• case study
• materiality
• sense of dissonance
• sustainability accounting
• system dynamics

This thesis explores the role of materiality assessment and sustainability accounting in supporting decision-making and sustainability transition. It focuses on the elements of tensions emerging from different materiality definitions – such as the impact, financial, and double approaches offered by the new sustainability reporting standards – and the misalignments between the internal and external reporting purposes, in a dynamic and complex environment. The literature and existing theories about sustainability reporting are analysed through the system dynamics method, whose findings are then applied to the explanatory case study of Barone Ricasoli S.p.A. The sense of dissonance and heterarchy frameworks are used to explore how conflicting internal perspectives on materiality can contribute to improvements in sustainability performance, aligning with the theoretical suggestions of the model.
In today’s business landscape, sustainability has become a major concern, driven by climate change and institutional efforts to mitigate environmental and social impacts. Stakeholders, including investors, customers, banks, and regulators, are increasing their pressure on companies to obtain information about their commitment to sustainability. Sustainability reporting plays a crucial role in responding to these pressures and aligning companies’ behaviour with broader societal goals, such as the United Nations’ Sustainable Development Goals (SDGs). In this context, limited comparability across reports has prompted calls for the standardisation of reporting guidelines. However, the existence of parallel standardisation attempts (e.g., GRI, EFRAG, IFRS guidelines) has led to divergencies in how companies assess materiality and determine which environmental, social, and governance factors are most relevant to their operations.
Materiality assessment has emerged as a critical process for determining the weight of a particular sustainability topic for an organisation’s strategy, defined in this thesis as internal materiality. Internal materiality has two components, a financial one, focusing on the financial repercussions of a sustainability issue, and an impact one, considering broader societal and environmental consequences. The weight attributed to these two components determines the company’s approach to materiality (i.e., financial, impact, or double). The emerging divergencies may create tensions within and across company boundaries, with different stakes involved (Baret and Helfrich, 2019). These tensions are analysed in a dynamic context, where sustainability challenges evolve as societal expectations change and environmental risks intensify.
The research adopts a dual-method approach grounded in the interpretive paradigm (Scotland, 2012), combining system dynamics with an explanatory case study interpreted through the lenses of sense of dissonance and heterarchy (Stark, 2009). This combination reflects the multi-level nature of sustainability reporting, which involves both systemic structures and organisational practices. System dynamics offers a macro-level, theory-driven perspective that maps the dynamic interrelations and structural tensions identified in the literature. In contrast, the case study of Barone Ricasoli S.p.A. provides a micro-level lens to explore how these tensions are experienced, negotiated, and transformed within an organisational context. The integration of these methods allows for a richer understanding of how abstract tensions — e.g., between impact and financial materiality — materialise in practice, and how they can serve as drivers of organisational learning and innovation rather than leading to organisational paralysis.
System dynamics is a powerful tool for understanding complex systems, as it uses simulation to identify the feedback loops responsible for problematic system behaviour (e.g., greenwashing practices) and find leverage points that can improve desired performance (e.g., sustainability performance or stakeholders’ satisfaction). In this research, this method is used to achieve a systemic perspective on the various theories about the managerial implications of sustainability accounting, highlighting dynamic interplays among system components.
The identification of system leverage points constitutes the main outcome of the system dynamics analysis. These leverage points highlight how integrating materiality into decision-making and increasing financial resource allocation are critical factors in enhancing sustainability performance. Interestingly, the model’s sensitivity analysis did not reveal behavioural consequences depending on whether an impact, financial, or double materiality approach was adopted. This finding is interpreted in light of materiality’s dynamic character: sustainability issues often gain financial significance over time (World Economic Forum, 2020). Therefore, the model highlights that it is not the formal type of materiality approach that matters most, but how materiality is embedded into decision-making processes (Calabrese et al., 2019; Lai et al., 2017), particularly in shaping resource allocation, strategy development, and stakeholder engagement. On the contrary, greenwashing practices, concerning the exaggeration of sustainability performance to appear more environmentally or socially responsible, proved to be a negative leverage point of the system. The simulations show that greenwashing may provide short-term reputational benefits but also present long-term risks including damage to the company’s credibility driven by stakeholders’ scepticism (Aji and Sutikno, 2015). This finding is particularly relevant in today’s business environment, where public scrutiny of corporate sustainability claims is increasing, and regulators are paying more attention to identifying misleading communication.
Barone Ricasoli S.p.A., a historic Italian producer of Chianti Classico wine, was selected for its strongly integrated reporting practices despite the absence of a formal materiality assessment. This apparent contradiction aligned with the study’s interpretive focus on internal organisational processes, making it a compelling site to validate and enrich the findings of the system dynamics model through qualitative inquiry. The case study provides a micro-level analysis of how sustainability topics are prioritised in practice, revealing the challenges and tensions (Busco and Quattrone, 2018) involved in balancing financial and impact materiality within the organisation. These tensions are exemplified by the differing perspectives of the CFO and the Technical Director: the CFO prioritises the financial implications of sustainability issues, while the Technical Director adopts an impact-oriented view, focusing on environmental and social outcomes.
In this context, the sense of dissonance framework is used to analyse how tensions between diverging materiality perspectives – rather than being a problem to be solved – can become a source of innovation and contribute to the company’s sustainability transition. These differing management perspectives constitute a case of heterarchical governance, in which multiple viewpoints coexist in flexible and dynamic arrangements without a single dominant perspective (Hutter and Stark, 2015).
At Barone Ricasoli, this heterarchical structure does not lead to paralysis or conflict. Instead, it successfully reproduces the dynamics suggested by the theoretical model, validating the robustness of the identified leverage points. These internal divergences generate a productive form of dissonance, encouraging cross-functional dialogue and innovative approaches to sustainability, enabling the company to integrate financial, environmental, and social considerations into strategy, particularly through cost-benefit analyses. This reinforces the idea that materiality, even when not formalised through structured assessments, can function as a practical principle guiding sustainability-related decisions.
Building on these findings, chapters 6 and 7 consolidate the theoretical, methodological, and practical contributions of the research, contemporary acknowledging research limitations and future opportunities and answering to the research question (RQ): “How do different materiality approaches and the tensions between internal and external perspectives on materiality influence the integration of sustainability reporting into decision-making processes and shape sustainability performance in dynamic contexts?”. Also, these chapters position the thesis within the broader literature on sustainability accounting, highlighting how internal dynamics and interpretive flexibility shape the effectiveness of sustainability strategies.
From a theoretical perspective, this thesis increases the system dynamics contribution to the sustainability accounting literature (Giorgino et al., 2020) by offering a systemic perspective on materiality assessment that locates the possible elements of conflicts along a continuum. The model challenges the prevailing literature that sees financial and impact materiality as conflicting (Adams and Abhayawansa, 2022). In this sense, Barone Ricasoli demonstrates how seemingly dissonant perspectives can not only coexist but also be actively used to foster innovation, contributing to the development of a heterarchical structure where the leverage points of the system improve the effectiveness of the sustainability strategy.
In terms of practical contributions, integrating materiality into strategy proved to be an effective policy to improve long-term sustainability performance, producing results comparable to those achieved through greater financial resource allocation. A key condition is to avoid greenwashing practices and maintain high levels of trust among the stakeholders. The Barone Ricasoli case offered examples of strategic integration of these leverages, based on cost-benefit analysis, the use of external funding opportunities and a progressive integration of sustainability in the cash-flow analysis, along with a “naive” approach and an integrated thinking development program to exclude greenwashing risks.
Methodological contributions concern the application of system dynamics to sustainability reporting, offering new paths for integrating both qualitative and quantitative analysis and reaching a multi-level understanding of the complexities involved in sustainability reporting dynamicity. The case study offered insights into how heterarchical systems work and their contribution to internalising sustainability. The complementary use of theoretical modelling and case study analysis merged perspectives that could have seemed distant before the analysis.
In conclusion, this thesis advances the understanding of materiality assessment and sustainability reporting by demonstrating how tensions between financial and impact materiality can be leveraged to drive innovation and improve decision-making. Through a combination of system dynamics analysis and a real-world case study, the research offers both theoretical insights and practical recommendations for how organisations can integrate sustainability into their decision-making processes to enhance their long-term performance and uncover new pathways for strategic development.