Determinants of GRI G3 Application Levels: The Case of the Fortune Global 500

The objectives of this research are to analyze the determinants for the adoption of the Global Reporting Initiative (GRI) G3 guidelines and GRI G3 application levels (undeclared, C, C+, B, B+, A, A+). Content analysis of the 2009 sustainability reports published by the world's 500 largest companies (Fortune Global 500) was conducted. Based on legitimacy theory and signalling theory, the study yielded two main findings. First, the binary logistic regression reveals that the adoption of GRI G3 guidelines is influenced by company size, profitability, business culture of a country, and industry. These results are consistent with past research on the factors influencing sustainability reporting. Second, the ordinal logistic regression shows that the GRI G3 application level is influenced by the industry in which a firm operates but not by company size, profitability or business culture of a country. In high-risk industries, the GRI G3 application level is more likely to be considered as a signal to manage the reputational risk of the companies. Copyright (c) 2012 John Wiley & Sons, Ltd and ERP Environment.