Protect, respect, remedy, and report? Development of human rights reporting in the context of formal institutional settings

Abstract

This paper investigates the influence of formal institutions, in particular legislation, on corporate human rights (HR) reporting. We use a mixed-method approach, combining qualitative institutional analysis of two European countries — the Netherlands and Switzerland — with quantitative content analysis of annual reports of 94 listed companies for the years 2007 to 2019 (1222 firm-years). We find that, for each observed book year, companies in the Netherlands are more willing to disclose HR information than companies in Switzerland, which we explain by their differences in formal institutional development. Our results indicate that formal institutions are essential determinants in HR reporting, both in the willingness of companies to disclose and the extensiveness of disclosure. Moreover, we observe a significant positive impact of legislation on HR reporting but find that the overall compliance levels of affected companies are low. We contribute to prior research, by providing evidence on the development and institutional drivers of HR reporting, a largely overlooked branch of sustainability reporting.