Nonfinancial reporting regulation and challenges in sustainability disclosure and corporate governance practices

This paper aims to investigate how the shift from voluntary to mandatory nonfinancial information started by the European Union (EU) Directive 95/2014 may influence corporate practices. In particular, this research presents a paradigmatic case study to highlight relevant changes in reporting strateg...

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Bibliographic Details
Published in:Business strategy and the environment 2020-09, Vol.29 (6), p.2392-2403
Main Authors: Aureli, Selena, Del Baldo, Mara, Lombardi, Rosa, Nappo, Fabio
Format: Article
Language:English
Subjects:
Case studies
case study
Companies
Corporate governance
Corporate law
Corporate strategies
Disclosure
Environmental audits
ESG reporting
EU Nonfinancial Directive
External pressure
Governance
internal audit
Policy making
regulation
stakeholders' engagement
Sustainability
Transparency
Transposition
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Summary:This paper aims to investigate how the shift from voluntary to mandatory nonfinancial information started by the European Union (EU) Directive 95/2014 may influence corporate practices. In particular, this research presents a paradigmatic case study to highlight relevant changes in reporting strategy and corporate governance adopted by an Italian listed company that never disclosed sustainability information before the transposition of the EU Directive into the Legislative Decree 254/2016. In this scenario, new obligations on nonfinancial reporting were not perceived as mere additional administrative duties and the nonfinancial statement became an opportunity to communicate company's paths towards sustainability, guaranteeing transparency and greater stakeholders' engagement. Our findings go beyond prior studies pointing out how organisations adopt strategic and tactical responses to the pressure stemming from the external environment. Additionally, it highlights the pivotal function played by the internal audit in setting up the direction of change. This research has theoretical and practical contributions for academic communities, policymakers and practitioners.
ISSN:0964-4733
1099-0836
DOI:10.1002/bse.2509