Assessing the alignment : An exploratory qualitative study of OMXS30 firms' sustainability narratives' calibration with their ESG performance

Sammanfattning: Purpose: The purpose of this paper is to gain a holistic understanding of Environmental, Social, and Governance (ESG) related narratives applied in OMXS30 firms’ annual reports. The understanding contributes to the existing literature by highlighting which main narrative strategies firms’ use to gain and maintain legitimacy, and whether or not the legitimacy gained and maintained from the narratives are in line with the firms’ ESG performance. Research questions: How do Swedish OMXS30 firms employ narratives in their annual reports as a means of legitimizing their ESG performance? How are the annual report narratives of OMXS30 firms related to their true ESG performance? Methodology and method: An inductive qualitative exploratory study was carried out to gain understanding of the most common ESG related disclosure narratives used by OMXS30 firms. To highlight how the narrative strategies are used to gain legitimacy, a thematic analysis of three OMXS30 firms’ annual reports for fiscal year 2022 was conducted. Discrepancies and similarities among the sample firms’ narratives was contrasted to the firms’ Refinitiv ESG score, which is used as a yardstick of ESG performance.The sample was based on the conceptually driven approach, where the authors of thisstudy assessed that data from firms with a high ESG score deviation compared to each other was the best base for further exploration. Conclusion: Our conclusion shows that there is no generalizable stringent alignment between firms’ ESG related narratives and their true ESG performance across the ESG score spectrum. This is shown by the many similarities in ESG related narratives between the firms, despite their highly deviating Refinitiv ESG scores. Furthermore, our study shows that narratives employed as a means of legitimizing ESG efforts are exclusively related to the Environmental and Social pillar of the ESG framework. Our main finding shows that the lowest rated firm narrative deviates from their ESG performance, by applying a narrative in line with the highest rated firm in terms of frequently addressed disclosure topics as well as applied linguistics.