Exploring the Transition to Normativity: An Analysis of Stakeholders’ Perspectives on Sustainability Reporting Standard-Setting

Normativity, how actors come to see norms as binding, is crucial to sustainability reporting standard-setting. Studies analyzing companies’ compliance with norms and exploring actors’ views on norms support this reasoning. Yet few studies have focused on the legitimacy of norm entrepreneurs and the critical role of stakeholders in this process. In 2021, the IFRS Foundation published a draft standard for global sustainability reporting. Prior to its publication, the IFRS Foundation initiated a consultation process on the demand from stakeholders for such a new standard. In total, 572 comment letters were received from a broad range of stakeholder groups across 46 countries. We examined these comment letters through thematic analysis. We find that stakeholders emphasize the IFRS Foundation’s well-established institutional platform, which partly compensates for the fact that the IFRS Foundation is not yet taken for granted as the natural authority in sustainability reporting. We find diverse international perspectives on the rationale, purpose, materiality, and audience of a global sustainability reporting norm across stakeholder groups, which challenges the formulation of a norm that is well designed for its intended purpose. We argue that the IFRS Sustainability Disclosure Standards are better positioned to achieve normativity in specific regions, particularly those where sustainability reporting legislation is less advanced or where there is a strong focus on financial materiality. The results add to the theory of normativity. They show how consultation processes contribute to norm emergence and the transition to a norm cascade and thus highlight the importance of legitimacy and stakeholders’ perspectives.