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The Narrative Component of Sustainability Reporting as a Strategic Tool of the Impression Management

Author

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  • Serhii Lehenchuk

    (Zhytomyr Polytechnic State University, Zhytomyr, Ukraine)

Abstract

In the context of the requirements of the EU Corporate Sustainability Reporting Directive (CSRD), sustainability reporting narratives serve as an effective means of revealing the complex cause-and-effect relationships, intentions, and strategic goals of an enterprise in the field of sustainable development. This article aims to analyse the narrative component of sustainability reporting in the context of CSRD and ESRS as a new communication channel between enterprises and stakeholders. It studies the causes, mechanisms, and consequences of manipulations with sustainability reporting narratives, based on the concept of impression management. The primary research tool is a theoretical and methodological analysis of scientific works focused on impression management in accounting. The author analysed key concepts, including E. Hoffmann's dramaturgical metaphor, legitimacy theory, and agency theory, to identify the motives, mechanisms, and consequences of using sustainability reporting narratives to exert the necessary influence on stakeholders. In addition, logical-theoretical modelling allowed for the identification of the consequences of information asymmetry, such as adverse selection and moral hazard, which reduce the efficiency of the sustainable investment market. The results of the study show that, unlike traditional financial reporting, the basis of sustainability reporting is narratives that describe the ESG aspects of an enterprise's activities. This creates a wide field for the application of impression management methods to form a distorted image of the enterprise regarding its role in ensuring sustainable development. Such actions lead to the emergence of information asymmetry between narrators and stakeholders. The consequences of this are an inefficient redistribution of capital in the sustainable investment market, moral hazard, and a undermining of trust. To overcome these threats, the study identifies the objects of sustainability reporting narratives in accordance with the ESRS. In addition, it identifies potential areas for regulatory improvement to enhance the transparency of sustainability reporting.

Suggested Citation

  • Serhii Lehenchuk, 2025. "The Narrative Component of Sustainability Reporting as a Strategic Tool of the Impression Management," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 14-25, December.
    • Handle: RePEc:iaf:journl:y:2025:i:4:p:14-25
    DOI: 10.33146/2518-1181-2025-4(110)-14-25
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    References listed on IDEAS

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