Bus Strat Env - 2023 - Esposito - Circular Economy Disclosure and Integrated Reporting The Role of Corporate Governance

Received: 8 September 2022 Revised: 12 February 2023 Accepted: 2 April 2023
DOI: 10.1002/bse.3427
RESEARCH ARTICLE
Circular economy disclosure and integrated reporting: The role

of corporate governance mechanisms
Benedetta Esposito 1 | Nicola Raimo 2 | Ornella Malandrino 1 | Filippo Vitolla 2
1
Department of Management and Innovation
Systems, University of Salerno, Salerno, Italy Abstract
2
Department of Management, Finance and In recent years, attention to the circular economy (CE) has grown considerably and it
Technology, LUM University, Casamassima,
Italy is now recognised as a model capable of overtaking the current linear economy of
unsustainable production and consumption. Organisations have started to implement
Correspondence
Benedetta Esposito, Department of
circular practices to transition towards this sustainable business model and to dis-
Management and Innovation Systems, close CE performance to their stakeholders. In this context, the integrated report
University of Salerno, Salerno, Italy.
Email: besposito@unisa.it
serves as a suitable tool to provide a holistic representation of how CE could impact
the companies' ability to create value over time. The relevance of this model has
prompted various scholars to examine CE disclosure. However, only some studies have
investigated this topic in the integrated reporting (IR) context. To the best of the
authors' knowledge, no studies have examined how corporate governance mechanisms
can affect the amount of CE information disseminated through the integrated reports.
By applying the lens of stakeholder-agency theory, this study aims to fill this important
gap by analysing the effect of the characteristics of the corporate governance mecha-
nisms on the level of CE disclosure within the integrated reports. The analysis, con-
ducted using a sample of 124 European companies, indicates a positive impact of the
board size, board gender diversity and the presence of the corporate social responsibil-
ity (CSR) committee on the level of CE disclosure within the integrated reports.
KEYWORDS
circular economy, circular economy disclosure, corporate disclosure, integrated reporting,
stakeholder-agency theory
1 | I N T RO DU CT I O N emissions (GHGs)—combined with population growth have exacerbated

the sustainability crisis (Ghisellini et al., 2016; Vitolla et al., 2021). The
During the last decades, the global ecosystem has been disrupted dra- recent health crisis caused by the spread of the COVID-19 pandemic
matically by unsustainable production and consumption systems has compounded this state of emergency, spurring policymakers to
(García-Sánchez et al., 2021a). The depletion of resources, climate implement urgent measures for global recovery (García-Sánchez
change and global warming—primarily caused by greenhouse gas et al., 2020). During the recent G20 Summit, the President of the
European Commission underlined the urgency to overcome the pan-
List of abbreviations: CE, Circular Economy; CEDI, Circular Economy Disclosure Index; CSR, demic condition, support global economic recovery and manage the
Corporate Social Responsibility; GHGs, Greenhouse Gas Emissions; IIRC, International
problem of climate change. Accordingly, as a part of the UN Climate
Integrated Reporting Council; OLS, Ordinary Least Squares; IR, Integrated Reporting; VIF,
Variance Inflation Factor. Change Conference (COP26), a series of initiatives have been launched
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,
provided the original work is properly cited.
© 2023 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.
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5404 ESPOSITO ET AL.
to galvanise progress towards a sustainable economy based on cleaner combining six different types of capital: financial, manufactured, intellec-
production systems and sustainable consumption patterns. tual, human, social and relationship and natural (IIRC, 2013;Nicolò
In this context, the circular economy (CE) has become increasingly et al., 2022; Vitolla et al., 2019). According to the IIRC, natural capital
important, as it can destabilise the current unsustainable linear economic includes information related to environmental areas, such as water, soil,
paradigm based on the extraction of raw materials, mass consumption air, energy, biodiversity and the ecosystem (Nicolò et al., 2022; Vitolla
and waste disposal (Ghisellini & Ulgiati, 2020). One of the most recog- et al., 2019). In light of this, IR represents an ideal solution for companies
nised CE definitions is associated with the end-of-life concept and the to disclose both financial and environmental information related to
practices of reducing, reusing, recycling and recovering materials in ‘pro- implemented CE practices (Barnabè & Nazir, 2022).
duction/distribution and consumption processes, thus operating at the Some scholars have begun to explore CE disclosure in the IR con-
micro-level (products, companies, consumers), meso level (eco-industrial text. Several studies have investigated how CE is disclosed in different
parks) and macro-level (city, region, nation and beyond), with the aim to geographical locations, such as Sri Lanka (Gunarathne et al., 2021) and
accomplish sustainable development’ (Kirchherr et al., 2017, pp. 22 and South Africa (Myeza et al., 2021), combining the analysis of integrated
225). This definition highlights the relevance of managing resources to and sustainability reports. Other scientific contributions have explored
achieve sustainable objectives within the environmental, social and eco- the interplay between IR and CE disclosure, providing theoretical
nomic dimensions. From this perspective, the concept of CE extends insights in light of the integrated thinking principles (e.g. Barnabè &
beyond the traditional interpretation that is exclusively linked to the Nazir, 2021, 2022). More specifically, Barnabè and Nazir (2021) have
environmental realm, highlighting the need to embrace the ecosystem's extracted and classified the most prevalent CE-related concepts from
actors at all levels to catalyse the ecological transition process. From this IR, demonstrating the potentiality of this tool to provide CE informa-
standpoint, companies could be considered key players in the ecological tion. Similarly, Barnabè and Nazir (2022) have theorised that IR con-
transition pathway, as they represent the links of a production and concepts exert a performative role, allowing a deeper interpretation of the
sumption chain that cannot be interrupted to close the resources loop CE initiatives and opportunities from a forward-looking perspective.
(Esposito et al., 2020; Gunarathne et al., 2021). Organisations are fos- However, these studies do not investigate factors affecting the CE
tered to adopt CE strategies for several reasons, such as the establish- disclosure level. To the best of our knowledge, the literature regarding
ment of legitimacy (Murray et al., 2017), the adoption of isomorphic this topic remains scant, and only a few articles have explored the CE in
behaviours relative to competitors (Korhonen et al., 2018) and compli- the IR context (Barnabè & Nazir, 2022; Opferkuch et al., 2022). In light
ance with institutional regulations (Barnabè & Nazir, 2021). Accordingly, of this gap in the literature, the present work relies on the stakeholder-
scholars have demonstrated that implementing CE business models agency theory to investigate the determinants of CE disclosure and
could also positively affect companies' economic and financial perfor- explore the motivations that drive companies to disclose CE information
mance (Geissdoerfer et al., 2017; Gonçalves et al., 2022). through IR. In particular, this research explores the impact of board size,
The relevance of this production and consumption model has also board gender diversity, board independence and the presence of a CSR
highlighted the need to disclose CE information (Barnabè & committee on the level of CE disclosure in the IR context.
Nazir, 2021). Companies have been called to increase sustainability dis- Accordingly, the present study aims to fulfil the following
closure and integrate CE-related information into their corporate report- research objectives:
ing cycle to fulfil emerging stakeholders' needs and to legitimate their
operations (Jakhar et al., 2019). Accordingly, companies are increasingly 1. To investigate to what extent companies provide CE information
exhorted by their stakeholders to enhance the transparency level in through their integrated reports.
their CE disclosure practices (Barnabè & Nazir, 2022). The growing 2. To investigate the impact of corporate governance variables on
awareness of the relevance of environmental issues, resource efficiency the level of CE disclosure in the IR context.
and waste management has entailed the development of several guide-
lines and standards to increase the quality of environmental disclosure The remainder of the work is structured as follows. Section 2 presents
(Barnabè & Nazir, 2021; García-Sánchez et al., 2021a; Giannarakis the literature review based on the analysis of the CE concept and
et al., 2020; Raimo et al., 2021). This normative proliferation has been prior research regarding CE communication. Section 3 focuses on the
reflected in the use of several reports and nonfinancial reporting tools theoretical background and the development of the hypotheses, while
to communicate CE-related information, such as CSR reports, sustain- Section 4 introduces the research methodology. Section 5 presents
ability reports, corporate websites and social media (Barnabè & and discusses the main findings, while Section 6 draws conclusions.
Nazir, 2021; Giacomini et al., 2020; Raimo et al., 2021). However, these
guidelines do not involve CE disclosure, which is already characterised
by a strongly subjective approach (Opferkuch et al., 2022). 2 | LI T E RA T U R E RE V I E W
To overcome this limitation, a new reporting tool has emerged that
is particularly suitable for disclosing environmental and CE information, The rising awareness of the relevance of CE has resulted in higher
namely, integrated reporting (IR), which can be used as a comprehensive demand from stakeholders and investors for comprehensive and reliable
framework for CE disclosure practices. Conceived by the International information regarding CE practices and policies implemented by compa-
Integrated Reporting Council (IIRC) (IIRC, 2013), IR can counteract the nies and their impacts on the value-creation process. Additionally, man-
drawbacks of both traditional financial and nonfinancial reports, agers have increasingly deemed it necessary to properly identify CE
ESPOSITO ET AL. 5405
practices' results and manage the strategies to achieve circular efficiency Some scholars have investigated companies' CE disclosure prac-
(Merli et al., 2018). More specifically, from an internal perspective, infor- tices, examining more types of corporate reports (i.e. García-Sánchez
mation regarding CE is pivotal for managers to develop strategic plans, et al., 2022; Kuo & Chang, 2021; Roberts et al., 2022). Kuo and Chang
define objectives and stimulate the adoption of business models focused (2021) examined Chinese companies' CSR and sustainability reports,
on reducing, reusing and recycling resources in the production process demonstrating that larger and more environmentally sensitive firms
(Ranta et al., 2018). From this standpoint, CE information also allows are likely to disclose more CE information to meet stakeholders'
companies to more accurately assess the potential economic value, risks expectations. Such firms also experience a higher sustainable growth
and opportunities deriving from their sustainable activities (Myeza et al., rate and return on equity. Additionally, García-Sánchez et al. (2022)
2021). From an external perspective, CE information is relevant for examined Spanish corporate websites and sustainability reports, not-
investors and other stakeholders, who are increasingly attuned to sus- ing that firms mainly disclose their commitment to greenhouse gas
tainable practices driven by international political initiatives (Barnabè & emissions reductions and resources management to ensure their sus-
Nazir, 2021). Moreover, CE information is crucial for customers who are tainable future. Their findings also revealed that sectors particularly
increasingly interested in sustainable practices. Thus, companies that sensitive to institutional pressures are more likely to disclose prob-
introduce environmental and circular innovations must ultimately dis- lems and potential solutions related to their CE projects. Furthermore,
close CE information to build a positive corporate image and maintain a Roberts et al. (2022) analysed the annual and sustainability reports of
competitive advantage (Kazancoglu et al., 2021). companies pertaining to different sectors, observing that those oper-
Therefore, the need to develop indicators and tools for measuring ating in the automotive industry are particularly committed to disclos-
and reporting CE levels and performance at a micro-level has ing CE-related information compared with companies operating in the
emerged. These indicators are considered useful tools for supporting defence, transportation and aerospace sectors, which are less likely to
policy development to provide information and to reduce environ- disseminate CE information.
mental pressure and impacts through circular processes (De Pascale Another strand of scholars has devoted specific attention to
et al., 2021). Accordingly, companies communicate CE results using examining the type of CE information disclosed by companies
these indicators to all relevant stakeholders (Kuo & Chang, 2021). (i.e. Istudor & Suciu, 2020; Stewart & Niero, 2018). In particular,
Empirically, scholars have started to devote increased attention Stewart and Niero (2018) observed that companies operating in the
to investigating companies' CE disclosure practices. Many articles fast-moving consumer goods sector are particularly attentive in rela-
have examined the extent of CE disclosure conveyed by companies in tion to transmitting information regarding end-of-life practices rather
their sustainability reports (i.e. Alfatlah et al., 2022; Moneva than circular business model strategies and product design. Addition-
et al., 2022; Opferkuch et al., 2021, 2022; Tiscini et al., 2022; Vitolla ally, Istudor and Suciu (2020) have demonstrated that retail food com-
et al., 2023). Some scholars have noted that despite general CE infor- panies are likely to primarily disclose information related to waste
mation being provided through sustainability reports, a strong subjec- management practices and greenhouse gas emissions reduction.
tivity characterises the disclosed content (Opferkuch et al., 2021, Lastly, some researchers have investigated the determinants of
2022). This is predominantly due to the lack of CE disclosure guide- CE disclosure. More specifically, Wang, Che, et al. (2014) have dem-
lines, which has entailed the adoption of noncommittal approaches onstrated a positive relationship between environmental institutional
towards the disclosure of CE practices and performances (Opferkuch pressures (i.e. institutional ownership and concentration) and compa-
et al., 2021, 2022). The inconsistent approach to CE disclosure within nies' level of CE disclosure through sustainability reports. Similarly,
sustainability reports has also been confirmed by other researchers Dagiliene et al. (2020) have examined the effects of external pressures
(i.e. Janik et al., 2020; Marco-Fondevila et al., 2021; Tiscini on CE disclosure. In particular, they have provided insights into the
et al., 2022). Tiscini et al. (2022) demonstrated that sustainability influence of regulations and mimetic pressures and the nonsignificant
reports provide underexplored CE information related to governance, impact of coercive factors on CE reporting practices. Nevertheless,
strategy, management and performance. Similarly, Marco-Fondevila these studies have focused on reporting tools aside from IR, which do
et al. (2021) highlighted an absence of CE information in sustainability not allow for a holistic assessment of CE practices that must integrate
reports. Additionally, Moneva et al. (2022) revealed that CE disclosure the technical, social, environmental and financial dimensions
is still in an ancestry stage in the financial sector, since it represents (De Pascale et al., 2021).
only a portion of the disclosed issues and is not subject to external Thus, more recently, scholars have started investigating CE disclo-
assurance. Analogue results have been provided by Janik et al. (2020), sure by adopting an integrated thinking lens (Barnabè & Nazir, 2021,
who observed that companies operating in the energy sector convey 2022; Kunc et al., 2020; Gunarathne et al., 2021; Myeza et al., 2021).
only limited CE-related information through sustainability reports, In particular, Barnabè and Nazir (2021) have analysed integrated
which mainly focus on the environmental impacts and the greenhouse reports published between 2011 and 2018 by a sample of EU compa-
gas emissions generated by corporate activities. Alfatlah et al. (2022) nies to detect how CE information is disclosed. They have extracted
noted that in countries with a low tax rate, companies tend to report 98 CE-related concepts, classified into four categories defined by the
a low CE disclosure rate through sustainability reports. Lastly, Vitolla IR framework (i.e. inputs, business activities, outputs and outcomes),
et al. (2023) found that firm size, financial leverage and firm profitabil- highlighting a more generic reporting approach towards CE informa-
ity represent positive drivers of the level of CE disclosure. tion. Furthermore, their case study has confirmed that ‘integrated
TABLE 1 Scientific contributions on CE communication.
Corporate documents/
Authors Year Country website Research method Main findings
Wang, Che, 2014 China CSR reports Content analysis Ownership governance and institutional
et al. pressures principally define the CE
accounting information disclosure
quality.
Jakhar et al. 2019 India - Survey The adoption of CE practices is positively
influenced by exploratory innovation.
However, the exploitative innovation
capability restrains the implementation
of CE practices.
Stewart and 2018 Worldwide CSR reports Content analysis and The most commonly reported CE activities
Niero mapping are focused on the end-of-life
management and sourcing strategies of
products and packaging rather than on
circular product design and business
model strategies.
Ünal et al. 2018 Italy - Case study To achieve the CE objectives in business
models, managerial commitment as a
moderating factor between the value
network and the customer value
proposition and interface dimensions
has been identified as pivotal.
Dagiliene et al. 2020 Europe Sustainability reports Content analysis By disclosing sustainable practices,
manufacturing companies seek to gain
societal legitimacy by reflecting
institutional logic centred around
regulatory factors and best practices
rather than legislative requirements.
Istudor and 2020 Europe Sustainability reports Content analysis By analysing information disclosed
Suciu following the global reporting initiatives
standards, different levels of
involvement in sustainable practices
across European agri-food companies
have emerged.
Kunc et al. 2020 Africa and Integrated reports Case study A framework that integrates the IR
Italy principles and the dynamic resource-
based view for CE disclosure has been
developed.
Janik et al. 2020 Europe Sustainability reports Content analysis In sustainability reports, the energy sector
predominantly discloses information
regarding GHG, without declaring the
methodology adopted to address them.
Scarpellini 2020 Spain - Survey There is a positive relationship between
et al. the firms' circular scope, the level of
corporate social responsibility and their
environmental accounting practices.
Barnabè and 2021 Worldwide Integrated reports Content analysis The CE-related reporting practices of
Nazir worldwide firms indicate differences in
reporting choices and highlight the role
of IR.
Gunarathne 2021 Sri Lanka Integrated reports Content analysis The research revealed the low disclosure
et al. of direct and explicit keywords about
the CE principles.
Kuo and 2021 China CSR and sustainability reports Content analysis Environmentally sensitive firms and larger
Chang firms are committed to disclosing
significantly more CE information to
fulfil the information-related needs of
stakeholders.
TABLE 1 (Continued)
Corporate documents/
Authors Year Country website Research method Main findings
Marco- 2021 Spain Sustainability reports Content analysis Spanish companies do not consider CE a
Fondevila priority, but the firms operating in the
et al. energy-intensive sector are more likely
to adopt CE as a strategic line.
Myeza et al. 2021 South Integrated reports and Content analysis The examined mining companies disclose
Africa sustainability reports CE information in integrated and
sustainability reports in light of
reporting principles.
Opferkuch 2021 Not Sustainability reports Literature review and The results showed discrepancies between
et al. provided content analysis the CE and sustainability reporting
literature.
Barnabè and 2022 Italy Integrated reports Case study The IR concept allows a better
Nazir understanding of CE-related activities
and opportunities for developing future
strategies.
Moneva et al. 2022 Europe Sustainability reports Content analysis and case CE information and initiatives are still in
study the launching stage, since they comprise
a minority of all the disclosed issues.
Alfatlah et al. 2022 Worldwide Sustainability reports Content analysis Countries with the lowest tax rate
recorded the lowest disclosure rate.
Opferkuch 2022 Europe Sustainability reports Content analysis CE information within sustainability
et al. reports is predominantly shallow and
inconsistent.
García- 2022 Spain Corporate websites and Content and textual Companies mainly disclose information
Sánchez sustainability report analysis regarding a sustainable future, resource
et al. management, and reduction of
greenhouse gas emissions.
Roberts et al. 2022 Worldwide Annual and sustainability Content analysis Companies provide limited and confusing
reports information regarding CE and
biodiversity. Moreover, the motor
industry has emerged as the most
engaged in CE compared with the other
industrial sectors.
Tiscini et al. 2022 Worldwide Sustainability reports Frequency term analysis The recent integrated reports include
environmental information from reports
published before the EU action plan for
CE. However, the CE information is still
under-reported in the governance,
strategy, management and performance
fields.
Vitolla et al. 2023 Worldwide Sustainability reports Content analysis Companies provide an adequate
dissemination of circular economy
information within the sustainability
reports. Firm size, financial leverage and
firm profitability represent positive
drivers of the level of CE disclosure.
Abbreviation: CE, circular economy.
thinking’ may successfully allow companies to manage their resources resource-based view perspective. From a similar standpoint, Barnabè
from a circular perspective and represent the corresponding informa- and Nazir (2022) performed a case study to examine how an Italian
tion. The relevance of IR for CE disclosure has also been proven by agri-food family-owned small-sized company applies integrated think-
Kunc et al. (2020), who have provided a preliminary framework to ing principles in disclosing CE information through IRs. Their study
identify firms' environmentally friendly ‘hot spots’ from a dynamic proved how IR may represent a pivotal instrument for managers to
identify strategic resources (i.e. IR capitals) and CE-related activities contracts between resource holders and seekers’ (Tauringana &
and opportunities. Furthermore, their findings highlighted the potenti- Chithambo, 2015, p. 427). Therefore, by extending the basic concepts
ality of CE and IR's integration for decision-making processes. of agency theory, the stakeholder-agency theory considers the
Gunarathne et al. (2021) also confirmed a generic approach towards implicit relationships that organisations have with stakeholders and
CE disclosure. Their analysis revealed a low level of disclosure of shareholders to be relevant (Blair, 1998; Tauringana &
direct and explicit CE keywords, as well as a higher level of implicit CE Chithambo, 2015). Therefore, this theory extends the classic
disclosure in Sri Lankan integrated and sustainability reports. These principal–agent relationship by also incorporating the one existing
findings suggest that companies need more awareness about CE and between managers and stakeholders (Gerged, 2021; Hill &
that they must enhance their sustainability performances following Jones, 1992; Kock et al., 2012). The relationship between managers
environmental management principles. On the other hand, Myeza and stakeholders, however, could be conflicting due to the presence
et al. (2021) have attempted to provide a normative framework for of divergent opinions about the allocation of resources (Tauringana &
integrating CE into strategic objectives and have assessed the CE Chithambo, 2015). In fact, stakeholders have no direct interest in the
information in the integrated reports of African mining companies. financial performance of the company and therefore assign value to
However, they have found an excessive generalisation in the CE com- other aspects of business management (Kock et al., 2012), while man-
munication of information, which does not allow an analysis of the agers frequently have a short-term time horizon and are interested in
quality of the information reported. immediate financial returns (García-Sánchez et al., 2021b). Thus,
The literature review (summarised in Table 1) demonstrated that according to Kock et al. (2012), conflicts frequently arise between
no scientific contribution has investigated the determinants of CE dis- managers and stakeholders in relation to environmental topics. In fact,
closure in the IR context. Moreover, it highlighted that scholars still environmental initiatives require significant monetary resources and
need to focus their analyses on the role of corporate governance therefore represent a certain cost, to which only uncertain and future
mechanisms in CE disclosure practices. Therefore, this study aims to benefits correspond (Darnall et al., 2010; King & Lenox, 2002). There-
fill these gaps by analysing the extent of CE information within the fore, they could be at the centre of the interests of stakeholders who
IRs and by examining the impact of the board of directors and the are attentive to environmental issues, while they may not be aligned
CSR committee on the amount of information provided. with the interests of managers due to the important monetary
resources they require (Raimo et al., 2021).
The existence of a conflictual relationship between managers and
3 | T H E O R E T I C A L BA C K G R O U N D A N D stakeholders entails the need for control mechanisms and systems
H Y P O T H E S E S D E V E LO P M E N T aimed toward aligning the interests of the parties (Raimo et al., 2021).
In line with the stakeholder-agency theory, there are external and
Different theoretical perspectives, such as legitimacy theory, agency internal mechanisms that make it possible to align the interests of
theory and stakeholder theory, have been used within the academic managers with those of stakeholders (Kock et al., 2012). External
literature to explain the choice of organisations to disseminate infor- mechanisms include government interventions and regulations, while
mation related to environmental issues (Freedman & Jaggi, 2005; Liao internal mechanisms refer to corporate governance systems
et al., 2015; Llena et al., 2007; Stanny & Ely, 2008). Some scholars (Tauringana & Chithambo, 2015). Corporate governance is considered
have also used a multitheory framework (Baalouch et al., 2019) due to to be the main element capable of ensuring the alignment of the man-
the overlap between the theories underlying corporate disclosure agers' objectives with those of the stakeholders (Raimo et al., 2021).
(Deegan, 2002). According to a definition provided by Daily et al. (2003, p. 371), cor-
Regarding the role played by governance mechanisms in disclo- porate governance represents ‘the determination of the broad uses to
sure choices, which represents the focus of this study, the prevalent which organizational resources will be deployed and the resolution of
use of agency theory within the academic literature is evident conflicts amongst the myriad participants in organizations’. Therefore,
(e.g. Barako et al., 2006; Vitolla et al., 2020, 2020). However, as noted through the lens of stakeholder-agency theory, we transition away
by Raimo et al. (2021), for the analysis of the disclosure of information from the vision of corporate governance as a tool for aligning the
related to environmental issues, it is necessary to employ a theoretical interests of managers and shareholders, and we incorporate other
perspective that also accounts for the needs and expectations of aspects, such as CSR and the environment, in the sphere of skills and
stakeholders, who are increasingly interested in the environmental interests of corporate governance mechanisms, such as the board of
impacts of organisations (de Villiers & Van Staden, 2011). directors and the CSR committee (Tauringana & Chithambo, 2015).
Therefore, in line with past contributions regarding the relation- Therefore, in relation to environmental aspects, these bodies have the
ship between corporate governance mechanisms and environmental task of controlling and monitoring managers' sustainable and environ-
disclosure (Frias-Aceituno et al., 2013; Gerged, 2021; Kock mentally friendly behaviour and ensuring full responsibility towards
et al., 2012; Raimo et al., 2021; Tauringana & Chithambo, 2015), this stakeholders (Tauringana & Chithambo, 2015). The board of directors
study uses stakeholder-agency theory to frame the impact of the and the CSR committee, by virtue of their fiduciary duties, should
characteristics of the board of directors and the CSR committee on intervene in the presence of an inclination on the part of managers
the amount of CE information disseminated by companies within the towards actions that contravene the environmental interests of the
integrated reports. This theory regards the firm as ‘a nexus of stakeholders (Halme & Huse, 1997; Tauringana & Chithambo, 2015).
In this regard, it is reasonable to expect that these bodies ensure that H1. CE disclosure is positively influenced by the
their responsibility is evident through a wide dissemination of infor- board size.
mation relating to the environment (Tauringana & Chithambo, 2015)
and to the CE. Another potentially relevant feature of the board of directors in
Some characteristics of the board of directors and the CSR com- relation to disclosure policies is represented by its diversity. In line
mittee influence the ability of these bodies to fulfil their responsibili- with the stakeholder-agency theory, a more diversified board of direc-
ties and to execute their control and monitoring functions in relation tors, on the one hand, has a greater ability to control and monitor the
to disclosure policies (Baalouch et al., 2019; Liao et al., 2015; work of management and, on the other hand, is more likely to repre-
Tauringana & Chithambo, 2015). This study examines the impact of sent the different interests of the stakeholders (Rodrigues
the size, gender diversity and independence of the board and the et al., 2017). Among the different types of diversity within the board
presence of the CSR committee on the amount of information relating of directors, gender represents an increasingly contentious and
to the CE disseminated by companies within the integrated reports. debated topic in the academic literature (Liao et al., 2015; Vitolla
The individual hypotheses are presented below. et al., 2020). Female directors tend to improve the control and moni-
According to the stakeholder-agency theory, the board of direc- toring functions of the board due to their diligence and commitment,
tors represents a fundamental governance mechanism for controlling their ability to create a positive working climate and their greater par-
and monitoring managers' activities and safeguarding stakeholders' ticipation in board meetings (Huse & Solberg, 2006). In addition, the
interests (Hill & Jones, 1992). Some scholars contend that a larger presence of female directors within the board allows a greater consid-
board of directors could perform these functions more effectively by eration of the various interests of the stakeholders (Rodrigues
virtue of the greater resources at its disposal (Coles et al., 2006). et al., 2017). In fact, women have a diminished orientation towards
Indeed, larger boards of directors are more likely to include more pres- the economic aspects of business management and are less focused
tigious members (Certo, 2003) and to have a larger pool of experience, on personal interests (Ibrahim & Angelidis, 1995), thus devoting more
knowledge and skills that could foster various control and monitoring attention to elements such as the environment, quality of life, well-
functions (Dalton et al., 1999). Furthermore, larger boards of directors, being, ethics and CSR (Liao et al., 2015). Furthermore, women are
thanks to the external relations of the individual members, could guar- more oriented towards transparent business management models and
antee greater ease in finding monetary resources (Raimo et al., 2021) therefore prefer broader disclosure policies (Baalouch et al., 2019;
to be allocated to CE disclosure policies in favour of stakeholders Vitolla et al., 2020). These circumstances could therefore favour a
(Tauringana & Chithambo, 2015). Finally, larger boards of directors wider CE disclosure by companies characterised by boards of direc-
could better represent the different interests and expectations of tors with a greater presence of women.
stakeholders (Tauringana & Chithambo, 2015) and are more likely to From an empirical perspective, although no contributions have
include directors with knowledge and experience specifically related directly focused on CE disclosure, Baalouch et al. (2019), Liao et al.
to the environment and the CE (de Villiers et al., 2011). These circum- (2015), Raimo et al. (2021), Rao et al. (2012) and Tingbani et al. (2020)
stances could therefore favour a wider CE disclosure by companies uncovered a positive impact of board gender diversity on the amount
characterised by larger boards of directors. However, it is necessary of environmental information disseminated by companies. Therefore,
to underline that some scholars have highlighted the presence of com- in light of this broad theoretical and empirical support, it is possible to
munication and coordination problems within larger boards of direc- formulate the following hypothesis:
tors, which could lead to obstacles in decision-making processes and
reduce the effectiveness of control and monitoring activities H2. CE disclosure is positively influenced by the board
(Cerbioni & Parbonetti, 2007; Ntim et al., 2013; Raimo et al., 2022). In gender diversity.
this regard, Jensen (1993, p. 865) has posited that ‘when boards get
beyond seven or eight people, they are less likely to function effec- Another potentially relevant feature of the board of directors in
tively and are easier for the CEO to control’. Therefore, in line with relation to disclosure policies is the degree of independence. In line
this alternative view, the increase in the number of directors within with the stakeholder-agency theory, the presence of independent
the board could lead to the dissemination of a smaller amount of members guarantees greater control and monitoring of the activities
information (Cerbioni & Parbonetti, 2007; Ntim et al., 2013; Raimo of the managers and mitigates the presence of opportunistic behav-
et al., 2022). iours that are deleterious to stakeholders (Hill & Jones, 1992; Raimo
From an empirical point of view, although no contributions have et al., 2021). The optimal control and monitoring capabilities were
directly focused on CE disclosure, Gerged (2021), Raimo et al. (2021), derived from the status of independent members who are not
Rao et al. (2012), Tauringana and Chithambo (2015) and Trireksani involved in the company's day-to-day activities (de Villiers
and Djajadikerta (2016) revealed a positive impact of the board size et al., 2011) and who do not strongly feel the pressure of competitors
on the amount of environmental information disseminated by compa- (Prado-Lorenzo & García-Sánchez, 2010). Independent members also
nies. Despite the presence of different theoretical perspectives have a greater stakeholder orientation and are more sensitive to social
regarding the impact of board size on the level of disclosure, broad demands (Baalouch et al., 2019; Ibrahim & Angelidis, 1995; Liao
empirical support warrants the formulation of the following et al., 2015). In fact, they have limited interests in the financial perfor-
hypothesis: mance of the firm (Ibrahim & Angelidis, 1995) and dedicate more
attention to aspects such as the environment, ethics and CSR whose reports refer to the IIRC or the international <IR> framework,
(Baalouch et al., 2019; Ibrahim & Angelidis, 1995), which are at the or are influenced by the framework through participation in <IR> net-
centre of stakeholders' interests. These circumstances could therefore works’. Choosing this section guarantees that the integrated reports
favour a wider CE disclosure by companies characterised by boards of examined have been devised in compliance with the <IR> framework.
directors with a greater presence of independent members. The inclusion of companies in this section is not based on an assess-
From an empirical point of view, although no contributions have ment of the quality of the integrated reports by the IIRC; therefore, it
directly focused on CE disclosure, Giannarakis et al. (2020), Gerged is possible to find documents of different depths and articulation. The
(2021), Liao et al. (2015) and Rao et al. (2012) demonstrated a positive list of companies is constantly updated by the IIRC and provides a
impact of board independence on the amount of environmental infor- referral to the companies' official website, from which it is then possi-
mation disseminated by companies. Therefore, in light of the broad ble to download the integrated reports for the different fiscal years.
theoretical and empirical support, it is possible to formulate the fol- Although the ‘<IR> reporters’ section contained integrated
lowing hypothesis: reports of companies located in Europe, South America, North Amer-
ica, Asia, Africa and Australasia, only European companies were
H3. CE disclosure is positively influenced by the selected through the search bar. This process led to the identification
board's independence. of 161 companies. From this initial list, companies for which the inte-
grated report for 2020 was not available and nonprofit organisations
The presence of a CSR committee also represents a potentially were eliminated. Subsequently, the companies whose data relating to
relevant element of disclosure policies. In line with the stakeholder- independent and control variables were not present in the Bloomberg
agency theory, the presence of a CSR committee indicates a strong database were eliminated. This process led to the exclusion of 37 com-
orientation of the company towards sustainability, the environment panies and the composition of the final sample, which includes
and stakeholders (Baalouch et al., 2019; Giannarakis et al., 2020; Liao 124 companies.
et al., 2015) and ensures enhanced control and monitoring of environ-
mental and social initiatives undertaken by management (Baalouch
et al., 2019; Raimo et al., 2021). Furthermore, the presence of a CSR 4.2 | Dependent variable
committee favours corporate transparency in relation to social and
environmental issues, since this body is often directly involved in col- The dependent variable is the CE disclosure level, which has been
lecting sustainability information and producing nonfinancial reports measured through the development of a CE disclosure index (CEDI).
(Giannarakis et al., 2020). In this regard, the CSR committee performs To calculate the dependent variable, a content analysis has been per-
in relation to sustainability disclosure a function comparable with that formed, following the coding framework proposed in Table 2. Accord-
performed by the audit committee in relation to financial disclosure ing to Berelson (1952, p. 18), content analysis ‘is a research technique
(Liao et al., 2015; Raimo et al., 2021). These circumstances could for the objective, systematic, and quantitative description of the mani-
therefore favour a wider CE disclosure by companies characterised by fest content of communication’. It allows researchers to realise ‘repli-
the presence of a CSR committee. cable and valid inferences from data according to their context’
From an empirical point of view, although no academic contribu- (Krippendorff, 1980, p. 21). Scholars have demonstrated that this
tions have directly focused on CE disclosure, Liao et al. (2015) and technique allows an upcoming implementation of econometric models
Odoemelam and Okafor (2018) uncovered a positive impact of the to investigate the factors that affect the level of the disclosure
presence of a CSR or environmental committee on the amount of explored (L'Abate et al., 2023; Nicolò et al., 2022; Raimo et al., 2020).
environmental information disseminated by companies. Therefore, in Several studies regarding environmental disclosure have implemented
light of the broad theoretical and empirical support, it is possible to content analysis techniques (e.g. Giacomini et al., 2020; Raimo
formulate the following hypothesis: et al., 2021), but this research method is also used in CE studies
(e.g. Barnabè & Nazir, 2021; Kuo & Chang, 2021; Wang, Shen, et al.,
H4. CE disclosure is positively influenced by the pres- 2014). The implementation of the content analysis may be performed
ence of a CSR committee. both manually and automatically (i.e. dictionary-based, supervised
machine learning, topic modelling and unsupervised methods). While
the automatic content analysis is achieved by using software that
4 | RESEARCH METHODOLOGY automatises the coding procedure, the manual content analysis is per-
formed by a coder (Stockwell et al., 2009). To assign a primary role to
4.1 | Sample researchers in interpreting CE information, this study employed a
manual content analysis technique (Esposito et al., 2021;
The sample used within this study includes 124 European companies Raimo, 2021). This methodological choice is also justified by the fact
that published an integrated report in 2020. The official website of the that the automatic content analysis does not support the researchers
IIRC was chosen for the selection of the companies. In particular, the in assessing the presence of synonyms and sentences with several
‘<IR> reporters’ section was utilised. It includes ‘those organizations meanings (Nicolò et al., 2022).
TABLE 2 Coding franework.
Categories Sources Items Scores

1. CE honours and performance Wang, Che, et al. (2014) 1. CE honours 0–1
Wang, Che, et al. (2014) 2. Energy conservation performance 0–1
Kuo and Chang (2021) 3. Emission reduction performance 0–1
Kuo and Chang (2021) 4. Resource reuse performance 0–1
Kuo and Chang (2021) 5. Recycling performance 0–1
2. Investment in the CE Vitolla et al. (2023) 6. CE significant investment 0–1
Wang, Che, et al. (2014) 7. Other CE recurrent expenditure 0–1
3. CE policies and implementation Myeza et al. (2021) 8. CE financial aids and tax concessions policies 0–1
Vitolla et al. (2023) 9. Implementation of CE-related provisions 0–1
Wang, Che, et al. (2014) 10. CE utilisation ratio information 0–1
Kuo and Chang (2021) 11. Costs saving due to CE implementation 0–1
4. Micro-level CE indicators and Adibi et al. (2017) 12. Global resource indicator 0–1
measurement systems De Pascale et al. (2021) 13. Life cycle assessment (LCA) 0–1
De Pascale et al. (2021) 14. Life cycle costing (LCC) 0–1
Franklin-Johnson et al. (2016) 15. Longevity indicator 0–1
De Pascale et al. (2021) 16. Material reutilisation score 0–1
Van Schaik and Reuter (2016) 17. Recycling index 0–1
Huysman et al. (2017) 18. CE performance indicator 0–1
Linder et al. (2017) 19. Product-level circularity metric 0–1
De Pascale et al. (2021) 20. Value-based resource efficiency indicator 0–1
Lee et al. (2014) 21. End-of-life indices 0–1
Mohamed Sultan et al. (2017) 22. Recycling desirability index 0–1
Azevedo et al. (2017) 23. Sustainable circular index 0–1
Bovea and Pérez-Belis (2018) 24. Circularity design indicator 0–1
De Pascale et al. (2021) 25. End-of-use product value recovery indicator 0–1
Zwolinski et al. (2006) 26. REmanufacturig with PROduct PROfiles (REPRO2) 0–1
IDEAL&CO Explore (2016) 27. Circularity calculator 0–1
Niero and Kalbar (2019) 28. Material circularity indicators 0–1
5. CE certifications/standards Scarpellini et al. (2020) 29. UNI EN ISO 14001:2015 (environmental 0–1
management system)
Kuo and Chang (2021) 30. UNI EN ISO 50001:2018 (energy management 0–1
system)
Esposito et al. (2021) 31. EMAS III (eco-management and audit scheme) 0–1
Authors' elaboration 32. BS 8001:2017 (framework for the CE 0–1
implementation)
Authors' elaboration 33. AFNOR XP X30-901:2018 (circular economy 0–1
project management system)
Authors' elaboration 34. Other certifications/standards 0–1
The coding framework was developed following previous studies 2. Investments in the CE: This category refers to relevant invest-
regarding CE measurement and disclosure, as reported in Table 2. The ments and expenditures related to CE initiatives.
analysis of these studies led to the identification of 34 items, which 3. CE policies and implementation: This category refers to
have been divided into the following categories: companies' implementation of CE policies and the
financial taxes and aid obtained due to high CE-related
1. CE honours and performance: This category refers to the awards performance.
gained by firms that implement CE, their performances in reuse- 4. Micro-level CE indicators and measurement systems: This category
reduce-recycle actions and the costs saved through the adoption refers to relevant indicators for CE measurements at a company
of CE practices. level.
TABLE 3 Variables and measurement.
Variable Measurement Previous studies

CEDI CE disclosure level measured through a disclosure index Own elaboration
Board size Number of members within the board of directors Frias-Aceituno et al. (2013); Raimo
et al. (2021); Vitolla et al. (2020)
Board gender Percentage of women within the board of directors Frias-Aceituno et al. (2013); Raimo
diversity et al. (2021); Vitolla et al. (2020)
Board Percentage of non-executive members within the board of directors Frias-Aceituno et al. (2013); Raimo
independence et al. (2021); Vitolla et al. (2020)
CSR committee Dummy variable that assumes a score of 1 if the company includes a CSR or Raimo et al. (2021); Vitolla et al. (2020)
sustainability committee and a score of 0 in the opposite case
Board meeting Number of annual meetings of the board of directors Raimo et al. (2021); Vitolla et al. (2020)
frequency
Firm size Natural logarithm of total assets Frias-Aceituno et al. (2013); Raimo
et al. (2021); Vitolla et al. (2020)
Firm profitability Net income divided by shareholders' equity Raimo et al. (2021); Vitolla et al. (2020)
Firm financial Ratio between total assets and equity Raimo et al. (2021); Vitolla et al. (2020)
leverage
Firm age Number of years since the foundation of the company Raimo et al. (2021); Vitolla et al. (2020)
Audit committee Number of members within the audit committee Raimo et al. (2021)
size
Audit committee Percentage of independent members within the audit committee Raimo et al. (2021)
independence
5. CE certifications and standards: This category refers to the disclo- size was measured as the number of members within the board of
sure of environmental and CE certifications and standards imple- directors (Frias-Aceituno et al., 2013; Raimo et al., 2021; Vitolla
mented by companies. et al., 2020). Board gender diversity and board independence, respec-
tively, were calculated based on the percentage of women and non-
Since the researchers believe that all items are equally important, an executive members within the board of directors (Frias-Aceituno
unweighted dichotomous approach to code the data was used. et al., 2013; Raimo et al., 2021; Vitolla et al., 2020). Finally, CSR com-
According to this approach, each single item assumes a score equal to mittee was measured through a dummy variable that assumes a score
1 if the specific information is disclosed in the integrated report and of 1 if the company includes a CSR or sustainability committee and a
0 in the opposite case (Raimo et al., 2021). In light of this, our depen- score of 0 in the opposite case (Raimo et al., 2021; Vitolla et al., 2020).
dent variable can assume a score ranging from 0 to 34. The econometric model also includes the following control vari-
To assess the quality and the reliability of the coding process, a ables: board meeting frequency, firm size, firm profitability, firm financial
two-stage checklist scoring approach has been adopted (Raimo leverage, firm age, audit committee size and audit committee indepen-
et al., 2021). In the first step, two coders conducted a pilot test jointly dence. Board meeting frequency was measured by the number of
on 10 integrated reports to assign the scores to the items identified in annual meetings of the board of directors (Frias-Aceituno et al., 2013;
the coding framework. Subsequently, to assess the intercoder reliabil- Raimo et al., 2021; Vitolla et al., 2020). Firm size was calculated as the
ity, the two coders separately analysed another 20 integrated reports. natural logarithm of total assets (Frias-Aceituno et al., 2013; Raimo
The results revealed an adequate reliability rate. Moreover, Krippen- et al., 2021; Vitolla et al., 2020), while firm profitability was calculated
dorff's alpha was measured to reinforce the results of the two-stage based on the net income divided by shareholders' equity (Raimo
approach and to confirm the reliability of the coding process. The et al., 2021; Vitolla et al., 2020). Firm financial leverage was calculated
coefficient scores a value of 0.872, which can be considered accept- as the ratio between total assets and equity, while firm age was mea-
able, since it is higher than the threshold of 0.80 (Krippendorff, 1980). sured in terms of the years that have elapsed since the foundation of
the company (Raimo et al., 2021; Vitolla et al., 2020). Audit committee
size was calculated as the total number of members within the audit
4.3 | Independent and control variables committee (Raimo et al., 2021). Finally, audit committee independence
was measured based on the proportion of independent members in
The independent variables within this study are as follows: board size, relation to the total amount of the audit committee members (Raimo
board gender diversity, board independence and CSR committee. Board et al., 2021). Table 3 presents an overview of all variables.
4.4 | Model specification
12
1
To test the research hypotheses and understand the factors capable
0.031
of influencing the amount of CE information disseminated by com-
1
11
panies within the integrated reports, this study has employed a
0.024
0.076
regression model. The model of analysis proposed by this study is
10
1
reflected in the following equation:
0.018
0.064
0.107
CEDI ¼ β0 þ β1 Board size þ β2 Board gender diversity
1
þ β3 Board independence þ β4 CSR committee
þ β5 Board meeting frequency þ β6 Firm size
0.266***
0.285***
þ β7 Firm profitability þ β8 Firm financial leverage
0.110
0.033
þ β9 Firm age þ β10 Audit committee size
þ β11 Audit committee independence þ ε:
1
8
0.252***
0.244***
0.047
0.086
0.059
5 | RESULTS AND DISCUSSION
1
0.247***
0.219**
5.1 | Descriptive statistics, variance inflation
0.040
0.001
0.005
0.012
factor (VIF) analysis and correlation analysis
1
6
0.220**
Table 4 presents descriptive statistics, a VIF analysis and a correla-
0.078
0.031
0.087
0.067
0.037
0.013
tion analysis. The dependent variable, represented by the CEDI, has
1
5
an average value of 11.58. Considering that the maximum score that
can be assumed by this variable is 34, it is evident that the compa-
0.339***
0.166*
0.022
0.051
0.063
0.129
0.041
0.143
nies examined still provide minimal information about the CE in the
1
integrated reports. In this regard, therefore, further efforts are nec-
4
Abbreviations: CEDI, CE disclosure index; CSR, corporate social responsibility; VIF, variance inflation factor.
essary to achieve full transparency regarding the dynamics con-
0.276***
0.176**
0.193**
0.203**
0.195**
0.223**
nected to the CE. Regarding the independent variables, the
0.149*
0.110
0.019
companies included in the sample have, on average, a board com-
3
posed of about 11 members. Moreover, on average, the boards of

0.344***
0.357***
0.318***
directors of the sampled companies are composed of about 30%
0.168*
0.083
0.105
0.108
0.050
0.023
0.109
women and 66% nonexecutive members. Finally, about 54% of the
2
companies in the sample provide for the presence of a sustainability

0.385***
0.364***
0.271***
0.363***
0.306***
0.247***
0.316***
or CSR committee.
0.029
0.038
0.036
As anticipated, Table 4 also presents the VIF analysis and corre- 0.031
1
lation analysis. The VIF analysis allows the exclusion of multicollinear-

1
Descriptive statistics, VIF and correlation analysis.
ity problems. The VIFs vary from a minimum of 1.06 to a maximum

1.37
1.40
1.31
1.09
1.19
1.35
1.25
1.18
1.06
1.20
1.38
VIF
of 1.40. These values are lower than 10, which is recognised by

Myers (1990) as the maximum threshold beyond which problems
17.82
18.24
13.54
55.67
17.01
5.56
3.51
0.49
6.61
2.59
1.72
1.28
S.D.
related to multicollinearity arise. The absence of multicollinearity

problems has also been demonstrated by the correlation analysis. In
Mean
0.54
8.39
3.18
4.16
11.58
11.10
30.38
66.25
11.58
10.76
70.90
80.27
fact, it indicates the presence of low coefficients with a maximum

value equal to 0.385. In this regard, according to Farrar and Glauber
(1967), multicollinearity problems are recorded only in the presence
Audit committee independence
of coefficients that exceed the thresholds of ± 0.8 or ± 0.9. There-

Board meeting frequency
Firm financial leverage

Board gender diversity
fore, it is legitimate to state that there are no multicollinearity prob-

Audit committee size
Board independence
lems in the interpretation of the results of the regression model.

***Significant at 1% level.
*Significant at 10% level.

Firm profitability
**Significant at 5% level.
CSR committee
Board size
Firm size
Variable
Firm age
5.2 | Regression analysis

CEDI
TABLE 4
Table 5 presents the results of the econometric analysis. The

10
11
12
1
2
3
4
5
6
7
8
9
adjusted R2 has a value of 0.344, which demonstrates the ability of

TABLE 5 OLS regression model

Variable Coefficient Standard error p-value Sign.
results.
Cons 2.785 2.965 0.000 ***
Board size 0.412 0.135 0.003 ***
Board gender diversity 0.048 0.026 0.076 *
Board independence 0.031 0.025 0.213
CSR committee 1.536 0.849 0.073 *
Board meeting frequency 0.155 0.669 0.022 **
Firm size 0.032 0.181 0.077 *
Firm profitability 0.058 0.033 0.081 *
Firm financial leverage 0.633 0.256 0.015 **
Firm age 0.004 0.007 0.592
Audit committee size 0.472 0.346 0.176
Audit committee independence 0.023 0.028 0.411
N 124
Adj. R2 0.344
***Significant at 1% level.
**Significant at 5% level.
*Significant at 10% level.
the regression model to explain about 34.4% of the variance in the board size on CE disclosure confirms what Gerged (2021), Raimo et al.
dependent variable. The results almost entirely support the research (2021), Rao et al. (2012), Tauringana and Chithambo (2015) and Trir-
hypotheses. eksani and Djajadikerta (2016) have found in relation to environmen-
In greater detail, Hypothesis 1 (H1) is supported by the regression tal disclosure.
model results. In fact, they indicate a positive and highly significant
association between board size and CEDI at p = 0.003. This result sug- Hypothesis 2. (H2) is also supported by the results. In
gests that a greater number of members within the board of directors fact, the results indicate a positive and significant asso-
favour greater dissemination of information related to the CE within ciation between board gender diversity and CEDI at
the integrated reports. In fact, according to the stakeholder-agency p = 0.076. This result indicates that a greater number of
theory, a larger board of directors can more effectively perform the female members within the board of directors favours a
functions of control and monitoring of the managers' activities to greater dissemination of information related to the CE
safeguard the interests of stakeholders (Coles et al., 2006; Hill & within the integrated reports. In fact, according to the
Jones, 1992). According to the stakeholder-agency theory, board stakeholder-agency theory, a more diversified board of
members represent the interests of the firm's various stakeholders directors more effectively performs the functions of
(Hill & Jones, 1992). Therefore, a larger board of directors will have a controlling and monitoring the managers' activities to
greater diversity of representation and consequently a greater amount safeguard the interests of stakeholders (Huse &
of information from different sources. This can help the board make Solberg, 2006; Rodrigues et al., 2017). In particular,
more informed decisions and account for the interests of all stake- women typically exhibit greater commitment and dili-
holders, as opposed to merely shareholders, in relation to environ- gence, participate more assiduously in board meetings
mental issues as well. Furthermore, a larger board of directors is more and help to create a positive working climate within the
likely to include members of greater prestige with an enhanced expe- board (Liao et al., 2015). In addition, the presence of
rience, skills and knowledge regarding environmental issues women on the board reduces the orientation of this
(Certo, 2003; Dalton et al., 1999). Finally, a larger board of directors is body toward economic aspects and allows the enhanced
more likely to enjoy improved external relations that could favour the consideration of the interests of stakeholders (Ibrahim &
collection of monetary resources (Tauringana & Chithambo, 2015) to Angelidis, 1995). Finally, greater gender diversity within
be allocated to the CE disclosure. Indeed, the inclusion of a greater the board increases attention to the environment and
number of members increases the likelihood of direct connections corporate transparency (Baalouch et al., 2019; Vitolla
and acquaintances with different providers of financial resources et al., 2020). These circumstances can therefore favour
(Tauringana & Chithambo, 2015). These circumstances can therefore a greater consideration of the needs of stakeholders in
favour a greater consideration of the needs of stakeholders in relation relation to environmental issues and can therefore
to environmental issues and can also explain the greater inclusion of explain the greater inclusion of CE information within
CE information within the integrated reports. The positive impact of the integrated reports. The positive impact of the
gender diversity board on CE disclosure confirms what independence and the presence of a CSR committee on the level of
Baalouch et al. (2019), Liao et al. (2015), Raimo et al. CE information disclosed by companies within integrated reports. The
(2021), Rao et al. (2012) and Tingbani et al. (2020) dem- results demonstrated a positive impact of some characteristics of the
onstrated in relation to environmental disclosure. board, such as size and gender diversity, and of the presence of the
CSR or sustainability committee on the level of CE disclosure. They
Conversely, Hypothesis 3 (H3) is not supported by the results. In also demonstrated a nonsignificant effect of board independence.
fact, the results suggest a nonsignificant association between board The results of this study have contributed significantly to enrich-
independence and CEDI. This indicates that the number of independent ing the academic literature. First, they provide information regarding
members within the board of directors does not affect the amount of the actual amount of information related to the CE disseminated by
CE information disclosed by the companies within the integrated companies within integrated reports. In this regard, this study has
reports. This result, although contrary to what was hypothesised and enriched the academic literature by further investigating the ability of
to the principles of the stakeholder-agency theory, is consistent with IR to represent a solution for companies to disseminate CE informa-
what was found by Tauringana and Chithambo (2015), Prado-Lorenzo tion. In fact, past studies have primarily devoted attention to other
and García-Sánchez (2010), Raimo et al. (2021) and Trireksani and documents, such as sustainability reports, dedicating limited attention
Djajadikerta (2016) in relation to environmental disclosure. The inde- to IR. Secondly, it has contributed to enriching knowledge of the fac-
pendence of some board members may be merely theoretical and not tors capable of influencing the CE disclosure level, demonstrating the
practical by virtue of connections with executive members that could role of corporate governance mechanisms. Considering their funda-
compromise their autonomy and professional judgement. Therefore, mental role in disclosure policies, the analysis of their characteristics
these circumstances could represent a possible explanation of the on CE disclosure is particularly important. Thirdly, this study extends
non-significant impact of board independence on the amount of CE the field of application of the stakeholder-agency theory, which is still
information disseminated by companies within the integrated reports. seldom applied to frame the issue of CE disclosure. Considering the
Finally, Hypothesis 4 (H4) is also supported by the results. In fact, relationships between corporate governance bodies and stakeholders,
the results indicate a positive and significant association between CSR this theory represents an ideal solution for framing the impact of the
committee and CEDI at p = 0.073. This result suggests that the pres- board's characteristics and the CSR committee on CE disclosure
ence of a CSR or sustainability committee promotes the greater dis- policies.
semination of information related to the CE within the integrated The findings of this study also have important practical implica-
reports. In fact, according to the stakeholder-agency theory, the pres- tions for companies. In fact, companies should expend further efforts
ence of a CSR or sustainability committee guarantees enhanced con- to implement CE models. The implementation of these models guar-
trol and monitoring of environmental issues and ensures the greater antees various advantages connected to environmental sustainability,
consideration of the expectations and needs of stakeholders including a reduction of impacts and a minimisation of the use of
(Baalouch et al., 2019; Giannarakis et al., 2020; Liao et al., 2015). Fur- resources and the production of waste, economic advantages con-
thermore, the presence of this body favours corporate transparency nected to a reduction of costs deriving from the efficient use of
regarding social and environmental issues (Giannarakis et al., 2020). resources and reduced waste production, reputational and relational
These circumstances can therefore favour a greater consideration of advantages connected with the improvement of the quality of prod-
the needs of stakeholders in relation to environmental issues and can ucts and services and greater respect for the environment. Secondly,
explain the greater inclusion of CE information within the integrated companies should provide information regarding the CE models
reports. The positive impact of the presence of the CSR committee on adopted to increase their level of transparency, satisfy the growing
CE disclosure confirms what was proven by Liao et al. (2015) and information-related needs of stakeholders and attract those investors
Odoemelam and Okafor (2018) in relation to environmental who are sensitive to sustainability and CE and who are seeking long-
disclosure. term investment opportunities. Furthermore, only an adequate dis-
Regarding the control variables, the results indicate a positive semination of CE information can guarantee the reputational advan-
impact of the board activity level and some characteristics of the com- tages and increase the trust that consumers and stakeholders
pany, such as size, profitability and financial leverage, on the amount generally place in the company. Furthermore, in light of the results
of CE information disclosed within the integrated reports. Conversely, obtained, companies should create corporate governance mechanisms
the company's age and the audit committee's characteristics have no that better protect the interests of stakeholders. In this regard, to
significant effect. increase transparency related to the CE, companies should form larger
boards of directors that include more women. These circumstances
can improve the board's control and monitoring capabilities, allow a
6 | C O N CL U S I O N S greater consideration of the needs of stakeholders and favour wider
dissemination of CE information. Finally, companies should prioritise
The goal of this work was to examine the factors that may influence the establishment of an internal CSR or sustainability committee. In
the CE disclosure level within the IR context. In particular, this study fact, this body can increase the company's attention to social and
explored the influence of board size, board gender diversity, board environmental issues by promoting a broader CE disclosure.
The findings also have important implications for policymakers. In Barnabè, F., & Nazir, S. (2021). Investigating the interplays between inte-
fact, they should incentivise the dissemination of CE information to grated reporting practices and circular economy disclosure. Interna-
tional Journal of Productivity and Performance Management, 70(8),
increase society's awareness and understanding of the opportunities
2001–2031. https://doi.org/10.1108/IJPPM-03-2020-0128
and benefits of sustainable economics, foster the adoption of sustain- Barnabè, F., & Nazir, S. (2022). Conceptualizing and enabling circular econ-
able business practices, enhance the demand for sustainable goods omy through integrated thinking. Corporate Social Responsibility and
and services and encourage an ecological transition and the achieve- Environmental Management, 29(2), 448–468. https://doi.org/10.1002/
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Received: 8 September 2022 Revised: 12 February 2023 Accepted: 2 April 2023

Circular economy disclosure and integrated reporting: The role

Benedetta Esposito 1 | Nicola Raimo 2 | Ornella Malandrino 1 | Filippo Vitolla 2

1 | I N T RO DU CT I O N emissions (GHGs)—combined with population growth have exacerbated

Bus Strat Env. 2023;32:5403–5419. wileyonlinelibrary.com/journal/bse 5403

TABLE 1 Scientific contributions on CE communication.

Abbreviation: CE, circular economy.

TABLE 2 Coding franework.

Categories Sources Items Scores

Abbreviation: CE, circular economy.

TABLE 3 Variables and measurement.

Variable Measurement Previous studies

Abbreviation: CE, circular economy.

4.4 | Model specification

posed of about 11 members. Moreover, on average, the boards of

companies in the sample provide for the presence of a sustainability

lation analysis. The VIF analysis allows the exclusion of multicollinear-

ity problems. The VIFs vary from a minimum of 1.06 to a maximum

of 1.40. These values are lower than 10, which is recognised by

related to multicollinearity arise. The absence of multicollinearity

fact, it indicates the presence of low coefficients with a maximum

of coefficients that exceed the thresholds of ± 0.8 or ± 0.9. There-

Firm financial leverage

fore, it is legitimate to state that there are no multicollinearity prob-

lems in the interpretation of the results of the regression model.

*Significant at 10% level.

5.2 | Regression analysis

Table 5 presents the results of the econometric analysis. The

adjusted R2 has a value of 0.344, which demonstrates the ability of

TABLE 5 OLS regression model

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