Integrated reporting and the Corporate Sustainability Reporting Directive: bridging the gap or growing apart?

Purpose This study aims to examine, through the lens of legitimacy theory, the compliance of integrated reports – prepared according to the framework prior to the introduction of the Corporate Sustainability Reporting Directive (CSRD) – with the European Sustainability Reporting Standards (ESRS). Additionally, it seeks to assess the impact of firm size and industry environmental sensitivity on this level of compliance. Design/methodology/approach This study employs manual content analysis to evaluate the compliance of integrated reports with the ESRS disclosure requirements. Using a sample of 166 European Union companies that published an integrated report in 2023, compliance levels are assessed by systematically coding the presence or absence of the required information in each report. Additionally, a linear regression model is used to examine the impact of firm size and industry environmental sensitivity on the level of compliance. Findings The results reveal a relatively low average level of compliance with the ESRS. They also demonstrate a positive effect of firm size and industry environmental sensitivity on compliance levels. Thus, larger companies and those operating in environmentally sensitive industries are more likely to align their integrated reports with the ESRS disclosure requirements. Originality/value This study makes a significant contribution to the literature by addressing the gap between current reporting practices based on the <IR> framework and the more detailed ESRS requirements introduced by the CSRD. It provides some of the first empirical evidence on integrated reporting compliance with the ESRS and expands knowledge of the factors influencing this compliance level. Furthermore, it extends the application of legitimacy theory, framing compliance with ESRS as a strategic response to evolving regulatory expectations.