Circular Economy Key Concepts and Reporting Practices: An Exploratory Study

The research builds on the current debate on how to include sustainability-related data and information into accounting corporate reporting practices. In detail, the research focuses on circular economy and integrated reporting. This research aims to discuss (a) whether integrated reporting provides the principles and elements that support the representation of CE-related activities and (b) how and to what extent current integrated report practices disclose CE data and information. To address the first aim, the study relies on the public IIRC database as the primary source of information. Specifically, this study identified CE-related information using a content analysis approach to investigate a sample of 12 reports drawn up by eight organizations from the basic materials industry. To address the second aim in detail, we searched for textual elements (number and frequency of concepts) and images (number and typologies of figures and graphical representations, e.g., closed-loops). The glossary (single concepts, groups, and/or categories of concepts) was defined ex-ante. To this end, the authors created a specific codebook that combined two primary sources (IIRC main concepts and the Glossary of Circular Economy by the US Chamber of Commerce). Additionally, the study focused on analyzing the visual representations included in the integrated reports. This aligns with a recent stream of literature in management accounting investigating how visual representations may be used to disclose data and conceive information about the relationships between an organization and its stakeholders. The study explores the primary nexus of IR with CE issues and activities. In this context, through content analysis, the study provided data valid to investigate how and to what extent integrated reports disclose circular economy-related information. Our preliminary findings show that the amount of disclosure of CE concepts still needs to be improved in this typology of corporate reports. As previous research demonstrated, one of the limitations of content analysis is the excessive focus on the quantity rather than the quality of disclosure. Stated differently, the amount of exposure does not necessarily entail an organization disclosing information of high quality or relevance for its stakeholders. Another limitation of this study is that it draws upon a limited sample or integrated reports. These limitations also open avenues for further research, specifically toward developing a quantitative exploratory study.