Aligning Corporate Priorities with Stakeholder Expectations: An Analysis of ESG Materiality Factors in the Fashion Industry

Growing regulatory pressure and heightened public scrutiny over labour rights, supply chain ethics, and worker safety have amplified the social dimension of environmental, social, and governance (ESG) reporting in the fashion and textile industry. Yet, despite the sector’s prominence in global sustainability debates, limited understanding exists regarding how companies identify and prioritize social issues within their ESG disclosures. This gap is critical because social factors—such as fair labour practices, diversity, and occupational safety—play a central role in shaping corporate legitimacy and stakeholder trust. Grounded in legitimacy theory, this study examines how fashion and textile companies use the materiality matrix as a strategic mechanism to align social priorities with stakeholder expectations. Legitimacy theory posits that organizations seek societal approval by demonstrating congruence between their actions and prevailing social norms. The materiality matrix operationalizes this process by ranking ESG topics based on perceived importance to both businesses and their stakeholders, thus serving as a legitimacy‐building instrument. Analysing sustainability reports from 44 fashion and textile companies listed on the Hong Kong Stock Exchange for the 2023–2024 financial year, the study conducts a content analysis and a comparative assessment of company–stakeholder perceptions of social issue importance. Findings suggest that companies emphasize issues with a more direct and measurable impact on operational performance and product quality—such as supply chain management, occupational health and safety, and product responsibility—while underrepresenting less tangible topics like diversity, equity, and inclusion. These gaps reveal persistent misalignments between corporate communication and stakeholder expectations, indicating potential legitimacy risks. By providing an empirically grounded framework for benchmarking social ESG materiality, this research advances both theoretical and practical understanding of how firms can strengthen societal trust and regulatory compliance through more stakeholder‐responsive reporting practices in the global fashion industry.