Creating sustainability reports that matter: an investigation of factors behind the narratives

Purpose: This paper provides a novel approach to examine sustainability report narratives by considering key features of these narratives including, forward-looking content, risk content, tone, and sustainability-specific content.

Design/methodology/approach: Using a sample of UK firms’ sustainability reports from 2014 to 2018, we capture the report content by compiling a collection of words using a computational linguistic technique that attempts to identify specific attributes of sustainability reports.

Findings: Findings show the main factors that determine the content of sustainability reports are: (i) external governance-related factors including the voluntary adoption of sustainability reporting assurance, the choice of assurance provider, stakeholder engagement, and ownership concentration, (ii) internal governance factors including board quality and the existence of a sustainability committee, and (iii) reporting behaviour including the publication of standardised Global Reporting Initiative (GRI) sustainability reports and financial reporting quality.

Practical implications: Corporate managers need to strengthen their internal and external governance mechanisms to enhance the comprehensiveness and credibility of sustainability reports and are encouraged to engage stakeholders in the sustainability reporting process. Policymakers can mandate the assurance of sustainability reports and establish reporting formats and standard words to control the tone of sustainability reports. Finally, researchers, professionals, as well as policymakers need to monitor sustainable development goals and targets to increase awareness, knowledge, and practices that can be operationalised to ensure a global society that can afford sustainable living.

Originality/value: To the best of our knowledge, no study has yet examined sustainability report narratives by considering key features of these reports including, forward-looking content, risk content, tone, and sustainability-specific content.