Non-financial reporting by utilities: a structured literature review

Abstract

Purpose

This paper aims to carry out a comprehensive overview of the academic debate on utilities’ non-financial reporting by highlighting the main issues and the emerging gaps.

Design/methodology/approach

Using a structured literature review, this study identifies the state of the art, maps the evolution of non-financial reporting in utility companies and reveals unexplored issues and aspects.

Findings

A critical analysis of the existing academic debate shows the development of utilities’ non-financial reporting literature and the focus of this debate. It provides insight into how utilities pay attention to non-financial reporting, what role this plays in corporate actions and relationships with stakeholders and what research gaps need further investigation.

Research limitations/implications

This study provides some useful recommendations to practitioners and regulators to be more conscious of the weaknesses and criticalities of utilities’ non-financial reporting and to address them when building such reporting. However, this study considered only articles published in peer-reviewed academic journals.

Originality/value

A comprehensive literature review in the utilities’ non-financial reporting area is timely, given the increase in this type of reporting. The study has an original focus and develops an analytical framework highlighting the peculiarities of utilities.

Citation

Testa, M. (2024), "Non-financial reporting by utilities: a structured literature review", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-12-2023-0719

1. Introduction

Utility companies produce, manage and distribute essential public services, covering several industry sectors (such as water, waste collection and energy provision). In the past decade, they have faced huge changes: utilities traditional models, linked to public and monopoly systems, have suffered profound transformations. Indeed, as a result of the New Public Management (NPM) paradigm, market liberalisations, new regulations, company mergers and outsourcing have changed the scenario wherein these companies manage and provide public services. Here, there are conflicting logics and instances between different stakeholders interplaying with utilities (Argento et al., 2016; Vakkuri and Johanson, 2020; Dameri et al., 2023; Campanale et al., 2020; Grossi et al., 2017; Enquist et al., 2005). Several stakeholder groups have interests not only in financial information but also in non-financial information. Utilities can meet their information needs and seek to face complex governance issues – arising from the mentioned changes – by adopting non-financial reporting documents.

Many utilities, more than companies in other sectors, are adopting these reports (KPMG, 2022). This is why the utilities have to act according to the NPM paradigm, involving, among other things, transparency, accountability and participation principles. Moreover, utilities are generally considered sensitive industries regarding their action impacts on nature (Bird, 2002; Bolívar, 2009). Furthermore, through non-financial reporting, these companies could address the complex governance issues experiencing.

Likewise, academic debate is paying attention to utilities’ non-financial reporting issues. A recent literature review analysis on utilities’ sustainability practices shows that the academic debate has a specific focus on the non-financial disclosure of these companies (D’Amore et al., 2023).

Considering the sensitivity of practitioners and literature, knowing what is the role of non-financial reporting in utility companies and how the literature on this topic has developed is important. Particularly, understanding what role these reporting documents play in corporate actions, including the decision-making process and the relationship with stakeholders, is significant.

For this purpose, understanding how academic debate has focused on what sustainability dimensions, industrial sectors, ownership structures, legal configurations and institutional context is crucial. Indeed, these aspects allow us to know the different sensitivity towards non-financial reporting practised by different types of utilities, in terms of different ownership structures (public company, private company, mixed company, state-owned enterprise, municipally owned enterprise), legal configuration (listed company, unlisted company), industrial sector (energy, water, waste, transport).

The academic debate on non-financial reporting is lively and has seen previous reviews with a focus on both the public and hybrid sectors (Fusco and Ricci, 2019; Manes-Rossi et al., 2020; Ahunov, 2023). However, these previous studies only marginally address issues relating to utilities. So, obtaining a comprehensive overview of the academic debate on utilities’ non-financial reporting is opportune. Indeed, literature review analysis is a tool for maturing new ideas and building up points of view (Paré et al., 2023; Clark and Key, 2021; Nwachukwu, 2022). This study identifies the state of the art, maps the evolution of literature utilities’ non-financial reporting and reveals unexplored issues and topics. The structured literature review is developed to answer the following three research questions:

RQ1.

How has the non-financial reporting literature developed with regard to utility companies?

RQ2.

What is the focus of the non-financial reporting literature regarding utility companies?

RQ3.

What are the main gaps in the existing non-financial reporting research regarding utility companies and what are the potentials for future research?

To answer these questions, this paper examines the literature in accounting and management fields by using an analysis of 48 articles in English.

The paper is organised as follows. Section 2 describes the adopted methodology, while Section 3 presents the results, and Section 4 the discussion. Finally, Section 5 presents the conclusions and limitations of the study, showing the practical and theoretical insights obtained.

2. Methodology

2.1 Research method

Among the different methodologies to conduct a literature review (Harari et al., 2020), this study adopts a structured literature review methodology because it is a replicable, scientific and transparent process and its guidelines can guarantee comprehensiveness, reliability, replicability and high-quality results of literature mapping (Massaro et al., 2016; Tranfield et al., 2003; Kotb et al., 2020; Tommasetti et al., 2020; Cuadrado-Ballesteros et al., 2023). Adapting the phases recommended by Pati and Lorusso (2018), this study identifies two key phases of the structured process: the construction of the reviewed sample, and the content analysis of the reviewed sample. Subsequently, to obtain a more complete analysis of the academic debate, this review also carried out the bibliometric analysis, using R Bibliometrix software (Aria and Cuccurullo, 2017).

2.2 Sample development

The first step concerns the selection of studies, defining the keywords and databases to be used. Regarding the selection of the databases, the research used the Scopus and Web of Science databases. The combined use of these two online platforms for literature search is common in management and accounting fields (Agostino et al., 2022; Mattei et al., 2021; Bisogno et al., 2018). This databases combination ensures coverage of the largest number of journals. Moreover, previous literature reviews investigating non-financial reporting, albeit with a different focus (Fusco and Ricci, 2019; Manes-Rossi et al., 2020; Ahunov, 2023), adopted this couple of databases.

Using specific keywords (Appendix 1), in July 2023, several searches for keywords in titles, abstracts and authors’ keywords have been carried out. The research used the word “utility” and its synonyms and included keywords referring to the different ownership or legal configurations that these companies can take, as the queried domains can refer to companies providing public services but not explicitly using the word “utility”. Furthermore, the other keywords are related to different non-financial reporting formats. The choice of these keywords is consistent with the research purpose, investigating all non-financial reporting formats, regardless of the title which the reporting entity might give them (sustainability reports, environmental reports, social reports, etc.). The search also included the word “accounting”, as generally, the documents dealing with this topic refer to reporting, although not explicitly in the abstract.

The study carried out queries regarding “business, management and accounting” in Scopus and “management”, “business” and “public administration” in Web of Science. This filter limitation allows us to identify journals dealing with the topic from the mentioned research perspective. In other terms, by setting these field filters potentially relevant papers can be identified. This research considered only articles written in English and selected exclusively articles published in peer-reviewed academic journals to safeguard the quality and effectiveness of the review. Owing to variability in the peer-review process and their limited availability, book chapters, editorials and papers from conference proceedings were excluded. This way is also common in many previous literature review studies within the accounting field (e.g. Manes-Rossi et al., 2020; Ahunov, 2023; Nasreen et al., 2023). No time limits were set because this review conducts extensive mapping of the topic, including all articles published to date.

The Scopus database returned 462 articles, while Web of Science returned 249, with 96 duplicated documents, which were removed, leading to an initial output of 615 articles.

As the queries used keywords that are sometimes used in a more generic way, the results yielded various studies related to other themes. Especially the keywords “utility” and “environmental” which can refer to “usefulness” and “context”, respectively, leading to the identification of off-theme documents. By reading the abstracts, and in uncertain cases the full papers, these articles concerning unrelated research fields were identified and excluded. In this process, 517 papers were excluded, as dealing with different research fields: social science, environmental science, engineering, energy, psychology, computer science, medicine, arts and humanities, mathematics, agricultural science.

The research considers the eligible 98 articles and analyses them by reading the full texts. In this phase, 3 documents were excluded because the full text was not available; 53 articles were excluded because although mentioning the non-financial reporting of utilities, it was not addressed, e.g. because these reporting documents were analysed to obtain data to investigate corporate performances. After these exclusions, 42 residual papers remained.

Finally, to obtain a more representative sample, the selection process was informed by additional research. Here, a search of the top journals was carried out. These journals (Appendix 2) were selected due to their aim and scope focusing on public management and accounting and utilities issues. This further investigation was carried out by manually inspecting titles and abstracts, without set time limits. By this search 6 additional articles were obtained. The final result was that 48 papers were relevant to this review.

2.3 Analytic framework

Massaro et al. (2016) suggest that in carrying out a structured literature review there is a need to determine the aspects to be analysed in the reviewed articles. Subsequently, a decision needs to be made regarding how to record and process the collected information (Krippendorff, 2013). Fundamental studies have developed analytic frameworks to carry out literature reviews on similar topics (Dumay et al., 2016; Mattei et al., 2021; Ahunov, 2023) or have adapted previous frameworks to the specificities of the conducted research (Manes-Rossi et al., 2020).

Considering the peculiarities of utilities and the mentioned research perspective, the development of a suitable analytic framework was required. Some units of analysis were identified covering all the relevant items to understand how the utilities’ non-financial reporting literature is developing, its focus, its main gaps and potential future research. So, as utilities suffer contextual factor pressures, such as institutional, regulatory social factors as well as different ownership structures and legal configurations (Qian et al., 2018; Landriani et al., 2019; D’Amore et al., 2021; Ligorio et al., 2022; Beecher, 2013; Calabrò et al., 2013; Massarutto and Ermano, 2013), knowing what is the industry sector investigated in selected papers (electric, gas and oil, drinking water, waste disposal services, transport, so on), the ownership structure and legal configuration and the possible stock exchange listing is crucial. Firstly, this study identified the following three categories:

1. Category (a) including the following sub-categories: energy sector; water; waste; transport; multi-line utility (for coding papers addressing multiutility companies); multisector (to consider documents addressing companies operating in different sectors, including no utility sector); utility (to consider a paper that addressed company operating in unspecified utility sector).

2. Category (b) includes ownership structure of the utilities investigated in selected articles: public company; private company; mixed company; different ownership structures; none. The first three sub-categories are straightforward to understand, then the category “different ownership structures” includes papers investigating different utilities with different ownership structures; while category “None” indicates papers not specifying the ownership structure of the analysed company.

3. Category (c) refers to the stock exchange listing of the investigated utilities in the selected documents: listed company; unlisted company; both (listed and unlisted companies) and none, again, this last sub-category codifies studies not indicating the genre of company.

Moreover, this study investigated the authors’ country. Category (d) includes a country, with one sub-category for each country. Previous studies (e.g. Dumay et al., 2016; Manes-Rossi et al., 2020) have codified this information into subcategories relating to supranational geographical regions. However, this coding hides differences across countries and the national context where research interest and sensitivity are developed, which could be interesting for this review in view of the crucial role played by the regulatory, institutional and social-cultural framework. This coding choice is based on these considerations.

As non-financial reporting is closely connected to environmental, social and governance (ESG) issues, Category (e) relates to the ESG dimensions investigated in the selected documents. It consists of five sub-categories:

1. environmental dimension (which refers to the focus on environmental resource use, emission, biodiversity, etc);

2. social dimension (which refers to the focus on employees, human rights, community, product responsibility, etc);

3. governance dimension (which reflects the focus on shareholders, management, strategy, etc);

4. environmental and social dimensions; and

5. ESG dimensions.

The latter two sub-categories include selected papers jointly dealing with the mentioned dimensions.

Besides, for this review, knowing what is the theoretical lens used to study the phenomenon [Category (f)], the research method adopted and the data collection [Category (g)] is also relevant. Being companies directly involved in the essential public services provision as well as in the public policies implementation, firstly, it was relevant to code-related information with three sub-categories:

1. single theories;

2. multiple theories; and

3. no theory.

Subsequently, this research considers relevant to perform another classification, used previously in other studies (e.g. Mattei et al., 2021); thus, this Category (f) includes systems-oriented theories; economic theories; systems-oriented theories and economic theories; other (including theories not referred to in the previous categories); no theory.

Category (g), based on previous studies with small adaptations (Guthrie et al., 2012; Dumay et al., 2016; Manes-Rossi et al., 2020), includes the sub-categories regarding research method and data collection:

• case study/interviews;

• content analysis;

• survey/questionnaire/other empirical;

• commentary/normative/policy;

• literature review; and

• mixed method.

Finally, Category (h), according to previous studies (Guthrie et al., 2012; Dumay et al., 2016; Manes-Rossi et al., 2020), includes three sub-categories:

1. academics;

2. practitioners; and

3. academics and practitioners.

This analytic framework allows the identification of key aspects of sampled studies and supports their critical analysis, answering research questions and pinpointing state-of-the-art, existing gaps and future research directions.

2.4 Bibliometric analysis

Using the R Bibliometrix software (Aria and Cuccurullo, 2017), the study carried out a bibliometric analysis, with a focus on “Word Cloud”, “Word Growth” and “Tree Maps”.

The “WordCloud” highlights the most common words in the abstracts, as these latter are a concise summary of the full papers (Aria and Cuccurullo, 2017). The visual image illustrates the most recurrent information within the selected texts, indicating the relevance of a theme examined (Lee, 2020; Atenstaedt, 2017).

The “Word Growth” shows the growth of crucial words over time, while the “Tree Map” shows the degree of correlation between the main words included in the abstracts of the selected articles (Aria and Cuccurullo, 2017). These techniques triangulate and confirm the results obtained by manual analysis.

2.5 Reliability and validity

This research adopted some actions to minimise subjectivity biases, obtain the highest reliability and ensure validity, which is a crucial aspect of qualitative research (Yin, 2013; Tommasetti et al., 2020). To avoid the omission of any relevant papers, an additional paper search was conducted in the relevant top journals. Moreover, the queries were also carried out on Google Scholar, considering exclusively journal documents embedded in the SCImago Journal Rank. Regarding the inclusion or exclusion of papers from the reviewed sample, where unclear, this has been decided after full reading and consultation with colleagues. This approach has also been used by a previous study (Ahunov, 2023).

Furthermore, the analytical framework developed was reconsidered after the study of the all-reviewed sample. Particularly, Category (f) related to the theoretical perspective adopted was recursively revised to improve its suitability, regarding the sub-categories. This activity was performed manually, according to previous studies preferring it to using software, because it allows to obtain a more nuanced and effective coding versus software-based analysis (Guthrie et al., 2012; Massaro et al., 2016; Awuah et al., 2023).

The rigorous sample formation, analysis criteria adopted and the mentioned dialogue with other colleagues to resolve any doubts, are steps ensuring reliability (Cuadrado-Ballesteros et al., 2023; Ahunov, 2023; Yin, 2013), thus it was considered unnecessary to perform formal reliability checking. Finally, WordCloud, Word Growth, Tree Map obtained through bibliometric analysis confirmed the manual analysis results.

3. Results

According to the analytical framework developed, data from the 48 selected articles (see Appendix 3) was analysed and the results were written up.

3.1 Investigated sectors

Just over 41% of the reviewed papers investigate the energy sector. Other articles focused on multiple utilities, while almost 17% of the academic debate investigated water utilities. The content analysis reveals that studies investigating the energy sector have a greater focus on the quality of information disclosed through non-financial reporting and on their assurance, compared with papers dealing with the water sector, which have a more pronounced focus on the institutional context, accountability and stakeholder issues. This result could be explained by considering the different institutional logics and interests (market/non-market) to which these different utilities respond.

However, 25% of reviewed documents investigate a sample of companies operating in different sectors, including utilities. Hence, a part of the academic debate when studying utilities’ non-financial reporting issues does not focus on the peculiarities of utilities but rather studies them regardless. There are no studies investigating the non-financial reporting issues for other utility sectors, such as waste and transport.

3.2 Investigated structured ownership and possible stock exchange listing

Other analysis units are considered crucial for the research questions: utilities’ ownership structures and possible listing. A total of 7 studies deal with public utilities, of which 5 papers focused on water organisations (Tregidga and Milne, 2006; Palme and Tillman, 2008; Vinnari and Laine, 2013; Tan and Egan, 2018; Venturelli et al., 2023), while Argento et al. (2019) and Greiling et al. (2015) dealt with energy utilities and the utility sector in general, respectively. A total of 6 papers focused on utilities where to some extent public entities play a role in ownership (Guthrie et al., 2017; Chelli et al., 2019; Nicolò et al., 2021; Passetti and Rinaldi, 2020; Paolone et al., 2021; Ligorio et al., 2022), and another 6 documents investigate a sample of different utilities with different ownership structures (Cormier and Gordon, 2001; Mio, 2010; Gnan et al., 2013; Bae, 2014; Traxler and Greiling, 2019; Slacik and Greiling, 2020a).

The ownership structure and the stock exchange listing seem to impact the adoption of non-financial reporting and the implementation of the GRI standards, but the findings are ambiguous and conflicting (Cormier and Gordon, 2001; Bae, 2014; Slacik and Greiling, 2020a; Traxler and Greiling, 2019) and calling for further empirical analysis. Moreover, 60.40% of the reviewed sample did not refer to the utility ownership structures covered by their analysis, while 33.33% of articles do not have a specific focus on listed or unlisted companies.

3.3 Investigating authors’ country

More interest in this review topic has been registered among Italian authors (with 10 papers in total), followed by Spain (4), Australia, Austria and the USA, the latter three with three papers, respectively. The content analysis supports an explanation of this result. More than half of the Italian academic debate analyses local utilities (Mio, 2010; Gnan et al., 2013; Paolone et al., 2021; Passetti and Rinaldi, 2020; Ligorio et al., 2022; Venturelli et al., 2023). Local utilities are the context wherein the stakeholder involvement theme prevails both regarding corporate governance issues (Gnan et al., 2013) and content reporting (Mio, 2010; Paolone et al., 2021). In a local utility context, sustainability accounting and reporting has been considered a tool to handle controversies with stakeholders, and to obtain moral legitimation in a complex institutional setting resulting from regulatory reforms inspired by the NPM principles (Passetti and Rinaldi, 2020). Here, normative isomorphism and coercive requirements influence non-financial reporting (Ligorio et al., 2022) achieving accountability towards stakeholders (Venturelli et al., 2023). So, this lively debate has fuelled itself via its stimulating reflections and has been whetted by the interest that the rich context generates in practitioners.

3.4 Investigated environmental, social and governance dimension

The most studied issues are those related to the environmental dimension (33.33%) and the three ESG dimensions together (29.16%). Governance issues are studied in 14% of the reviewed papers, while there are no papers dealing exclusively with social issues. However, these latter are studied jointly with environmental issues in as many as 11 papers (23%).

These results are also confirmed by the bibliometric analysis. In “Word Cloud”, the word “environmental” has a central position, occurring 90 times in the abstracts of the articles. Then, there are “reporting” (83) and “sustainability” (72) with a more distanced position. The word “companies” appears 60 times. While the word “disclosure” occurs 59 times. The words “reporting”, “reports” and “disclosure” experienced a growth during the research period from 2010 and especially after 2018, which is combined with the exponential growth of the focus on “environmental”.

Hence, when the academic debate discusses utilities’ non-financial reporting issues, it mainly focuses on environmental issues. This is consistent with the strong environmental impacts that utilities have on the natural habitat and the consequential need to provide information on their actions on the issue (Bolívar, 2009; Tiron-Tudor et al., 2019; Gao et al., 2005; Alshiban and Al-Adeem, 2022) and confirms the findings of a recent study focusing on sustainability practices of utilities (D’Amore et al., 2023).

3.5 Theories adopted

The reviewed articles used a specific theory, more than one theory or no theory. The most commonly used theoretical frameworks are legitimacy theory and institutional theory. As well as singly, these theories are also used in combination with other system-oriented theories. A total of 58.33% papers adopted systems-oriented theories (legitimacy, institutional, stakeholder theories and their derivations), and 8.33% used systems-oriented theories in combination with economic theories (economic and legitimacy theory: Bae, 2014; institutional, legitimacy and agency theory: Miras-Rodríguez and Di Pietra, 2018; stakeholder, legitimacy and agency theory: Traxler and Greiling, 2019; Economies of Worth theoretical framework and legitimacy theory: Passetti and Rinaldi, 2020).

The joint adoption of systems-oriented and economic theories is very relevant, and it appears related to the peculiar regulatory and governance regime of utilities. Conflicting market and non-market goals, multiple stakeholders, multiple values, ownership structure, legal configuration and governance raise numerous complex issues to be understood using different theoretical systems. In line with this, there are some studies exploring an innovative theoretical framework:

• Palme and Tillman (2008) (Gond and Herrbach theoretical framework);

• Boiral (2013) (Debord and Baudrillard perspective);

• Chelli et al. (2019) (Thompson and Eagleton framework);

• Slacik and Greiling (2020b) (Logic and conversation theory);

• Frank et al. (2016) (multi-attribute utility theory by Frank et al. (2013); and

• Guthrie et al. (2017) (management accounting change).

This represents an effort to investigate the topic from different and new theoretical perspectives, encompassing aspects not covered by existing theories.

3.6 Research method adopted

The reviewed studies used several research methods to carry out the empirical analysis. Scholars prefer case studies, single or multiple, statistical analyses but also mixed approaches. When utilities have been investigated together with other industry sectors, quantitative statistical methods prevail. In other instances, case studies (single or multiple) and content analysis dominate. This result can be explained by considering the relative availability of all industry data for the sector lends itself to statistical approaches. However, the complexity of utilities issues – resulting from the regulatory reforms of a few decades ago – calls for the exploration and understanding typical of qualitative analysis and leads to a prevalence of case studies.

No article is a theoretical analysis.

3.7 Academics and practitioners

A total of 98% of the sampled documents were authored by university academics, while two articles were written by at least one scholar at research institutes (Nicholas and Vedachalam, 2021; Mamun, 2023). None of the reviewed articles were written by practitioners. This result may confirm the findings of Steccolini’s (2018) study: sometimes there is no interrelationship between practitioners and academics, and accounting practices are not influenced by academic research. However, considering the utilities multiple stakeholders and multiple (contrasting) interests as well as their complex governance system, interrelationship could enhance the research on utilities’ non-financial reporting, by providing an internal practitioner viewpoint to academics. Academic research could advantage itself from the involvement of practitioners, who in their research role could carry out the investigations enjoying direct and unmediated knowledge of the phenomenon.

3.8 Additional bibliometric analysis

To complete the analysis of sampled articles, further bibliometric analysis is shown.

According to “Tree Map”, the words “sustainability reporting” and “environmental social” have connections. Additionally, the words “sustainability reports” and “electricity retailers”; “social responsibility” and “CSR reports”; “voluntary disclosure” and “moral legitimacy” and “reporting initiative”; “sustainable development” and “financial risk”; “environmental disclosure” and “local public”; “water utilities” and “public accountability” also have connections. This co-occurrence index demonstrates that non-financial reporting and related practices are a response to a social responsibility felt by utilities. According to institutional and legitimacy theoretical perspectives, this could be the result of regulatory, institutional and social influences existing in the context wherein the utilities operate. Consistently, the relationship between “voluntary disclosure” and “moral legitimacy” could also be explained. The latter connection as well as those between “water utilities”, “reporting initiative” and “public accountability”; “reporting practices”, “electric utilities” and “financial risk” show that non-financial reporting is used to obtain specific corporate goals, in particular to realise legitimacy, accountability practices and to contrast financial risk. These results are in line with the content analysis showing that non-financial reporting is used to inform stakeholders for influencing them to some extent (Freedman and Stagliano, 2008; Bolívar, 2009; Gnan et al., 2013; Tan and Egan, 2018; Passetti and Rinaldi, 2020; Beelitz et al., 2021); to communicate to the public (Freedman and Stagliano, 2008), to provide information to investors on a proactive environmental strategy and to obtain moral legitimation (Passetti and Rinaldi, 2020); to obtain stakeholder involvement (Gnan et al., 2013) and to provide managerial accountability with intra-governmental stakeholders and with external stakeholders (Tan and Egan, 2018); and where there is business competition, to became more competitive in the marketplace and reduce negative market effects (Beelitz et al., 2021).

Moreover, “Tree Map” shows that disclosure of sustainability information is also studied as integrated reporting. Indeed, there are connections between “integrated reporting” and “energy companies”; “corporate social” and “integrated report”; “environmental performance” and “integrated thinking”. Through, these reporting formats it is possible to obtain specific corporate goals: to enhance reputation (Robertson and Samy, 2020), to obtain transparency and accountability (Venturelli et al., 2023), to cater for conflicting interests (Manes-Rossi et al., 2021), to reduce a company’s risk (Vitolla et al., 2023), also of a financial nature (Radu and Dragomir, 2023).

Finally, the literature has paid incrementally increasing attention to non-financial reporting documents. Indeed, although non-linearly, especially in the first decade (since 2001), the number of papers published on the topic has been increasing. In particular, except for the years 2020 and 2021, after 2015 the growth has been steady.

This could be explained by considering the cultural sensitivity of the institutions, society and academics regarding sustainability issues and their disclosure, which was being formed in that period (Atkins and McBride, 2023) and which saw the issuing in 2015 of the UN Agenda 2030. The latter, on the one hand, prompted the development of greater cultural awareness at an academic level and, on the other, generated practitioner interest, which was in turn followed by an increasingly lively academic debate.

The referred results of this paragraph are represented graphically and by pictures below (see Figures 1, 2, 3 and 4)

4. Discussion

From the results shown in the previous section, it emerges that utilities’ non-financial reporting has increased since 2001 with a marked growth since 2016. Nevertheless, it remains an under-investigated topic, especially from the viewpoint of the peculiarities of these companies.

The descriptive nature of most previous studies confirms the need for exploring the complexity of utilities issues, arising from the regulatory reforms and new institutional logics of a few decades ago. Given that these logics have a strong impact on governance issues, one might expect a rich academic debate on the theme, instead only rarely have scholars addressed these issues. An institutional perspective is present as the main theoretical framework adopted, and institutional theory and legitimacy theory dominate. In line with previous studies analysing environmental disclosure (Lepore and Pisano, 2022) and utilities’ sustainability practices (D’Amore et al., 2023), these findings reveal that, through non-financial reporting, utilities could show their actions are respectful of the instances, concerns and expectations of stakeholders (Traxler and Greiling, 2019; Imperiale et al., 2023). Indeed, according to some scholars, companies use these documents to demonstrate the adherence of corporate actions to the social values and rules, so, obtaining legitimacy (Deegan, 2002; Dowling and Pfeffer, 1975; Guthrie and Parker, 1989). Moreover, non-financial reporting adoption has been seen as a reaction of utilities to the institutional context where there are serious environmental worries and to obtain legitimacy in this area (Bolívar, 2009; Greiling et al., 2015; Passetti and Rinaldi, 2020; Soares et al., 2020; Manes-Rossi et al., 2021; Pinheiro et al., 2021; Ligorio et al., 2022). However, some studies show that the institutional pressures impact differently depending on the stage of adoption of the specific report (Moseñe et al., 2013) and that a strong level of institutional development reduces utilities’ interest towards environmental disclosure involving legitimacy (Ellimäki et al., 2021).

This literature review reveals that on the one hand, non-financial reporting is adopted by utilities to achieve specific corporate goals (as seen above) and on the other, it reveals criticalities around access to these documents. It is necessary that the reporting documents reach their users. Sometimes, there are real problems with accessibility to them. An empirical study regarding the consumer confidence reports of US water utilities shown that they are not easily accessible and readable by the public (Nicholas and Vedachalam, 2021). To counter these obstacles and in compliance with policies on transparency, utilities are using different instruments to communicate their reports, including new technological tools to disclose environmental information in addition to the typical paper-based documents. However, even when reporting documents are published online there are still issues, such as the readability of the text. While online text is easier to obtain, it is less easy to read than printed text, especially if it is too long (Bolívar, 2009).

The issue of whether non-financial reporting can create real accountability is central. Added to these critical issues are those related to the content of the reports. The quality of information contained within reporting documents, whether it is complete, reliable and material, has been addressed in the literature, with the observation of several weaknesses. Freedman and Stagliano (2008) revealed that voluntary environmental disclosures are not sufficient to provide complete information to stakeholders. A majority of environmental reports are only declarative: there are few numbers and measuring qualitative information is difficult (Mamun, 2023). An empirical analysis noted that sample reports experience an increasing “use of images and photographs” (Ruggiero and Bachiller, 2023). The inadequate use of images had already been shown by a previous study, which also noted a methodological weakness of these reports (Dragomir, 2012).

This negatively impacts on their credibility, effectiveness and reliability of sustainability standards (Moseñe et al., 2013). The materiality issue is crucial for the relevance and significance of reporting and its credibility, the absence of which is lamented by some scholars (Slacik and Greiling, 2020b). Conversely, other scholars note that the implementation of materiality principle depends on the level of maturity of the non-financial reporting processes and, therefore, differs from one company to another (Mio, 2010; Greiling et al., 2015). Considering the significance of the materiality principle, Sepulveda-Alzate et al. (2022) developed a materiality index to measure ESG information reported. However, to date materiality does not shape reporting practices and it is not central to these practices (Slacik and Greiling, 2020b). Moreover, it is not straightforward to compare reports and companies due to the different types of sustainability indicators adopted by companies, which lead to a heterogeneous level of their quality (Frank et al., 2016; Beelitz et al., 2021).

In this context, it is clear the detrimental to real accountability, wherein these indicators play a crucial role (Palme and Tillman, 2008; Mamun, 2023), and the related impact on company dialogue with its stakeholders (Gnan et al., 2013; Slacik and Greiling, 2020a).

Moreover, there is also a propensity to avoid referring to bad news (Boiral, 2013). Indeed, an empirical analysis by Boiral (2013) examining 23 sustainability reports from energy companies adopting sustainability reporting standard setters, found that there were 116 items of bad news, but 90% of them were not included in reporting documents.

This prompts scholars to consider the possible advantages of corporate performance disclosure (Ates, 2023) and assurance reports (Miras-Rodríguez and Di Pietra, 2018). Non-financial reporting is to be prevented from becoming a facade document, not representing corporate activities, as some scholars warn (Vinnari and Laine, 2013; Chelli et al., 2019; Ellimäki et al., 2021). Fortunately, there are cases where companies are working towards the construction of a factual non-financial report, with a focus on concrete actions and practices, in terms of full sustainability (Tregidga and Milne, 2006). Moreover, although Dong and Burritt (2010) noted that these reports suffer some shortcomings as for example, no information is provided about the quantification of targets and outputs, they found that companies perform relatively well in reporting human resource information (Dong and Burritt, 2010).

In the face of the criticalities, it is interesting to determine whether integrated reporting will be able to overcome them. Integrated reporting can be seen as a suitable tool to meet external and internal pressures and to lead to specific advantages (Robertson and Samy, 2020; Venturelli et al., 2023; Manes-Rossi et al., 2021; Radu and Dragomir, 2023; Vitolla et al., 2023; Argento et al., 2019), however, it can be considered an appropriate tool for sustainability disclosure only if it is informed by an integrated process (Paolone et al., 2021) and integrated thinking (Guthrie et al., 2017). Regrettably, integrated reporting seems to suffer the same weaknesses as non-financial reporting and the disclosure of forward-looking content elements is still limited (Nicolò et al., 2021). These findings on integrated reporting are in line with the recent study by Cinquini and De Luca (2022).

5. Conclusion, thoughts and ways forward

This study mapped and critically analysed previous literature on non-financial reporting by utilities. What emerges in relation to the research questions is linked, apart from a few exceptions, to the weaknesses of non-financial reporting. These weaknesses and the criticisms of non-financial reporting may preclude its use in corporate decisions. The lack of credibility prevents its internal use, due to its unreliability, making its impact on corporate actions impossible.

However, utilities are using these documents to communicate to stakeholders and so to handle different instances and interests experienced by utilities. Managing and balancing different institutional logics resulting from the NPM paradigm implementation, are activities which utilities can undertake supported by these reporting tools (Gnan et al., 2013; Manes-Rossi et al., 2021; Nicolò et al., 2023).

It is worth noting what emerges on this aspect is related to non-financial reporting as a tool to communicate to stakeholders and not with stakeholders. Stakeholders are considered as recipients of the non-financial information contained in the reports and there is a lack of studies addressing stakeholder engagement and the stakeholders’ role in the phase of “building” of these reporting documents.

A large part of the academic debate so far has not focused on the specific peculiarities and structural aspects (ownership structure, listed or unlisted) of utilities. Although there are studies showing (with contrasting findings) that ownership structure influences non-financial reporting, in terms of its adoption and coverage of GRI standards, there are few studies using ownership structure and legal configuration aspects for analytic perspective analysis. Moreover, there are specific utility industrial sectors completely neglected by academic investigation.

Utilities’ non-financial reporting deserves future theoretical and empirical research. Specifically, in the future, there are need for theoretical analyses exploring possibilities for the development of new non-financial reporting perspectives adherent to the complex governance system experienced by utilities. Moreover, by empirical analyses focusing on the specific ownership peculiarities of utilities, it will be interesting to investigate whether the non-financial reporting role in the utilities’ decisions differs depending on those (public company, private company, mixed company, state-owned enterprise, municipally owned enterprise). Furthermore, considering the conflicting findings of previous literature (Cormier and Gordon, 2001; Slacik and Greiling, 2020a; Traxler and Greiling, 2019; Bae, 2014), it will be interesting for future empirical research to address the relationship between utility ownership structures and legal configurations, on the one hand, and non-financial reporting adoption and implementation of related standard setters, on the other hand. Finally, other two future research paths arise. Firstly, considering the debate regarding integrated reporting and integrated thinking (Paolone et al., 2021; Guthrie et al., 2017), it will be significant to investigate whether integrated reporting informed by integrated thinking may be really able to overcome the weaknesses suffered by other non-financial reporting formats. Secondly, it will be relevant to future empirical analyses involving practitioners as authors or co-authors, as their internal viewpoint could provide insights and enrich the academic debate, highlighting practical aspects so far overlooked.

In summary, this literature review produced a map of the utilities’ non-financial reporting, highlighting the main issues and the emerging gaps. It provides insight on how utilities pay attention to non-financial reporting and what role this plays in corporate actions and relationships with stakeholders. This analysis is particularly important considering that (as seen above) previous literature reviews offered depiction from specific perspectives and left this topic not fully covered. It facilitates the studying of the investigated phenomenon in the future, and the identification of gaps in the literature is a call for new research. Moreover, this study provides some useful recommendations to practitioners and regulators, who may be more conscious of the weaknesses and criticalities of non-financial reporting and address them when building this reporting.

However, any study is subject to limitations. To achieve higher accuracy and a lower subjectivity, this research used only articles published in peer-reviewed academic journals. Consequently, a portion of the literature has been excluded. Moreover, using documents available on Scopus and Web of Science databases, the findings are affected by the coverage of the database at the query time. Finally, this research focused on entity reporting peculiarities whatever the non-financial reporting formats without delving into the specific issues related to each of them.

Figures

Figure 1.

Contextual factors investigated

Figure 2.

Bibliometrix analysis results

Figure 3.

TreeMap – colour word occurrence measure

Figure 4.

Documents per sectors and theories and research methods adopted

Appendix 1. Used keywords

“utility”; “utilities”; “hybrid organization*”; “SOE”; “state-owned enterprise*”; “government-linked compan*”; “social enterprise*”; “MOE”; “municipally-owned enterprise*”; “MOC”; “municipally-owned compan*”; “PPO”; “public-private partnership*”; “public service*”; “ESG”; “environmental social and governance”; “SDG”; “sustainable development goals”; “Agenda 2030”; “UN Agenda”; “sustainable development”; “environmental”; “sustainability”; “social”; “non-financial”; “CSR”; “corporate social responsibility”; “social return on investment”; “SROI”; “integrated”; “integrated thinking”; “non-financial”; “report*”; “disclosure”; “accounting”.

The asterisks in the keywords were used to allow a broader query in the databases.

Boolean connectives “and” and “or” connectors were used.

Appendix 2. Inspected journals for additional search

Administration and Society; Accounting, Auditing and Accountability Journal; Accounting Forum; American Review of Public Administration; Australian Journal of Public Administration; Critical Perspective on Accounting; Financial Accountability and Management; Government Information Quarterly; International Journal of Accounting and Information Management; International Journal of Public Sector Management; International Public Management Journal; International Review of Administrative Sciences; International Review of Public Administration; Journal of Public Administration Research and Theory; Journal of Public Budgeting, Accounting and Financial Management; Local Government Studies; Management Accounting Research; Meditari Accountancy Research; Public Administration; Public Administration Review; Public Management Review; Public Money and Management; Social Responsibility Journal; Sustainability Accounting, Management and Policy Journal; Utility policy.

Appendix 3. Reviewed articles

Alshiban, R.F., and Al-Adeem, K.R. (2022). Empirically investigating the disclosure of nonfinancial information: A content study on corporations listed in the Saudi capital market. Journal of Risk and Financial Management, 15(6), 251.

Argento, D., Culasso, F., and Truant, E. (2019). From sustainability to integrated reporting: The legitimizing role of the CSR manager. Organization and Environment, 32(4), 484–507.

Ates (2023). The credibility of corporate social responsibility reports: evidence from the energy

Bae (2014). Voluntary disclosure of environmental performance: do publicly and privately owned organizations face different incentives/disincentives?. The American Review of Public Administration, 44(4), 459–476.

Beelitz, A., Cho, C.H., Michelon, G., and Patten, D.M. (2021). Measuring CSR disclosure when assessing stock market effects. Accounting and the Public Interest, 21(1), 1–22.

Boiral (2013). Sustainability reports as simulacra? A counter-account of A and A+ GRI reports. Accounting, auditing and accountability journal, 26(7), 1036–1071.

Bolívar, M.P.R. (2009). Evaluating corporate environmental reporting on the internet: the utility and resource industries in Spain. Business and Society, 48(2), 179–205.

Chelli, M., Durocher, S., and Fortin, A. (2019). Substantive and symbolic strategies sustaining the environmentally friendly ideology: A media-sensitive analysis of the discourse of a leading French utility. Accounting, Auditing and Accountability Journal, 32(4), 1013–1042

Cormier, D., and Gordon, I.M. (2001). An examination of social and environmental reporting strategies. Accounting, Auditing and Accountability Journal, 14(5), 587–617.

Dong, S., and Burritt, R. (2010). Cross‐sectional benchmarking of social and environmental reporting practice in the Australian oil and gas industry. Sustainable Development, 18(2), 108–118.

Dragomir, V.D. (2012). The disclosure of industrial greenhouse gas emissions: a critical assessment of corporate sustainability reports. Journal of Cleaner Production, 29, 222–237.

Ellimäki, P., Gómez-Bolaños, E., Hurtado-Torres, N., and Aragón-Correa, J.A. (2021). Do global firms increase their environmental disclosure and performance? Symbolic versus effective operations and the moderating role of liability of origin. Legitimation implications. Industrial Marketing Management, 92, 354–363.

Eng, L.L., and Fikru, M.G. (2022). Are US electric utilities improving their sustainability disclosures and performance?. The Electricity Journal, 35(10), 107221.

Frank, A.G., Dalle Molle, N., Gerstlberger, W., Bernardi, J.A.B., and Pedrini, D.C. (2016). An integrative environmental performance index for benchmarking in oil and gas industry. Journal of cleaner production, 133, 1190–1203.

Freedman, M., and Stagliano, A.J. (2008). Environmental disclosures: electric utilities and Phase 2 of the Clean Air Act. Critical Perspectives on Accounting, 19(4), 466–486.

Gao, S.S., Heravi, S., and Xiao, J.Z. (2005). Determinants of corporate social and environmental reporting in Hong Kong: a research note. Accounting Forum, 29(2), 233–242.

Gnan, L., Hinna, A., Monteduro, F., and Scarozza, D. (2013). Corporate governance and management practices: Stakeholder involvement, quality and sustainability tools adoption: Evidences in local public utilities. Journal of Management and Governance, 17, 907–937.

Greiling, D., Traxler, A.A., and Stötzer, S. (2015). Sustainability reporting in the Austrian, German and Swiss public sector. International Journal of Public Sector Management, 28(4/5), 404–428.

Guthrie, J., Manes-Rossi, F., and Orelli, R.L. (2017). Integrated reporting and integrated thinking in Italian public sector organisations. Meditari Accountancy Research, 25(4), 553–573.

Imperiale, F., Pizzi, S., and Lippolis, S. (2023). Sustainability reporting and ESG performance in the utilities sector. Utilities Policy, 80, 101468.

Ligorio, L., Caputo, F., and Venturelli, A. (2022). Sustainability disclosure and reporting by municipally owned water utilities. Utilities Policy, 77, 101382.

Mamun (2023). Sustainability reporting of major electricity retailers in line with GRI: Australia evidence. Journal of Accounting and Organizational Change, 19(3), 474–493.

Manes-Rossi, F., Nicolò, G., Tiron Tudor, A., and Zanellato, G. (2021). Drivers of integrated reporting by state-owned enterprises in Europe: a longitudinal analysis. Meditari Accountancy Research, 29(3), 586–616.

Mio (2010). Corporate social reporting in Italian multi‐utility companies: An empirical analysis. Corporate Social Responsibility and Environmental Management, 17(5), 247–271.

Miras-Rodríguez, M.D.M., and Di Pietra, R. (2018). Corporate Governance mechanisms as drivers that enhance the credibility and usefulness of CSR disclosure. Journal of Management and Governance, 22, 565–588.

Moseñe, J.A., Burritt, R.L., Sanagustín, M.V., Moneva, J.M., and Tingey-Holyoak, J. (2013). Environmental reporting in the Spanish wind energy sector: an institutional view. Journal of Cleaner Production, 40, 199–211.

Nicholas, W., and Vedachalam, S. (2021). Poor accessibility of water utilities’ consumer confidence reports. Utilities Policy, 72, 101272.

Nicolò, G., Zampone, G., Sannino, G., and Tiron-Tudor, A. (2023). Worldwide evidence of corporate governance influence on ESG disclosure in the utilities sector. Utilities Policy, 82, 101549.

Nicolò, G., Zanellato, G., Manes-Rossi, F., and Tiron-Tudor, A. (2021). Corporate reporting metamorphosis: empirical findings from state-owned enterprises. Public Money and Management, 41(2), 138–147.

Palme, U., and Tillman, A.M. (2008). Sustainable development indicators: how are they used in Swedish water utilities?. Journal of Cleaner Production, 16(13), 1346–1357.

Paolone, F., Sardi, A., Sorano, E., and Ferraris, A. (2021). Integrated processing of sustainability accounting reports: a multi-utility company case study. Meditari Accountancy Research, 29(4), 985–1004.

Passetti, E., and Rinaldi, L. (2020). Micro-processes of justification and critique in a water sustainability controversy: Examining the establishment of moral legitimacy through accounting. The British Accounting Review, 52(3), 100907.

Pinheiro, A., da Silva Filho, J.C.L., and Moreira, M.Z. (2021). Institutional drivers for corporate social responsibility in the utilities sector. Revista de Gestão, 28(3), 186–204.

Radu, O.M., and Dragomir, V.D. (2023). The Relationship between Integrated Thinking and Financial Risk: Panel Estimation in a Global Sample. Risks, 11(1), 6.

Robertson, F.A., and Samy, M. (2020). Rationales for integrated reporting adoption and factors impacting on the extent of adoption: A UK perspective. Sustainability Accounting, Management and Policy Journal.

Ruggiero, P., and Bachiller, P. (2023). Seeing more than reading: The visual mode in utilities’ sustainability reports. Utilities Policy, 83, 101610.

Sepulveda-Alzate, Y.M., Garcia-Benau, M.A., and Gómez-Villegas, M. (2022). Materiality assessment: The case of Latin American listed companies. Sustainability Accounting, Management and Policy Journal, 13(1), 88–113.

Shima, K., and Fung, S. (2019). Voluntary disclosure of environmental performance after regulatory change: Evidence from the utility industry. Meditari Accountancy Research, 27(2), 287–324.

Slacik, J., and Greiling, D. (2020a). Coverage of G4-indicators in GRI-sustainability reports by electric utilities. Journal of Public Budgeting, Accounting and Financial Management, 32(3), 359–378.

Slacik, J., and Greiling, D. (2020 b). Compliance with materiality in G4-sustainability reports by electric utilities. International Journal of Energy Sector Management, 14(3), 583–608.

Soares, R.A., Abreu, M.C.SD, Rebouças, S.M.D.P., and Marino, P.D.B.L.P. (2020). The effect of national business systems on social and environmental disclosure: a comparison between Brazil and Canada. Revista Brasileira de Gestão de Negócios, 22, 29–47.

Tan, L.K., and Egan, M. (2018). The public accountability value of a triple bottom line approach to performance reporting in the water sector. Australian Accounting Review, 28(2), 235–250.

Tiron-Tudor, A., Nistor, C.S., Ştefănescu, C.A., and Zanellato, G. (2019). Encompassing non-financial reporting in a coercive framework for enhancing social responsibility: Romanian listed companies’ case. Amfiteatru Economic, 21(52), 590–606.

Traxler, A.A., and Greiling, D. (2019). Sustainable public value reporting of electric utilities. Baltic Journal of Management, 14(1), 103–121.

Tregidga, H., and Milne, M.J. (2006). From sustainable management to sustainable development: a longitudinal analysis of a leading New Zealand environmental reporter. Business strategy and the environment, 15(4), 219–241.

Venturelli, A., Ligorio, L., and de Nuccio, E. (2023). Biodiversity accountability in water utilities: A case study. Utilities Policy, 81, 101495.

Vinnari, E., and Laine, M. (2013). Just a passing fad? The diffusion and decline of environmental reporting in the Finnish water sector. Accounting, Auditing and Accountability Journal, 26(7), 1107–1134.

Vitolla, F., Raimo, N., Campobasso, F., and Giakoumelou, A. (2023). Risk disclosure in sustainability reports: Empirical evidence from the energy sector. Utilities Policy, 82, 101587.