Trends in the Sustainability Reporting in Italian 2 LGOs : better Stick or Carrot ? 3

The role of public-sector organizations (PSOs) for promoting the agenda of sustainability 10 accounting and accountability is often not adequately considered [1]. In the public sector universe, 11 Local Governments are close to their communities and thus have a particularly important role to 12 play in the pursuit of sustainability goals [2,3]. Hence, further research is still needed to understand 13 if Local Governments Organizations (LGOs) are still using reporting tools to promote sustainable 14 development. The empirical data show that the Sustainability Report (SR) is not having the spread 15 assumed in the past years; over time, the great majority of Italian Municipalities does not continue 16 or embark on a path of sustainability reporting. The findings suggest the fashion of SR in Italy is 17 falling and it seems that the SR tool is a “mere trend reporting based on descriptive indicators leads 18 to decreasing interest from internal and external audiences” [4]. The carrot is unsuccessful; maybe 19 the mandatory requirements could be a stick? 20


Introduction
Nowadays the paradigm of sustainable development (SD) is considered as one of the key research and policy issues [5].The concept of sustainable development was institutionalized at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro in June 1992.During this conference, about 170 governments agreed on a common commitmentdefined Agenda 21-including programs and aims in the field of social and environmental sustainability.Agenda 21 assigned a specific role and well-defined powers to Local Governments Organizations (LGOs) because many of the issues addressed by Agenda 21 have their roots in local activities.Hence, public institutions are specially involved not only at the central government level but also at local level.
The role of LGOs towards sustainability is essential.Recently the United Nations Conference on Sustainable Development, the so called Rio+20, emphasizes the issues related with sustainability and the function of the Public Sector Organization (PSOs) in facing these topics: "Given the scale of the challenges, the international community will not make meaningful progress without much greater action by governments in the coming years and decades" [6].Essentially, LGOs are the institutional reference closest to the citizens and to economic and social organizations and they have the task of promoting a culture of sustainable development [2,3].
The debate on the SD regards both the identification of the actors called upon to implement it, both the methods and tools to achieve it.In this sense, a means considered useful for the promotion of the SD agenda is the attention devoted by the accounting research related to the reports [7,8,9].
There are several kinds of reports dealing with sustainability issues, they may contain social aspects only or environmental items only, or they may include these in connection with subjects such as economic, safety, corporate governance, risks.In the present paper they will be identified using the terms "sustainability reports" (SR).The sustainability reports are the external tools (written reports) that communicate public policies of LGOs on sustainability matters [10,11].
In this scenario, the study focuses on the sustainability reports of the Local Governments and the purpose is to analyze the trend and the barriers of the diffusion in Italian LGOs.
To examine the extent to which Italian LGOs are reporting on sustainability, it is used a mail survey technique.Taking into account that literature [12,13] suggests that the majority of Italian municipalities do not produce sustainability report, two specific research questions area considered.

RQ 1 Are Italian
LGOs reporting on sustainability nowadays?RQ 2 Which are the barriers to the diffusion of the SR?
The paper contributes to the sustainability reporting in LGOs research field.The study provides insights into the status of sustainability reporting in LGOs throughout a quantitative research that shows the trend in a long period of reporting practices.From the theoretical perspective, the study adds contribution to the existing literature on public sector sustainability reporting by analyzing the barriers to the SR adoption.Considering that over 90% of Italian municipalities did not produce the SR, Italy is a relevant case study because there could be a long evaluation period that allow to deepen the reasons behind the choice to not adopt the SR (barriers) that validate the trend.On this basis the study could suggest policy implications for local actors to go beyond the barriers and enhance the diffusion of SR.
The paper is structured as follow.Second paragraph provides literature review on the diffusion of SR while the third paragraph describes the institutional context of Italian LGOs.The fourth paragraph presents the methodology.The fifth paragraph introduces and discusses the results.
Finally, the last paragraph presents conclusions, policy implications and future researches in the field examined.

Literature review on the diffusion of sustainability report
Terms like "sustainable development" and "sustainability" are not covered by a universal definition [14,15,16] and the most recalled arises from the Brundtland Report of the United Nations World Commission on Environment and Development (WCED, 1987).SD is defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs".
Starting from the definition of the Bruntdland Report, the sustainable development concept has to be declined from theory into practice: according to Williams, Wilmshurt and Clift [17] there is the need "to move the term from a theoretical concept to an operational concept".This means translating the sustainable strategies into sustainable practical decisions and activities.This process is not so easy to do as to say but it is accepted that "the Local Government has a key role to play if the sustainable development agenda is to be pursued" [2,17,6].According to previous literature the definition of sustainable development at local community level adopted in this paper is "the sustainable development consists of local activities that create the conditions for economic growth without damage the local territories and increasing social equity".
The attention on sustainability matters in Local Governments is one of the core themes of Agenda 21 [18] and the transparency on social, environmental and governance information in LGOs is an issue also at European level [19].
To study the empirical application of the sustainable development one of the public accountability tools, from an external point of view, is the sustainability report [10,11].
The majority of researches in sustainability reporting have centered their attention on the private sector that has devoted increasing attention to the issue of sustainability accounting [20,21].In the public sector only in recent years has increased the interest on this topic [22,23,24].As aforesaid, public sector organizations, and Local Government in particular, play a central role in delivering the sustainable development agenda [2,1,25].
The literature on the sustainability reporting in LGOs is concentrated in particular on the content of SR in a single country, as introduced for example by Greco, Sciulli and D'Onza [26], or in a multicultural context [19], discussing European LGOs in sustainability disclosure and linking it with the administrative culture.
Only few researches have focused on understanding the characteristics and reasons for the preparation of SR in the context of public sector [1, 27, 28, 24 , 29] and even more limited are studies that deepen barriers to diffusion [30,31,18].
In this regard, Ball and Grubnic [1] state that the economic dimension and the environmental impact and responsibilities would be expected to lead sustainability reporting.According to Gray [27], institutions disclose their SD activities only if they are convinced that this increases the perceived value by the stakeholders.In this regard SR are perceived as useful to promote and enhance accountability.The limitation to the spread of SR, so the barriers, would therefore result from LGO perception of the lack of utility.
Another approach is proposed by Marcuccio e Steccolini [29] in which trough interviews of 12 Italian LGOs, they show that LGOs' inclination to disclosure and ability to provide information, in a non-mandatory SR framework, is the result of a path that drive organizations to become more similar, without necessarily becoming more efficient.In a subsequent work the authors, Marcuccio and Steccolini, [10] found that the legitimacy process is the driver of reporting sustainability matters.To similar conclusions get to a subsequent study focusing on 55 Spanish LGOs [32].These results recall the work of Powell and Di Maggio [33].In opposition to competitive isomorphism, authors purposed three forms of institutional isomorphism: (1) coercive isomorphism, which can arise by requirements required by law; (2) mimetic isomorphism, which relate to the introduction of practices used by organizations defined as excellence; and (3) normative isomorphism, which emerges as the consequence of shared values about proper behavior, often widespread through professional communities.In this scenario, a barrier to the diffusion of SR is the non-compulsory prediction of SR in the legal order.
First Mercer et al. [30], then Pini et al. [31], identified some factors that inhibiting LGOs SR in Australia.Graymore [18] gave a clear picture of these factors in her paper identifying that barriers are related to capacity (i.e.lack of financial resources), commitment (i.e.lack of support from key staff), coordination (i.e.lack of understanding of the various roles of LGOs), community (i.e.lack of interest from the community on these topics) and finally to complexity of sustainability.She then suggested an approach to foster the application of SR in Australian LGOs (a collaborative approach).
From this review emerges that there are no studies, focused on a single country so not influenced by diverse culture, which analyzed jointly the trend of SR in a long period and the barriers that inhibit the diffusion.The paper tries to fill the gap in this area and contributes to the research field connecting trend and barriers in a long evaluation period.

The sustainability reporting in Italian LG
In order to explain the use of sustainability reporting by Italian LGOs, a brief description should be given of the context in which it takes place.In Italy there are about 8,000 Local Governments, 70% of them are small LGOs with fewer than 5,000 inhabitants.Italian LGOs are responsible in particular for the following areas: management of social services, land charges register management, urban and housing planning in the municipality and participation in territorial planning at a supra-municipal level, organization and management of garbage collection and related tax collection, school building, planning and management of school services, municipal police.Since 1990, LGOs have been given more autonomy in setting taxes and fixing fees for public services and since 2010 they have witnessed a heavy reduction in the number of transfers from central government and have been driven to spinning off their activities.Italian LGOs have undergone a wide-ranging reform process covering governance, the definition of the areas of action of politicians and managers and accounting systems.Moreover, the Italian PSOs have been subjected to a general claim for greater accountability on the one hand (accounting harmonization) and to the need for a cost reduction on the other (austerity period).During this period, sustainability reporting has been one of the main issues of interest and experimentation in Italian LGOs.In Italy, the theme of sustainability reporting was first studied in the 1980s [34] focusing the attention on the private sector.Lately, there have grown researches dedicated on reporting tools used by Italian public sector organizations [8,29].However, SR in the Italian civil law system, public sector organizations can voluntarily reporting their SR practices.Even if SR is not mandatory, public institutions could disclose and report their choices on sustainable issues referring to three national guidelines.These guidelines were born with the intent to increase the transparency of public sector organizations on social and environmental issues The first are issued by Gruppo Bilancio Sociale (GBS Group) in 2005 while the other two of these guidelines have been issued by public agencies: Presidenza del Consiglio dei Ministri, Dipartimento della Funzione Pubblica, and Osservatorio per la finanza e la contabilità degli enti locali -Ministero dell'Interno, in 2006 and 2007 respectively.In addition Italian LGOs can obviously refer to the international sustainability reporting guidelines issued by the GRI.
With regard to Italy, it is interesting to research Siboni's work [12]: it is one of the few researches empirically addressed the issue of social reporting.Through a survey involving 760 municipalities and all Italian provinces, Siboni has empirically investigated the dissemination of accountability tools, including the social report (in the selection of the sample, were excluded municipalities with the population less than 1,999 inhabitants).The results, with particular reference to the LGOs, highlighted a SR presence in 13% of respondents.Only a few LGOs claiming to involve stakeholders in their social reporting process, and even where this is improved, it is a simple mapping of the general stakeholders' classes, with no active involvement of identified stakeholders.
Recalling that research, and analyzing the few LGOs that involved stakeholders in drafting SR (the so-called "better practice"), Farneti, Guthrie and Siboni [35] analyzed the SR content.Through the content analysis they found that in practice the SR prepared by LGOs considered not include all the voices outlined by the GRI framework and that social reports focus mainly on administrative and managerial matters.
With another method, Farneti and Rammal [36]  It should also be remembered the study of Greco, Sciulli, D'Onza [26] to investigate the motivations of Italian local councils for producing a sustainability report.The study is based on semistructured interviews with the sustainability report preparers of a sample of Italian local councils.
The findings demonstrate that initially transparency seems to be the main driver behind voluntary SR adoption even if the findings also show limited interest from stakeholders for the sustainability report produced.Moreover, authors highlight that LGOs moved from traditional SR to more complete accountability tools of policy-making and reporting, aimed at increasing citizen participation.

Research method
A technique of quantitative analysis was used to collect data: the mail survey, conducted on a sample considered to be sufficiently large and representative to allow the generalization of the results obtained on the sample to represent the entire population.This technique has allowed to reach a high number of data which place this study among those with the largest number of municipalities' involved.the size variable, 3 clusters were identified: 5,000-20,000; 20,001-100,000; > 100,001.With reference to the geographical area, 4 clusters were identified: north-west, north-east, centre, south and islands.

The sample
Once the population was stratified, a common contact was identified through the random selection of 1,300 municipalities, accounting for 16.13% of the total, selected to be proportionate to the various strata of the population "Italian municipalities".
The data obtained with reference to the diffusion of the SR were compared with the data recorded in a previous survey conducted, with similar methodology, with reference to the year 2009 [37].

The questionnaire
This study is one of the first using the mail survey to collect data concerning sustainability reporting diffusion [17].With the aim of adopting an objective approach in the analysis, it was decided to distribute a questionnaire to CFOs that had to be filled in by sending a certified email in March 2015 and a second recall in June 2015.
Since the literature analysed suggests that in the absence of an isomorphistic tendency resulting from coercive pressure, the reduction in SR spread is expected, the questions posed are aimed at investigating the barrieres to draft the SR.The questions are developed on the basis of the objectives of the research, taking account of the indications contained in the literature and the Italian context, summarized in the previous paragraphs.
The questionnaire was structured as follow: 1. Did you prepare the SR about the financial year 2013?
If not, what is the motivation (barriers) that led to the non-publication of the SR?
The results were analyzed both using descriptive statistics and investigating possible relations between the variables considered.The data obtained with reference to the diffusion of the SR of 2013 were compared with the data recorded in a previous survey conducted, with the same methodology, with reference to the year 2009 [37].

The response rate
In surveys carried out over the Internet, it is quite common to get a rather limited response rate.
An acceptable rate of response for this type of survey is equal to 10%.In this study with reference to 2013, a total of 234 usable responses were received, equal to a response rate of 18.0%, while in 2009 the response rate was 23.0% with 314 respondents [38].

Results
The first result is that only the 4% of the Municipalities prepares a SR in 2013 (no. 9 Municipalities among 234).This result highlights a strong decrease (Figure 1) considering the results of 2009 (11%).The evident decline in the widespread of sustainability reports could demonstrate the theory that the managerial fashion of the early twenty-first century led to the introduction and distribution of the sustainability report [29].After that, and without a coercitive approach or incentive for LGO that drawn up the SR, phenomenon is abandoned by LGOs.The most recent trend demonstrates that SR has substantially disappeared.The answers can be deeply investigated considering the size of the LGOs.Data analysis (Table 1) showed a significant association between the population groups and the sustainability report adoption: variable (Pearson χ² (2)=24.19,p<0.01,Kendall's tau-b=0.24).100,000" compiled the report.In conclusion, the highest propensity towards preparation of the sustainability report is of the largest municipalities.
By comparing the results of 2013 with those obtained with reference to 2009, we can observe the general reduction in the spread of SRs except LGOs with more than 100,000 inhabitants (Figure 2).In fact, with reference to 2009, the SR spreads were 3.9% in LGs belonging to the "fewer than 5,000" category, 19.1% in the cluster "5,000-20,000" and 20.0% in the "20,000-100,000" clusters.
As regard the RQ 1, results confirm the suggestion provided in literature about the difficulties in the diffusion of the SR without any incentives or the mandatory adoptions of the reports.The results of the second question, related to the causes of the diffusion of the sustainability report, are shown in Figure 3.The most common answer (Table 2) given by 225 municipalities is that the cost reduction, related to austerity, represents a barrier to the sustainability report preparation in terms of time and availability of staff (48%).The voluntary nature of the reporting tool is the second reason, indicated by 39% of the municipalities surveyed.Only the 8% linked the SR with its usefulness.Looking at reasons why the SR has not been published conditionally demographic classes (Figure 4) it emerges that the theme of the cost reduction weights more on smaller Local Governments.The result is not surprising: the preparation of the SR affects proportionally more on the budgets of small municipalities although the incidence on total expenditure also if in these cases is extremely limited.In simple words the lack of financial resources to devote to SR, influence the significant number of disappearances of the sustainability report in municipalities with fewer than 20,000 inhabitants.In middle municipalities, with inhabitant from 20,000 to 100,000, and in the bigger cities with more than 100,000 inhabitants, the most relevant reason is the voluntariness of SR.So in these cases it seems to be that the decline of SR phenomenon in LGOs is not related to managerial fashion but to the absence of a coercive isomorphism.In the municipalities from 5,000 to 20,000 inhabitants, the causes at the limited diffusion of the SR are equally distributed between the cost reduction and the voluntariness of report.Finally, the opinion that SR is not useful prevails in municipalities with a size ranging from 5,000 to 20,000 inhabitants.

Conclusions and policy implications
In the light of evidence emerging from empirical research it is possible to formulate some conclusions and policy implications for the development of the diffusion of sustainability reporting in Italian municipalities.
Sad to say but evident from the available data: better stick than carrot in Italian framework.
Research has shown that the SR in LGOs was a phenomenon of considerable relevance but with a decreasing trend.Comparison data from 2009 to 2013 shows that there has been a drastic reduction in the diffusion of sustainability reporting: is the fashion effect finished?The main barriers to the SR are on one hand the prevalence of short-term goals (cost reduction) versus those of long-term (sustainability) and on the other hand, the voluntary nature of the SR that does not lead to a growth of sustainability reporting since the Italian LGOs focus solely on mandatory accounting obligations LGOs.Faced with a growing academic interest in the subject of sustainability accounting and numerous contributions from a theoretical point of view, it was considered useful to support a large-scale empirical survey on the diffusion of the phenomenon over a long period.Secondly, even for sustainability reporting it seems that local politicians and public servants, rather than looking at the relationship with the various stakeholders they give priority to the regulatory requirements (coercive isomorphism).In the past, both the lack of recognized standards together with the absence of incentive to change their choices on the environment and social needs lead the Local Governments to ignore the importance of disseminating information on sustainability [39].For ten years, however, LGOs have the ability to choose among the many frameworks and guidelines that have been implemented for sustainability reporting.
Hence, that reason cannot explain the choice not to publish the sustainability report followed by 96% of the municipalities surveyed.Most spread of the sustainability report in large municipalities, in line with findings in previous years [37] confirms what also found in other studies related to sustainability practices: larger LGOs have more human and financial resources hence, they are therefore more likely to engage in sustainable development [40].
In terms of policy implications results suggest that decision makers must take into account that although socio-psychological forces can be sufficient to legitimize the introduction of a new technique in the short term, they cannot be sufficient to guarantee their long-term legitimacy, for which careful consideration of techno-economic forces is crucial [41].
In this regard, two policy implications that can be formulated to overcome barriers to the spread of the report.On the one hand, monetary incentives or professional updating of human resources to issues that are far from the background and the culture of the public administration.On the other hand, the introduction of an obligation seems consistent with the context of local authorities, highly responsive to the coercive pressure.Obviously, the introduction of mandatory SR brings a high risk: a reformed enforced by law tends to become a matter of compliance rather than a mechanism for enabling change [42].
As any piece of research, also this paper presents limitations.First, data about municipalities over 100,000 inhabitants should be improved.In addition to this purely methodological detail, it should be recognized that the quantitative analysis approach used in this article has significant limitations.Further work is required to identify more fully how sustainability reporting is practiced within the public sector and how the choice to do sustainability reporting is influenced by the values, interests and pressures of internal and external stakeholders.Whilst the quantitative analytical approach adopted here has the advantage of producing generalizable results, case studies will be needed to explore the role of political leadership and public managers' values and skills in promoting SR reporting practices.
Could the study suggest a mandatory requirement for SR in LGOs as a 'stick'?More research is needed in the public sector to enforce this option.At the moment, the 'carrot' proves to be unsuccessful.
Furthermore, the role of information and accounting tools applied to sustainability deserves further attention.In this regard, for example, Thomson, Grubnic and Georgakopoulos have written about the concept of accounting sustainability hybrids [43].Future research, both qualitative and quantitative can help to understand better whether and how the need to provide information on sustainability issues can lead to increase engagement in sustainability or, in other words, what is role of accounting in promoting sustainability practices in Local Governments.Finally, the European Directive 95/2014 requires all 'large public interest entities' to start disclosing 'non-financial information' that could be a starting point to think about a similar directive or law for government (at all levels).The introduction of a mandatory minimal sustainability report may bring also small municipalities to work on the theme of sustainability thanks to the information inductance process started from the obligation of reporting and reinforced by the subsequent coercive isomorphism.
Information inductance is the process by which the behavior of an individual is influenced by the information that is required to disclose [44].

Preprints
(www.preprints.org)| NOT PEER-REVIEWED | Posted: 8 September 2017 doi:10.20944/preprints201709.0025.v1 investigated motives and influence of sustainability reporting in the Italian public sector.They conducted semi-structured interviews with key informants from nine Italian public sector organizations.They found that the internal pressure for writing the SR comes from individuals in the foreground positions in organizations that see SR preparation as a way to highlight the results they have achieved.External pressure for editorial work comes from stakeholders (general population), and is the result of greater attention, including media, environmental and social issues.

Figure 1 .
Figure 1.Diffusion of the sustainability report in 2009 and 2013

Figure 2 .
Figure 2. Diffusion of the social report in municipalities aggregated with demographic criteria.Years 2013 and 2009

Figure 3 .
Figure 3. Reasons why the SR has not been published

Figure 4 .
Figure 4. Reasons why the SR has not been published, results aggregated with demographic criteria

preprints.org) | NOT PEER-REVIEWED | Posted: 8 September 2017 doi:10.20944/preprints201709.0025.v1
was considered appropriate, in terms of cost and time, to use stratified sampling, taking a basis of all 8,003 Italian Municipalities.LGOs were classified, according to ISTAT criteria as of 31/12/2010, according to: (i) size, measured on the basis of the population; (ii) geographical area.In relation to Preprints (www.

Table 1 .
Diffusion of the sustainability report in municipalities aggregated with demographic and area criteria.
On the one hand, only 1.2% of the municipalities belonging to the "fewer than 5,000" category compiled the sustainability report.Similarly, 4.0% of the municipalities belonging to the "5,000-20,000" category compiled the report.Results are better regarding bigger Municipalities.The 16.7% and the 50.0% of the municipalities belonging to the clusters "20,000-100,000" and "more than

Preprints (www.preprints.org) | NOT PEER-REVIEWED | Posted: 8 September 2017 doi:10.20944/preprints201709.0025.v1 required
by the Central Government (coercive isomorphism).The choice of the vast majority of municipalities not to draft SR is not based on assessments of the usefulness of the reporting tool but it happens for other reasons just mentioned.The choice of the Central Government to promote sustainable development appears particularly schizophrenic.On one hand by creating, through the Ministry of Public Organization, a social accounting model addressed to local authorities and on the other hand to heavily cut (-80%) the resources allowed to LGOs for publications addressed to citizens (which also includes the SR).Italian LGOs have been subjected to a general claim for accountability on the one hand and the need for a cost reduction on the other, and they chose the latter.The barriers that are found in the survey validate the trend that is falling.This article presents a quantitative analysis of sustainability reporting implementation in Local Government.It responds to calls for studying accounting for sustainability in Local Governments by providing a twofold contribution.The article first provides quantitative data to support a clear view of the trend of sustainability reporting among Italian