Stakeholder engagement in sustainability reporting by Fortune Global 500 companies: a call for embeddedness

Summary of “Stakeholder Engagement in Sustainability Reporting by Fortune Global 500 Companies: A Call for Embeddedness” (Ardiana, 2023, Meditari Accountancy Research)

 

  1. Purpose and Focus of the Study

This paper investigates whether Fortune Global 500 companies truly embed stakeholder engagement within their sustainability reporting. It explores whether stakeholder engagement disclosures are integrated into sustainability disclosures, rather than appearing as separate, independent sections of the report.

The study’s main research question asks:

Do large global corporations not only disclose stakeholder engagement practices but also link these disclosures to sustainability issues, thereby embedding stakeholder engagement in their sustainability reporting?

The paper argues that “embeddedness” means that stakeholder engagement is deeply ingrained in an organisation’s sustainability practices, influencing the selection of report content, disclosure framing, and accountability toward diverse stakeholders.

 

  1. Background and Motivation

Large multinational corporations, particularly those listed in the Fortune Global 500, play a dominant role in shaping global sustainability discourse. Their size and visibility expose them to diverse stakeholder expectations and potential conflicts. As a result, sustainability reporting has evolved as a legitimacy and communication tool to reduce information asymmetry and signal accountability.

However, despite widespread reporting, previous studies have found that sustainability reports often reflect managerial self-promotion rather than meaningful dialogue (Gray, 2006; Milne & Gray, 2013). Reports may highlight positive achievements while downplaying or omitting challenges.

This study argues that true sustainability accountability requires embedding stakeholder engagement—that is, ensuring that reported issues genuinely reflect stakeholder concerns, rather than being “cherry-picked” by management. By linking engagement disclosures to sustainability topics, reports can demonstrate that companies are responsive and inclusive, fostering dialogic accountability (Manetti, 2011; Bellucci et al., 2019).

 

  1. Theoretical Foundation

The study builds upon stakeholder theory and dialogic accounting. Stakeholder engagement is conceptualised as an interactive, dialogic process involving consultation, communication, and participation (Greenwood, 2007).

Key prior studies (Bellucci et al., 2019; Kaur & Lodhia, 2018) emphasise that quality stakeholder engagement must:

  • Allow stakeholders to express their views on sustainability issues;
  • Enable co-determination of report content; and
  • Encourage shared problem-solving and co-creation of knowledge between firms and their stakeholders.

The paper advances this theoretical conversation by proposing that embeddedness requires explicit connections between stakeholder engagement disclosures (who is engaged and how) and sustainability disclosures (economic, social, and environmental issues). Without this linkage, reports risk becoming generic, “boilerplate” statements that lack stakeholder relevance.

 

  1. Research Method

The study uses mixed content analysis—both quantitative and qualitative—on 646 sustainability reports (in English) produced by 219 Fortune Global 500 companies between 2015 and 2017.

  • Quantitative analysis: Developed two binary disclosure indices—one for stakeholder engagement (five items based on GRI 102–40 to 102–44) and another for sustainability disclosures linked to stakeholder engagement (18 items across economic, social, and environmental dimensions).
  • Qualitative analysis: Conducted detailed textual reviews to capture evidence of linkage between engagement and sustainability topics, illustrated with excerpts from selected reports.
  • Inter-rater reliability: A cross-check using Krippendorff’s alpha (0.9871) ensured consistency and coding reliability.

The sample spans 31 countries and 19 industries, representing both developed and emerging markets.

 

  1. Key Findings

(a) Low Level of Stakeholder Engagement Disclosures

  • 78% of reports identified key stakeholder groups (employees, customers, investors, NGOs, etc.).
  • Only 15% disclosed the basis for stakeholder identification and classification, such as criteria for relevance or influence.
  • Fewer than half (47%) explained approaches to engagement (dialogue, surveys, consultations).
  • 54% mentioned stakeholder concerns, but only 28% described corporate responses to those concerns.

Example: BP’s 2015 report detailed responses to oil spill concerns, but such examples were rare.

These results show that most companies list stakeholders but fail to demonstrate reciprocal engagement or responsiveness.

 

(b) Weak Connection Between Engagement and Sustainability Disclosures

The analysis revealed scant evidence of embeddedness—that is, few companies linked stakeholder engagement practices to specific sustainability topics.

  • Only 20–30% of economic disclosures, 10–15% of social disclosures, and 5–10% of environmental disclosures** were explicitly based on stakeholder engagement.
  • Examples of strong linkage included Vodafone’s community empowerment programs, Microsoft’s worker safety dialogues, and Chevron’s local water management collaborations, but these remained exceptions.

Overall, the findings indicate that most companies treat stakeholder engagement as a symbolic exercise—an obligatory section rather than an integrated foundation for sustainability reporting.

 

  1. Discussion

The study concludes that stakeholder engagement is loosely embedded in sustainability reporting among the world’s largest corporations. Reports often satisfy formal disclosure requirements (e.g., GRI) but fail to demonstrate substantive integration between engagement activities and sustainability content.

This gap illustrates a broader decoupling between sustainability rhetoric and practice:

  • Companies engage stakeholders superficially to enhance legitimacy.
  • Disclosures often lack evidence of dialogue or stakeholder influence on material topics.
  • Consequently, sustainability reports risk becoming self-referential, aimed more at reputation than accountability.

Embedding stakeholder engagement requires connecting strategy, governance, and operations to reporting. Firms must demonstrate how stakeholder input shapes decision-making, materiality assessment, and disclosure design.

 

  1. Research Limitations and Future Directions

The study’s analysis was limited to English-language PDF sustainability reports (2015–2017), excluding web-based or social media disclosures. Findings may not generalise beyond the Fortune Global 500 sample.

Future research could:

  1. Explore regional or sectoral variations in embeddedness, especially among developing-economy firms.
  2. Examine stakeholder perceptions of engagement quality to complement corporate disclosures.
  3. Investigate assurance mechanisms and reporting frameworks (e.g., GRI vs. ISSB) to assess their role in strengthening embeddedness.
  4. Use longitudinal designs to track improvement in embedding stakeholder engagement over time.