Drawing on institutional and signaling theories, this paper investigates country‐and firm‐level impact of Sustainable Development Goals (SDGs) on the European Union (EU) companies' decision to have ...sustainability reporting assured prior to the implementation of the Corporate Sustainability Reporting Directive (CSRD). The dataset consists of 960 companies based in the EU and covers 2020–2022. The total number of observations equals 2880. The research focuses on SDGs‐related factors influencing companies' assurance decisions such as the countries' advancement in SDGs implementation represented by SDG SCORE and companies' efforts toward the SDGs achievement captured with SDG INDEX. The data are analyzed using descriptive statistics and the fixed effects regression model for panel data. The results of the study indicate that SDGs impact companies' assurance decisions on both levels. Larger companies tend to opt for assuring their sustainability reporting more frequently, while those operating in environmentally sensitive industries display greater hesitancy in this regard. The research findings suggest adding SDGs to the wide range of factors identified in previous literature as determinants of the differences in sustainability reporting assurance. Company managers should increase their efforts to achieve the SDGs, as this might promote the use of assurance. The involvement of government agencies, national accounting and auditing associations and standard setters in the implementation of the SDGs can be useful in facilitating the transition from voluntary to mandatory implementation of assurance under the new CSRD.
Within the 2030 Agenda, the United Nations have explicitly required that the Member States introduce within their jurisdictions new forms of regulations about non‐financial reporting practices. The ...aim of this paper is to investigate the effects related to the transposition of Directive 2014/95/EU by analyzing firm‐level, governance‐level, and report‐level determinants of business reporting on the Sustainable Development Goals (SDGs). To conduct such an analysis, this study defines and introduces the SDG Reporting Score (SRS)—a qualitative proxy representing a firm orientation toward SDG reporting. The study sample includes the non‐financial reports of 153 Italian Public Interest Entities. The results show a positive relationship between a firm's SRS and various determinants, such as the presence of independent directors on the board, expertise with non‐financial reporting, and length of the report. Finally, the highest levels of SRS are achieved by firms operating in environmental sensitive sectors.
This study explores the impact of the implementation of Directive 2014/95/EU on the comparability of non-financial information across listed European firms, focusing on the usage of non-financial ...reporting (NFR) frameworks - those developed by the SASB, IIRC, OECD, EFFAS, GRI, UNGC, ISO, AA, and FEE. Using computer-aided text-analysis software (MAXQDA 2022), we analysed the annual reports and stand-alone non-financial (sustainability) reports from listed firms in the STOXX Europe 600 Index covering 2012-2020. The results showed that the implementation of the Directive led to an increase in the use of investor-oriented NFR frameworks (e.g. that of the SASB); frameworks oriented towards a wide range of stakeholders (e.g. GRI) are predominantly used by voluntary adopters. Furthermore, although disclosures by resisters (mandatory adopters) indicate a stronger focus on investors, the disclosure of non-financial information exacerbated information asymmetry for resisters, whereas NFR mitigated information asymmetry for voluntary adopters.
ABSTRACT
We investigate real effects of a widespread corporate social responsibility (CSR) reporting mandate. In 2014, the European Union (EU) passed Directive 2014/95 (hereafter, “CSR Directive”), ...mandating large listed EU firms to prepare annual nonfinancial reports beginning from fiscal year 2017 onward. We document that firms within the scope of the directive respond by increasing their CSR activities and that they start doing so before the entry‐into‐force of the directive. These real effects are concentrated in firms that are plausibly more strongly affected by the directive, that is, those with previously low levels of both CSR reporting and CSR activities. Using various alternative outcome variables (e.g., new CSR initiatives, improvements in CSR infrastructure, or firm performance), we show that these real effects reflect meaningful increases in CSR beyond firms’ potential attempts to “greenwash” CSR performance. Finally, we conduct tests that increase our confidence that the documented real effects are attributable to the CSR Directive and not general EU trends in CSR.
Evaluating the determinants of environmental, social and governance (ESG) score is significant for topic for academics and regulators and companies. Despite its importance, little attention has been ...paid to non‐financial strategy disclosure and how to communicate non‐financial information. However, in the recent years, attention to the topic has considerably increased as demonstrated, in the European context, by the introduction of the non‐financial reporting directive in 2014. Therefore, it is important to analyse how the quantity and quality of disclosure influence the ESG score. To explore this relationship, a configurational analysis aimed at 31 Italian listed companies was studied by fuzzy‐set qualitative comparative analysis. The results showed that there were three path types driving the ESG score and that integrated reporting played a highly significant role in promoting a high ESG score. Specifically, we show the importance of assessing the combinations of quality and quantity disclosures for ESG score through configurational thinking. These results provide a first theoretical basis for the effectiveness of disclosure measurements on ESG score, charting the future direction for environmental management studies.
Based on the legitimacy theory, the study enhances the understanding of disclosure practices of European companies operating in the energy sector regarding the adherence to Sustainable Development ...Goals (SDGs). Toward this end, the study analyses how SDGs reporting is evolving and what are the most addressed SDGs in the context of European energy sector companies. The paper's ultimate contribution is to dive deep into how such companies disclose their contributions to the SDGs to determine whether they adopt a substantive or merely symbolic approach to corporate legitimacy. To address the research objectives, a content analysis has been performed on non‐financial reports published by a sample of 15 European energy sector companies included in the Global Reporting Initiative database as SDGs reporters for the period 2017–2019. Our findings suggest that while SDGs are becoming an integral part of corporate disclosure, symbolic rather than substantial changes appear to prevail, calling for actions from legislators and policy‐makers.
In this paper we conceptually identify the gap in the literature about lack of business's awareness in non ‐financial activities, especially biodiversity, which can be responsible for crisis like ...Covid‐19 which can adversely affect the global economy. We recommend approaches to existing business about how to enhance the quality of reporting by considering non‐human element in reporting and making it more comprehensive for the stakeholders. We adopt Actor Network Theory (ANT) and the Natural Inventory Model to support our argument that nature consists of both human and non‐human. From our observation about the Covid‐19 crisis and by consulting the existing relevant literature on CSR, Covid‐19, non‐financial reporting and integrated reports (IR), we propose the implication of non‐financial reporting by companies based on a theoretical framework. We recommend that companies should implement/adopt Circular Economy concept for sustainable business model and report on biodiversity and extinction accounting in more structured and mandatory way via producing IR to create value on short, medium and long terms. This is the first paper to tackle the Covid‐19 crisis and offer solution for future reporting. The findings will add value in the academia and society.
In response to recent calls about the need to improve the current understanding of what drives SDG reporting, this paper analyzes the individual and joint effect of a broad array of factors on the ...integration of the sustainable development goals (SDGs) into the non‐financial information system. Using a sample made up of 1535 international companies for the period 2015–2017, we examine the extent to which both external and internal factors affect SDG reporting as well as the role played by two influential actors in corporate decision‐making (i.e., the CEO and the board of directors) in promoting this disclosure strategy. The results indicate that institutional pressures at the country level, firm size and incentives associated with the monitoring of financial analysts and the demands of investors, together with the specialisation and size of the board of directors are, in this order, drive the level of integration of the SDGs into the non‐financial information system. In the absence of these factors, the training of the CEO in sustainability issues is the main determinant of SDG reporting.
Environment, social, and governance (ESG) reporting guidelines are institutional rules that can enhance the credibility of firms' publicly disclosed information related to ESG. Reporting is often ...voluntary and global ESG reporting guidelines typically rely on process‐focused third party verification. However, in developing its reporting guidelines, the Japanese government gave firms the unusual option of pursuing either process‐ or content‐focused verification. This paper draws on the unique Japanese setting to examine whether firms that use ESG reporting guidelines increase their quantity of disclosed sustainability information. Furthermore, it assesses whether, given the option, (1) firms tend to pursue process‐ or content‐focused verification, and (2) which type of verification leads to greater information disclosure. We show that firms that follow ESG guidelines disclose 39% more sustainability information compared to firms that publish sustainability reports but do not follow ESG reporting guidelines. Content‐focused verification leads to greater information disclosure than process‐focused verification in that firms publish 23% more text in their sustainability reports. Moreover, given the option, firms prefer to use content‐ over process‐focused verification. However, most global ESG reporting guidelines endorse process‐focused verification and this verification is less effective than content‐focused verification at encouraging firms' information disclosure. Our findings raise a timely and relevant question about the movement by global ESG standard developers to promote process‐ rather than content‐focused verification. They also suggest that firms that wish to create sustainability distinction by way of ESG reporting may benefit by advocating for more robust forms of verification.
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