Levels of Connectivity in Swedish Integrated Reports - How does the IR framework and recent regulations shape connections between different content elements?

Abstract

This study examines the levels of connectivity between financial and sustainability information in the integrated reports of Swedish industrial companies in relation to the Integrated Reporting (IR) Framework and the recent developments of regulation, including the EU Corporate Sustainability Reporting Directive (CSRD) and the IFRS sustainability standards. Using mixed methods of content analysis of annual reports of five Swedish industrial firms between 2019–2023 the study explores how the IR Framework shapes connectivity of content elements and how this connectivity progresses under regulatory pressure. The analysis is structured around four forms of connectivity: financial and impact materiality, financial and sustainability performance, strategies and operations, and sustainability risks and financial outcomes. The study finds that connectivity increased modestly in all types of connectivity, especially in firms with more structured sustainability strategies and reporting mechanisms. The study uses institutional theory to describe how coercive, mimetic, and normative pressures have influenced firms to adopt and implement connectivity in corporate reporting. The study contributes to the literature demonstrating the dynamic interaction between voluntary reporting frameworks and regulatory developments and by proposing a scoring model to assess connectivity levels. This research offers practical implications for regulators, standard setters, and organizations seeking to improve the coherence and overall decision-usefulness of their integrated reports.