Environmental, social and governance disclosures in Europe

Abstract

Purpose\ud – The purpose of this paper is to shed light on the European Union’s (EU) latest regulatory principles for environmental, social and governance (ESG) disclosures. It explains how some of the EU’s member states are ratifying the EU Commission’s directives on ESG reporting by introducing intelligent, substantive and reflexive regulations.\ud \ud Design/methodology/approach\ud – Following a review of EU publications and relevant theoretical underpinnings, this paper reports on the EU member states’ national policies for ESG reporting and disclosures.\ud \ud Findings\ud – The EU has recently revised a number of tools and instruments for the reporting of financial and non-financial information, including the EU’s modernisation directive, the EU’s directive on the disclosure of non-financial and diversity information, the EU Energy Efficiency Directive, the European pollutant release and transfer register, the EU emission trading scheme, the integrated pollution prevention and control directive, among others.\ud \ud Practical implications\ud – Although all member states are transposing these new EU directives, to date, there are no specific requirements in relation to the type of non-financial indicators that can be included in annual reports. Moreover, there is a need for further empirical evidence that analyse how these regulations may (or may not) affect government entities and big corporations.\ud \ud Social implications\ud – Several EU countries are integrating reporting frameworks that require the engagement of relevant stakeholders (including shareholders) to foster a constructive environment that may lead to continuous improvements in ESG disclosures.\ud \ud Originality/value\ud – EU countries are opting for a mix of voluntary and mandatory measures that improve ESG disclosures in their respective jurisdictions. This contribution indicates that there is scope for national governments to give further guidance to civil society and corporate business to comply with the latest EU developments in ESG reporting. When European entities respond to regulatory pressures, they are also addressing ESG and economic deficits for the benefit of all stakeholders.peer-reviewe

The integrated reporting of financial, social and sustainability capitals: a critical review and appraisal

“…Therefore, the practitioners who would like to comply with IIRC's <IR> framework will probably experience a dynamic process of adaptation, learning and action to redesign their disclosures. They may have to change their internal management systems, processes and strategies to incorporate ESG issues into their core business model (Camilleri, 2015b, Adams, 2015, Churet & Eccles, 2014Eccles & Krzus, 2010).…”

“…(EU, 2014). Therefore, large undertakings are expected to bear responsibility for the prevention and reduction of pollution (Camilleri, 2015b). The EU recommends that the large organisations should implement ILO's Tri-partite Declaration of Principles on Multinational Enterprises and Social Policy, as well as other conventions that promote the fair working conditions of employees.…”

“…Therefore, large undertakings are expected to disclose material 11 information on their ESG behaviours. They are required to shed light on any deviations from the directive's recommendations in their annual declaration of conformity, as per the EU's "Comply or Explain" principle (see Camilleri, 2015b). The entities' non-financial disclosures can include topics, such as; social dialogue with stakeholders, information and consultation rights, trade union rights, health and safety, gender equality, among other issues.…”

“…The EU recommends that the large organisations should implement ILO's Tri-partite Declaration of Principles on Multinational Enterprises and Social Policy, as well as other conventions that promote the fair working conditions of employees. It also makes reference to OECD Guidelines for Multinational Enterprises, the 10 principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and mentions ISO 26000 Guidance Standard on Social Responsibility (Camilleri, 2015b;EU, 2015). This information is also available on its web page about corporate social responsibility, at the time of writing this paper (EU, 2017).…”

“…The European Union (EU) has developed non-binding guidelines on non-financial disclosures of large public-interest entities (Camilleri, 2015b;EU, 2014). The European Parliament mandated Directive 2014/95/EU on non-financial reporting, that was subsequently ratified by the European member states.…”