Theoretical and Methodological Foundations of Sustainability Reporting
DOI:
https://doi.org/10.58423/2786-6742/2026-12-373-392Keywords:
sustainability reporting, narrative component, non-financial reporting, corporate social responsibility (CSR), stakeholder theory, legitimacy theory, institutional isomorphism, signaling theoryAbstract
This article is devoted to the theoretical and methodological substantiation of the conceptual foundations of sustainability reporting and provides a critical analysis of the scientific discourse on the theoretical basis of non-financial reporting, which enabled the systematization of key paradigms that shape modern approaches to corporate reporting. The growing attention to sustainable development and corporate responsibility actualizes the need for a well-grounded theoretical framework for non-financial reporting. The methodological foundation of the study is based on the synthesis of five fundamental theoretical concepts. Stakeholder theory is examined in terms of identifying users of reporting information and structuring their information requests. Legitimacy theory is interpreted as an explanatory model of companies' motivation to publicly disclose information regarding their compliance with social expectations, distinguishing three types of organizational legitimacy (pragmatic, moral, cognitive). Institutional theory reveals the mechanisms of standardizing reporting practices through the lens of three forms of isomorphic pressure. Agency theory is positioned as a theoretical basis for understanding reporting as a tool to overcome information asymmetry. Signaling theory explains the communicative function of reporting through a model of transmitting signals about ESG aspects and sustainable development to external users. Special attention is paid to the role of the narrative component as a link between quantitative metrics and qualitative perception. It is demonstrated that high-quality narratization enhances the signaling function of reporting, whereas greenwashing narratives generate negative reputational effects. The systematization of theoretical concepts creates a foundation for understanding sustainability reporting as a multifunctional corporate communication tool that simultaneously addresses the needs of various stakeholder groups, ensures legitimacy of corporate activities, and fosters trust in the company.
References
1. Legenchuk, S., & Serpeninova, Y. (2024). Legitimation theory of additional disclosure of accounting information on social and environmental activities of the enterprise. Economics, Management and Administration, 1(107), 103–110. https://doi.org/10.26642/ema-2024-1(107)-103-110 [in Ukrainian].
2. Awa, H. O., Etim, W., & Ogbonda, E. (2024). Stakeholders, stakeholder theory and Corporate Social Responsibility (CSR). International Journal of Corporate Social Responsibility, 9(1). https://doi.org/10.1186/s40991-024-00094-y.
3. Baharom, Z., & Abdullah, K. H. (2025). Bibliometric analysis of institutional theory research. Fronteira: Journal of Social, Technological and Environmental Science, 14(2), 168–184. https://doi.org/10.21664/2238-8869.2025v14i2.p168-184.
4. Bartolacci, F., Bellucci, M., Corsi, K., & Soverchia, M. (2022). A systematic literature review of theories underpinning sustainability reporting in non-financial disclosure. In L. Cinquini & F. De Luca (Eds.), Non-financial disclosure and integrated reporting: Theoretical framework and empirical evidence (pp. 87–113). Springer International Publishing. https://doi.org/10.1007/978-3-030-90355-8_4.
5. Bussolo, G., et al. (2026). Assessing stakeholder engagement to the EU strategy for sustainable and circular textiles: A systematic review integrating stakeholder and institutional theories. Journal of Environmental Management, (397), 128308. https://doi.org/10.1016/j.jenvman.2025.128308.
6. Connelly, B. L., Ketchen, D. J., & Slater, S. F. (2011). Toward a "theoretical toolbox" for sustainability research in marketing. Journal of the Academy of Marketing Science, 39(1), 86–100. https://doi.org/10.1007/s11747-010-0199-0.
7. Cunea, M. I., & Bratu, A.-M. (2025). Disclosing innovation in sustainable business models: A stakeholder and legitimacy perspective. Proceedings of the International Conference on Business Excellence, 19(1), 236–245. https://doi.org/10.2478/picbe-2025-0021.
8. Derun, I., Mysaka, H., & Skliaruk, I. (2023). Contextual research of strategic theories for non-financial reporting: A system-structural approach to formulating reporting principles. Scientific Papers of the University of Pardubice, Series D: Faculty of Economics and Administration, 31(1). https://doi.org/10.46585/sp31011644.
9. Diab, C. A., & Stubbs, W. (2025). Analyzing CSR decision-making by multinational corporations: An institutional theory perspective. Corporate Social Responsibility and Environmental Management. https://doi.org/10.1002/csr.70030.
10. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.
11. Dziak, M. (2023). Legitimacy theory. EBSCO Research Starters. https://www.ebsco.com/research-starters/business-and-management/legitimacy-theory.
12. Ferdian, T., & Girsang, R. N. (2025). Social accountability in non-profit institutions: The stakeholder theory approach in social impact-based reporting. Nomico, 2(6), 76–82. https://doi.org/10.62872/axsnew36.
13. Friske, W., Hoelscher, S. A., & Nikolov, A. N. (2022). The impact of voluntary sustainability reporting on firm value: Insights from signaling theory. Journal of the Academy of Marketing Science. https://doi.org/10.1007/s11747-022-00879-2.
14. Gangi, F., & D'Angelo, E. (2016). The virtuous circle of corporate social performance and corporate social disclosure. Modern Economy, 7(12), 1396–1418. https://doi.org/10.4236/me.2016.712129.
15. Herold, D. (2018). Demystifying the link between institutional theory and stakeholder theory in sustainability reporting. Economics, Management and Sustainability, 3(2), 6–19. https://doi.org/10.14254/jems.2018.3-2.1.
16. LIGA ZAKON. BUKHHALTER.UA. (n.d.). New reporting on sustainable development and IFRS at state-owned enterprises – changes to the Law on Accounting. https://buh.ligazakon.net/news/237246_nova-zvtnst-z-stalogo-rozvitku--msfz-na-derzhpdprimstvakh--zmni-do-zakonu-pro-bukhoblk [in Ukrainian].
17. Mahajan, R., et al. (2023). Stakeholder theory. Journal of Business Research, (166), 114104. https://doi.org/10.1016/j.jbusres.2023.114104.
18. Martens, W., & Bui, C. N. M. (2023). An exploration of legitimacy theory in accounting literature. OALib, 10(1), 1–20. https://doi.org/10.4236/oalib.1109713.
19. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–363. https://doi.org/10.1086/226550.
20. Mitchell, R., Agle, B., & Wood, D. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–896.
21. Mohanty, K. R., Parhi, A., & Subudhi, R. N. (2024). The multifaceted world of integrated reporting: A journey through theory. Multidisciplinary Reviews, 7(12), 2024280. https://doi.org/10.31893/multirev.2024280.
22. O'Donovan, G. (2002). Environmental disclosures in the annual report. Accounting, Auditing & Accountability Journal, 15(3), 344–371. https://doi.org/10.1108/09513570210435870.
23. Oliveira, F. M., & da Silva, E. A. (2026). Corporate social responsibility (CSR) in mining: An integrated institutional and agency theory perspective. Corporate Social Responsibility and Environmental Management. https://doi.org/10.1002/csr.70399.
24. Osburg, V.-S., et al. (2022). (In)compatibilities in sustainable luxury signals. Ecological Economics, (196), 107430. https://doi.org/10.1016/j.ecolecon.2022.107430.
25. Patten, D. M. (1992). Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on legitimacy theory. Accounting, Organizations and Society, 17(5), 471–475. https://doi.org/10.1016/0361-3682(92)90042-q.
26. Features of Ukrainian digital banks. SBSB Fintech Lawyers. https://sb-sb.com/publications/features-of-ukrainian-digital-banks/.
27. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.
28. Strategic management: A stakeholder approach. (2010). Cambridge University Press. https://scholar.google.com/citations?view_op=view_citation&hl=en&user=ZcvIxwsAAAAJ&citation_for_view=ZcvIxwsAAAAJ:IRz6iEL74y4C.
29. Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. The Academy of Management Review, 20(3), 571. https://doi.org/10.2307/258788.
30. Tyvonchuk, O. (2025). Corporate sustainability reporting transformation: A critical view on legitimacy theory. Journal of Lviv Polytechnic National University. Series of Economics and Management Issues, 9(1), 72–82. https://doi.org/10.23939/semi2025.01.072.
31. Woodhouse, D. (2024). Institutional theory. In S. Rashid, J. Manzies, & V. Ratten (Eds.), International encyclopedia of business management (pp. 209–217). Elsevier. https://doi.org/10.1016/B978-0-443-13701-3.00150-X.
32. Wright, P. M., & McMahan, G. C. (1992). Theoretical perspectives for strategic human resource management. Journal of Management, 18(2), 295–320. https://doi.org/10.1177/014920639201800205.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Olha Fedorova
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons CC BY-NC License.
