Corporate Governance and the Quality of Materiality Assessment Disclosure Under GRI 3: Evidence From Italy

Abstract

This study explores the link between corporate governance and the quality of Materiality Assessment Disclosure (MAD) in sustainability reporting. Based on Agency Theory and the debate over substantive versus symbolic governance, it analyses 138 Italian firms subject to Legislative Decree 254/2016 that published their 2023 Non‐Financial Statements before the mandatory ESRS adoption. The study develops a MAD index aligned with GRI 3 (2021) to assess impact identification, evaluation, and governance. Results indicate that governance mechanisms embedded within strategic decision‐making processes, such as board sustainability committees and ESG‐linked incentives, are correlated with higher MAD quality, unlike standalone structures. By operationalising GRI 3 impact criteria into a replicable measure, this research extends prior studies and provides empirical evidence on governance configurations and materiality in the Italian pre‐CSRD context. The findings have implications for firms, investors, and policymakers aiming to improve transparency and governance in sustainability reporting.