Choice of sustainability reporting framework by companies listed on Nasdaq Helsinki

Abstract

Stakeholders demand transparency in regard to companies’ social, economic and environmental impact. 2014/95/EU Directive obliges publicly listed companies to disclose sustainability information related to their business activities. Companies, in turn, may choose freely what sustainability reporting framework to follow in order to fulfill this obligation and respond to the stakeholders’ demands. This thesis investigates what sustainability reporting frameworks publicly listed companies in Finland choose and potential reasons behind their choice. Also, idea of universal sustainability reporting framework is explored form the perspective of reporting entities. The following research questions are being answered: What percentage of publicly listed companies reports their sustainability using GRI standards? Which sustainability reporting frameworks are used among publicly listed companies on Helsinki Stock Exchange? What factors affect the choice of the sustainability reporting framework? What would be the pros and cons of having a universal reporting system among publicly listed companies on Helsinki Stock Exchange? A mixed research method is applied. Quantitative content analysis is followed by a self-completed survey. The findings of the research suggest that almost 40% of publicly listed companies mention reporting in accordance with GRI in their sustainability reports. Other frameworks that are used include UN Sustainable Development Goals, UN 10 Principles, CDP, EPRA, SASB, TCFD, PRI, ESG Reporting Guide, UN Principles for Responsible Investment, IIRC, Nasdaq ESG and ICC. The choice of sustainability reporting framework appears to be affected by comparability that the framework offers, credibility of the framework organization, choice of industry peers, availability of company financial and intellectual resources as well as global recognition. Potential benefits of universal sustainability reporting framework include simplification and harmonization of reporting, improved reliability and comparability, more financially viable application process. Possible disadvantages may be heaviness and complexity of such framework and limited resources of different-sized companies from different industries.