How prepared is the Finnish forest industry for the upcoming ESRS standards? A gap analysis
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School of Business |
Master's thesis
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Date
2024
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
77+6
Series
Abstract
The market for corporate sustainability information has been rapidly growing in recent years. Corporate Social Responsibility (CSR) is defined as companies understanding their positive and negative impacts on society and the environment and the prevention, management, and mitigation of any negative impact that they may cause. The European Union’s upcoming Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) aim to standardize corporate sustainability reporting, improve reporting quality and reliability, and eventually promote sustainability progress among European companies. This thesis aims to investigate how well Finnish forest companies are prepared for the CSRD and related ESRS standards. The sample of the thesis consists of the sustainability reports 2023 of Metsä Group, Stora Enso Oyj, and UPM-Kymmene Oyj. The case companies are in the first group to publish a sustainability report following the ESRS for the financial year 2024. The method used is gap analysis and the chosen standards for examination are ESRS 2 General disclosures and ESRS E1 Climate change. The theoretical framework consists of three dominating theories in sustainability reporting research, legitimacy theory, institutional theory, and stakeholder theory. When examining the findings, the conclusion is that the industry’s reporting is not yet at the required level. Metsä Group achieves the highest level of compliance with 50 percent of datapoints classified as adequate when adjusted. The sustainability report is organized according to ESRS standards and double materiality has been considered. The adjusted compliance levels of Stora Enso (36 %) and UPM (33 %) indicate that the companies need to allocate more resources to sustainability reporting. Overall, the adjusted proportion of datapoints classified as adequate regarding ESRS 2 (54 %) is significantly higher than for ESRS E1 (26 %). From a theoretical perspective, the differences in the interests of stakeholders and society might explain why the case companies allocate varying amounts of resources to reporting on different topics. Reporting on certain topics, such as human rights policy commitments and the prevention of climate change, may influence the legitimacy of a company more than reporting on other less interesting subjects. In addition, the regulatory environment and the actions of other similar companies are likely to have an effect on the contents of sustainability reports.Description
Thesis advisor
Sihvonen, JukkaKeywords
sustainability, CSR, CSRD, ESRS, green deal, forest industry, gap analysis