Circular economy and environmental disclosure in sustainability reports: empirical evidence in cosmetic companies

The purpose of this paper is to investigate the content and quality of circular economy CE) and environmental information (CEEI) disclosure in sustainability reports. Additionally, it provides suggestions for heightening CEEI disclosure. Using the content analysis, we analysed the changes that took place after the European Union (EU) action plan (2015) selecting a sample of sustainable reports in the cosmetic industry in Italy in 2014 and 2019 years. We applied the Climate Disclosure Standard Board (CDSB) framework focused on 12 reporting requirements designed to encourage corporate standardized disclosure of environmental information. Our analysis is performed through a frequency term analysis. Additionally, to measure the general shift of semantic over the two years towards CEEI, a semi-supervised topic modelling approach was applied, whose topics were obtained by aggregating all terms with a significant variation from the content analysis. Findings show that the recent reports (2019) include terms related to the environment in a slightly more frequent way compared to 2014. We provide stronger evidence of the shift in the origin of the topics, being coherent with the changes introduced from the EU 2015 act, and the requirements of the CDSB framework nevertheless the CE seems still under-reported in the area of governance, strategy, management and performance. The paper discusses the need for further Institutional (EU directives), regulatory (CDSB framework) and stakeholders' pressure (on companies. Finally, the implementation of an integrated reporting for social, economic and environmental disclosure is suggested as a way to ensure an effective CEEI disclosure.