A Comparative Analysis of Environmental Disclosure Before and After EU Directive 95/2014 Implementation

The primary focus of this article is on the disclosure of environmental aspects of the non-financial information, as it is a subject poorly explored in emerging economies. Romania, an emerging economy, is the focus of this study of the effectiveness of environmental disclosure because in 2017, under EU Directive 95/2014, it became mandatory for companies having more than 500 employees to disclose non-financial information on their financial statements. This study investigates whether companies disclose more environmental information under the new regulation as compared to a previous year. To perform this analysis, environmental data was collected from annual reports, financial reports, environmental reports and sustainability reports. The companies that are the subject of this research are Romanian companies listed on the Bucharest Stock Exchange and companies that issue environmental reports according to the Global Reporting Initiative (GRI). The companies are categorized as Oil & Gas, Consumer Goods, Consumer Services, Industrial (Melloni et al. in J Acc Public Policy 36:220–238, 2017). Companies in the financial sectorare excluded due to their different accounting practices (Frias-Acetuino et al., 2013). The main elements considered for data collection are materials, energy, water, biodiversity, emissions, effluents and waste, environmental compliance, supplier environmental assessment, management approach (GRI-G4). Based on the items disclosed on these elements, an environmental disclosure index is calculated and used as a dependent variable (outcome). The next step considers different independent variables (conditions) such as size, industry, reporting type, environmental certification, and quotation on stock market. The anticipated results were that companies are disclosing more environmental information after the implementation of the EU Directive as compared to the previous period when it was voluntary. Another expectation was that environmentally sensitive industries would disclose more information concerning their environmental effects and efforts as compared to companies in non-environmentally sensitive industries. This study highlights the increased disclosure of environmental information under Romania’s newly enforced regulations as compared to when such disclosures were voluntary.