Circular economy and accounting information: A study of the reporting of circular economy in Sweden
Abstract: Background and problem: Facing today's climate crisis, companies play a key role incontributing to a sustainable change. Alternative business models have gained importance, suchas circular economy, which refers to the concept of cyclical closed-loop systems. Bothgovernments and external stakeholders are now stressing the importance of circular economy,resulting in new regulations and initiatives. Accounting information, including sustainabilityreporting, is an important tool for companies to communicate their sustainable actions. Thus, it isof essence for both companies and external stakeholders to gain insight into where thedevelopment of reporting sustainability is heading. Correspondingly, to what extent it isinfluenced by circular economy.Purpose: The purpose of this paper is to examine the development of reporting circular economyin Sweden. Specifically, to investigate the development during the last five years in which theimplementation of the European Union directive and Action Plan have taken place.Method and theory: The CONI method was used in the study to extract information fromaccounting information, combining both a quantitative and qualitative approach. Through CONI,both disclosure quality and word frequency have been measured and evaluated. The theoreticalframework consists of institutional-, stakeholder-, and legitimacy theory.Findings: There has been an increase in disclosure quality and quantity regarding the reporting ofcircular economy over the time period studied. The cause of this increase cannot be explainedusing a single variable, nor by the empirical results. Hence, its correlation with the new EuropeanUnion directive or Action Plan cannot be determined. Conversely its contribution can neither bediscarded. It is more likely to be the result of many contributing factors. While the terminology ofcircular economy becomes more frequent and recognized in society, institutional pressure mightmotivate companies to implement more circular economy in their reports. Furthermore,indications of industry specific characteristics influencing the reporting could be found in thesample. In addition, some specific circular economy activities could be considered more commonto report by companies in all industries in the sample. Equally important, the industry that emittedthe most greenhouse gases also showed the highest disclosure quality and quantity. A possiblecorrelation could be suspected but not concluded.
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