European Financial Services SMEs: Language in Their Sustainability Reporting

Abstract

In this study we concentrate on the segment of small companies in the financial sector in Europe. Services in this sector are developing rapidly and are not necessarily provided only by traditional banks and financial companies. Many nonfinancial companies provide financial services, and this may open the sector to additional risk. In this context, the aspects of both financial and nonfinancial reporting are important and need to be taken into consideration as a whole to provide a complex picture of a particular institution. The goal of this paper is to analyze sustainability reporting according to the Global Reporting Initiative (GRI) by European financial services small and medium-sized enterprises (SMEs). First, we conducted a descriptive analysis of the features of nonfinancial information and its assurance, studying a sample of all European SMEs reporting according to the GRI from 2016 to 2018. Then, we chose only financial services SMEs to apply lexical analysis to their narrative reporting based on a corpus of 102,056 words. We conclude that nonfinancial information does not have the same importance as traditional financial information, and this sustainability reporting only complies with the minimum requirements. Thus, there is still a long way to go in this field.

Exploration of small and medium entities' actions on sustainability practices and their implications for a greener economy

“…Evidence from SMEs in the manufacturing sector in New Zealand suggests that owners' positive attitude and awareness of environmental activities do not necessarily translate into a better engagement with quality environmental practices, especially in waste management (Cassells and Lewis, 2011). This evidence is consistent with the findings of a recent study that analyses the sustainability reports of SMEs operating in the European Financial sector prepared following the GRI standards (Ortiz-Martinez and Marin-Hernandez, 2020). They find that the SMEs sustainability report narratives are weak and not extensive, thus, there is the problem of a lack of valuable content in SMEs sustainability reporting.…”

Corporate Sustainability Reporting Directive (CSRD) and His Future Application Scenario for Italian SMEs

“…The question that arises is whether SMEs that successfully integrate sustainable practices are better equipped to handle the overload or whether, conversely, sustainability demands create an additional layer of complexity with the risk associated with the dissemination of incorrect or unreliable information (Arena & Azzone, 2012). The simplest answer is to turn to external support to comply with the required information obligations (Ortiz-Martínez & Marín-Hernández, 2020). This solution, however, would create only a partial benefit, nullifying an individual organization's awareness and responsibility for sustainability and ethics (Ortiz-Martínez & Marín-Hernández, 2022).…”