Digitalization of ESG reporting: technologies, challenges, and opportunities for FTSE MIB companies

Purpose: The increasing demand for information on environmental and social issues has led to a growing emphasis on transparency and more detailed corporate reporting. In this context, awareness has spread regarding the limitations of traditional financial statements in effectively addressing the informational needs of a diverse range of stakeholders (Piedepalumbo, 2024). Currently, three dimensions—financial, social, and environmental—are considered essential to ensuring corporate sustainability in the long term. Consequently, merely analyzing economic-financial and asset-related information is no longer sufficient to obtain a comprehensive view of a company's performance, associated risks, and prospects (Minutiello & Tettamanzi, 2022). To address these needs, many companies have progressively expanded the voluntary disclosure of non-financial information through the adoption of early sustainability reports (La Torre et al., 2020). This has resulted in the publication of two types of documents: the financial and asset statement, which has become increasingly concise, and the sustainability report, which has progressively expanded (Vitolla et al., 2020). The introduction of the EU Directive on Non-Financial Reporting (2014/95/EU) has made sustainability reporting mandatory for large, listed companies, thereby legitimizing non-financial disclosure practices (La Torre et al., 2018). The objective of this regulation is to improve the quality, credibility, consistency, and comparability of non-financial information, strengthening investor and stakeholder confidence and encouraging companies to commit to more sustainable development (Dumay et al., 2019; La Torre et al., 2018; Dumay et al., 2017). Moreover, it aims to harmonize non-financial disclosure by European public interest entities through binding regulations (Krasodomska et al., 2017). According to the research firm Frank Bold (2017), the directive seeks to lay the foundation for a new approach to corporate reporting that integrates financial transparency with essential environmental and social data, allowing a deeper understanding of a company’s development, performance, and position, as well as the impact of its activities on society (Frank Bold, 2017, p.1). Another significant transformation concerns the growing demand for data and information from stakeholders. The adoption of new information technologies enables more dynamic communication, adaptable to various needs and reporting processes. The corporate information system encompasses all activities related to data collection, processing, and transmission to meet both internal and external informational requirements. It consists of data representing the corporate and environmental reality, procedures for data collection and distribution, and technological and human resources employed in the information process (Candiotto, 2013). With the advent of digitalization, companies have immediately sought targeted solutions to address informational challenges (Miotto, 2003). Data is collected and disseminated through procedures supported by tangible and intangible tools that constitute the physical and virtual infrastructure. The concept of Reporting 4.0 (Alles et al., 2021) marks an evolution toward personalized reporting, fully leveraging modern technologies such as the Internet, ERP systems, databases, visualization software, and cloud computing. The same technologies used for financial reporting could also support the preparation and dissemination of sustainability reports. From the analysis of the literature and current knowledge, a clear gap emerges in studies that, through case studies, examine how and which technological tools can support companies in various phases of sustainability reporting. In this regard, using the framework proposed by Piedepalumbo (2024), this study aims to achieve a dual objective through a case study analysis: on the one hand, to identify the technological tools employed in the different phases of collecting, processing, and disseminating non-financial information; on the other, to determine in which phase these tools are most effective in providing support. Methodology: The methodological approach adopted in this study is based on the use of a survey investigation, a well-established methodology in empirical research in the field of business and economics, which allows for the collection of structured data directly from the subjects involved. Surveys represent an effective tool for analyzing complex phenomena, ensuring a high degree of generalizability and providing valuable insights into companies’ perceptions, practices, and strategies (Dillman, Smyth, & Christian, 2014). In particular, the use of surveys in corporate reporting and digitalization processes is widely documented in the literature, with studies demonstrating their utility in examining the diffusion of technologies and their impact on organizational processes (Bryman & Bell, 2015). The present survey aims to analyze the role of technology in supporting companies in the preparation of sustainability reports, with a specific focus on the phases of ESG (Environmental, Social, and Governance) data collection, processing, and dissemination. The objective is to assess the degree of integration of digital tools—such as reporting software, data analytics platforms, and artificial intelligence—into corporate processes, as well as to identify the main benefits and challenges perceived by industry professionals (Piedepalumbo, 2024). The use of self-reported surveys presents certain methodological challenges, including the risk of response bias and social desirability bias. These distortions may lead participants to provide responses that align with social expectations rather than accurately reflecting corporate practices. This risk is particularly relevant in studies on sustainability and digitalization, as companies may tend to overestimate their level of technological innovation or the integration of ESG practices to align with market and stakeholder expectations (Groves et al., 2009). To mitigate these effects, specific methodological strategies have been adopted. Firstly, the survey questions were designed to reduce social desirability bias by avoiding phrasing that implicitly suggests “correct” or preferable responses. Additionally, the questionnaire includes questions addressing both the challenges and opportunities related to the adoption of technology in ESG reporting processes. Another strategy employed is data triangulation, which involves cross-referencing survey responses with the information contained in companies’ published sustainability reports, as well as other available secondary sources, such as corporate statements, official ESG reports, and regulatory documents. This approach aims to verify the consistency of corporate declarations and identify potential discrepancies between the survey responses and the actual practices adopted (Saunders, Lewis, & Thornhill, 2019). Finally, to rule out distortions arising from the sectoral composition of the sample, an analysis of response homogeneity across companies from different industrial sectors will be conducted. This will help identify any systematic response patterns, i.e., trends attributable to the industry rather than the actual level of digitalization in ESG reporting (Hair, Hult, Ringle, & Sarstedt, 2017). The sample selection was guided by the need to ensure high representativeness of the Italian economic context, focusing on large publicly traded companies in the FTSE MIB segment. This index includes the 40 largest market capitalization companies listed on the Italian Stock Exchange, operating in diversified sectors but sharing a strong commitment to sustainability and the regulatory obligation to publish a sustainability report in compliance with the European Union’s Corporate Sustainability Reporting Directive (CSRD). The exclusive inclusion of FTSE MIB companies offers significant methodological advantages. Firstly, it allows for the analysis of firms operating in a highly regulated environment, with access to advanced resources for implementing digital technologies in sustainability reporting. Secondly, it enables the collection of more homogeneous and comparable data, reducing the risk of distortions resulting from excessive size or sectoral differences. To maximize the response rate and ensure data quality, the survey will be directed specifically to corporate sustainability officers (Chief Sustainability Officer, ESG Manager, or equivalent roles), identified through publicly available information in sustainability reports or direct contact with the relevant reporting divisions. This approach ensures the involvement of individuals directly responsible for ESG reporting, reducing the risk of inaccurate responses or answers unrelated to corporate decision-making processes. The questionnaire was designed following best practices in corporate survey construction (Fowler, 2013), balancing closed-ended questions—to ensure comparability and quantitative analysis—with open-ended questions aimed at gathering qualitative insights. To measure the level of digitalization in sustainability reporting among FTSE MIB companies, a five-point Likert scale was adopted, allowing respondents to self-assess their use of technology across various ESG reporting phases. The questions are structured into three main sections, each dedicated to a specific aspect of sustainability reporting digitalization, in line with the adopted analytical framework: 1. Technologies and tools for ESG data collection – This section analyzes the digital tools used for ESG data collection and aggregation, with a particular focus on environmental management software, data analytics platforms, artificial intelligence-based solutions, and process automation tools (Robotic Process Automation – RPA). Respondents assess the level of automation and technological integration on a Likert scale from 1 to 5, where 1 indicates minimal use (predominantly manual processes) and 5 represents advanced adoption (full automation with AI and IoT). 2. Processing, control, and verification of ESG data – This section examines the level of integration between reporting software and other corporate systems (ERP, CRM, business intelligence tools), as well as strategies adopted to ensure the quality and verifiability of ESG data. Again, respondents assign a score on a Likert scale from 1 to 5, evaluating the degree of digitalization in validation and predictive analysis processes. 3. Technologies for communication and transparency in sustainability reporting – The final section focuses on the tools used for the publication and dissemination of sustainability reports, with attention to XBRL, blockchain for data certification, and stakeholder engagement platforms. The Likert scale differentiates between companies that adopt only static formats (e.g., PDF) and those that implement interactive digital reports, blockchain certification, or dynamic platforms. Once data collection is complete, the level of digitalization in ESG reporting will be synthesized through the Sustainability Reporting Digitalization Index (SRDI), calculated as the average of the scores assigned across the three phases described above. This indicator will allow for the classification of companies based on their degree of digital maturity, providing a detailed perspective on the adoption and impact of technology in ESG reporting within the FTSE MIB. Results: The analysis of the collected data highlights a heterogeneous level of digital technology adoption across the different phases of non-financial information reporting among FTSE MIB companies. Firms are progressively integrating advanced tools, such as reporting software, data analytics platforms, and artificial intelligence-based solutions. However, the degree of adoption of these technologies varies significantly among companies. In the data collection phase, the most commonly adopted solutions include environmental management software and process automation tools. Nevertheless, many companies report challenges in integrating data from multiple sources, emphasizing the need for more interoperable and standardized systems. Regarding the data processing and verification phase, ERP systems and business intelligence platforms support ESG data quality control. However, challenges related to information standardization and compliance with existing regulations persist, making the reporting process still complex and fragmented. In the dissemination phase, the adoption of innovative tools, such as blockchain for data certification and interactive digital reports, remains limited. Many companies continue to favor traditional formats, such as PDF files, suggesting resistance to change or a lack of sufficient incentives for implementing advanced digital solutions. The analysis of the Sustainability Reporting Digitalization Index (SRDI) reveals an uneven level of digital maturity: while some companies exhibit a high degree of digitalization, others still rely on manual processes with limited integration of digital tools. The adoption of digital technologies is progressively transforming sustainability reporting, offering opportunities in terms of efficiency, reliability, and transparency of ESG information. However, significant obstacles remain, particularly concerning data standardization and regulatory compliance. Companies with higher digital maturity appear to derive more substantial benefits from digitalization, but a broader evolution of the sector requires further technological infrastructure development and increased awareness of the advantages of innovation in ESG reporting. Practical and theoretical implications: The analysis conducted in this study offers significant practical and theoretical implications. For companies within the FTSE MIB, the findings serve as a valuable benchmark for assessing the degree of digitalization in their sustainability reporting, facilitating the identification of areas for improvement and best practices. Firms with lower digital maturity can draw inspiration from industry leaders to optimize ESG data collection, processing, and communication processes, ultimately enhancing transparency and operational efficiency. From a policy perspective, the study’s results can support policymakers in refining ESG reporting regulations, promoting the adoption of digital tools, and reducing technological barriers that hinder corporate digital transformation. At the same time, software providers and developers of ESG reporting solutions can leverage the empirical evidence to design more targeted tools that effectively address the specific needs identified in this study. Theoretically, this research contributes to the literature on ESG reporting digitalization by introducing the Sustainability Reporting Digitalization Index (SRDI), an innovative framework for measuring corporate technological maturity in this field. Furthermore, the adoption of technology in ESG reporting can be analyzed through the lenses of the Resource-Based View and Dynamic Capabilities Theory, highlighting how companies with a higher degree of digitalization can achieve a sustainable competitive advantage. Finally, the study’s findings open new avenues for future research, such as analyzing the evolution of digitalization over time or comparing different international contexts. These further investigations could contribute to the academic debate on the digital transformation of sustainability reporting, providing valuable insights for the development of increasingly effective corporate strategies and public policies.