Sustainability Materiality and ESG Reporting Frameworks: A Systematic Literature Review

This systematic literature review aims to analyze the main academic themes and discussions related to materiality in sustainability reporting research. Sustainability materiality is one of the most important accounting principles in sustainability reporting research. It serves as a guide for companies to identify, assess, and prioritize their corporate sustainability practices, as well as determine which sustainability information and performance should be disclosed in their sustainability reports. This principle takes into account the importance and impacts of specific environmental, social, and governance (ESG) issues to their business and the interests of their stakeholders.

In recent years, the fashion industry has made significant progress in enhancing its sustainability commitments. An increasing number of fashion companies are voluntarily disclosing their sustainability policies, practices, performance, and targets. They are utilizing a variety of international sustainability reporting standards and frameworks such as Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB), providing guidance and structure for companies to effectively communicate their sustainability efforts. However, the proliferation of international sustainability reporting frameworks has raised concerns about sustainability materiality. These frameworks vary in their definitions, scopes, and reporting requirements, affecting the content (i.e., financial, economic, social and environmental) and the level of impact of the information (i.e., significance, magnitude, and relevance). Therefore, there is an urgent need for greater consistency and comparability in ESG disclosures to enable users of sustainability reports to make justified conclusions for their investment. This is crucial for ensuring transparency, accuracy, quality, and comparability of information in ESG disclosures.

This study employed a topic modeling analysis to identify prevalent themes and topics in sustainability reporting research. A total of 9856 articles sourced from Scopus, and 55 articles were chosen for scientometric analysis. The outcomes of this study revealed nine key themes, encompassing 60 topics. These themes include: 1) the impact and effectiveness of ESG frameworks, 2) standardization and consistency, 3) stakeholder engagement and disclosure, 4) materiality and relevance, 5) integration with business strategy, 6) assurance and verification, 7) regulatory frameworks and compliance, 8) metrics and measurement, and 9) reporting and disclosure. This investigation contributes to providing an overview of the current state of knowledge on sustainability materiality in ESG reporting.