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

Abstract

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.

The stakeholder engagement in the European banks: Regulation versus governance. What changes after the NF directive?

“…Unfortunately the first version of the EU Directive does not identify the concept of materiality and/or the stakeholder engagement process. Nevertheless, considering that the non-financial information to be disclosed must follow the standards and guidelines already existent, companies that choose to adopt the GRI standard, as evidenced mostly in previous studies, disclose also the process of stakeholder engagement, according to the principle of materiality (La Torre et al, 2020).…”

Sustainability Reporting in the Public Realm—Trends and Patterns in Knowledge Development

“…Finally, the sustainability reporting in the public sector, regardless of the particular area approached or the choice of a reporting format, was mainly explained through the accountability concept [5,8,35,58,61,65] and specific theories, namely stakeholder [11,37,66], legitimacy [11,12,51,52,62] and institutional theory [12,51]. These results are consistent with prior literature [6,17], concluding that sustainability reporting evolved under high institutional pressure driven by both the desire to answer stakeholders' demand for greater accountability and transparency, and the willingness to meet their expectations for increasing legitimacy and reputation.…”

Axes of a multidisciplinary model for sustainable innovation: Life transition after COVID-19

“…Axes of a multidisciplinary model for sustainable innovation: Life transition after COVID-19 | 1-17 Dynamic equilibrium. From various perspectives, dynamic equilibrium is an operational condition within a system (Ben-Eli, 2018;Binder et al, 2020;La Torre et al;van Barneveld et al, 2020;Wolff, 2020;Zabaniotou, 2020). Under this context, by building the model that encompasses sustainability, we took the broader aspect of general system theory: cybernetics.…”