Assessing Stakeholder Engagement in Non-financial Reporting: Evidence from companies listed on the Italian stock exchange

Non-financial reporting is a fundamental aspect of the organizational learning process toward sustainability in the business context (Stolowy & Paugam, 2018). Among the necessary requirements for the realization of advanced practices of non-financial/sustainability reporting, there are stakeholder engagement and materiality analysis. Stakeholder engagement (Noland & Phillips, 2010) implies the process of involving an organization’s stakeholders in understanding their interests and consequent information needs. Therefore, stakeholder engagement is recognized as a fundamental accountability and responsiveness mechanism, which implies the involvement of the subjects interested in the organization’s activity, aimed at identifying and replying to their problems, expectations, and concerns, connected with sustainability. By performing effective stakeholder engagement, organizations can gather the necessary information to identify significant stakeholder issues, thus allowing a materiality analysis (Khan et al., 2016) of relevant information to be disclosed in sustainability reporting. The principle of materiality implies that the disclosure of non-financial information leads to highlighting those topics that have significant economic, environmental, and social impacts, or substantially influence stakeholder assessments and decisions. In this sense, materiality can represent a sort of beacon in the evaluation processes of sustainability strategies and their effectiveness (Whitehead, 2017). Stakeholder engagement and materiality analysis are strictly interconnected and find their theoretical reference in stakeholder theory (Freeman, 1994; Donaldson & Preston, 1995). Starting from these premises, the purpose of this work is to investigate the quality of disclosure in the stakeholder engagement process. The research method utilized an assessment model based on 12 variables identified from an academic literature review and from the most common international sustainability reporting standards. Then, a specific system of indicators was identified for each variable. The disclosure quality assessment scores were obtained through the development of a content analysis (Krippendorff, 2018) on the non-financial statements published by companies listed on the Italian Stock Exchange. The results reveal that during the stakeholder engagement process, the fundamental principle of inclusivity envisaged by stakeholder theory was not fully respected and observed. Moreover, the research shows lights and shadows regarding aspects such as reporting balance and impartiality, description of the impacts, and their corresponding influence on stakeholders, which appeared to be worthy of further investigation.