Does stakeholder pressure have an effect on the quality of the sustainability report?

University essay from Umeå universitet/Företagsekonomi; Umeå universitet/Företagsekonomi

Abstract: Our planet suffers from severe climate change and environmental issues has never been as important as it is now. Countries and communities come together to get involved in environmental questions and to work against a sustainable future. Companies are also expected to take act on this concern and incorporate sustainability into their business practices. To account for this, company’s disclosure a sustainability report and the numbers of companies that do so has increased rapidly the last years. From 2011 to 2013 there was almost a 50% increase of submitted sustainability reports. Since then, sustainability reporting has gone from optional to mandatory as a new law came into place in 2016. However, as companies start to disclosure sustainability reports more than ever before, new issues have arisen. The lack of regulation means that there is no guarantee for quality in the report and studies has shown that the stakeholders demand higher quality and more transparency of the sustainability report. Thus, it could be of importance for companies to produce reports of better quality in order to meet the demands of their stakeholders. Retaining a good relationship is crucial and it affects the growth of the company as it affects competitive advantage and the possibility to manage risks. Previous literature has found evidence that stakeholder pressure has influence on the transparency, which has similarities to quality, of the sustainability reports globally. With this thesis we aim to contribute with additional information to existing literature with a new geographical area, Sweden. We also aim to contribute to understanding of how quality of the sustainability reports can be determined. The critical assessment of the sustainability reports from each stakeholder becomes more important and previous literature has shown that different stakeholders have different effect on transparency in the sustainability reports. First and foremost, the purpose of this thesis is to investigate if the pressure from different stakeholder groups has an effect on the quality of the sustainability report. We intend to do so with the following research question: Does stakeholder pressure have an effect on the quality of sustainability reports? The companies will be split into four different groups based on the industry the company operates within and the sub-purpose is to see if there is any difference in the impact on the quality of the sustainability reports between the different groups. The quality will be determined by adherence level to the GRI G4 framework, how many other standards and guidelines the report is in compliance with and the existence of external assurance. The population is the 127 companies who has their reports available in the GRI database. We have conducted a quantitative study using a linear regression analysis on those 127 companies. The results led us to the conclusion that the relationship between stakeholder pressure and the quality of the sustainability reports cannot be explained by the model used in this thesis. A two-sample t test was conducted for each group of industry to see if there was any difference of the mean of quality if the companies was represented in the industry or not. The results showed us that the mean of the quality was higher for the companies operating in an environmentally sensitive industry.

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