Determinants of quality in SDG disclosures in Norwegian state- owned enterprises

Abstract

The Sustainable Development Goals (SDGs) urge nations to address critical challenges by 2030 (UN Global Compact, n.d.). While Norway ranks highly in SDG progress (Sachs et al., 2023), issues such as poor coordination and inadequate reporting have been highlighted (Riksrevisjonen, 2021). SOEs, balancing public and commercial objectives, face heightened expectations for transparency and sustainability (Grossi et al., 2015). However, their SDG disclosures risk being symbolic, undermining trust (van der Waal & Thijssens, 2020). Limited research on the quality of SOE SDG disclosures underscores the need to identify drivers of meaningful reporting (Bebbington & Unerman, 2018; Bose & Khan, 2022).

The aim of this study was to explore how SOE characteristics influence the quality of their SDG disclosures. We applied stakeholder and legitimacy theory to derive theoretical hypotheses on how public policy goals, degree of government ownership, and board gender diversity impact the quality of SDG disclosures in the annual reports of Norwegian SOEs from 2020 to 2023. Subsequently, we found that SOEs with public policy goals report with lower quality than SOEs without. Conversely, fully state-owned firms reported higher quality than partially owned firms, while the effect of gender diversity was deemed inconclusive due to insignificant effects.

Despite its limitations, this study contributes to SDG and SOE literature by identifying factors influencing disclosure quality, expanding measurement practices for SDG reporting, and highlighting the distinct challenges SOEs face in balancing public mandates with commercial viability. The findings emphasize the importance of integrating comprehensive frameworks to improve reporting quality. Future research should address limitations, explore broader communication channels, assess temporal shifts in disclosure practices, and examine the role of organizational culture and leadership in shaping the quality of SDG disclosures in SOEs

The Sustainable Development Goals (SDGs) urge nations to address critical challenges by 2030 (UN Global Compact, n.d.). While Norway ranks highly in SDG progress (Sachs et al., 2023), issues such as poor coordination and inadequate reporting have been highlighted (Riksrevisjonen, 2021). SOEs, balancing public and commercial objectives, face heightened expectations for transparency and sustainability (Grossi et al., 2015). However, their SDG disclosures risk being symbolic, undermining trust (van der Waal & Thijssens, 2020). Limited research on the quality of SOE SDG disclosures underscores the need to identify drivers of meaningful reporting (Bebbington & Unerman, 2018; Bose & Khan, 2022).

The aim of this study was to explore how SOE characteristics influence the quality of their SDG disclosures. We applied stakeholder and legitimacy theory to derive theoretical hypotheses on how public policy goals, degree of government ownership, and board gender diversity impact the quality of SDG disclosures in the annual reports of Norwegian SOEs from 2020 to 2023. Subsequently, we found that SOEs with public policy goals report with lower quality than SOEs without. Conversely, fully state-owned firms reported higher quality than partially owned firms, while the effect of gender diversity was deemed inconclusive due to insignificant effects.

Despite its limitations, this study contributes to SDG and SOE literature by identifying factors influencing disclosure quality, expanding measurement practices for SDG reporting, and highlighting the distinct challenges SOEs face in balancing public mandates with commercial viability. The findings emphasize the importance of integrating comprehensive frameworks to improve reporting quality. Future research should address limitations, explore broader communication channels, assess temporal shifts in disclosure practices, and examine the role of organizational culture and leadership in shaping the quality of SDG disclosures in SOEs