The revision of nonfinancial reporting directive: A critical lens on the comparability principle

Abstract

The launch of the European New Green Deal represents a strategic plan developed in Europe to favor the transition to more sustainable business models. One of the main initiative is represented by the revision of the Directive 95/2014/EU. This revision came in response to several criticisms of the directive's application to European Public Interest Entities, including the low degree of comparability that characterize the resulting nonfinancial declarations. This research paper analyzes how 70 Italian PIEs adhere to the comparability principle when preparing their nonfinancial declarations. Furthermore, a difference-indifferences analysis has been performed to assess the impacts of Directive 95/2014/EU on nonfinancial declarations' comparability. Our results highlight how the comparability of nonfinancial reports is an objective not yet achieved. In this regard, the revision of Directive 95/2014/EU will represent an opportunity for policymakers to address this critical issue.

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

“…On the other hand, the overall SE_Quant has been characterised by a decrease from 7.49% to 5.80%. The overall SE_Quant decrease confirms, as evidenced in prior studies, the limited effects of the non-financial reporting regulation (Doni et al, 2019;Venturelli et al, 2020). Specifically, these studies have showed how the non-financial reports prepared on mandatory basis are typically characterised by the standardisation of the information without an adequate degree of accountability.…”

Non-Financial Disclosure Assurance: Critical Insights from the Italian Financial Services Sector

“…The lack of clear direction for NFD has also steered the NFD assurance process. While numerous studies have supported the abovementioned concerns about NFDs, few have critically analysed the assurance aspects (Bozzolan & Miihkinen, 2019;Venturelli et al, 2020).…”

“…While the majority of studies have focused on the main implications of the Directive and national laws on the disclosure of NFI, little attention has been paid to NFD assurance (Bozzolan & Miihkinen, 2019;Venturelli et al, 2020). Assurance procedures for reports on sustainability and social responsibility play a pivotal role in supporting the credibility of NFDs (Farooq & de Villiers, 2017).…”

A Text-Mining Analysis on the Review of the Non-Financial Reporting Directive: Bringing Value Creation for Stakeholders into Accounting

“…Other academic studies have highlighted negligible disclosure of NFI, scarce procedures on risk assessment and materiality determination processes [10]. Specific requirements for reporting standards [13,53,58] and the complexity to collect non-financial data and ensure comparability [17] have been acknowledged as primary deficiencies of these new mandatory NFI disclosure. Together with the myriad of international standards frameworks that jeopardize comparability of data, this ill-defined set of non-financial reporting practices may potentially lead to levels of "green-washing" or "un-sustainability" [59,60] that encourage business-as-usual practices with instrumental, merely compliance-driven, and profit-oriented terms.…”

“…Others have highlighted several guidelines and international frameworks that have led to a heterogeneous landscape of accounting procedures, metrics, and disparate approaches instead of a common language of sustainability reporting [14][15][16]. Consequently, sustainability reporting is affected by a lack of comparability, reliability, and relevance of NFI [4,17]. This is the second knowledge gap [8] that this research aims to address.…”