Inter-firm Comparability in Sustainability Reports : A study of GRI G4 implementation by companies in the EU energy sector

Background: Sustainability reporting is increasingly recognised by both companies and stakeholders to be a valuable tool of communication. However, the quality of these reports has come in to question where the inter-firm comparability principle, accentuated by the Global Reporting Initiative, is argued by scholars to be ineffective. Inter-firm comparability being essential for the user of the reports to understand how companies compare to others therefore needs to be analyzed. Purpose: The objective of this paper is to study the inter-firm comparability of sustainability reports among companies in the EU energy sector that employ the GRI G4 guidelines. Method: This study conducts a comparative content analysis of 13 energy companies’ sustainability reports. The systematic comparison conducted on the 28 most common G4 indicators in the energy companies’ sustainability reports shed light on the underlying conditions of inter-firm comparability. Conclusion and Contributions: The results of this study show that it is difficult to compare sustainability reports due to the qualitative nature of most indicators, the absent explanatory information, the incomplete disclosure on many indicators, and the extensive amount of superfluous information included in the reports. The moral and managerial branch of the stakeholder theory is further applied in the study to discuss the possible explanations as to why inter-firm comparability issues exist. The outcome of the study will therefore provide a deeper understanding of the inherent comparability issues and to possibly aid future improvements of the reports and their guidelines