Gaizka Ormazabal, professor at IESE Business School at the University of Navarra, has outlined the interlocking mechanisms that build trust in companies’ sustainability-related disclosures.
He identified regulators, boards of directors, shareholders, auditors and other stakeholders as the key actors for ensuring information is credible and trustworthy.
Ormazabal also set out four factors that determine the influence of these stakeholder groups:
- Proximity to information creation
- Scope and influence
- Maturity of mechanisms
- Incentives to monitor
“Since credibility depends on interaction and reinforcement among multiple mechanisms, regulations must strengthen coordination across different stages of the reporting process rather than operate in isolation,” he writes. “That introduces a complexity that is mostly absent from traditional financial reporting. But it also means that no single entity can halt efforts to produce more widespread, relevant and reliable information on sustainability.”