Received: 21 January 2020 Revised: 11 April 2020 Accepted: 25 April 2020

DOI: 10.1002/csr.1961

RESEARCH ARTICLE

Disclosure of eco-innovation activities in European large

companies' sustainability reporting

António Pedro Vieira1† | Gregor Radonjič2

1
Faculty of Economics, University of Porto,
Porto, Portugal Abstract
2
Faculty of Economics and Business, Institute This study examines how eco-innovations activities are disclosed within sustainability
of Technology and Entrepreneurial
reporting of European large companies and provides one of the first studies on the
Environment Protection, University of
Maribor, Maribor, Slovenia intersection of both fields. To achieve such goal, the research was carried out based
on the qualitative content analysis of the sustainability reports of the European com-
Correspondence
Gregor Radonjič, Faculty of Economics and panies selected on their ranking of research and development expenditure and Dow
Business, Institute of Technology and
Jones Sustainability Index. We investigated if and how eco-innovations activities
Entrepreneurial Environment Protection,
University of Maribor, Maribor, Slovenia. were contemplated and communicated. The findings show a generalized lack of
Email: gregor.radonjic@um.si
direct reference to the term eco-innovation. Analysis of the reports showed that
companies disclosed information on different types of eco-innovation, albeit not
referring to them explicitly as eco-innovations. Benefits of using eco-innovation men-
tioning in sustainable reports are also discussed and guidelines are given how to
report on eco-innovation in such documents.

KEYWORDS

Dow Jones sustainability index, eco-innovation, large companies, research and development,
sustainability reporting

1 | I N T RO DU CT I O N interest in CSR and its reporting is further evidenced by the numerous

Due to increase in society's interest on the environment, it has become
increasingly important for companies to communicate their environ-
mental performance to their stakeholders (Guziana & Dobers, 2013;
KPMG, 2017; PwC, 2018). In general, reporting is an important commu-
nication tool, which may ensure greater corporate transparency and
enable better engagement with stakeholders (Lozano, Nummert, &
Ceulemans, 2016). In spite of the recent uptake of integrated reporting
(Stacchezzini, Melloni, & Lai, 2016), the disclosure of corporate social
responsibility (CSR) information is nowadays mostly done by means of
sustainability reporting (Lozano et al., 2016). The requirement of
publication of such information by the large European Union
(EU) organizations based on the Directive 2014/95/EU is a testimony
of the importance attributed to sustainability reporting by policy
makers (Montecchia, Giordano, & Grieco, 2016). The corporate sector
† gies (Cagno, Trucco, & Tardini, 2005; Radonjič & Tominc, 2007), imple-
At the time of research, António Pedro Vieira was the post-graduate student at the
University of Porto, Faculty of Economics e-mail: apedromv@gmail.com.
companies that are using the Global Reporting Initiative (GRI) sustain-
ability reporting guidelines (Lozano, 2012). Furthermore, several studies
confirmed increasing demand for more disclosures not just on eco-
nomic performance but also on companies' environmental and social
practices (KPMG, 2015; KPMG, 2017; van Wensen, Broer, Klein, &
Knopf, 2011). According to recent PwC consulting company report,
more than 70% of surveyed companies mention sustainable develop-
ment goals in their annual or sustainability reports (PwC, 2018). Studies
on companies' sustainability reporting practices abound, as evidenced
by the numerous literature reviews on the topic published so far
(Dienes, Sassen, & Fischer, 2016; Hahn & Kühnen, 2013).
Companies can use a variety of strategies and approaches to imple-
ment sustainability into their production processes and business prac-
tices (Albino, Balice, & Dangelico, 2009), ranging from product ecodesign
(Brezet & van Hemel, 1997; Hanssen, 1999; Radonjič, Pisnik, &
Krajnc, 2015), process improvements and adoption of cleaner technolo-
mentation of environmental management systems (Comoglio &

Corp Soc Responsib Environ Manag. 2020;1–14. wileyonlinelibrary.com/journal/csr © 2020 ERP Environment and John Wiley & Sons Ltd. 1
2 VIEIRA AND RADONJIČ
Botta, 2012; Hertin, Berkhout, Wagner, & Tyteca, 2008; Morrow &
Rondinelli, 2002), energy efficiency measures (IEA, 2017), greenhouse
gases reduction policies (Carbon Disclosure Project, 2013; KPMG, 2015;
KPMG, 2017), environmental accounting (Bartolomeo et al., 2000;
Wilmshurst & Frost, 2001), green marketing practices based on environ-
mental labeling (Bauzinske, Haydon, McArthur, & Bysshe, 2017;
Golden, 2010), and sustainability reporting (Bradford, Earp, Showalter, &
Williams, 2017; KPMG, 2015; KPMG, 2017; Ramos, Cecilio, Douglas, &
Caeiro, 2013; Roca & Searcy, 2012; Searcy, Dixon, & Neumann, 2016),
to mention some of them. What is common to all these approaches is
that all of them are somehow based on eco-innovation.
The term eco-innovation has been widely used at different eco-
nomic levels: at the companies' level as a part of environmental policy
development and management systems, as well as at the level of
national and the EU international sustainable development agendas
where eco-innovations are seen as an important contributor to the
objectives of economic policy framework (OECD, 2012). They are con-
sidered as one of the key enabling instruments identified for a transi-
tion to a more resource efficient economy. In such a context, the
European Commission has developed a policy framework to encourage
the uptake of eco-innovative solutions within economy (UNEP, 2014).
Furthermore, eco-innovations are supposed to play a central role in
transforming the traditional linear economy system of production and
consumption into circular economy that is starting to penetrate the
strategic national policy agendas of the EU member states (de Jesus,
Antunes, Santos, & Mandonça, 2018; EIO, 2016). In order to promote
the transition toward a greener economy, the United Nations Environ-
ment Programme identifies eco-innovation as one key policy approach
(UNEP, 2015). At the company level, there is evidence that companies
are increasingly adopting eco-innovation practices by integrating them
into their corporate strategies to improve overall corporate competi-
tiveness (Cai & Li, 2018; He, Miao, Wong, & Lee, 2018; O'Brien
et al., 2018; Poussing, 2019; UNEP, 2014).
Due to the importance of such policy actions, the phenomenon of
eco-innovation has been widely studied in last decades, taking into
account many aspects and perspectives, such as drivers and barriers
for their adoption (Bossle, de Barcellos, Vieira, & Sauvée, 2016;
Hojnik & Ruzzier, 2016; Kesidou & Demirel, 2012; Markusson, 2001;
Rademaekers et al., 2012; Treibswetter & Wackerbauer, 2008;
Yaramhadi & Higgins, 2012), market success factors (Halila &
Rundquist, 2011), employment (Kunapatarawong & Martinez-
Ros, 2016), economic benefits (EIO, 2012; Frondel, Horbach, &
Rennings, 2006; Horbach, 2016), and its links with environmental
management systems (Rehfeld, Rennings, & Ziegler, 2007;
Wagner, 2007; Wagner, 2008). But the question is how companies
communicate their eco-innovative projects and achievements with
their stakeholders and wider community.
This study aims to analyse, how eco-innovations activities are dis-
closed in the framework of sustainability reporting and to explore
whether the concept of eco-innovations has (or has not) been directly
or indirectly used as an element of sustainability reporting. The struc-
ture of this paper is as follows. Section 2 describes the conceptual
background of the research describing in more detail the importance
and dimensions of linking sustainability reporting and eco-innovation.
In Section 3 aim and goals of the study are given. Section 4 describes
research methodology in more detail. In Section 5, main findings of
the study are given together with discussion. The final section draws
conclusions and emphasizes main limitations of the study together
with proposals for further research.
2 | CONC EP TUAL BAC KG RO U ND
Nowadays, a variety of tools, methodologies, and approaches exist to
support management in establishing environmental policy including
calculation of relevant quantitative data to detect “hot-spots” of pro-
cesses, products, services, and supply chains. As environmental pro-
tection measures spread from on-site pollution minimization to life
cycle based thinking they are becoming more and more complex
(Jensen & Remmen, 2006; Sonnemann & Margni, 2015). Hence, it is
essential for companies to merge and relate different techniques,
tools, and approaches and be aware that synergistic effects can be
achieved when using different environmental information together.
Thus, information flow among different organization's departments
F I G U R E 1 Information flow
of environmental data within an
organization
VIEIRA AND RADONJIČ
that actively contribute to environmental policy decisions is needed
(Figure 1). Namely, relevant data means foundation for environmental
management systems (ISO 14001, EMAS), ecodesign and process
engineering innovations, suppliers differentiation, marketing promo-
tion tasks (environmental labeling) as well as for corporate sustainabil-
ity reporting which all represent different approaches to eco-
innovations (Figure 1).
Besides being innovative in terms of developing and introducing
new products, processes and business models, companies are increas-
ingly forced to reveal and publish information on environmental
impacts as a consequence of their business activities. Different types
of corporate reports (sustainability, environmental, annual) reveal
quantitative and qualitative information in a certain time period and
can be used to inform stakeholders about a company's environmental
performance (KPMG, 2008; KPMG, 2017). This results in a wide vari-
ability of sustainability aspects being disclosed (Tagesson, Blank,
Broberg, & Collin, 2009; Asif, Searcy, dos Santos, & Kensah, 2013;
Bradford et al., 2017; Siew, 2015). Even in companies with well-
established reporting practices, the challenge remains how to focus
on completeness, relevance, and validity of environmental data.
As a consequence, a number of critiques and concerns have
emerged over sustainability reporting quality and credibility
(Dragomir, 2012; Fonesca, 2010; Lyon & Maxwell, 2011; Mahoney
et al., 2013; Mion & Adaui, 2019; Garcia-Torea, Fernandez-Feijoo, &
De La Cuesta, 2020) in spite of growing popularity of sustainability
and similar reporting (KPMG, 2017; PwC, 2018). A growing body of
research suggests that sustainability and similar reports often have
little to do with long-term sustainable development goals, instead
presenting narratives of a business as usual redefining sustainability
in ways that do not threaten business as usual. Besides objectivity,
an important question is how stakeholders (and wider community)
understand and trust disclosed information. Surely, relevant com-
munication will represent an important part of any environmental
policy in the future including improved company's reputation, they
may seek for those sustainability terms and notions that have a
strong appeal to the stakeholders. Therefore, a question remains
what information reports should contain to backup sustainability
oriented policy.
In such a context, explicitly mentioning of eco-innovation can be
expected to add value of sustainability reporting and enhance the
information on sustainability efforts. Namely, eco-innovations are
considered to have an important role in achieving sustainable devel-
opment goals (EIO, 2016; OECD, 2009; UNEP, 2015). Carillo-
Hermosilla, Gonzales, Könnölä, and Del Rio (2009) reported on several
benefits where eco-innovation can help enhance a company's com-
petitive edge in different ways: improved operating and reductions in
the costs caused by ineffective resource management, reduction in
pollution control and waste management costs, reduced risk of
breaching environmental regulation, marketing innovation itself and
the creation of new markets or market segments, improved image and
relationship with customers, suppliers, authorities and employees.
Therefore, being an eco-innovative company can have a profound
effect on its brand image and competitiveness.
3
In order to enhance reporting on their sustainability goals and tar-
gets, companies may include the explicit notion of eco-innovation into
their reporting practices. Namely, eco-innovations in terms of new
products, services and processes are recognized in a wider community
as a result of dedicated environmental policy and show what concrete
activities have been undertaken. This can further reduce the occurrence
of misleading communication practices known as “greenwashing”
(Lyon & Maxwell, 2011; Terrachoice, 2009). Hence, properly given
information based on explicit eco-innovation terminology might
strengthen communication with stakeholders in several ways (Figure 1).
In a certain way, companies already communicate on eco-
innovations in their sustainability, environmental and nonfinancial
reports. However, it seems this is done indirectly in text not using
explicit notion of “eco-innovation.” Roca and Searcy (2012) reported
that a total of 585 different indicators were used in corporate
sustainablity reports of Canadian companies. However, they reported
that the majority of indicators were used only once in reports and
only three of them were highlighted in as many as 40 reports. Many
of summarized indicators reported by the quoted authors can cer-
tainly be classified as certain type of eco-innovation and prove that a
certain level of eco-innovation activities was implemented within
organizations. However, from such a long list of several hundreds of
disclosed indicators important differences between developing and
implementing eco-innovations are not so obvious (Roca &
Searcy, 2012). For example, reduction of emissions into air and water
can be result of end-of-the-pipe or cleaner technologies. However,
there is a big difference between both types of technologies in terms
of level of improvement. Therefore, mentioning and explaining eco-
innovation more explicitly may serve to enhance the information
about the organization toward achieving sustainability goals and may
further confirm that an organization implements innovative efforts
into sustainability policy. In such a manner, companies might further
strengthen their image of “really doing something more” as the results
of research and development (R&D) activities that go beyond moni-
toring of emissions and not just following prescribed environmental
regulation requirements (Asif et al., 2013).
In addition, reporting on eco-innovation may further explain how
environmental targets have been met (e.g., energy efficiency, emissions
reductions etc.). This is especially important in case of environmentally
friendlier products because consumers increasingly base their purchas-
ing choice on the assessment of reliable information. Bradford
et al. (2017) found that corporate sustainability reporting often focuses
on issues that are less or unimportant to stakeholders. Namely, con-
sumers often see different dimensions than those put forth by the stan-
dardized reporting guidelines (like GRI framework), thereby suggesting
a disconnect between corporate sustainability reporting and stake-
holder views and interests (Bradford et al., 2017). Thus, reporting on
eco-innovations may stimulate dialogue about sustainability activities
and opportunities among stakeholders and contribute to further sus-
tainability incentives because the term “eco-innovation” is a recogniz-
able term in a wider society. Such form of dialogue may also introduce
new discourses that may open up new directions in how companies
contribute to sustainability (Higgins & Coffey, 2016).
4 VIEIRA AND RADONJIČ
In general, by disclosing explicit mentioning of eco-innovations
within sustainability reporting, it is believed that companies may
further increase transparency, enhance brand value, reputation and
legitimacy, enable benchmarking against competitors, signal competi-
tiveness, motivate employees, and support overall corporate informa-
tion (Hahn & Kühnen, 2013). Finally yet importantly, the information
on eco-innovations reported may raise the consciousness of managers
about their wider environmental activities and motivate further
change and investments.
2.1 | Various types of eco-innovation
For a proper understanding of sustainability report contents, their def-
inition and typology description is necessary in order to comment
corporate sustainability reporting practices. According to the Eco-
Innovation Observatory (2013), eco-innovation is the introduction of
any new or significantly improved product (good or service), process,
organizational change, or marketing solution that reduces the use of
natural resources (including materials, energy, water and land) and
decreases the release of harmful substances across the whole life
cycle. The Oslo Manual guidelines on innovation activities developed
by the OECD (2005) identified four distinct types of innovation, which
can be applied in the field of eco-innovation: product innovation, pro-
cess innovation, organizational innovation, and marketing innovation.
It is therefore important to emphasize in the context of this study that
eco-innovation's concept is not only limited to technologies.
Process eco-innovation refers to the improvement of existing
production processes or the addition of new processes to reduce envi-
ronmental impacts. It modifies the organization's operation processes
and systems, decreases unit costs of production, produces new or signif-
icantly improved products, and reduces overall environmental impacts
from production (Cheng, Yang, & Sheu, 2014). Product eco-innovation
captures the improvement of existing products or the introduction of
new products to reduce their environmental impact (Peng & Liu, 2016).
Nowadays, one of the main product eco-innovation concepts is based
on life cycle perspective of products. Product eco-innovations can be
viewed as creating new products aimed at satisfying market needs,
while process eco-innovations are concerned with introducing new
technologies into production operations (Cheng et al., 2014).
Organizational eco-innovations can be based on the introduction
of organizational methods and management systems for dealing with
environmental issues in production and products, including: pollution
prevention schemes, environmental management and auditing schemes
and/or supply chain management (cooperation between companies to
close material loops and avoid environmental damage across the whole
value chain) (Kemp & Pearson, 2007; Peng & Liu, 2016). As such, orga-
nizational eco-innovation may also include an enquiry into various col-
laborative organizational forms and their potential eco-innovative
qualities (ranging from business networks and clusters to advanced
solutions in industrial systems) (EIO, 2013). Organizational eco-
innovation generally does not reduce environmental impacts directly,
but very often facilitates the implementation of process and product
eco-innovations. This is related to the reorganization of routines, proce-
dures, structures or systems to deal with environmentally oriented
issues, thus improving company's performance by reducing administra-
tive and transaction costs, reducing costs of suppliers or increasing
workplace safety (He et al., 2018). As emphasized by Peng and
Liu (2016), organizational eco-innovations (together with product eco-
innovations) are more easily perceived by stakeholders.
Marketing eco-innovations involve changes in product design
packaging, environmental labeling, product placement, and product
promotion or pricing. They involve marketing techniques that can be
used to persuade people to buy, use, or implement eco-innovations.
In addition, marketing eco-innovations have a special importance
because developing a green brand is one of the best ways of selling
eco-innovations (EIO, 2013).
3 | A I M OF TH E S T U D Y
Despite the fact that a growing amount of literature explores the rela-
tionship between eco-innovation with different aspects regarding
companies' performance, there is an obvious lack in academic
research on how eco-innovation is related to sustainable reporting
practices in industry. Although both trends (eco-innovation activities
and sustainability reporting) are becoming more and more important
worldwide, very little research was carried out until now to find to
what extent these two trends are connected. Researchers have
addressed eco-innovation and sustainable reporting from many differ-
ent perspectives but study on mutual interrelationship is still lacking.
To address this gap we explored whether the concept of eco-
innovations has (or has not) been directly or indirectly used as an ele-
ment of sustainability reporting.
The purpose of this paper is to investigate how organizations
explicitly communicate eco-innovations in their sustainability and
related reports. In answering these questions, we analyze reports of
selected companies, discuss benefits of this type of disclosures, and
give guidelines how to report on eco-innovation in such documents.
In addition, our intention is to stimulate a dialogue between expert
groups responsible for corporate communication and R&D teams.
4 | METHODOLOGY
4.1 | Sample description
The research was carried out based on the qualitative analysis of the
sustainability reports of two groups of European large companies to
determine if and how eco-innovation activities were being contem-
plated and communicated. Taking into consideration that less sustain-
ability reports would be published by companies not active on a
multinational scale (because large companies are under more pressure
by their stakeholders) it was decided to follow the same methodologi-
cal approach as Daub (2007) and give preference to companies of
multinational scale. Corporate size has consistently been found to be
VIEIRA AND RADONJIČ 5

positively associated with the adoption and extent of sustainability
reporting, as larger companies have the tendency to cause greater
impacts, becoming more visible and therefore facing greater stake-
holder pressure (Hahn & Kühnen, 2013). Selection of the companies
was based on the ranking of a company in two different categories:
research and development (R&D) expenditure of companies; and Dow
Jones Sustainability Index (DJSI). Two following groups of companies
were considered in this study:
• Group A: The top 10 EU companies that have invested the most in
R&D in 2014.
• Group B: The top 10 European leaders in 2015 according to
the DJSI.
For each of these two groups, the 10 top ranked companies were
taken into consideration for the analysis. The reason to select the first
group is a speculation that companies that have invested the most in
R&D are more likely to apply eco-innovations. The selection of this
group is further supported by the findings of Rennings, Ziegler,
Ankele, and Hoffmann (2006) and Horbach (2008) on the connection
between R&D activities and eco-innovation. In addition, we followed
OECD's suggestion that eco-innovative activities can be evaluated by
measuring inputs such as R&D expenditures (OECD, 2009). A report
on the EU leading companies on R&D expenditure entitled “The EU
Industrial R&D Investment Scoreboard" published by the European
Commission (2015) was the main source of information for the selec-
tion of the Group A companies.
European companies with better sustainability performances
were selected in accordance with the DJSI (RobecoSAM, 2016) for
the Group B. Following the definition of eco-innovation given by the
Eco-Innovation Observatory (2013), it is possible to suggest that
terms eco-innovation and sustainability are related. Thus, it is reason-
able to assume that sustainable companies also pursue eco-innovative
activities more often (as this assumption makes them more “sustain-
able”). The DJSI, considered by the United Nations Environment Pro-
gram Finance Initiative as the most rigorous in a triple bottom line
(economic, social, and environmental) performance (UNEP, 2008),
uses a best-in-class approach. It includes companies that comply with

TABLE 1 List of companies included in the study with types of reports analyzed

Year of
Group Companies Country Sector Type of report publication
Group A
Volkswagen Germany Automobiles and parts Sustainability report 2014
Daimler Germany Automobiles and parts Sustainability report 2015
Robert Bosch Germany Automobiles and parts Sustainability report 2015
Sanofi France Pharmaceuticals and Corporate responsibility report 2014
biotechnology
BMW Germany Automobiles and parts Sustainability report 2015
Siemens Germany Electronic and electrical Sustainability information (annual report 2015
equipment addendum)
AstraZeneca UK Pharmaceuticals and Sustainability report 2015
biotechnology
GlaxoSmithKline UK Pharmaceuticals and Responsible business supplement 2015
biotechnology
Ericsson Sweden Technology hardware and Sustainability and corporate responsibility 2015
equipment report
Bayer Germany Pharmaceuticals and Annual report 2015
biotechnology
Group B
CNH industrial NV UK Capital goods Sustainability report 2015
SGS SA Switzerland Commercial and professional Sustainability report 2015
services
Sodexo France Consumer services Corporate responsibility report 2015
UBS Group AG Switzerland Diversified financials Annual report 2015
Metro AG Germany Food and staples retailing Corporate responsibility report 2014
Unilever NV Netherlands Food, beverage and tobacco Sustainable living plan 2015
Swiss Re AG Switzerland Insurance Corporate responsibility report 2015
Akzo Nobel NV Switzerland Material Annual report 2015
Telenet group Belgium Media Sustainability report 2015
holding NV
6 VIEIRA AND RADONJIČ
sustainability criteria better than the majority of their peers (Dow
Jones Indices, 2013). RobecoSAM and S&P Dow Jones (2013) state
that “companies that anticipate and manage current and future eco-
nomic, environmental and social opportunities and risks by focusing
on quality, innovation and productivity will emerge as leaders that are
more likely to create a competitive advantage and long-term stake-
holder value”. The DJSI Europe (created in 2010) belongs to the family
of DJSI World Index (created in 1999) by the Sustainable Asset Man-
agement (now named RobecoSAM) and S&P Dow Jones Indices
(Stolowy & Paugam, 2018). An ever-growing number of studies examin-
ing sustainability issues use the DJSI indexes as proxies for good repu-
tation for sustainability (Lourenço, Callen, Branco, & Curto, 2014). The
rationale behind the use of the DJSI group of companies pertains to
the expectation that in companies from this index the ingoing innova-
tions would be biased to improved environmental performance. In addi-
tion, it allows us to include in the analysis some companies, which are
not industrial companies, such as those operating in the Commercial
and Professional Services, Consumer Services, Diversified Financials,
and Insurance sectors. Regarding the DJSI European Industry Leaders,
this sample of companies was selected from the list available on the
RobecoSAM website (RobecoSAM, 2016).
Regarding the geographic distribution, the companies analyzed in
both groups come from seven countries, mainly from Western, North-
ern, and Central European regions (Table 1). One company is classified
in both groups. Overall, seven companies (37%) are from Germany.
Regarding sector of activity, cars and related components sector has
the highest share among the sectors in both groups (with five compa-
nies they represent 26%). This is followed by the pharmaceuticals and
biotechnology sector with four companies (21%). All the other sectors
are represented by only one company each.
4.2 | Data collection and analysis
In order to follow the objectives of the study, a systematic and com-
prehensive review of corporate reports of the selected companies
included in the sample (Table 1) was carried out between April and
September of 2016, relying on their online availability. Preference
was given to the analysis of standalone sustainability reports, as they
comprehend a more integrated type of information regarding environ-
ment protection. In case of unavailability of this type of report, other
report disclosing sustainability information, such as environment
report or annual report were used (Table 1). Among reports taken into
consideration, eight were named “sustainability report,” four were
named “corporate sustainability report” while the rest of the sample is
represented by single type report named differently (Table 1). In case
of absence of any report explicitly indicating sustainability or environ-
mental content in its title, annual reports were analyzed. Only reports
published in English were considered. In every case, the most recently
published report at the time was taken into consideration. The data
collected in this survey are self-reported information by the compa-
nies under study. In Table 1, the complete list of analyzed companies,
the types of reports taken into consideration, and the year of
publication of each individual report, is presented. It is important to
mention that 19 (and not 20) reports were analyzed, as BMW com-
pany is ranked in both sample groups. Thus, in this particular case the
analysis was made based in the same report in both cases.
Although the analysis of companies' reports were the main focus
of our study, we checked also whether the explicit term “eco-innova-
tion” is used for communicating environmental activities via compa-
nies' websites. This has been done for the comparison purpose with
sustainability reports because nowadays websites can represent an
important way for the communication purposes (Guziana &
Dobers, 2013; Tagesson et al., 2009).
The methodology employed for reports examination was a con-
tent analysis. Krippendorf (2004) defines content analysis as a
research technique for making replicable and valid inferences from
texts (or other meaningful matter) to the context of their use. It is
based on finding the presence or absence of particular information in
a given subject (Asif et al., 2013; Krippendorf, 2004). Narrative corpo-
rate communication was interrogated, its content extracted, analyzed
and commented upon. We employ this method because it has been
widely accepted methodological framework in studying and analyzing
corporate sustainability and similar reports (Asif et al., 2013; Beck,
Campbell, & Shrives, 2010; da Silva Monteiro & Aibar-Guzmán, 2010;
Daub, 2007; Guziana & Dobers, 2013; Landrum & Ohsowski, 2018;
Roca & Searcy, 2012; Torelli, Balluchi, & Furlotti, 2020). The main data
taken into consideration was any kind of information related to eco-
innovation activities communicated within the reports of the selected
companies. A detailed reading of each report of sample organizations
was undertaken, in terms of textual analysis examining words, sen-
tences and paragraphs in order to detect and to identify any notion
on eco-innovation (or related terms) by reading each document. The
approach in our study does not discriminate between relative impor-
tance of the items of information analyzed.
For the purposes of this study, by eco-innovative activities we
mean those activities that lead to any type of eco-innovation
(s) according to the definition given by the Eco-Innovation Observa-
tory (2013). We supposed that in the case when different terms like”
sustainable innovation,” “environmental innovation,” and “green inno-
vation” were used in reports, they represent the same type of innova-
tion as those termed “eco-innovation.” Each term related to eco-
innovations (or related terms) that was highlighted either in charts,
tables or text was recorded. Words, sentences, claims, and statements
appearing in the text of reports were used as indication of eco-
innovation communication, as well as description of concrete prod-
ucts, processes, or organizational measures. It has to be emphasized
that the results (achievements and improvements) in environmental
performance are outcome of different types of eco-innovations.
Attempts were made to categorize the identified eco-innovative activ-
ities into product eco-innovation, process eco-innovation, and organi-
zational eco-innovation according to typology given in Section 2.1
and guidelines given in EIO (2013). Marketing eco-innovations were
not considered in this study not because we consider them as less
important but due to their special purpose and unique characteristics
that require specific approach for analyzing.
VIEIRA AND RADONJIČ 7

A special attention was given to the “Environmental” and “Innova-
tion” sections in reports where information on eco-innovations was
expected to be more concentrated. This necessity comes from the
fact that sustainability is being addressed through compartmentaliza-
tion and so the specific content regarding environment and innovation
can be found in specific report sections (Lozano & Huisingh, 2011). To
follow the research goal, keywords such as “eco-innovation,”
“innovation,” “R&D,” and “environment” were used to facilitate the
research process.
According to the way eco-innovative activities were being dis-
closed in reports, they were classified into two types: (a) direct, mean-
ing that “eco-innovation” was explicitly present in report's text (direct
reference to eco-innovation or eco-innovative activities),
(b) indirect, meaning that it was possible to conclude that an eco-
innovative activity, following the definition of “eco-innovation”, was
performed by the company although no explicit mentioning of term
eco-innovation was given in text. However, our aim was not to ana-
lyse the environmental performance trends of companies in terms of
emissions and wastes reductions but to focus on how selected com-
panies communicate the concrete term(s) related to their eco-
innovative strategies. Based on the data collected from the reports,
the identified eco-innovative activities were categorized into the
three main types of eco-innovations as described in Section 2.1: prod-
uct eco-innovation, process eco-innovation and organizational eco-
innovation.
5 | RESULTS AND DISCUSSION
The results on mentioning the terms “innovation,” “R&D expenditure,”
and “eco-innovation” in reports of both sample groups are given in
Table 2. Use of the term “innovation” was detected in all investigated
reports. However, Group A clearly outnumbers Group B in “R&D expen-
diture” disclosures. These findings are not surprising, as the companies
included in Group A represent European leaders regarding this aspect
what classified them into this particular group. Namely, any serious inno-
vation policy requires financial support for R&D activities and implemen-
tation procedures and this is also reflected in reports for Group A.
However, for both groups the term “eco-innovation” is only men-
or tioned in one report. It is reported and described in Daimler's, 2015
Sustainability Report in the product responsibility section regarding
headlamps innovation for the future type of the car (Daimler, 2015,
p. 36). For Group B, “eco-innovation” term is never directly mentioned
in any of the analyzed reports. It is interesting that the term eco-
innovation was found more often in the company's websites than in
the reports. In case of website reporting, four companies from Group
A (three of them from the automobile industry) explicitly mentioned
“eco-innovation” on their websites and none from Group B. All men-
tioned eco-innovations in websites could be classified as product eco-
innovation, which indicates that investigated companies prefer to
report on their product eco-innovations via websites (together with a
tendency for a deeper communication by giving a more detailed

TABLE 2 Use of the different terms in the reports and websites

Group Company Innovation R&D expenditure Eco-innovation Website (eco-innovation)

Group A
Volkswagen X X X
Daimler X X X X
Robert Bosch X X X
Sanofi X X
BMW X X
Siemens X X X
AstraZeneca X X
GlaxoSmithKline X X
Ericsson X X
Bayer X X
Group B
BMW X X
CNH industrial NV X X
SGS SA X
Sodexo X
UBS Group AG X
Metro AG X
Unilever NV X
Swiss Re AG X
Akzo Nobel NV X X
Telenet group holding NV X
8 VIEIRA AND RADONJIČ

product description). In all four website reporting, explicit “eco-
innovation” term was used instead of terms like “green innovation,”
“sustainable innovation,” or similar. Such online reporting used for
sustainability communication has certain advantages, because it over-
comes the limitations of paper-based disclosure, such as “one size fits
all” reports, print medium fixation, and one-way communication as
stressed by Isenmann, Bey, and Welter (2007). Bolívar (2009)
reported that corporations are turning to the Internet when reporting
on environmental disclosure because of its growing reach, higher flex-
ibility, speed of communication, lower costs, level of interactivity
between stakeholders, and graphic and audio contents. As Tagesson
et al. (2009) showed on a case of social disclosures, the content and
frequency of such website-type of reporting are associated with firm
size, profitability, ownership, and industrial sector.
In general, the reports analysis revealed a clear contrast in using
terms “innovation” and “eco-innovation.” It is obvious that companies
intend to communicate to be innovative but without extra mentioning
eco-innovations as a value-added information. However, it is not
always easy to make a clear distinction which innovation can be classi-
fied as eco-innovation especially in highly innovative companies. For
example, implementing digital and IT innovations can express indirect
environmental benefits as side-effect of modernization and digitaliza-
tion (GeSI, 2008; OECD, 2010).
The results on the categorization of eco-innovations into the
groups of process eco-innovations, product eco-innovations, and
organizational eco-innovations for both samples are presented in
Table 3. This categorization was based on analysis of words and sen-
tences used in reports that suggest on novelties that can be classified
as any form of eco-innovation given by the Eco-Innovation Observa-
tory (EIO, 2013). Although no explicit mentioning of any of terms like
product eco-innovations, process eco-innovation or organizational
eco-innovation in investigated reports was found, it was possible to
presume that all three types of eco-innovations were reported in indi-
rect manner using notions that follow the definition of eco-innovation
and description of types of eco-innovation given by the EIO (2013).
Replacement of fossil fuels by renewable energy resources and
increasing a share of renewable resources was the most common
example of process eco-innovation. Regarding organizational eco-
innovations, the examples found were generally related to projects or
programs design to improve the environmental performance of the
organization, changes in means of transport for commodity shipping
and pressure on the supply chain' business partners, through stricter
environmental standards. We are aware that such classification based
on indirect notions cannot be completely accurate because an
improvement can result from combining different eco-innovation
activities to achieve certain sustainability goal. Nevertheless, such tex-
tual descriptions definitely indicate on certain level of eco-innovation
activities in companies.
Findings presented in Table 3 reveal that among the companies
included in Group A process eco-innovation was the most indirectly

TABLE 3 Types of eco-innovations identified in reports as indirectly disclosed

Group Company Product eco-innovation Process eco-innovation Organizational eco-innovation

Group A
Volkswagen X X X
Daimler X X X
Robert Bosch X X
Sanofi X X
BMW X X X
Siemens X X X
AstraZeneca X X X
GlaxoSmithKline X X
Ericsson X X X
Bayer X X X
Group B
BMW X X X
CNH industrial NV X X X
SGS SA X X X
Sodexo X X
UBS Group AG X X
Metro AG X X X
Unilever NV X X
Swiss Re AG X X
Akzo Nobel NV X X
Telenet group holding NV X X X
VIEIRA AND RADONJIČ
disclosed type of eco-innovation. In fact, all of the companies from
Group A provided some type of information referring to the adoption
of new or modified processes that contribute to a reduction in their
environmental impact. Process type of eco-innovation was followed
by organizational eco-innovations descriptions. For the Group A, indi-
cations regarding product eco-innovation were found in all except
two reports.
As for the Group A, findings for the Group B show that process-
and organizational eco-innovations are the most disclosed types of
eco-innovation. Only one company of this sample did not disclose infor-
mation that may represent process related eco-innovation. Very similar
situation was found for the case of organizational eco-innovations. The
less disclosed type of eco-innovation in Group B was product eco-
innovations. Findings indicate that majority of companies from Group B
introduced certain product eco-innovation except three nonindustrial
companies operating in consumer services, diversified financials and
insurance sectors. Operating outside manufacturing sector, these com-
panies obvious focus on other sustainability priorities than industrial
companies (at least within reporting practices).
Discussing the results it must be emphasized that absence of
using term “eco-innovation” in sustainability reporting does not mean
that certain company is not innovative in terms of environmental
criteria. It only means that its sustainability reporting strategy left out
this form of information. To certain extent, results might be explained
by the sector specifics in which companies operate. In the case of
pharmaceutical companies from Group A that did not offer disclosures
on product eco-innovations, the improvements in their products are
related to enhanced and upgraded medicines and vaccines that lead
to social improvements in terms of disease reduction. Regarding the
companies from Group B that did not disclose information on product
eco-innovation, they are all nonindustrial companies. Thus, it seems
that the sector in which a specific company operates could exert influ-
ence in the type of eco-innovations considered. As concluded by He
et al. (2018), the understanding of eco-innovation concept is often
overly simplistic. Even though new or modified services and manage-
ment practices are mentioned in the definitions of eco-innovation,
they found that more than half of the eco-innovation studies are pub-
lished in the field of engineering or design sciences, but less so in the
economics and management fields of research. This is likely to be
related to the lack of references to eco-innovation and to the differ-
ent types of eco-innovation.
There has always been some difficulty in comparing sustainability
related information across different companies. For example, different
authors recognized that reporting on sustainability issues is character-
ized by large variations in form, structure, features, and content
depending on the reporting strategy chosen (KPMG, 2008;
KPMG, 2017; van Wensen et al., 2011). Not rarely, companies dis-
close information on different topics or present similar topics in differ-
ent ways (Jones, 2001). In addition, there is evidence suggesting that
there are significant industry-specific reporting patterns within sus-
tainability reporting (Cormier & Magnan, 2003; da Silva Monteiro &
Aibar-Guzmán, 2010; Roca & Searcy, 2012). On the other hand, if
companies have different priorities for different stakeholders, it is
9
reasonable to assume that, in the absence of mandatory reporting
requirements, sustainability reports target some stakeholders and dif-
ferent indicators are disclosed as a consequence (Bradford
et al., 2017). Moreover, since different companies may be the subject
of different expectations from society, they may find it necessary to
report different indicators in order to be perceived as legitimate
(Roca & Searcy, 2012).
The lack of specific mentioning of eco-innovation may also be
related to lack of interaction between different departments in the
company. Lozano et al. (2016) found that the reports from the compa-
nies included in their sample have been mainly developed by the cor-
porate responsibility department. They found that other departments
were normally not often involved in preparing the sustainability
report. Hence, it is very likely that the research and development
departments, which are directly linked to product and process eco-
innovation activities were not involved in the preparation of the
reports analyzed in this study. Research and development department
is, of course, one of the main sources for process- and product eco-
innovation information, which can be used as an information in sus-
tainability reports.
This is likely to be improved in integrated reports compared to
sustainability reports. Although not having exact the same goal as sus-
tainability reporting, integrated reporting clearly focuses on sustain-
ability issues and on the stimulation of integrated thinking within the
company (Stacchezzini et al., 2016). Integrated thinking allows teams
from different departments within a firm to “better appreciate and
understand the impact of their decisions, behaviour and processes on
stakeholders, other internal units and the firm as a whole” (Dumay &
Dai, 2017). With its acknowledgment of the crucially of avoiding silo
thinking—thinking as if the individual units operate in isolation—and
instead improve work together (Dumay & Dai, 2017), the inclusion of
all departments when preparing the integrated report is likely to lead
to a more thorough consideration of aspects deemed important by
departments which are traditionally not involved in the corporate
external reporting process.
Despite the results obtained in this study, we believe that men-
tioning of eco-innovations in a more explicit way might upgrade the
content of sustainability and similar reports due to the reasons
explained in Section 2. Reporting on different types of eco-
innovation can be performed both in narrative way or with the form
of numerical data (number of eco-innovation patents, investments
into R&D on eco-innovations, etc.). However, the essence of eco-
innovation cannot necessarily be adequately represented by a sin-
gle set of target. Instead, it is best viewed in terms of an array of
characteristics ranging from modifications to creations across prod-
uct, process, and organization (OECD, 2009). Quantitative values
of emissions and wastes reduction provide little information about
future performance and intentions. In contrast, reporting on eco-
innovation activities of the organization can give a broader idea of
future plans because serious eco-innovation activities indicate
company's long-term vision which requires management engage-
ment and financing in short- and even long-term periods within
established innovation-policy.
10
In principle, a broad definition of eco-innovation includes any
innovation, which would result in reduced environmental impact, even
if such an outcome was not intended initially. Therefore, the distinc-
tion between incremental and radical eco-innovation is important to
understand when reporting on this issue because there is a social con-
sensus that overall environmental sustainability can only be achieved
with radical eco-innovations which have a higher potential to
completely replace the current polluting mechanisms (Hazarika &
Zhang, 2019). Although important, incremental improvements may
also help lock practices on radical solutions. Namely, incremental inno-
vations aims at modifying and improving existing technologies and
processes to raise efficiency of resource and energy use, but without
fundamentally changing the underlying current technologies. Incre-
mental eco-innovations might even contribute to the wrong impres-
sion of making important steps toward firms' sustainability. The fact is
that the state of the planet requires serious changes in business
models. In addition, incremental eco-innovations only are insufficient
to contribute in reaching these goals. On the other hand, radical inno-
vation could include not only the development of radical break-
through technologies but also a reconfiguration of product-service
system and development of business models (OECD, 2012). There-
fore, if not properly communicated, reporting on eco-innovations may
even further increase the practice of greenwashing. Namely, general
understanding of eco-innovation is very broad. Thus, reporting on
eco-innovation would require a clear description of what is really radi-
cally new compared to the older type of eco-innovation. This is espe-
cially important due to the opposite trend: the use of misleading and
nonrelevant labels, claims and other types of communication, which is
defined as greenwashing. References to greenwashing in the literature
have grown rapidly since the term was introduced about two and half
decades ago (Lyon & Montgomery, 2015). For example, Terrachoice,
an environmental marketing firm, reported that more than 98% of
2,219 commercial product investigated in their study committed at
least one of the “Six Sins of Greenwashing” that Terrachoice defined
as criteria of such practices (Terrachoice, 2009). Greenwashing is also
about misleading consumers and investors by telling the truth, but not
the whole truth (Lyon & Maxwell, 2011). In principle, the same prob-
lem might exist when nonsignificant environmental improvements are
reported as eco-innovation with important sustainability potential
although they are far from being such.
Finally yet importantly, the findings of this study should also be
commented in the context of the EU Directive 2014/95/EU intro-
duced in 2014 on mandatory nonfinancial disclosure. According to
this directive, all public-interest entities, included listed corporations
and financial institutions, operating in the EU member countries are
required to publish publicly available nonfinancial information related
also to environmental aspects of business activities. First mandatory
nonfinancial disclosures were published in the EU member countries
in 2018, containing information about performance in 2017. This reg-
ulation has come into force after this research was carried out. Com-
parative analysis carried out by Mion and Adaui (2019) found
significant differences in the quality of sustainability reporting before
and after the directive has come into force in German and Italian
VIEIRA AND RADONJIČ
companies. Although the implementation of this directive could con-
tributes to increasing quality on sustainability reporting, it is too early
for general conclusions that such regulatory change could accelerate
mentioning eco-innovations as an element of future reporting. Further
research on this issue must be carried out in future to indicate any
effect of a new regulation on eco-innovation adoption and reporting.
6 | CONC LU SION
Based on the content analysis of the sustainability reports of two
sample groups of European companies we examined if and how eco-
innovation activities were being contemplated and communicated.
Our aim was to provide new insights within the research on sustain-
able reporting and eco-innovation practices. The paper provides one
of the first studies on the topic of eco-innovation disclosures in sus-
tainable reports and highlights several areas that were not discussed
in the earlier papers investigating these two research fields. In addi-
tion, we want to emphasize the need for integration of different
sustainability-related fields of environmental management practices.
The findings show a generalized lack of direct reference to the
term eco-innovation in examined reports. Obtained results confirmed
that the term eco-innovation was rarely explicitly communicated in
spite of its wider recognition and political support in the
EU. However, a more thorough analysis of the reports shows that
companies do disclose information that suggest on novelties that can
be classified as one of the type of eco-innovation. We found that
product eco-innovation is the least disclosed type of eco-innovation
for selected companies' reports although most of analyzed companies
operate in manufacturing sector. Although we can presume that com-
panies achieved environmental benefits due to the application of dif-
ferent eco-innovative activities, there is a general absence of the term
“eco-innovation” in their reports. More often, indirect communication
of eco-innovation may be detected. The results indicate that the dis-
closure of “eco-innovation” term is more often present in companies'
websites than in their respective reports. In general, explicit disclosure
in case of selected groups indicate that using explicit notion of “eco-
innovation” is rather an exception than widespread practice. The rea-
sons for this finding will be topic of future research.
Studies on mutually interrelated sustainability aspects like this
one can contribute to better understanding of a growing complexity
of environmental issues. Moreover, we believe that explicit mention-
ing of eco-innovation in reporting may result in additional effect on
companies' environmental goal contribution. In doing so, a company
can confirm that its environmentally policy goes beyond regulation-
based requirements. It also confirms that it already launched or
started to use environmental friendly products and services as a
results of its own R&D activities. Same can be true for cleaner pro-
cesses. However, presenting only incremental improvements as big
innovation achievements could bring the opposite effect. Therefore,
the question that remains open is how companies understand the
term “eco-innovation” at all. Do they understand it about the recent
definitions taking into consideration the whole life cycle of products
VIEIRA AND RADONJIČ
together with inclusion of “nonintended" or “indirect” eco-innovations
as the result of wider innovation policy? Namely, such wider under-
standing of eco-innovations in companies opens up the various possi-
bilities for communication (including sustainable reporting).
This study is not without limitations. First, a rather small sample
of European companies has been taken into consideration. There may
well be individual companies that have disclosed and named their
eco-innovative achievements in a more explicit way. More extensive
future analysis may point to such cases (also in small and medium-
sized companies). Secondly, both samples are biased, which means
that results cannot be extended and generalized to companies and
sectors in other countries and regions. Hence, extending our analysis
to a larger sample of companies is warranted. Third, we have focused
on the information being disclosed, rather than in the quality of the
information provided. Finally, this study has taken into consideration
sustainability reporting in a certain period of time. The examination of
the evolution of eco-innovation disclosure is another promising direc-
tion for additional research.
In spite of above mentioned research limitations, this paper is
innovative in its goal to clarify and understand the researched topic.
Thus, the conclusion of present study must be considered as a first
examination of the topic that can be expanded through future
research. The paper opens some new academic and practical ques-
tions whether the combination of two sustainability issues—reporting
and eco-innovating—which have been separately examined so far can
enhance the efforts on communication and R&D activities or not.
Surely, with the ever-growing importance and interest in both fields,
the research questions and findings from this paper are valuable for
preparers of corporate sustainability reports and organizations that
actively implement such reports into their sustainability policies.
ACKNOWLEDGMENT
The authors wish to thank Dr. Cristina Chaves and Dr. Manuel Castelo
Branco from the University of Porto, Faculty of Economics (Portugal)
for their valuable suggestions and proposals during the preparation of
this paper.
ORCID
Gregor Radonjič https://orcid.org/0000-0003-2621-5045
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