Communicating on ESG impacts: The case of the largest European construction industry companies

Abstract

The impact is a change in an outcome caused by an organization. An impact can be positive or negative, intended or unintended. The enterprises can measure and compare impact performance data – and use this data to set goals and communicate performance. Impact, as it is internally measured and managed, should be communicated to the stakeholders. The impact valuation approach can support companies to ensure long-term and sustainable value creation by improved reporting, better strategic decision making, and improved operational management. The aim of the chapter is to investigate the communication of impact that is exerted by the companies form the construction industry (CI) through the non-financial disclosure (NFD). We perform our research using a cutting-edge textual analysis tool that is latent Dirichlet allocation (LDA), which is an unsupervised Bayesian machine-learning analysis. This approach allows for finding hidden topics related to the impact and each of Environmental Social and Governance (ESG) pillars in CI companies’ NFD. The results lead to the conclusions that companies from this sector are very selective in disclosing information about their impact in relation to the ESG pillars. Therefore, the communication transparency is questionable and needs improvements.

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