Citation: Henriques, R.; Gaio, C.; Costa, M. Sustainability Reporting Quality and Stakeholder Engagement Assessment: The Case of the Paper Sector at the Iberian Level. Sustainability 2022, 14, 14404. https://doi.org/10.3390/su142114404 Academic Editor: Wen-Hsien Tsai Received: 30 July 2022 Accepted: 25 October 2022 Published: 3 November 2022 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affil- iations. Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). sustainability Article Sustainability Reporting Quality and Stakeholder Engagement Assessment: The Case of the Paper Sector at the Iberian Level Rita Henriques 1 , Cristina Gaio 1, * and Marisa Costa 2 1 ADVANCE/CSG & ISEG Business School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 Lisboa, Portugal 2 ISEG Business School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 Lisboa, Portugal * Correspondence: cgaio@iseg.ulisboa.pt Abstract: Materiality assessment identifies the main issues to be disclosed in non-financial reports to respond to the concerns of stakeholders, thus improving the quality of those reports. The purpose of this research is to understand whether there is a relationship between the quality of non-financial reports and the application of standards such as the Global Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC), as well as between the impact of stakeholder engagement and the adoption of the materiality principle. To do so, manual content analysis was performed on companies from the paper industry in the Iberian Peninsula that published non- financial reports in accordance with the GRI and/or IIRC standards during the period between 2015 and 2020. The sample consists of 133 company-year observations, and data were collected through content analysis of the reports. The results show that companies that more scrupulously follow the GRI and/or IIRC standards and those that pay more attention to the relationship with their stakeholders show higher levels of materiality, meaning higher quality of reports. In addition, it is also noticeable that, over the years, the concern with these disclosures has increased, reflecting an increase in attention given to materiality. Keywords: corporate social responsibility; GRI; stakeholder engagement; materiality; IIRC 1. Introduction With the climate and environmental changes that have occurred in recent decades, the issue of sustainability and sustainable development has gained increasing attention from individuals, companies, government institutions, and international organizations, highlighting the importance that corporate social responsibility (CSR) should have and the role of businesses in promoting social and environmental well-being. This increased attention has encouraged the disclosure of non-financial reporting by companies [1]. In fact, a good CSR disclosure can improve returns, create new market opportunities, reduce risks, and improve the company’s reputation, promoting customer– company identification [2,3]. Non-financial reporting also promotes comparability among companies and economies, due to increased transparency and reliability, contributing to the rationale for decision making and for differentiation based on social concerns [4,5]. However, there are companies where these reports are nothing more than statements of policies and intentions, without real substance, and where no environmental and social data are presented. According to [2], these reports are not expected to prevail over time. The trend of reporting non-financial information is increasing and likely to continue [2,6], and companies seek to improve their environmental performance and disclosure to gain a competitive advantage [7]. Even if there are no direct benefits from disclosure, there may be disadvantages to not doing so [8]. There are different frameworks that guide the production of these reports, such as the European Directive 2014/95/EU, the Global Reporting Initiative (GRI) standards for sustainability reporting, and the IIRC guidelines Sustainability 2022, 14, 14404. https://doi.org/10.3390/su142114404 https://www.mdpi.com/journal/sustainability