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Effects on Corporate Stakeholders and Limitations of The Implementation of The Non-Financial Reporting Directive (2014/95/EU)

Author

Listed:
  • NingShan Hao
  • Voicu D. Dragomir
  • Oana Marina Radu

    (Department of Accounting and Audit, The Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

Research question- What are the effects of non-financial reporting (NFR) for companies and stakeholders? Motivation- We draw on previous research that examines the effects and limitations of the Non-Financial Reporting Directive on key stakeholders. Idea- This article investigates the increasing significance of the sustainability orientation in corporate operations, as well as the role of NFR in providing information about social, ethical, and environmental aspects of a particular organization. Additionally, the article explores the possible benefits of sustainability reporting, such as improved reputation, in addition to the company’s ability to contribute to the sustainable development goals. Data and tools- This paper provides a scoping review that explores the influence of NFR on the decisions of various stakeholders, such as companies, investors, governments or regulators, accountants and auditors, employees, and the general public. The review discusses existing studies in the literature focusing on NFR and the legislative context in respect to the transition from NFR to sustainability reporting. Findings and Contribution- This article shows that Directive 2014/95/EU positively influenced the quality and transparency of the sustainability disclosure process of companies. Also, we identify various gaps in the literature, along with challenges faced by firms when reporting on non-financial information and ensuring accuracy and completeness. Based on summarized evidence from the literature, the limitations of NFR include inconsistent formats, lack of standardization, weaknesses in the reliability and comparability of information used in decision-making process, and limited assurance. Finally, our study highlights the importance of transitioning from NFR to sustainability reporting, the latter having significant effects in increasing stakeholder participation, safeguarding business reputation, boosting investor confidence and achieving the sustainable development goals, while complying with legislation. It explores the challenges and opportunities linked to NFR (a synonym of ESG reporting) and specifies the necessary components of sustainability reporting frameworks.

Suggested Citation

  • NingShan Hao & Voicu D. Dragomir & Oana Marina Radu, 2023. "Effects on Corporate Stakeholders and Limitations of The Implementation of The Non-Financial Reporting Directive (2014/95/EU)," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 22(4), pages 609-630, December.
    • Handle: RePEc:ami:journl:v:22:y:2023:i:4:p:609-630
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    References listed on IDEAS

    as
    1. Blanco, Christian C. & Caro, Felipe & Corbett, Charles J., 2020. "Do carbon abatement opportunities become less profitable over time? A global firm-level perspective using CDP data," Energy Policy, Elsevier, vol. 138(C).
    2. Matteo La Torre & Svetlana Sabelfeld & Marita Blomkvist & John Dumay, 2020. "Rebuilding trust: sustainability and non-financial reporting and the European Union regulation," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 28(5), pages 701-725, August.
    3. Fabio Caputo & Rossella Leopizzi & Simone Pizzi & Virginia Milone, 2019. "The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context," Sustainability, MDPI, vol. 12(1), pages 1-13, December.
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    More about this item

    Keywords

    non-financial reporting; sustainability reporting; Corporate Sustainability Reporting Directive; European Union; ESG performance;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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