Assessing the Effects of Directive 2014/95/EU on Nonfinancial Information Reporting: Evidence from Italian and Spanish Listed Companies

Abstract

This paper explored the effects of new regulation on the disclosure of NFI in two European countries, Italy and Spain. The method used to develop the analysis is mainly qualitative. Content analysis was performed to verify the sustainability indicators disclosed by Italian and Spanish companies, listed on the FTSE MIB and IBEX 35 Indexes, before and after the Directive’s publication and implementation in national legislation. The level of NFI disclosure was scored using a disclosure index. The comparative analysis found a progressive reduction in disclosure levels for Italian companies compared with Spanish companies, for which an expansion of the disclosure was detected. Moreover, a reduced gap between the quantity of NFI reported in the two countries was found. This is one of the few studies to use a 3-year longitudinal analysis to investigate the EU Directive’s impact at the cross-country level.

How does the European Green Deal affect the disclosure of environmental information?

“…On the other hand, the fact that Directive 2014/95/EU, despite its great relevance, as it constituted the first impulse to regulate the disclosure of information on sustainability in the EU, has less relative influence may be because it is a proposal based on principles, the use of the comply or explain principle, and the absence of specific requirements, including the lack of a clear definition of the concept of materiality, or how it is transposed into the national legislation of the Member States (Beerbaum, 2021; Caputo et al, 2021; Carmo & Ribeiro, 2022; Matuszak & Różańska, 2021; Posadas & Tarquinio, 2021). To this, we must add that the Directive refers general sustainability information, including environmental and social issues and those related to governance.…”

“…Several authors highlight the influence of the characteristics of the company (size and activity sector) and the particularities of each country's regulatory framework on the degree of response to regulation (Caputo et al, 2020;Ferrer et al, 2020;García-Benau et al, 2022;Sierra-Garcia et al, 2018). It has also been observed that the existence of previous legislation at the national level on disclosure of environmental information and the previous experience of the company in disclosure of information on sustainability affect compliance with Directive 2014/95/EU (Carmo & Ribeiro, 2022;García-Sánchez, Sierra-García, & García-Benau, 2022;Lippai-Makra et al, 2022;Mion & Loza Adaui, 2019;Posadas & Tarquinio, 2021). Future studies could address these aspects.…”

Institutional isomorphism under the test of Non-financial Reporting Directive. Evidence from Italy and Spain

“…Using a methodology adopted in the literature dealing with sustainability reporting (Romero et al, 2019;Michelon et al, 2015;Beretta and Bozzolan, 2004), we create a quality index based on the content analysis of sustainability information disclosed by Italian (years 2013Italian (years , 2016Italian (years and 2017 and Spanish listed companies (years 2013, 2017 and 2018). We consider different years given the different timing of the EU Directive transposition into Italian and Spanish law (Posadas and Tarquinio, 2021). Our results highlight that normative and mimetic mechanisms positively affect the quality of sustainability information.…”

Does the Directive of the European Union on disclosure of non-financial and diversity information improve reporting?

“…Moreover, several studies have already examined the effects of ED (Caputo et al, 2019;Mion and Loza Adaui, 2019;Nicolò et al, 2020;Agostini et al, 2021;Korca et al, 2021;Matuszak and R ozanska, 2021;Posadas and Tarquinio, 2021;Carmo and Ribeiro, 2022;Lippai-Makra et al, 2022). However, all such studies analyze the effects of the directive only in selected countries or sectors, or only consider a specific aspect of the directive.…”

“…As far as we know, such an investigation has not yet been carried out in this field and thus provides novel evidence. Existing studies in this context have either examined only selected countries (Mion and Loza Adaui, 2019;Caputo et al, 2019;Agostini et al, 2021;Korca et al, 2021;Matuszak and R ozanska, 2021;Posadas and Tarquinio, 2021;Carmo and Ribeiro, 2022;Lippai-Makra et al, 2022), sectors or industries (Nicolò et al, 2020;Korca et al, 2021) or specific areas of the directive (Agostini et al, 2021) and thus do not allow for a conclusive answer. Furthermore, it uses the Global Reporting Initiative (GRI) framework, the most widely used NFR framework worldwide (KPMG, 2022), as a basis for evaluating the improvement by European Union assigning the individual GRI indicators to the information required by the directive.…”