Who's in and who's out? Reading stakeholders and priority issues from sustainability reports in Turkey

Sustainability reports serve as crucial communication tools for corporations to disclose their governance and triple-bottom-line performance to stakeholders. These reports signal a commitment to corporate social responsibility (CSR), legitimacy, and accountability, enhancing stakeholder relations. However, the increasing pressure for improved stakeholder engagement and integrated governance practices can also create challenges for companies. Longitudinal studies analyzing stakeholder representation in sustainability reports are rare, particularly within the Turkish context. This research aims to address this gap by examining stakeholder trends in Turkish sustainability reports published between 2004 and 2019. The study focuses on companies listed in both the BIST Corporate Governance Index and the BIST Sustainability Index to ensure a sample of companies with strong sustainability commitments. The central research question is: How have stakeholders addressed in sustainability reports changed over the last 16 years? The study hypothesizes that the frequency of stakeholder mention reflects the prioritization of their demands by management.

The concept of 'stakeholder' has evolved since its introduction in the 1960s, with various definitions and classifications proposed. Freeman's (1984) stakeholder theory provides a foundational framework, but a common consensus on the meaning remains elusive. Studies on stakeholder identification have yielded diverse lists, highlighting the complexities and contextual variations in identifying stakeholders. Existing research on sustainability reporting in Turkey tends to be limited in scope, focusing on specific sectors or periods. While some longitudinal studies exist, they are uncommon. This study builds upon the work of Şener et al. (2016), who called for a comprehensive longitudinal examination of stakeholder representations in sustainability reports, a gap this research aims to fulfill. The study considers Mitchell et al.'s (1997) concept of stakeholder salience, suggesting that the frequency of mention in sustainability reports reflects the degree to which managers prioritize stakeholder demands. International comparisons highlight variations in reporting practices and policies related to stakeholder relations due to national contexts, legal systems, and government regulations (e.g., Sarbanes-Oxley Act in the US, German Corporate Governance Code). The Turkish context, with its civil law system and recent emphasis on CSR, presents a unique opportunity for longitudinal analysis.

This research employed quantitative content analysis to analyze 179 sustainability reports published between 2004 and 2019 by 26 companies listed on Borsa Istanbul and included in both the BIST Sustainability Index and BIST Corporate Governance Index. The selection of these companies ensured a focus on organizations with established sustainability commitments. Reports were coded for all stakeholders mentioned, with synonyms and multiple references consolidated to yield a distinct list of 102 stakeholders categorized into 16 groups. Inductive category development, a reductive process involving iterative refinement and inter-coder reliability checks, guided the categorization. The analysis focused on the frequency of stakeholder mention as an indicator of stakeholder salience and prioritization. Data analysis using MAXQDA software involved calculating sums, frequencies, averages, and rankings of stakeholders across the years. The study also examined the latest reports (2019) and company statements on stakeholder engagement to identify overlaps between salient stakeholders and priority issues. Frequency analysis and weighted average calculations were used to assess the alignment between statements and disclosed stakeholders. Sectoral analysis (B2C vs. B2B) was conducted to investigate industry-specific variations in stakeholder disclosures.

The analysis revealed a significant increase in the number of stakeholders disclosed over the study period, rising from 12 in 2004 to 102 by 2019. Eight core stakeholders (employees, suppliers, NGOs, customers, society, public institutions, investors, and shareholders) were consistently mentioned, with increasing frequency over time. Numerous other stakeholders were added over the years, reflecting a broadening of stakeholder engagement. The 16 stakeholder groups were ranked based on frequency of mention. Employees consistently emerged as the most salient stakeholder, followed by customers, society, management, business partners, suppliers, and industry. The prominence of 'customers' increased, surpassing 'society' in recent years, potentially reflecting a shift toward prioritizing financial value creation. The analysis of priority issues highlighted the use of materiality matrices in most reports, with a predominance of social issues (51%), followed by environmental (23%), economic (19%), and governance (7%). Key prioritized issues included occupational health and safety, diversity and equal opportunity, customer satisfaction, climate change, and talent management. Sectoral analysis revealed that B2C companies disclosed more stakeholders than B2B companies, with different stakeholder groups showing prominence in each sector (customers in B2C, employees in B2B).

The findings indicate a growing recognition and engagement with a wider range of stakeholders in Turkish sustainability reports. The increased salience of employees and customers reflects changing stakeholder dynamics and corporate priorities. The prominence of social issues aligns with the increasing importance of CSR and social value creation in the business environment. The observed shift towards customer-centric disclosures and the reduced emphasis on 'society' after 2007, especially in the aftermath of the 2008 global economic crisis, highlights the complexities of balancing financial and social concerns. The emergence of specific issues like occupational health and safety and diversity reflect both evolving legal and social expectations and the recognition of their importance for business performance. The sectoral variations indicate the influence of industry characteristics on stakeholder engagement and disclosure priorities. The research contributes to the existing literature by providing a comprehensive and longitudinal analysis of stakeholder representation in Turkish sustainability reports, a unique contribution considering the scarcity of such research in the Turkish context. The focus on companies in both the BIST Sustainability and Corporate Governance indices ensures the reliability of the findings, focusing on companies strongly committed to sustainability reporting.

This study provides a longitudinal analysis of stakeholder disclosure in Turkish sustainability reports (2004-2019), revealing an expanding range of stakeholders and a shift in prioritization towards employees and customers. The findings underscore the importance of integrating stakeholder perspectives into sustainability strategies. Future research could expand this analysis to include a broader range of companies, incorporate qualitative data to enhance understanding, and extend the time frame to capture longer-term trends. Further research might also investigate the impact of specific events, such as the 2008 economic crisis and the 2023 earthquake, on stakeholder salience. The study's contribution lies in providing an evidence-based framework for policymakers and companies to enhance their stakeholder engagement and sustainability practices.

The study is limited by its focus on companies listed in both the BIST Sustainability and Corporate Governance indices, potentially excluding companies with less robust sustainability commitments. The reliance on content analysis may overlook nuanced aspects of stakeholder engagement not explicitly captured in the reports. Further research incorporating qualitative methods would strengthen the understanding of stakeholder dynamics. The time frame of the study is also limited, focusing primarily on the period up to 2019; an updated analysis incorporating more recent reports would provide valuable insights into the evolving trends.