Examining the ESG of banks. The integrated reporting perspective

Sustainable development has been one of the most influential themes in business studies over the past 2 decades. Sustainability profoundly affects not only the management, organization, and performance measurement practices of firms, but also the implementation of production processes, sourcing strategies, and resource utilization models (e.g. Schrettle et al., 2014; Hermundsdottir and Aspelund, 2022). Underpinned by expert and academic consensus, societal interest in sustainability rapidly accelerated during this period, giving rise to growing expectations around the protection of the external environment, natural resources, labor rights, and broader stakeholder concerns (e.g. Trizotto et al., 2024; Zameer et al., 2024).

International institutions are responding to these expectations by introducing increasingly detailed regulations. Among these, the most prominent is the 2030 Agenda for Sustainable Development, which has been endorsed by nearly all countries and outlines 17 Sustainable Development Goals (SDGs) and 169 targets, many of which directly involve the way production activities are carried out.

In the European Union (EU) industrial context, sustainability concerns led to the introduction of the Non-Financial Reporting Directive 2014/95, whose purpose was to provide large companies' stakeholders with additional insights, beyond traditional financial information, related to a wide range of non-financial issues such as the environment, social matters, employee relations, human rights, and anti-corruption efforts (Breijer and Orij, 2022; Fiandrino et al., 2022). In 2023, the Corporate Sustainability Reporting Directive (CSRD) broadened the scope, sustainability disclosure, and reporting requirements of the previous 2014/95 Directive. The purpose of these measures is to enhance the content, transparency, and comparability of sustainability disclosures, and to introduce mandatory independent assurance to ensure the reliability of reported information (Caputo et al., 2021; Odobaša and Marošević, 2023).

To comply with CSRD disclosure requirements, the European Financial Reporting Advisory Group (EFRAG) introduces standardized reporting criteria, the twelve European Sustainability Reporting Standards (ESRS), expected to provide companies with a reference framework for reporting Environmental, Social and Governance (ESG) topics. The adherence to ESG criteria is one of the most widely recognized frameworks for operationalizing SDGs (Delgado-Ceballos et al., 2023; Sueyoshi and Goto, 2025), but also a way to promote the company's image, if not a marketing tool (Khan et al., 2024; Singh and Vaziri, 2025).

However, adherence to ESG criteria may not be sufficient to meet all stakeholders' disclosure needs. Regarding the banking sector, for example, the ESG ratings assigned by prestigious organizations (e.g. Institutional Shareholder Services, Morningstar Sustainalytics, Standard Ethics Rating, MSCI ESG Research, S&P Global Corporate Sustainability Assessment, Sustainable Fitch) indicate an improving trend. Even so, many recent investigations (Gigante et al., 2023; Gambacorta et al., 2024a; Liu et al., 2024; Birindelli et al., 2025) underline that the phenomenon of greenwashing, meant as a disparity between a bank's environmental and social disclosure level and the practical implementation of the relative measures, is increasing, with a total number of potential cases across EU banks from 2012 to 2023 of 26,1% (EBA, 2024).

Therefore, the need for more complex tools examining information about the quality of ESG and non-financial disclosure (henceforth NFD) of banks emerges (Galletta et al., 2024; Venturelli et al., 2025; Demartini et al., 2026; Neves et al., 2025). Within this research stream, this study aims to evaluate the level of ESG and NFD in general of Italian listed banks through the interpretative lens of integrated reporting (henceforth <IR>).

<IR> is a relatively recent accounting tool designed to overcome the fragmentation and lack of coherence found in earlier forms of reporting, such as social or sustainability reports, and aspires to become a single, unified instrument capable of demonstrating how companies create value by linking financial performance with ESG issues (Eccles et al., 2015; De Villiers et al., 2020; Beretta et al., 2024). In doing so, <IR> meets the growing demand for non-financial information among diverse stakeholder groups, demonstrating how corporate value creation benefits not only shareholders but also the broader societal and environmental systems from which the company draws its resources and legitimacy. For these reasons, an approach increasingly adopted in accountancy research (Melloni et al., 2017; Beretta et al., 2024b; Keski̇n and Esen, 2025) investigates the information provided by companies in accordance with the principles of <IR>.

Regarding banks, with millions of clients, they are believed to play a crucial role in supporting the transition toward a sustainable economy, both as direct investors and as providers of responsible lending (Birindelli et al., 2024; Barone et al., 2025). Therefore, evaluating their disclosure quality makes a valuable contribution to the literature on NFD, banking sector behavior, and sustainable development.

To evaluate the NFD issued by banks, the study combines two complementary methodological approaches. First, it adopts an indicator already applied in previous literature (Stent and Dowler, 2015; Alqallaf and Alareeni, 2018; Thomas and Scandurra, 2023) targeted at better capturing banks' communication on green issues. Second, the analysis is supplemented with a text-mining approach grounded in natural language processing techniques. Particularly, cosine-based text similarity measures and clustering algorithms are employed to assess the degree of convergence or divergence among the reports, offering a quantitative and replicable perspective that complements the qualitative, more subjective evaluation. The latter component enabled the systematic mapping and comparison of the reports' content, highlighting convergences and divergences in the addressed themes and detecting recurring patterns or notable differences among banks. By integrating clustering and cosine similarity, the approach offers a granular and data-driven view of NFD, moving beyond purely descriptive interpretations and providing empirical evidence on the degree of consistency and homogeneity in ESG communication within the Italian banking sector.

Findings indicate that although most of the analyzed reports display a high compliance with ESG criteria, they largely retain the structure of traditional sustainability reports. As a result, they do not adequately illustrate the interconnections between economic and financial dynamics and social and environmental dimensions in relation to the interests of different stakeholder groups. In this sense, banks appear more oriented toward formal compliance than toward the substantive application of the principles outlined in recent European directives. This tendency may stem largely from limited awareness of the benefits of a form of disclosure that actively engages stakeholders in strategic decision-making (Fathoni et al., 2025). Such a limitation makes the work of standard setters and policymakers more complex, as it places additional burdens on them in the search for tools capable of effectively supporting sustainable development.

Following this introduction, Section 2 presents the theoretical framework related to the arguments discussed, Section 3 outlines the method, and Section 4 presents the findings. The study concludes with final considerations and implications.

The topic of corporate disclosure about sustainable development actions is relatively recent. The concept of the Triple Bottom Line proposed by Elkington (1994) is generally credited with introducing a reporting model that goes beyond a purely financial perspective. This contribution gathered and systematized insights already present in the academic literature (e.g. Gray et al., 1996; Milne and Gray, 2013), according to which firms should simultaneously pursue economic development, environmental development, linked to the renewability of resources and the preservation of natural capital, and social development, concerning the satisfaction of human needs such as health, culture, equality, and social cohesion.

However, efforts to expand knowledge about corporate developments in the social and environmental dimensions collide with the limitations of the traditional financial statement, which is unable to effectively represent qualitative improvements oriented toward the future or effects relating to intangible assets, such as skills and customer retention. To overcome these limitations, two main paths have been developed. The first focused on creating models and tools for performance evaluation that combine retrospective and forward-looking results through the use of both financial and non-financial indicators (e.g. the Balanced Scorecard, Business Navigator, Intangible Asset Monitor). The second path concentrated primarily on communication, encouraging the dissemination of non-accounting information, often on a voluntary basis.

This last perspective has gained increasing importance over time, being directed both internally and externally. When present and well-structured, it can influence multiple aspects, from the construction of a corporate image to the shaping of stakeholder behavior, from the functioning of capital markets to the strengthening of employees' sense of belonging (Stolowy and Paugam, 2018; Caputo et al., 2021).

Over the past 2 decades, there has therefore been a gradual attempt to constantly improve corporate disclosure practices by introducing reports with increasingly clear objectives and more specific drafting methods. The broader ambition has been to assign a transformative role to NFD, turning the growing awareness of ESG issues into the starting point of a process capable of steering Western economic systems toward a new phase of capitalism aligned with sustainability objectives (Eccles and Krzus, 2010; Gleeson-White, 2014; Thomson, 2015). The adoption of the SDGs represents the culmination of this now irreversible process, which requires firms to assume wider and more clearly defined responsibilities.

The SDGs, moreover, reflect the growing critical awareness of citizens in many parts of the world, especially in areas with higher economic and social well-being. In these contexts, a vision of the company as an entity oriented toward human well-being emerges, with individuals seen as beneficiaries, rather than instruments, of economic activity. This perspective, now well-established in the international managerial community, is underpinned by the presence of guiding values that shape corporate actions, including the progress in non-financial perspectives (Elkington, 2004; Frías-Aceituno et al., 2014). Hence, currently, high-quality corporate disclosure represents tangible evidence of the progress made by economic organizations in these parallel directions.

With specific regard to the banking sector, the corporate scandals of the early 2000s and the 2008 financial crisis have demonstrated how easily a gap can be created between formal adherence to rules/codes of conduct and actual internal management practices. ESG quality is believed to be a means of addressing these risks, as it emphasizes the pursuit of transparent management in line with fundamental values and principles (e.g. Bebbington and Unerman, 2020; Caputo et al., 2021). This approach intends to minimize the possibility of greenwashing and impression management practices, which involve the instrumental use of NFD directed at improvements in reputation and image, or at compensating for criticality inherent to business behavior (Melloni et al., 2015; Venturelli et al., 2025; Neves et al., 2025) while favoring whistleblowing.

Transparency enables the forecasting of potential banking difficulties (Gutiérrez-Ponce and Wibowo, 2023; Adikaram and Holcomb, 2024), serves as a stabilizing tool in unfavorable macroeconomic conditions (Chiaramonte et al., 2021; Fiordelisi et al., 2023), and makes banks less prone to procyclical lending, thereby helping to stabilize credit in difficult times (Li et al., 2022; Barone et al., 2025). Conversely, by pursuing sustainability principles and communicating them effectively to stakeholders, organizations can generate tangible benefits and advantages over slower-adapting competitors, thereby creating value that is shared with the surrounding socioeconomic context (Li et al., 2024; Radwan et al., 2025).

In turn, when channeled into green investments, banking activity has a positive impact on financial systemic risk, either directly or indirectly, through lending and the request for sustainability ratings, such as ESG, to borrowers (Curcio et al., 2024; Di et al., 2024). That is, attention to sustainability principles and offering high-quality disclosure responds to both regulatory compliance requirements that benefit society at large and to potential advantages for the company itself (Liu et al., 2024). Moreover, banks with extensive environmental disclosures lend less to brown borrowers (Gambacorta et al., 2024b), in doing so, encouraging the ecological transition of borrowers' companies.

A high qualitative level of ESG and NFD also appears positively linked with better banks' economic and financial performance (Pawar and Munuswmy, 2024; Siddik et al., 2024), higher efficiency levels and cost containment (Liang et al., 2024; Cao et al., 2024), greater customer and supplier loyalty (Kılıç and Kuzey, 2019; Curcio et al., 2024), reduced operational risks or increased resilience (Izcan and Bektas, 2022; Birindelli et al., 2024), cost reductions despite investments required to comply with sustainability principles (Liang et al., 2024), market evaluations of banks (Ersoy et al., 2022; Demartini et al., 2026), at least up to a certain point (Azmi et al., 2021), and reduces the pricing of bank bonds in the primary market (Carnevale and Drago, 2024).

Considering the above, numerous studies have focused on examining the qualitative level of disclosure by financial institutions, which in turn is a result of increasingly virtuous behavior, as well as on the elements that can favor a high-quality NFD. They include the sensitivity of the external context to sustainability (Chiaramonte et al., 2021; Birindelli et al., 2025), the impact of external regulations/incentives, which are neither globally homogeneous (Maroun and Atkins, 2019; Menicucci and Paolucci, 2023), nor consistent across bank types (Kılıç and Kuzey, 2019; Keski̇n and Esen, 2025), and some bank-specific factors such as the board composition, the organizational structure, or the legal form (Birindelli et al., 2024; Fathoni et al., 2025).

For over 3 decades, renowned international standard setters such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the International Integrated Reporting Council (IIRC), and the mentioned EFRAG, have issued guidelines encouraging improvements in ESG and NFD quality. These guidelines are added to and often overlap with those issued by the EU specifically for financial institutions. For instance, the Sustainable Financial Disclosure Regulation 2088 of 2018 aimed at harmonizing the information provided to final investors regarding sustainability risks and the impact of investment activities. Even the European Banking Authority issued two technical standards in 2021 and 2022 regarding the prudential disclosure of sustainability information.

It is evident that the accumulation of such normative frameworks and codes also increases the reporting burden and costs for banks without necessarily adding value for the recipients of such communication. Too many regulations also make access to information more complex. Not by chance, considering these complexities and compliance requirements, in 2025, the European Commission introduced the Omnibus package, intended to ease the reporting burden for companies, especially small and medium-sized enterprises.

Contrasting with approaches that enrich external information by accumulating additional documents and reports beyond mandatory financial disclosure, accountancy scholars have long advocated for new forms of reporting that visualize the effects of corporate actions and behavior, linking them to the company's mission and the declared and effectively pursued strategy, as well as to the ability to generate value for all stakeholders directly or indirectly involved in the production process (Abhayawansa et al., 2019; Adhariani and de Villiers, 2019). This type of reporting aims to propose a communication tool that harmonizes corporate assessment criteria across various investigative perspectives, highlighting the interrelationships between corporate goals and choices within a unified framework (Maroun and Atkins, 2019; VRF, 2022a, b).

The acclaim for having initiated the development of a new non-financial reporting framework with a multidimensional perspective is usually attributed to a seminal study by Eccles and Krzus (2010). It emphasized the importance of high-quality, concise, and comprehensive communication, the One Report, capable of integrating both financial and non-financial information and narratives, including environmental, social, competitive, and governance issues, with a systemic view of stakeholder interests (Eccles et al., 2015; de Villiers et al., 2020).

Subsequent studies and developments led to the first theorization of <IR> as a corporate communication process that explains how an organization creates, preserves, or erodes value over time, by interlinking traditional financial reporting with information related to sustainability, strategy, governance, and risk management (IFRS, 2021). Although the <IR> model in some respects (e.g. materiality, stakeholder engagement, reliability, and completeness) represents an evolution of the sustainability report proposed by the GRI (Beretta et al., 2024b), it aspires to provide a more comprehensive and unified picture of organizational performance and value creation potential for stakeholders. Simultaneously, <IR> aspires to promote the accountability and optimal management of all forms of capital used or influenced by the company: financial, manufactured (including infrastructure), human (employees), social (relationships/society), natural (environment), and intellectual (skills) (IFRS, 2022). In particular, the <IR> tries to improve the quality of information available to providers of financial capital, enabling a more efficient and productive allocation, and to promote a more cohesive approach to corporate reporting that reflects the full range of factors concretely affecting the organization's ability to generate long-term value (Eccles and Krzus, 2014).

Hence, <IR> can be considered the natural evolution of a process, described as the journey (IIRC, 2015), of continuous qualitative enrichment of NFD. This process culminates in the combining of these different sources with information relating to the effects that corporate actions have on the surrounding context in terms of environmental and social impact (materiality). From this fusion, a new, previously absent competitive perspective emerges in traditional financial statements, accompanied by a qualitative leap in the transparency of corporate behavior, beginning with governance.

Currently, the main organization dedicated to developing <IR> practices and policies is The Value Reporting Foundation, established in 2021 through the merger of SASB and IIRC. The <IR> framework promoted by this Foundation, currently the most widely adopted model worldwide (De Villiers et al., 2024), is structured around a set of guiding principles and content elements that guide organizations in preparing and presenting their reports (IFRS, 2021; VFR, 2022a). The guiding principles encompass topics such as strategic focus and future orientation, information connectivity, stakeholder relationships, materiality, conciseness, reliability, completeness, consistency, and comparability. The content element covers issues such as strategy and resource allocation, organizational overview and external environment, governance, business model, risks and opportunities, outlook, performance, and basis of preparation and presentation.

As illustrated in the following section, both principles and content elements represent the backbone of the qualitative tool (checklist) applied to assess the banks' disclosure.

To address the study's objectives, we adopt a dual-method research design that integrates qualitative interpretation with quantitative text analysis. Alongside the checklist-based assessment, we apply a text-mining approach grounded in natural language processing to the same set of reports. Cosine-similarity metrics and clustering algorithms are employed to map the proximity and divergence of textual content, thereby offering a comparative and replicable evaluation of disclosure patterns across banks. The integration of these complementary perspectives links interpretive depth with empirical robustness, enabling a richer understanding of both the substantive orientation and the degree of alignment in the observed disclosure practices.

In this regard, the analysis focuses on the 2024 mandatory NFD reports published online by fourteen Italian banks listed on the national Stock Exchange (Table 1): Emilia and Romagna Popular Bank (BPER), Milan Popular Bank (BPM), Sondrio Popular Bank (BPS), Credem, Desio and Brianza, Fineco, Generali, IFIS, Illimity, Intesa, Mediobanca, Mediolanum, MPS, and UniCredit.

For the sake of consistency, listed banks exempt from the CSRD directive were not considered, as were companies with a primary mission of providing specific financial instruments (e.g. factoring), despite labeling themselves as banks. Similarly, both banks belonging to foreign groups and foreign banks listed on the Italian Stock Exchange have been excluded.

To better capture banks' communication on sustainability issues, a methodology previously validated in literature, although across different industries (e.g. Stent and Dowler, 2015; Alqallaf and Alareeni, 2018), was employed. It inquires into the compliance of the NFD reports with the <IR> guiding principles and content elements through specific checklists. We adopted the most recent available checklist (Scandurra and Thomas, 2023), which is characterized by sections numbered A–M, each of which evaluates the correspondence between a topic in the <IR> and its level of consideration in the bank report (Table 2). Sometimes, also subsections are present. For every section, there is a score ranging from 0 to 1, or 2. The maximum achievable score, resulting from the total of the various section scores, is 50.

To assign the score, firstly, the scoring scales adopted in the quoted investigations were deepened to harmonize the evaluation criteria. Subsequently, each author of this study independently assessed every section of the banks' reports with the checklist, assigning the corresponding score. The resulting evaluations were then compared: convergent scores were accepted as final, while divergent scores were discussed further until a shared judgment was reached.

To complement the qualitative evaluation, a further stage of analysis was conducted to investigate the degree of narrative convergence among the fourteen banks through a textual similarity exercise applied to their respective reports. Specifically, the cosine similarity was computed on Term Frequency–Inverse Document Frequency (TF-IDF) vectors to quantify the proximity between documents. This technique assesses the angle between two vector representations of the texts, providing a scale-invariant indicator of semantic similarity. The cosine (cos) of the angle θ between vectors X and Y yields the similarity score (sim(X, Y)):

where X and Y are the vectors of the word frequency in two corpora, $∑i=1kXi·Yi$ is the dot product of the two vectors; ||X|| and ||Y|| represent the Euclidean norms (magnitude) of the two vectors.

Unlike Euclidean distance, cosine distance is insensitive to document length, which is crucial when analyzing reports that vary considerably in size and verbosity. To ensure analytical tractability while preserving the most content-rich disclosures, only the first 40 pages of each report were analyzed. This approach is consistent with prior research, which shows that the most critical information, such as strategy, governance, materiality, and ESG performance, is typically concentrated in the early sections of corporate reports (Higgins et al., 2014; Michelon et al., 2015; Melloni et al., 2017).

Text preprocessing was performed according to standard protocols in Natural Language Processing (NLP). Specifically, the text was tokenized, lowercased, and purged of punctuation and Italian stop-words using established lexicons. To refine the vocabulary and mitigate noise, tokens with a document frequency below 5% or above 90% were excluded, a technique widely used to filter out idiosyncratic and overly generic terms. The resulting term-document matrix encompassed 21,678 unique tokens. TF-IDF weighting was applied to highlight salient yet distinctive terms across the corpus, and L2 normalization was used to standardize vector lengths and facilitate meaningful comparisons between documents (Manning et al., 2008).

By employing this methodological pipeline, the study contributes to a growing literature on computational text analysis in sustainability and financial communication (Loughran and McDonald, 2016; García-Sánchez et al., 2022). It further sheds light on the extent of standardization or differentiation in the sustainability narratives of systemically important financial actors in Italy, thus offering implications for regulators, analysts, and stakeholders monitoring ESG disclosure practices.

Pairwise cosine similarity scores were computed between each pair of bank reports, resulting in a 14 × 14 similarity matrix S. To derive dissimilarities, a distance matrix D = 1−S was calculated and subjected to hierarchical agglomerative clustering using the complete linkage method. This approach is believed to be particularly effective in uncovering latent groupings within text corpora, allowing for the exploration of underlying thematic or rhetorical patterns (Manning et al., 2008; Murtagh and Legendre, 2014).

Cosine distance is a valuable metric in textual analysis, as it measures the angular divergence between vectorized documents, thereby emphasizing directional similarity rather than absolute magnitude. This characteristic renders it particularly suitable for analyzing financial and institutional reports, such as those produced by banks, for several reasons.

First, cosine distance is inherently scale-invariant, as it remains unaffected by differences in document length. This is essential when comparing reports across institutions whose disclosures may vary significantly in volume. Second, it effectively captures lexical overlap while mitigating distortions caused by high-frequency terms, ensuring that word repetition does not dominate similarity assessments. Third, its application is well-established in financial and ESG textual research, as highlighted in studies by Loughran and McDonald (2016) and Melloni et al. (2015), which lends methodological credibility and comparability to its use.

However, the cosine distance has limitations. It fails to capture semantic relationships, such as synonymy or contextual nuance, and is restricted to surface-level lexical similarity. As a result, deeper narrative structures, sentiment, or rhetorical tone may go undetected (Higgins et al., 2014). To partially overcome this limitation, we apply lemmatization to the reports, consolidating different inflected forms of the same word. This preprocessing step enhances the consistency and interpretability of the vector representations, thereby improving the precision of the similarity metric.

Figure 1 presents the cosine dissimilarity matrix related to the NFD issued by Italian banks. The heatmap provides a comprehensive, pairwise visualization of textual dissimilarity based on cosine distance, enabling a systematic comparison of narrative content across institutions.

The matrix entries range from 0 (complete similarity) to values approaching 1 (complete dissimilarity). Banks are ordered by hierarchical clustering, and thus block patterns in the heatmap correspond to latent clusters observed in the dendrogram.

The heatmap demonstrates that while some banks display low inter-textual distance (blue regions), a substantial portion of the matrix contains intermediate to high distances (yellow to red), indicating moderate to low narrative alignment across the banks. This pattern aligns with prior literature suggesting that, despite some common reporting regulations (e.g. EFRAG guidelines), narrative standardization in financial sector ESG reporting remains incomplete and uneven (Adhariani and de Villiers, 2019; Beretta et al., 2024).

Focusing on the results, we observe that a blue cluster emerges at the bottom right, encompassing Mediolanum, BPM, Mediobanca, Desio and Brianza, which signals strong textual alignment. IFIS Bank consistently shows high-distance scores (orange-red) compared to all other banks, suggesting a highly distinct narrative approach. The other banks highlight an intermediate distance from the others. This matrix offers a granular and interpretable view of narrative convergence and deviation within the Italian banking sector, mapping both cluster cohesion and boundary strength.

To identify latent groupings within the corpora, we employed hierarchical agglomerative clustering using the complete linkage method. This approach defines the distance between clusters as the maximum pairwise distance between points in separate clusters, thereby favoring the formation of tight, compact, and well-separated groups. Compared to alternative methods such as single linkage, complete linkage is more robust against the so-called chaining effect, which can lead to elongated and loosely connected clusters.

Figure 2 presents the resulting dendrogram, generated from the cosine distance matrix based on the TF-IDF representations of the first 40 pages of each bank's non-financial report. Each leaf node represents an individual report, while the vertical axis indicates the lexical dissimilarity at which two reports or clusters merge. Lower merger heights suggest greater linguistic and thematic similarity, whereas higher linkage points denote more distant textual relationships.

To validate the number of clusters, the silhouette method was applied. It balances intra-cluster cohesion against inter-cluster separation (Rousseeuw, 1987). The highest silhouette score was observed at k = 4, indicating that a four-cluster solution best captures the data's structure (Figure 3).

The clustering analysis, optimized using the silhouette method and visualized through cosine-distance metrics, reveals a nuanced configuration of narrative practices among the examined banks. Rather than a binary divide between conforming and non-conforming institutions, the results suggest a more textured landscape of disclosure behavior, culminating in four distinctive clusters that reflect institutional pressures and strategic discretion (Chakraborty et al., 2025).

The first element examined was the title assigned to the reports under the CSRD by each bank. Only three institutions (Generali Bank, Illimity, and Unicredit) use the label Integrated Report; two banks (Desio and Brianza Bank, Fineco) adopt the label Sustainability Report, while the others refer to their documents as Non-Financial Disclosure. It can be reasonably assumed that the use of the term <IR> reflects the aspiration of these banks to prepare a report consistent with that format, regardless of its actual operational implementation. On the other hand, the widespread use of the term NFD appears to mainly reflect the intention to comply with a legal requirement.

The second element concerns the length of the reports. The documents exhibit a highly variable structure, with an average length of 333 pages, ranging from a minimum of 152 to a maximum of 705, and a standard deviation of 165 pages. The heterogeneity could highlight significant disparities in the scope and depth of the disclosures.

Table 3 presents the qualitative assessment scores assigned to the reports published by each individual bank. Unsurprisingly, two of the three Italian banks explicitly referring to their disclosure as <IR> rank among the top performers. Conversely, the three popular banks incidentally register the lowest scores.

With an average score of 36.5, corresponding to a qualitative coverage of nearly 73%, the overall score can certainly be considered more than satisfactory, especially given that all banks exceed at least 50% of the qualitative criteria associated with <IR>. This finding is well aligned with results obtained in studies on foreign banks, albeit based on different evaluation checklists (e.g. Alqallaf and Alareeni, 2018).

Table 4 focuses on the reporting elements that currently achieve the highest cumulative scores across all banks, identifying the sections with the greatest potential for improvement. The most critical section is readability, where the presence of excessive technical jargon hinders comprehension for non-expert readers. By contrast, the explanation of methodology is widely adopted.

The qualitative assessment reveals a mixed level of maturity in disclosure across the sampled banks. The dimensions most in need of improvement concern the articulation of performance and strategic objectives, which appear with comparatively low frequency. This finding is consistent with previous studies that have observed persistent gaps in the integration of strategy and performance within non-financial reporting (Azmi et al., 2021). Similarly, weaknesses emerge in readability and accessibility, two features that have long been regarded as fundamental to effective corporate communication (Palazzo et al., 2020; Gutiérrez-Ponce et al., 2023). Their absence is not merely stylistic: where linguistic clarity and navigability are limited, stakeholder engagement and knowledge transmission are weakened (Cortese and Rubino, 2022; Liang et al., 2024).

By contrast, governance-related disclosures, particularly those related to oversight structures and management transparency, are generally well-developed. From a theoretical perspective, this observation aligns with claims that governance mechanisms constitute a central pillar of sustainable banking, fostering system resilience and responsible behavior (Izcan and Bektas, 2022; Birindelli et al., 2024). However, such practices do not uniformly translate into improved financial performance (Siddik et al., 2024).

A further area of relative uniformity concerns assurance practices. All examined institutions adopt a limited assurance model, typically framed through cautious and non-affirmative conclusions (e.g. “Nothing has come to our attention …”). The more robust reasonable assurance, characterized by affirmative evaluative judgments, is still absent. The forthcoming introduction of a new standard in December 2026 may represent a turning point in this regard (Krasodomska and Zarzycka, 2024).

Overall, the qualitative evidence suggests that disclosure performance can be regarded as broadly adequate from an ESG perspective. Conversely, in line with other recent investigations (Di et al., 2024; Pawar and Munuswamy, 2024), difficulties persist in aligning narrative disclosures on strategy, risk, and financial performance.

Therefore, for Italian-listed banks transitioning under the CSRD framework, the trajectory toward <IR> still appears incomplete. As previous studies state that the adherence to disclosing initiatives does not significantly mitigate greenwashing (Gigante et al., 2023; Gambacorta et al., 2024a; Liu et al., 2024), that exhibits an increasing trend (EBA, 2024), it is conceivable that filling the above gap could discourage managers to manipulate disclosure in order to present the company in a more favorable light, according to the impression management hypothesis.

The second step, related to text analysis, provides a complementary, data-driven perspective that helps interpret these qualitative observations in a comparative and relational manner. Cosine similarity and clustering techniques reveal four distinct reporting profiles. The first cluster, including Fineco, Mediobanca, BPM, Mediolanum, Illimity, and Unicredit, displays a high degree of linguistic convergence. Reports in this group exhibit a strongly standardized rhetorical structure, likely shaped by consolidated frameworks such as GRI or SASB, or by consultant-led reporting solutions. The lexical density, recurrent use of KPIs, and structured formatting suggest a communicative strategy geared toward measurability and external comparability, in line with mimetic isomorphism, the tendency to imitate the structures, strategies, or practices of other, more successful companies, particularly when faced with uncertainty (Martínez-Ferrero and García-Sánchez, 2017). We mean that managers disclose non-financial information to reduce information asymmetries, providing support to the decision-making process according to the incremental information hypothesis (Melloni et al., 2017).

A second cluster, which includes Desio e Brianza, Generali, Intesa, and MPS, adopts a transitional approach. While engaged with the evolving language of ESG reporting, these banks retain features associated with the legacy of old CSR communication. Their disclosures demonstrate a hybrid rhetorical orientation that blends institutional alignment with elements of distinctive corporate voice. This intermediate positioning aligns with the narrative dynamics identified by Higgins et al. (2014), where disclosure serves as both a legitimacy-seeking device and a vehicle for identity maintenance.

A third, more technically oriented, cluster is composed of BPER and Credem. Their reports are characterized by a minimal rhetorical register and a strong emphasis on factual or tabular content. This style suggests an instrumental logic, where reporting is conceived primarily in terms of procedural compliance rather than narrative elaboration. Such an approach aligns with conceptions of instrumental legitimacy (Liesen et al., 2017), where stakeholder pressure ensures regulatory adherence but primarily serves as a symbolic act to address concerns about legitimacy.

Finally, IFIS emerges as an outlier, positioned at a notable distance from other banks. Its linguistic distinctiveness reflects a communication style that diverges from the prevailing sectoral patterns. While formally aligned with sustainability disclosure requirements, the report's structure and tone suggest a degree of decoupling. This is a possible consequence of organizational responses to external pressures, such as regulations, policies, or citizens' sensitiveness, which often resulted in internal buffering of daily practices from outside control and inspection (Jabbouri et al., 2022).

The overall picture concerning the quality of ESG disclosure that emerges from this study is generally positive, as the reports exhibit a high level of qualitative content. The use of external assurance and the extensive length of the documents, replete with detailed explanations, signal a commendable level of transparency and a clear intent to meet external informational needs, thereby gaining legitimacy and stakeholder trust. Many reports also display additional certifications issued by prestigious external bodies, further enhancing their credibility and transparency.

However, while the checklist-based analysis highlights a general formal adherence to ESG, the assessment is not entirely favorable when it evaluate the adherence of all the NFD to the more stringent principles of <IR>, finalized at identifying not so much or not only measures of emotional or image impact, perhaps of an occasional nature, but connections with long-term development processes of the company in the social and environmental dimensions, but also competitive, as well as economic and financial. That is, regardless of their formal titles, many reports retain the structure of traditional sustainability reports, often aligning with the GRI standards, rather than the more coherent yet complex framework proposed by the Value Reporting Foundation under <IR> guidelines.

In this perspective, the mentioned exclusive adoption of limited assurance, as opposed to reasonable assurance, constitutes a weakness. Other limitations include excessive report length, the use of overly technical language, and a tendency to present a sum of information rather than its integration. Additionally, the performance section, which covers the various dimensions of corporate development, often appears insufficiently linked to other objectives of the banks, particularly their contribution to territorial development and the sustainability and reproducibility of resources drawn from the surrounding environment.

Thus, it can be assumed that the examined banks are making progress toward improving their disclosure practices, although the journey remains ongoing. Continued advancement will require time and institutional support to foster deeper assimilation and organizational commitment (Gigante et al., 2023; Gambacorta et al., 2024a; Liu et al., 2024).

The clustering results also reveal a more complex landscape of narrative positioning that extends beyond mere compliance to CSRD and ESRS standards. The four clusters identified through cosine similarity and TF-IDF analysis reveal that Italian banks do not follow a uniform path in constructing their sustainability narratives. Instead, they distribute themselves along a continuum that ranges from standardized, template-driven reporting to hybrid, compliance-oriented, and idiosyncratic disclosure styles. This heterogeneity challenges the assumption that regulatory convergence necessarily yields rhetorical homogeneity.

The largest and most cohesive cluster demonstrates how mimetic isomorphism can lead to highly uniform disclosures, where institutional legitimacy, capital market expectations, and standardized frameworks exert a strong harmonizing effect (Martínez-Ferrero and García-Sánchez, 2017). Conversely, the emergence of transitional, minimalist, and fully distinctive clusters demonstrates that banks continue to exercise rhetorical agency, balancing external pressures with their identity, strategy, and communicative intent. This finding appears aligned with perspectives on decoupling, instrumental legitimacy, and hybridization in corporate reporting.

Overall, the evidence confirms that the <IR> model functions not only as an instrument of institutional compliance but also as a strategic space for differentiation. Even under shared regulatory mandates, banks selectively interpret and perform sustainability communication in ways that reflect their governance models, market positioning, and narrative ambitions.

Taken together, the clusters depict a reporting landscape that is neither uniform nor merely fragmented. Rather, it reflects a continuum of behaviors shaped by institutional pressures, organizational identity, and varying degrees of strategic alignment (Chakraborty et al., 2025; Birindelli et al., 2025; Demartini et al., 2026). The integration of qualitative and computational evidence allows these differences to be interpreted not as anomalies but as structured variations in how banks negotiate the demands of standardization, comparability, and distinctiveness in NFD communication.

This study aimed to assess the degree of alignment of the main listed Italian banks with the Environment, Social, and Governance (ESG) issues and non-financial disclosure (NFD) in general, applying integrated reporting (<IR>) as the interpretive lens. Originally conceived to meet the need for higher-quality disclosure capable of capturing not only financial aspects but also the broader dimensions of corporate behavior, <IR> aspires to become an accountability tool that overcomes typical limitations of traditional financial reporting, also integrating the environmental, social, and competitive perspectives of corporate development. The underlying aim is to demonstrate that value performance creation within economic entities occurs according to principles of fairness and transparency, safeguarding the external resources upon which businesses rely, and that this value is appropriately distributed among stakeholders.

To this end, the study examines the quality of disclosures produced by Italian banks in response to the CSRD. As intermediaries between millions of depositors and thousands of entrepreneurs seeking capital to invest, banks hold considerable influence in steering the behavior of other economic actors toward sustainable development.

The results offer multiple points of reflection, extending prior literature on the quality of sustainability disclosure, and contribute to the stream of literature focused on the narrative features of corporate reporting. For regulators, findings highlight how clearer and enforceable guidance on both the structure and semantics of non-financial reporting could enhance comparability without erasing contextual specificity. For banks, the clusters function as discursive reference points that can support benchmarking, reputational positioning, and the design of future ESG communication. For scholars, the analytical framework illustrates how quantitative narrative analysis can be used to observe convergence, differentiation, and symbolic alignment in corporate disclosure.

The coexistence of convergence and divergence in ESG and NFD reporting also suggests that sustainability communication is not a static compliance exercise but a dynamic field where institutional pressures intersect with strategic discretion. Understanding this tension is crucial for assessing how integrated reporting evolves as both a regulatory artifact and a communicative practice in the financial industry.

Standard setters and policy makers could benefit from the findings of this research by acknowledging that ESG disclosure quality does not necessarily reflect the underlying sustainability performance. Therefore, they could take these results into account in revisions of the current reporting standards.

CSRD and ESRS. Similarly, standard setters and researchers should clarify and improve the modalities through which <IR> can become a more effective communication tool. It should not be forgotten that, as many scholars of this accountability tool have argued, the <IR> is ideally positioned to incorporate the content of traditional financial statements, while also being more cost-effective to produce than the current proliferation of separate, and often overlapping, reports on specific aspects of corporate activity. From this perspective, economic organizations would likely welcome standardized formats that reduce the need to produce hundreds of pages of documentation, allowing them to focus on concise and meaningful disclosures instead.

Policy makers, in turn, have a dual responsibility: on the one hand, to support and promote research into <IR> and assist companies in their reporting efforts; and on the other hand, to establish guidelines that enhance the temporal and mainly cross-sectional comparability of reports, thereby increasing their explanatory power. Such guidelines would also help promote more consistent and transparent assessments of qualitative report content, including evaluative judgments issued by competent institutions, particularly given that a universally accepted ESG format is still lacking, and with it, a unified rating framework.

From a practical perspective, it is evident that the possibility of improving the quality of disclosure, as well as strengthening the actions carried out in the direction of sustainable development, extends beyond mere obligations of formal compliance fulfillment. Indeed, it could be linked to endogenous motivational factors, such as the possibility of obtaining direct subsidies or other economic and financial benefits; for instance, a reduction in productive costs, or an increase in revenues related to the loyalty of the most sensitive customers toward sustainability. Additionally, as many scholars emphasize that the benefits of ESG reporting could be reduced when the generalized adoption of these principles increases, thereby annulling the first-mover advantage previously enjoyed by early adopters, a strong motivational element correlates with the emergence of a specific awareness about the importance of sustainable development for individuals. We mean that a strong driver for adopting the <IR> may stem from the governance culture within individual organizations. Such a culture could—and should—be nurtured through institutional efforts to foster public awareness of the positive social role of the firm, particularly when it operates in accordance with principles of fairness, transparency, and shared value creation. Even the growing community of scholars working in this field could offer insightful guidance to standard setters and policymakers.

The mentioned results and their related implications are subject to clear limitations related to the type of banks analyzed and the method adopted. On the first side, banks listed on the stock exchange tend to be more dynamic in addressing sustainability needs, especially when their larger average size presumably makes the costs related to both drafting reports and, primarily, pursuing the described actions less evident. Regarding the method, like any qualitative analysis, a certain indeterminacy can be correlated to the sensitivity of the researchers in evaluating the individual actions that the banks have implemented. Obviously, the adopted checklist is also a factor influencing the outcome. In this regard, creating a unified model by the most authoritative bodies in the field of sustainability disclosure would represent a big step forward. Moreover, this study focuses on only one country, whereas the effects of such regulatory initiatives in different national contexts require a cross-country analysis.

Despite these limitations, we are confident that the findings of this study accurately represent the tendency of banks to continually improve their sustainability levels and position themselves as primary actors in the sustainable development of their local contexts. This study also contributed to a deeper understanding of how sustainable development disclosures function within the broader nexus of sustainability performance and bank outcomes. Findings from this investigation provide empirical support for the argument that disclosure does not merely represent a regulatory compliance tool, but also a strategic asset that can enhance a company's financial and non-financial performances. Further investigations into other countries and types of banks will provide fundamental tools for comparison and reflection, benefiting standard setters, policymakers, and bank managers alike.

We are grateful to the Editor and the anonymous referees for their insightful and constructive comments, which greatly helped us to improve the clarity and contribution of the manuscript.