Essays on the Institutionalization of Sustainability Reporting

Growing awareness of the environmental and social consequences of economic activity has changed the information firms are expected to provide to investors, policymakers, and other stakeholders. In addition to reporting on financial performance, firms are increasingly expected to disclose how sustainability issues affect their business and how their activities affect society and the environment. Yet sustainability reporting remains an evolving and contested field, characterized by differences across jurisdictions in regulation, reporting practices, definitions of materiality, and interpretations of sustainability information. This dissertation examines the institutionalization of sustainability reporting in the European Union and the United States—that is, how sustainability reporting practices are shaped and become increasingly established, standardized, and legitimized. The three essays provide evidence on organizational variation, cross-border regulatory spillover, and stakeholder interaction in sustainability reporting standard-setting.
The first essay examines whether corporate culture is associated with disagreement in environmental ratings across ESG rating providers. The findings show that firms with stronger people-oriented cultures are associated with greater environmental rating disagreement, whereas firms with stronger technology-oriented cultures are associated with lower disagreement. Additional analyses suggest that these associations are linked to the extent of firms’ environmental disclosures and the standardization of their ESG reporting practices. The essay shows that, in a largely voluntary reporting environment, organizational characteristics such as corporate culture may be associated with firms’ disclosure practices and the information available to rating agencies, thereby potentially contributing to variation in their assessments.
The second essay investigates whether the EU’s Non-Financial Reporting Directive (NFRD) generated spillover effects on U.S. multinational firms through their EU subsidiaries. The results show that, following the implementation of the NFRD, U.S. firms with EU subsidiaries increased their sustainability transparency and performance relative to firms without EU subsidiaries. The effects are stronger for firms with greater EU exposure, higher prior ESG performance, and more salient EU subsidiaries. The essay illustrates how regulatory pressures can extend across borders through multinational firms and influence corporate practices beyond the jurisdiction in which the regulation originates.
The third essay examines stakeholder engagement in consultation events related to the development of the European Sustainability Reporting Standards under the Corporate Sustainability Reporting Directive. It investigates the key motives and arguments of stakeholders from different professional fields and the trade-offs they encounter as the process of standardization both supports and challenges goals rooted in their respective field logics. The findings show that these stakeholder trade-offs collectively give rise to tensions over the purpose of sustainability reporting standards and the appropriate balance between flexibility and prescriptiveness. Overall, the study contributes to our understanding of how institutional complexity influences sustainability reporting standardization.
Together, the three essays portray sustainability reporting as an evolving institutional domain that can be understood across societal, organizational-field, and organizational levels. The dissertation contributes to the sustainability reporting literature by providing evidence on how corporate culture, cross-border regulatory spillover, and stakeholder interaction in standard setting shape the development of sustainability reporting practices. More broadly, it contributes to a multi-level understanding of institutionalization as a recursive process through which emerging reporting norms are developed, interpreted, and gradually established.