Early Insights in Accounting for the EU Taxonomy: A Case Study on an Industrial Company's Responses and Internal Implications
Sammanfattning: Scholars and practitioners have recently struggled in defining and integrating sustainability. In response, the European Commission enforced the Regulation (EU) 2020/852 in July 2020. Establishing a standard classification tool, defining environmentally sustainable economic activities to relocate financial flows towards low-carbon activities. As such, this study qualitatively examines a multinational industrial's implementation process toward the institutional regulatory pressure through the lens of Oliver's (1991) strategic responses framework. We find that accounting for the EU Taxonomy is not a straightforward process of implementing the external requirements. To seek conformity, the case organization carved out the regulatory definition and responded through acquiescence, normative discussions, compromise, and influence tactics. It finds support from management (sustainability) control systems M(S)CS through cognitive and normative elements in the presence of ambiguity. These findings extend prior literature on strategic responses to institutional pressure, indicating more passive conformity than theoretically suggested. Furthermore, we provide insights and arguments toward mobilizing organizational integration caused by the EU Taxonomy's aggregated structure and impending mandatory reporting requirements, challenging preparers' institutionalized structures requiring cross-functional interaction.
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