Ex-Ante Impact Assessment of Sustainability Information–The Directive 2014/95

Abstract

Directive 2014/95, in force since 2017, is the first European step that requires undertakings to provide mandatory non-financial information. The regulation concerns sustainability information, such as environmental, social, and employee information, human rights, and anti-corruption and bribery matters, and the disclosure of diversity policies for board members. According to the theoretical framework of Integrated Assessment (IA), the study aims to examine the expected impact of the Directive within the analysis of empirical evidence before the mandatory approach. This allows, on the regulatory side, evaluation of the quality of the regulation, therefore, whether the law achieves its policy objectives (i.e., if it fills the gap in the sustainability disclosure) and, on the firms' side, to identify where companies have to invest to meet the legal requirements. The oil and gas sector is chosen as a sample for the study, because it is one of the most advanced sectors in sustainability disclosure, and if the regulation could impact on this sector, it would be the same for less-informed ones. The findings reveal a fair level of completeness of non-financial information, however, there are some areas that have to be improved to achieve the requirements of the Directive. The results also show the presence of overlap between financial and sustainability reports. In conclusion, the quality of regulation is good because it will also increase sustainability disclosure in an advanced sector, such as oil and gas, even if there is an open point on the location of information; companies in this sector will have to invest more in environmental and employee information in future years to comply with the Directive.

Encompassing Non-Financial Reporting in A Coercive Framework for Enhancing Social Responsibility: Romanian Listed Companies’ Case

“…The main findings of our research reveal that Romanian companies' disclosure was on average, higher than the Italian (Venturelli et al, 2017) or the Polish ones (Matuszak and Rozanska, 2017), the strong increase being encountered in case of companies belonging to an environmental sensitive industry (e.g. Oil & gas), which reached a level higher even than the average of the European extractive petroleum companies (Carini, et. al, 2018).…”

“…As it can be seen, the disclosure levels per industry demonstrate a particular inclination toward the EUD by organizations belonging especially to Energy (Oil & Gas and Utilities), where they reached a disclosure level higher than the averege of the European similar domains (Carini, et. al, 2018) as it is presented in Table 5.…”

“…Thus, most researchers conducted an ex-ante analysis of the non-financial reporting and its determinants (Carini et al, 2018;Szadziewska et al, 2018;Dumitru et al, 2017;Galant and Cerne, 2017), while there are few ex-post evidences (Sierra-Garcia et al, 2018;Venturelli et al, 2017;Matuszak and Rozanska, 2017). For example, the quality of CSR disclosure in Polish-listed Companies in the light of EUD requirements (Matuszak and Rozanska, 2017), the compliance to the EU Guidelines 2017/C215/01 with the IIRF and the GRI 4 guidelines on the European companies (Manes-Rossi et al, 2018), the level of non-financial and diversity disclosure and the transposition of the EUD into Italian law (Venturelli et al, 2017) or the level of completeness of NFI and the expected impact of the EUD in oil and gas sector (Carini et al, 2018) and the clarity of reports published by organizations (containing elements related to bioeconomy) in Europe (Avram et al, 2018).…”

The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?

“…In October 2014, as part of the 'renewed EU strategy 2011-2014 for Corporate Social Responsibility' [12], the European Union decided to shift from a voluntary disclosure approach to a mandatory one and adopted Directive 2014/95/EU (hereafter the EU Directive), which mandates companies of a certain size to draft and publish a nonfinancial declaration (NFD) related to the disclosure of corporate NFI about society and the environment [13,14]. The EU Directive aims to restore needed trust to the investor and consumer [15,16] and to enhance the consistency and comparability of corporate NFI disclosed throughout the EU by harmonizing the nonfinancial reporting practices [17].…”

The Institutionalization of the Consistency and Comparability Principle in the European Companies

“…Preliminary research [47] argues that this purpose will be hard to be achieved because of the differences which arise at the transposition of the directive in the national legislation and because of the variate range of options available for reporting (for instance, a multitude of frameworks, unclear assurance requirements). It has been shown that even in experienced countries from the point of view of CSR reporting, the use of the Directive will represent an improvement [48,49].…”