IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i16p8876-d610756.html
   My bibliography  Save this article

Mandatory ESG Reporting and XBRL Taxonomies Combination: ESG Ratings and Income Statement, a Sustainable Value-Added Disclosure

Author

Listed:
  • Alessio Faccia

    (School of Business and Law, Coventry University, Coventry CV15FB, UK
    Centre for Blockchain Technologies (CBT), University College London (UCL), London WC1E6BT, UK)

  • Francesco Manni

    (Dipartimento di Economia Aziendale, Università Roma TRE, 00145 Rome, Italy)

  • Fabian Capitanio

    (Dipartimento di Medicina Veterinaria, Università di Napoli Federico II, 80137 Napoli, Italy)

Abstract

Corporate financial statements address multiple stakeholders’ needs. International Financial Reporting Standards (IFRSs), among others, allow two different classifications, “by function of expense” and “by nature of expense”, for the statement of profit and loss and other comprehensive income for the period (from now on, also identified in short as “Income Statement”, or “IS”). XBRL standards ensure compliance and consistency in financial statements’ drafting and filing. XBRL taxonomies reflect the Income Statement IFRS disclosure requirement in the {310000} and {320000} codifications, respectively. Given the recent EU enhanced regulations that proposed extend mandatory ESG reporting to SMEs, this study aims to design and recommend an additional Income Statement to embed structured Environmental, Social, and Governance (ESG) disclosure. A restatement of the IS is organised following an adjusted Value-Added perspective to fit the purpose of sustainability disclosure. The above-mentioned Income Statement should be suitable and adaptable for entities of any size and operating in any industry. This goal can be achieved through customised input weighting. Therefore, this applied research can fill a current financial ESG disclosure gap, ensuring financial statements’ comparability and encouraging additional mandatory disclosures through standardisation. Two more items in the XBRL (IFRS-based) structure are suggested, leading to the introduction of one fully structured statement “{330000}— Statement of comprehensive income, profit or loss, by Added Value, ESG based ” and a semi-structured “{814000}— Notes—ESG Ratings and Reporting ” to better discuss and disclose the assumptions and results of the ESG Statement.

Suggested Citation

  • Alessio Faccia & Francesco Manni & Fabian Capitanio, 2021. "Mandatory ESG Reporting and XBRL Taxonomies Combination: ESG Ratings and Income Statement, a Sustainable Value-Added Disclosure," Sustainability, MDPI, vol. 13(16), pages 1-17, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:8876-:d:610756
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/16/8876/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/16/8876/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nancy E. Landrum & Brian Ohsowski, 2018. "Identifying Worldviews on Corporate Sustainability: A Content Analysis of Corporate Sustainability Reports," Business Strategy and the Environment, Wiley Blackwell, vol. 27(1), pages 128-151, January.
    2. Dominique Diouf & Olivier Boiral, 2017. "The quality of sustainability reports and impression management," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 30(3), pages 643-667, March.
    3. O'Riain, Seán & Curry, Edward & Harth, Andreas, 2012. "XBRL and open data for global financial ecosystems: A linked data approach," International Journal of Accounting Information Systems, Elsevier, vol. 13(2), pages 141-162.
    4. Elena Escrig-Olmedo & Maria Jesus Munoz-Torres & Maria Angeles Fernandez-Izquierdo, 2010. "Socially responsible investing: sustainability indices, ESG rating and information provider agencies," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 2(4), pages 442-461.
    5. Yousuf Kamal, 2021. "Stakeholders expectations for CSR-related corporate governance disclosure: evidence from a developing country," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 29(2), pages 97-127, January.
    6. Sabina Du Rietz, 2018. "Information vs knowledge," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 31(2), pages 586-607, February.
    7. Andrija Sabol & Filip Sverer, 2017. "A Review Of The Economic Value Added Literature And Application," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 8(1), pages 19-27.
    8. Richard Barker & Alan Teixeira, 2018. "Gaps in the IFRS Conceptual Framework," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 153-166, May.
    9. Ángel Iván Moreno & Teresa Caminero, 2020. "Application of text mining to the analysis of climate-related disclosures," Working Papers 2035, Banco de España.
    10. Anca Băndoi & Claudiu George Bocean & Mara Del Baldo & Lucian Mandache & Leonardo Geo Mănescu & Cătălina Soriana Sitnikov, 2021. "Including Sustainable Reporting Practices in Corporate Management Reports: Assessing the Impact of Transparency on Economic Performance," Sustainability, MDPI, vol. 13(2), pages 1-20, January.
    11. McLeay, Stuart, 1983. "Value added: A comparative study," Accounting, Organizations and Society, Elsevier, vol. 8(1), pages 31-56, February.
    12. Valentina Beretta & Maria Chiara Demartini & Laura Lico & Sara Trucco, 2021. "A Tone Analysis of the Non-Financial Disclosure in the Automotive Industry," Sustainability, MDPI, vol. 13(4), pages 1-16, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carmona, Pedro & Dwekat, Aladdin & Mardawi, Zeena, 2022. "No more black boxes! Explaining the predictions of a machine learning XGBoost classifier algorithm in business failure," Research in International Business and Finance, Elsevier, vol. 61(C).
    2. Hok-Ko Pong & Chun-Cheong Fong, 2024. "Environmental, Social and Governance Awareness and Organisational Risk Perception Amongst Accountants," JRFM, MDPI, vol. 17(11), pages 1-31, October.
    3. Saleh Mohammed Mashehdul Islam, 2025. "Exploring How Corporate Maturity Moderates the Value Relevance of ESG Disclosures in Sustainable Reporting: Evidence from Bangladesh’s Developing Market," Sustainability, MDPI, vol. 17(13), pages 1-21, June.
    4. Ștefănescu Cristina Alexandrina, 2024. "Exploring the Interplay Between Digitalization, Corporate Governance, and SDG Reporting: A Pathway to Sustainable Development," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 69(3), pages 24-42.
    5. Maurizio Comoli & Patrizia Tettamanzi & Michael Murgolo, 2023. "Accounting for ‘ESG’ under Disruptions: A Systematic Literature Network Analysis," Sustainability, MDPI, vol. 15(8), pages 1-32, April.
    6. Jekaterina Novicka & Tatjana Volkova, 2024. "Regulation of Sustainability Reporting Requirements—Digitalisation Path," Sustainability, MDPI, vol. 17(1), pages 1-19, December.
    7. Arkadiusz J. Derkacz & Agnieszka Dudziak & Monika Stoma, 2021. "General Concept of Business Process Measures in the Circular Economy," Sustainability, MDPI, vol. 13(22), pages 1-14, November.
    8. Patrizia Tettamanzi & Riccardo Gotti Tedeschi & Michael Murgolo, 2024. "The European Union (EU) green taxonomy: codifying sustainability to provide certainty to the markets," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 27111-27136, November.
    9. repec:prg:jnlcfu:v:2022:y:2022:i:2:id:577 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Quatrini, Simone, 2021. "Challenges and opportunities to scale up sustainable finance after the COVID-19 crisis: Lessons and promising innovations from science and practice," Ecosystem Services, Elsevier, vol. 48(C).
    2. Mathias Cöster & Gunnar Dahlin & Raine Isaksson, 2020. "Are They Reporting the Right Thing and Are They Doing It Right?—A Measurement Maturity Grid for Evaluation of Sustainability Reports," Sustainability, MDPI, vol. 12(24), pages 1-19, December.
    3. Thaís Vieira Nunhes & Enzo Viviani Garcia & Maximilian Espuny & Vitor Homem de Mello Santos & Raine Isaksson & Otávio José de Oliveira, 2021. "Where to Go with Corporate Sustainability? Opening Paths for Sustainable Businesses through the Collaboration between Universities, Governments, and Organizations," Sustainability, MDPI, vol. 13(3), pages 1-31, January.
    4. Fábio Albuquerque & Ana Isabel Dias & Alexandra Domingos, 2023. "The Students’ Intrinsic Motivation for Learning Non-Financial Information Matters from Their Self-Identification as Global Citizens," Sustainability, MDPI, vol. 15(10), pages 1-19, May.
    5. Olivier Boiral & Marie‐Christine Brotherton & Léo Rivaud & David Talbot, 2022. "Comparing the uncomparable? An investigation of car manufacturers' climate performance," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2213-2229, July.
    6. Ali Uyar & Simone Pizzi & Fabio Caputo & Cemil Kuzey & Abdullah S. Karaman, 2022. "Do shareholders reward or punish risky firms due to CSR reporting and assurance?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1596-1620, July.
    7. Waris Ali & Zeeshan Mahmood & Jeffrey Wilson & Hina Ismail, 2024. "The impact of sustainability governance attributes on comprehensive CSR reporting: A developing country setting," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1802-1817, May.
    8. Gerard Farias & Christine Farias & Isabella Krysa & Joel Harmon, 2020. "Sustainability Mindsets for Strategic Management: Lifting the Yoke of the Neo-Classical Economic Perspective," Sustainability, MDPI, vol. 12(17), pages 1-14, August.
    9. Aditya Pandu Wicaksono & Doddy Setiawan, 2024. "Impacts of stakeholder pressure on water disclosure within Asian mining companies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(3), pages 6493-6515, March.
    10. Marius Banke & Stephanie Lenger & Christiane Pott, 2022. "ESG Ratings in the Corporate Reporting of DAX40 Companies in Germany: Effects on Market Participants," Sustainability, MDPI, vol. 14(15), pages 1-21, August.
    11. NUGRAHANI Tri Siwi & ARTANTO Dwi Ari, 2022. "Sustainability Reporting By Disclosing Economic, Social And Environmental Performance," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(2), pages 216-226, August.
    12. António Pedro Vieira & Gregor Radonjič, 2020. "Disclosure of eco‐innovation activities in European large companies' sustainability reporting," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2240-2253, September.
    13. Renato Camodeca & Alex Almici & Umberto Sagliaschi, 2018. "Sustainability Disclosure in Integrated Reporting: Does It Matter to Investors? A Cheap Talk Approach," Sustainability, MDPI, vol. 10(12), pages 1-34, November.
    14. Monica Billio & Michele Costola & Iva Hristova & Carmelo Latino & Loriana Pelizzon, 2021. "Inside the ESG ratings: (Dis)agreement and performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1426-1445, September.
    15. Isabel-María García-Sánchez & Víctor Amor-Esteban & Alejandra García-Sánchez, 2021. "Different Leaders in a COVID-19 Scenario: CEO Altruism and Generous Discourse," Sustainability, MDPI, vol. 13(7), pages 1-19, March.
    16. Mähönen Jukka, 2020. "Integrated Reporting and Sustainable Corporate Governance from European Perspective," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 10(2), pages 1-40, July.
    17. Anette Hallin & Tina Karrbom‐Gustavsson & Peter Dobers, 2021. "Transition towards and of sustainability—Understanding sustainability as performative," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1948-1957, May.
    18. Pereira, Vijay & Tuffour, James & Patnaik, Swetketu & Temouri, Yama & Malik, Ashish & Singh, Sanjay Kumar, 2021. "The quest for CSR: Mapping responsible and irresponsible practices in an intra-organizational context in Ghana’s gold mining industry," Journal of Business Research, Elsevier, vol. 135(C), pages 268-281.
    19. Cristina Maranesi & Pietro De Giovanni, 2020. "Modern Circular Economy: Corporate Strategy, Supply Chain, and Industrial Symbiosis," Sustainability, MDPI, vol. 12(22), pages 1-25, November.
    20. Agne Sneideriene & Renata Legenzova, 2025. "Uncovering Greenwashing: Investigating Impression Management Gap in Corporate Reporting," Sustainability, MDPI, vol. 17(18), pages 1-27, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:8876-:d:610756. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.