While more New Zealand companies are reporting on sustainability, the information is difficult to read, and might be concealing negative sustainability performance.
This is the finding of the paper “The Readability of Sustainability Reporting in New Zealand Over Time”, the first readability study examining sustainability reporting in New Zealand.
It suggests a strong possibility of obfuscation and thus, a risk that sustainability reporting is sending the wrong signal to stakeholders.
The research finds that although the number of companies disclosing sustainability information has increased substantially, and companies have published sustainability reporting of greater length since 2007 – suggesting an increase in the demand for sustainability reporting – no significant improvement was seen in the readability of sustainability reporting.
This paper examines the readability of sustainability reporting in the annual reports, and stand-alone reports of New Zealand listed companies over a ten-year period.
Sustainability reporting was manually extracted from 264 reports, and readability software was used to determine the readability scores using five readability indices.
The findings also indicate that environmentally sensitive companies published more readable sustainability information in comparison to companies from non-environmentally sensitive industries.
Report co-author, Assistant Professor Tracy-Anne De Silva, said if sustainability reporting is going to be meaningful for stakeholders and investors, companies need to consider the readability when preparing their reports.
*The Readability of Sustainability Reporting in New Zealand over time https://ro.uow.edu.au/aabfj/vol14/iss3/7/