From voluntarism to regulation: effects of Directive 2014/95/EU on sustainability reporting in the EU

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Philipp Ottenstein ◽  
Saskia Erben ◽  
Sébastien Jost ◽  
Carl William Weuster ◽  
Henning Zülch
Keyword(s):  
Financial Reporting ◽  
Sustainability Reporting ◽  
Future Research ◽  
Information Quantity ◽  
Content Type ◽  
Listed Firms ◽  
Reporting Practices ◽  
Cross Cultural Differences ◽  
Practical Implications ◽  
The Eu

PurposeThe aim of this paper is to examine the effects of the European Non-financial Reporting Directive (2014/95/EU) on firms' sustainability reporting practices, especially reporting quantity (i.e. availability of information) and quality (i.e. comparability and credibility).Design/methodology/approachTo test the main hypotheses, the authors select 905 treated firms from the EU 28 + 2 countries for a difference-in-differences regression analysis of dependent variables from the Refinitiv ESG database.FindingsThe results suggest that the Directive influences sustainability reporting quantity and quality. Treated firms provide around 4 percentage points more sustainability information (i.e. availability) than propensity score matched control firms and are 19 percent more likely to receive external assurance (i.e. credibility). However, we also find that the Directive is not the decisive factor in the adoption of GRI guidelines (i.e. comparability).Research limitations/implicationsThe analysis is restricted to large listed firms and does not account for small, mid-sized and private firms. Further, cross-cultural differences which influence sustainability reporting are controlled for but not investigated in detail. The authors derive several suggestions for future research related to the NFR Directive and its revision.Practical implicationsThe authors’ findings have practical implications for the future development of sustainability reporting in the EU and for other regulators considering the adoption of sustainability reporting.Originality/valueThis study is the first to provide evidence on the NFR Directive's reporting effects across multiple countries. It adds to the growing literature on the consequences of mandatory sustainability reporting. Additionally, this paper introduces a novel measurement approach sustainability information quantity that could benefit researchers.

scholarly journals Double materiality and the shift from non-financial to European sustainability reporting: review, outlook and implications

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Josef Baumüller ◽  
Karina Sopp
Keyword(s):  
Corporate Sustainability ◽  
Sustainability Reporting ◽  
Future Research ◽  
Content Type ◽  
Corporate Reporting ◽  
Stakeholder Groups ◽  
Reporting Requirements ◽  
Historic Development ◽  
Practical Implications ◽  
The Eu

PurposeThis paper outlines the development of the principle of materiality in the European accounting framework, from the Modernization Directive (2003/51/EC) to the NFI Directive (2014/95/EU) and on to the proposals for a Corporate Sustainability Reporting (CSR) Directive (2021/0104 (COD)). The authors highlight how the requirements for corporate reporting in terms of sustainability matters have changed, underlining the main issues that require further attention by practitioners, researchers and legislators.Design/methodology/approachThis paper is based upon a historic analysis of European Union (EU) regulations in the field of non-financial and sustainability reporting and how these have changed over time. A conceptual comparison of different reporting concepts is presented, and changes in their relevance to the EU accounting framework are discussed as part of the historic analysis. Implications from corporate practice are derived from previous empirical findings from the EU Commission's consultations.FindingsThe proposed change from non-financial to sustainability reporting within the EU affects more than simply the terminology used. It implies that a different understanding is needed of both the purposes of company reporting on sustainability matters and the aims of carrying out such reporting. This change was driven by the need and desire to appropriately interpret the principle of materiality set forth in the NFI Directive. However, the recent redefinition in the shift within the EU Commission's proposals presents considerable challenges–and costs–in practice.Research limitations/implicationsFuture research on the conceptualization and operationalization of ecological and social materiality, as well as on the use of this information by different stakeholder groups, is necessary in order to (a) help companies that are applying the reporting requirements in practice, (b) support the increased harmonization of the reports published by these companies and (c) fully assess the costs and benefits associated with the increase in reporting requirements for these companies.Practical implicationsCompanies have to establish relevant reporting processes, systems and formats to fulfil the increasing number of reporting requirements.Originality/valueThis paper outlines the historic development of the principle of materiality regarding mandatory non-financial or sustainability reporting within the EU. It outlines a shift in rationales and political priorities as well as in implications for European companies that need to fulfil the reporting requirements. In consequence, it describes appropriate interpretations of this principle of materiality under current and upcoming legislation, enabling users to apply this principle more effectively.

scholarly journals Unemployment and spell duration during the Great Recession in the EU

2015 ◽  
Vol 36 (2) ◽  
pp. 216-235 ◽  
Author(s):  
Carlos Gradín ◽  
Olga Cantó ◽  
Coral del Río
Keyword(s):  
Great Recession ◽  
Negative Impact ◽  
Labour Force ◽  
Future Research ◽  
Cross Sectional ◽  
Content Type ◽  
The Great Recession ◽  
Unemployment Spells ◽  
Practical Implications ◽  
The Eu

Purpose – The purpose of this paper is to analyze the different dynamic characteristics of unemployment in a selected group of European Union countries during the current Great Recession, which had unequal consequences on employment depending on the country considered. Design/methodology/approach – The paper follows Shorrocks’s proposal of a duration-sensitive measure of unemployment, and uses cross-sectional data reported by Eurostat coming from European Labour Force Surveys. Findings – The results add some evidence on the relevance of incorporating spells’ duration in measuring unemployment, finding remarkable differences in unemployment patterns in time among European countries. Research limitations/implications – In this paper unemployment is analyzed for all the labor force. Future research should investigate patterns across specific groups such as young people, women, immigrants or the low skilled. Practical implications – It is generally accepted that the negative impact of unemployment on individual welfare can be very different depending on its duration. However, conventional statistics on unemployment do not adequately capture to what extent the recession is not only increasing the incidence of unemployment but also its severity in terms of duration in time of ongoing unemployment spells. The paper shows an easy and practical way to do it in order to improve the understanding of the unemployment phenomenon, using information usually reported by statistical offices. Originality/value – First, the paper provides a tool for dynamic analysis of unemployment based on reported cross-sectional data. Second, the paper demonstrates the empirical relevance of considering spells’ duration when assessing differences in unemployment across countries or in unemployment trends. This is usually neglected or only partially addressed by most conventional measures of unemployment.

scholarly journals The effect of Islamic values on voluntary corporate governance disclosure

2017 ◽  
Vol 8 (2) ◽  
pp. 182-202 ◽  
Author(s):  
Waleed M. Albassam ◽  
Collins G. Ntim
Keyword(s):  
Corporate Governance ◽  
Fixed Effects ◽  
Future Research ◽  
Government Ownership ◽  
Firm Level ◽  
Content Type ◽  
Listed Firms ◽  
Alternative Measures ◽  
Islamic Values ◽  
Practical Implications

Purpose The study aims to examine the effect of Islamic values on the extent of voluntary corporate governance (CG) disclosure. In addition, the authors investigate the effect of traditional ownership structure and CG mechanisms on the extent of voluntary CG disclosure. Design/methodology/approach The authors distinctively construct Islamic values and voluntary CG disclosure indices using a sample of 75 Saudi-listed firms over a seven-year period in conducting multivariate regressions of the effect of Islamic values on the extent of voluntary CG disclosure. The analyses are robust to controlling for firm-level characteristics, fixed-effects, endogeneities and alternative measures. Findings The authors find that corporations that depict greater commitment towards incorporating Islamic values into their operations through high Islamic values disclosure index score engage in higher voluntary CG disclosures than those that are not. Additionally, the authors find that audit firm size, board size, government ownership, institutional ownership and the presence of a CG committee are positively associated with the level of voluntary CG disclosure, whereas block ownership is negatively associated with the extent of voluntary CG disclosure. Practical implications The study has clear practical implications for future research, practice and broader society by demonstrating empirically that corporations that voluntarily incorporate Islamic values into their operations are more likely to be transparent about their CG practices and thereby providing new crucial insights on the effect of Islamic values on voluntary CG compliance and disclosure. Originality/value This is the first empirical attempt at explicitly examining the effect of Islamic values on the extent of voluntary CG disclosure. The authors also offer evidence on the effect of traditional CG and ownership structures on the extent of voluntary CG disclosure.

Rebuilding trust: sustainability and non-financial reporting and the European Union regulation

2020 ◽  
Vol 28 (5) ◽  
pp. 701-725
Author(s):  
Matteo La Torre ◽  
Svetlana Sabelfeld ◽  
Marita Blomkvist ◽  
John Dumay
Keyword(s):  
European Union ◽  
Financial Reporting ◽  
Future Research ◽  
The European Union ◽  
Special Issue ◽  
Accounting Systems ◽  
Content Type ◽  
Research And Practice ◽  
Eu Directive ◽  
The Eu

Purpose This paper introduces the special issue “Rebuilding trust: Sustainability and non-financial reporting, and the European Union regulation”. Inspired by the studies published in the special issue, this study aims to examine the concept of accountability within the context of the European Union (EU) Directive on non-financial disclosure (hereafter the EU Directive) to offer a critique and a novel perspective for future research into mandatory non-financial reporting (NFR) and to advance future practice and policy. Design/methodology/approach The authors review the papers published in this special issue and other contemporary studies on the topic of NFR and the EU Directive. Findings Accountability is a fundamental concept for building trust in the corporate reporting context and emerges as a common topic linking contemporary studies on the EU Directive. While the EU Directive acknowledges the role of accountability in the reporting practice, this study argues that regulation and practice on NFR needs to move away from an accounting-based conception of accountability to promote accountability-based accounting practices (Dillard and Vinnari, 2019). By analysing the links between trust, accountability and accounting and reporting, the authors claim the need to examine and rethink the inscription of interests into non-financial information (NFI) and its materiality. Hence, this study encourages research and practice to broaden mandatory NFR practice over the traditional boundaries of accountability, reporting and formal accounting systems. Research limitations/implications Considering the challenges posed by the COVID-19 crisis, this study calls for further research to investigate the dialogical accountability underpinning NFR in practice to avoid the trap of focusing on accounting changes regardless of accountability. The authors advocate that what is needed is more timely NFI that develops a dialogue between companies, investors, national regulators, the EU and civil society, not more untimely standalone reporting that has most likely lost its relevance and materiality by the time it is issued to users. Originality/value By highlighting accountability issues in the context of mandatory NFR and its linkages with trust, this study lays out a case for moving the focus of research and practice from accounting-based regulations towards accountability-driven accounting change.

Towards a sustainability reporting guideline in higher education

2018 ◽  
Vol 19 (2) ◽  
pp. 218-232 ◽  
Author(s):  
Sandra Huber ◽  
Alexander Bassen
Keyword(s):  
Higher Education ◽  
Financial Reporting ◽  
Early Stage ◽  
Sustainability Reporting ◽  
Point Of View ◽  
Reporting Guideline ◽  
Content Type ◽  
Reporting Framework ◽  
Further Development ◽  
Practical Implications

Purpose So far, sustainability reporting in higher education is in a very early stage – partly, because of the lack of an established and widely recognized sustainability reporting framework for higher education institutions (HEIs). Therefore, a modification of the sustainability code for the use in the higher education context was recently developed in Germany. The purpose of this paper is to evaluate this modification from an academic point of view. Design/methodology/approach The evaluation of the sustainability code is based on selected reporting principles drawn from frameworks of sustainability and financial reporting. Findings The evaluation shows that to a large extent, the modification of the sustainability code for HEIs contributes to the fulfillment of the selected reporting principles. However, it also became evident that there is still room for improvement, especially in terms of clarity and the inclusion of material aspects. Practical implications The need for an implementation manual regarding the modified HEI-specific sustainability code is emphasized, as the sustainability code requires further clarification to be manageable for HEIs. Originality/value This paper provides suggestions for the further development of a sustainability reporting guideline for HEIs to enhance its alignment with both sustainability reporting principles and the needs of HEIs.

scholarly journals An empirical study of sustainability reporting assurance: current trends and new insights

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kholod Fahad Alsahali ◽  
Ricardo Malagueño
Keyword(s):  
Sustainability Reporting ◽  
Future Research ◽  
Firm Level ◽  
Accounting Firms ◽  
Content Type ◽  
Global Trends ◽  
Current Trends ◽  
Consulting Firms ◽  
Sustainability Reports ◽  
Practical Implications

Purpose This study aims to examine trends in the global assurance practices of sustainability reports, updating and broaden the extant literature and proving new insights that could guide future research. Design/methodology/approach The data were collected for 12,783 companies and exploratory descriptive analyses of sustainability reporting assurance practices were undertaken. Findings The study shows that assurance growth is lagging behind the growth in sustainability reporting. It reveals that assurer switching is a common practice amongst companies. There is an increasing trend towards the use of the International Standard for Assurance Engagements 3000 by non-accounting assurers. Additionally, in terms of assurance providers, the study finds that accounting firms are dominating the market, however, engineering firms are fast increasing their share of the sustainability assurance market, whilst consulting firms’ share is decreasing. However, the switch towards consulting firms is higher than the switch towards accounting firms in the last switch period. Practical implications Overall, the results of this study provide insights about companies’ assurance practices for regulators, assurance providers and companies interested in assuring their sustainability reports. Social implications This study is relevant for companies’ stakeholders, including investors, to enhance their understanding of companies’ current assurance practices. Originality/value Prior studies on the assurance practices of sustainability reports are limited in scope (concentrate on large companies) and depth (examine accounting vs non-accounting assures and consider the evolving patterns at the institutional rather than firm-level). This study presents developments and trajectories of assurance practices to inform researchers and practitioners on the global trends by bringing an updated and broader perspective on the topic.

Communicating corporate social responsibility (CSR) in the coffee industry

2018 ◽  
Vol 9 (2) ◽  
pp. 139-164 ◽  
Author(s):  
Oliver James Bradley ◽  
Gloria Oforiwaa Botchway
Keyword(s):  
Vertical Integration ◽  
Sustainability Reporting ◽  
Sustainability Indicators ◽  
Content Type ◽  
Reporting Practices ◽  
Single Use ◽  
Systematic Development ◽  
Sustainability Challenges ◽  
Corporate Social ◽  
Practical Implications

PurposeThe purpose of this paper is to identify the sustainability indicators disclosed by ten British Coffee Association corporate members in their sustainability reporting and examine whether the indicators correspond to the sustainability challenges faced by the coffee industry, as identified in the literature.Design/methodology/approachA normative account of sustainability challenges was developed based on a review of extant literature. A content analysis of the sustainability reports and/or Webpages of the companies was conducted to identify quantitative and qualitative sustainability indicators. Frequency and thematic analysis enabled the subsequent examination.FindingsA total of 94 sustainability indicators (44 environmental, 30 social and 20 economic) were identified in company reporting. The indicators correspond to the sustainability challenges identified in the literature. In addition to broad challenges, indicators are used to communicate specific issues. A significant number (47) of single-use indicators were identified, communicating less frequently reported challenges. Some companies account for sustainability from bean to cup, attributed to crucial differences in organisational characteristics (degree of vertical integration). Furthermore, the findings highlight the discretionary nature of sustainability reporting, finding considerable variance in indicators disclosed.Research limitations/implicationsAs this paper relies on self-reported corporate disclosures, it critically examines the reporting practices of organisations, as opposed to verifying the activities associated with their claims. The authors minimised subjectivity by reducing the interpretation of what constituted “an indicator” using a clearly agreed definition and multiple rounds of coding.Practical implicationsThis paper examines the reporting practices of organisations, providing a useful insight and a competitor benchmark. By comprehensively examining the sustainability challenges faced by the coffee industry, it offers “sustainability context” that can be used by organisations to improve their accounting and reporting practices.Social implicationsThis paper acknowledges and addresses social initiatives that call for the systematic development of practical and appropriate sustainability indicators that can become embedded in policy and decision-making, affecting the measurement of progress and responses to important sustainability challenges.Originality/valueThis paper presents the first systematic review of sustainability indicator disclosure in an industry that faces significant sustainability challenges.

Impression management tactics in sustainability reporting

2015 ◽  
Vol 11 (4) ◽  
pp. 677-689 ◽  
Author(s):  
Maria Sandberg ◽  
Maria Holmlund
Keyword(s):  
Impression Management ◽  
Design Methodology ◽  
Sustainability Reporting ◽  
Future Research ◽  
Content Type ◽  
Template Analysis ◽  
Impression Management Tactics ◽  
Practical Implications ◽  
Insight Into ◽  
Management Tactics

Purpose – The study aims to analyzes how companies present their actions to give the impression that they are sustainable actors. It identifies the organizational impression management tactics that companies use in sustainability reporting. Design/methodology/approach – A qualitative template analysis of two sustainability reports was conducted to inductively identify the organizational impression management tactics that companies use in sustainability reporting. Findings – The study identified eight organizational impression management tactics used in sustainability reporting, four of which relate to how companies present their actions while the remaining four are characteristic of the writing styles that companies use. Research limitations/implications – The study is exploratory in nature and does not claim to identify all existing impression management tactics. Therefore, future research is needed to confirm the results and identify possible additional tactics. Practical implications – Companies can use impression management tactics that more strongly aim to shape the impressions that stakeholders hold or tactics that more neutrally inform stakeholders of their actions. Companies need to make a choice between the two, considering that stakeholders’ expectations of sustainability reporting would be useful. Originality/value – The study shows the different ways that companies use impression management in sustainability reporting, thus lending insight into a perspective on sustainability reporting that has rarely been explored in previous research.

scholarly journals Banking on bullshit: indifferences towards truth in corporate social responsibility

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
David M. Herold ◽  
Timo Dietrich ◽  
Tim Breitbarth
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Reporting ◽  
Design Methodology ◽  
Banking Sector ◽  
Future Research ◽  
Corporate Communications ◽  
Content Type ◽  
Corporate Social ◽  
Practical Implications

PurposeThis study aims to identify and deconstruct bullshit in banks' corporate social responsibility (CSR) communication to advance the management rhetoric research space, which has been characterised by an indifference to truth and meaning.Design/methodology/approachWe provide a typology of bullshit phenomena overview in the banking sector and follow the McCarthy et al.'s (2020) C.R.A.P. framework from to showcase how bullshit can be comprehended, recognised, acted against and prevented.FindingsThis paper puts a spotlight on written and spoken language to detect bullshit in banks' CSR statements. It provides actionable insights into how stakeholders can act against and prevent bullshit statements from occurring in the future.Research limitations/implicationsFuture research is warranted to assess the use of still imagery, events and video materials in corporate communications and non-financial reporting. Further rigorous assessment of actual CSR initiatives must be undertaken to assess claimed contributions.Practical implicationsMonitoring mechanisms and independent assurance statements prepared by authorised third parties may strengthen the motivation and ethicality of CSR activities.Originality/valueThis viewpoint is the first to follow the C.R.A.P framework and critically assess indifferences towards truth in banks' CSR communications.

Developing a GRI-G4-based persuasive communication framework for sustainability reporting (SR)

2018 ◽  
Vol 13 (1) ◽  
pp. 136-161 ◽  
Author(s):  
Ranjan Kumar ◽  
Neerja Pande ◽  
Shamama Afreen
Keyword(s):  
Financial Reporting ◽  
Banking Sector ◽  
Sustainability Reporting ◽  
Persuasive Communication ◽  
Global Reporting Initiative ◽  
Sustainability Metrics ◽  
Content Type ◽  
Reporting Practices ◽  
Communication Framework ◽  
Indian Banks

Purpose The purpose of this paper is to critically examine sustainability reporting (SR) practices of top 10 Indian banks, on parameters derived from a Global Reporting Initiative (GRI)-G4-based persuasive communication framework. Design/methodology/approach SR metrics from GRI-G4 guidelines were mapped to persuasive communication parameters to develop a blended analytical framework. Content analysis (CA) technique was used to assess SR of top 10 banks on this framework. Findings The study has three key findings. First, most of the top 10 Indian banks are yet to adopt adequate disclosure and transparency practices in SR. Second, even though environmental and social goals are broadly reported, there are glaring omissions on metrics like “equal remuneration,” “occupational health and safety” and “customer privacy.” Third, stakeholder engagement focus is weak as reflected in low persuasive appeal of SR content of most banks. Research limitations/implications The blended framework provides a theoretical and analytical pathway for operationalizing the sustainability context principle, which has been inadequately addressed even within the GRI framework implementation. Practical implications The paper provides a “health check” and identifies “red flags” in SR of top 10 Indian banks, enabling them to undertake a critical review of their sustainability metrics and reporting practices. Social implications The paper establishes the significance of evaluating non-financial reporting practices addressing broader sustainability metrics in the banking sector, in an emerging economy context. Originality/value This paper develops a GRI-G4-based persuasive communication framework for SR assessment, and conducts an evaluation of top 10 Indian banks using CA technique.

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