Strategic responses to sustainability reporting regulation and multiple stakeholder demands: an analysis of the Spanish EU non-financial reporting directive transposition

Purpose - This paper aims to study companies’ strategic responses to regulative institutional pressures on sustainability reporting. Particularly, it investigates the role of multiple stakeholder demands in shaping corporate responses to Law 11/2018 that transposes the EU Non-Financial Reporting Directive in Spain. Design/methodology/approach - Informed by Oliver’s framework, the study analyzes the 2018 non-financial information of Spanish listed companies mandated to report under Law 11/2018 to explore the relationship between adopting a particular strategic response and companies’ stakeholder configuration. Findings - Companies facing multiple stakeholder pressures tend to use a compromise strategy favoring the disclosure of relevant topics to a specific stakeholder type. Specifically, environmentalists are the most influential stakeholder in determining the coverage of sustainability topics to the detriment of other stakeholders when companies suffer from regulatory pressures. Research limitations/implications - The study contributes to disentangling the factors determining how companies respond to sustainability reporting regulation. Future research could perform longitudinal and large multinational analyses to study the evolutionary process of corporate responses. Practical implications - The study is relevant to managers and policymakers as it highlights that sustainability reporting regulation should promote the coverage of relevant topics to less influential stakeholders. Social implications - The study explores the extent to which current sustainability reporting regulation can increase transparency on sustainability issues for all stakeholders. Originality/value - In contrast to previous literature exploring the extent to which firms comply with regulation, the study considers that companies can respond more actively to mandatory sustainability reporting requirements.