Directive 2014/95/EU: Are Italian Companies Already Compliant?

Abstract

According to Directive 2014/95/EU on disclosure of non-financial information from 2017 onwards, large companies (exceeding 500 employees) headquartered in Member States will be required to provide a series of social, environmental, and governance statements. The Directive was transposed into Italian law by Legislative Decree 254 of 30 December 2016.The aim of this paper is to evaluate the information gap for Italian companies and, consequently, the adjustments required by the new Directive on non-financial information. In order to analyze the level of non-financial and diversity disclosure, we created an assessment model called "Non-financial information score", which records the required information as a percentage. We apply it to a sample of 223 large companies. The results (with an average NFI score of about 49%) show that, in spite of what has previously emerged in the European debate about the application of the Directive on the part of large companies, an information gap remains, although the implementation of the directive should help to fill it in the coming years. In this sense, the potential contribution of the EU directive to non-financial disclosure in Italy appears to be greater than we had expected. Thus, in accordance with the literature, this paper appears to confirm the role of regulation in improving the quality of disclosure of non-financial information.

CSR Disclosure in Polish-Listed Companies in the Light of Directive 2014/95/EU Requirements: Empirical Evidence

“…The largest difference concerns certain categories, such as human rights and anti-corruption. Our finding is consistent with Italian evidence [19], which indicated that the quality of non-financial information disclosure is much higher in voluntary CSR reports than in mandatory annual reports.…”

“…According to the new regulations, only some non-financial information may by omitted, being exceptions rather than the general rule. The results of the research allow us to state that the level of compliance of Polish companies is low compared to that of Italian companies, which show an average non-financial information score of about 49% [19].…”

“…Cronbach's alpha coefficient indicated very high reliability of our CSR measurement concept. We believe that our instrument enriches the literature examining content analysis of CSR disclosures, due to it having a different construction to those proposed in the literature [19,37].…”

“…Nowadays, companies already report about CSR activities on a voluntary basis, but research on sustainable disclosure [47] has pointed to an increasing incompleteness in the information reported. Moreover, an information gap in this matter still exists in EU member states [19]. Thus, it is possible that the new CSR reporting requirements will affect PIEs, as they have not yet disclosed necessary non-financial information.…”

“…The relevant exemption in this matter is one study [19] which was conducted in Italy. The results show that there is still an important information gap that needs to be filled even among large entities.…”