicating a lack of standardization in this field. Furthermore, regulations appear to have minimal influence on the firms’ NFR development. Instead, legitimacy concerns seem to be the main driving force, further explaining the disparities between reports as different firms have varying primary legitimacy concerns. In conclusion, the results of this study suggest that the current regulatory landscape is insufficient, placing legitimacy at in the drivers seat. Therefore, regulations need to be restructured to align with the requirements of regulators, the desires of stakeholders, and the objectives that firms aim to achieve, ultimately forging a landscape where NFRs include relevant information that can be effortlessly compared between firms.