The Influence of Stakeholder Engagement on Sustainability Reporting: Evidence from Italian local councils

Abstract

This study investigates the motivations of local councils for producing a sustainability report. Inter-connecting theories of legitimacy, accountability, and the New Public Management are used to structure an investigation that explains patterns of behaviours by Italian local councils. The project assesses if, and how, stakeholder engagement can influence the local councils’ decision-making process through the adoption of sustainability reporting. Semi-structured interviews were conducted with the sustainability report preparers of a sample of Italian local councils. The findings demonstrate that initially sustainability reporting is introduced for accountability and legitimacy reasons. However, over time traditional sustainability reporting was incidental to more sophisticated tools of policy-making and reporting, in which some of the stakeholders were actively involved. The findings highlight the political negotiations in which sustainability reporting finds itself. The stakeholder engagement projects implement legitimizing strategies within the context of the search for an arrangement between political programs and stakeholder demands.

Key words:

• Sustainability reporting
• local councils
• legitimacy
• accountability
• stakeholder engagement

Notes

1. For a comprehensive review see Marcuccio and Steccolini (2005).

2. The Region key powers include healthcare system management and economic development. The Provinces have traditionally lesser administrative powers and their existence is nowadays questioned.

3. The database is available online at: http://bilanciosociale.formez.it/node/365 (accessed February 2010). In one case, we did not find the report mentioned in the database, but a later issuance. In the interview, we were told the report mentioned in the database was a draft.

4. We also considered other methods, but discarded them as they would not have achieved the same objectives. In the focus groups, the interviewees tend to avoid more sensitive topics, self-criticism and are biased by group dynamics (Gilham 2005; Silverman 2005). Also, the focus groups limit the number of topics that can be covered and can reduce differentiations among the interviewees’ responses. Surveys are limited by the need to establish an operational definition of the phenomena observed before investigating it (Gilham 2005).