IDEAS home Printed from https://ideas.repec.org/a/eme/medarp/medar-12-2021-1530.html
   My bibliography  Save this article

From talk to action: the effects of the non-financial reporting directive on ESG performance

Author

Listed:
  • Maria Aluchna
  • Maria Roszkowska-Menkes
  • Bogumił Kamiński

Abstract

Purpose - Non-financial reporting (NFR) is viewed as a major step towards organisational transparency and accountability. While the number of non-financial reports published every year has been growing exponentially over the last two decades, their quality and effectiveness in managing environmental, social and governance (ESG) performance have been questioned. Addressing these concerns, several jurisdictions, including EU Member States, introduced mandatory NFR regimes. However, the evidence on whether such regulation truly translates into enhanced ESG performance remains scarce. This paper aims to fill this gap in the literature by investigating the impact of the EU’s Directive 2014/95/EU (Non-financial Reporting Directive, NFRD) on the ESG scores of Polish companies. Design/methodology/approach - Drawing upon institutional and strategic perspectives on legitimacy theory, the authors test the relationship between the introduction of the NFRD and the ESG scores derived from the Refinitiv database, using a sample of all those companies listed on the Warsaw Stock Exchange whose disclosure allows for measuring ESG performance (yielding 171 firm-year observations from 43 companies). Findings - This study’s findings show an improvement of ESG performance following the introduction of the NFRD. The difference-in-differences approach indicates that the improvement is larger for companies that are subject to the legislation when it comes to overall ESG performance, particularly for environmental and social performance. Nonetheless, to the best of the authors’ knowledge, no significant effect is found for performance in the governance dimension. Originality/value - This study investigates the role of transnational mandatory reporting regulation in the first years of its enactment. The evidence offers insights into the effects of disclosure legislation in the context of an underdeveloped institutional environment.

Suggested Citation

  • Maria Aluchna & Maria Roszkowska-Menkes & Bogumił Kamiński, 2022. "From talk to action: the effects of the non-financial reporting directive on ESG performance," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 31(7), pages 1-25, November.
    • Handle: RePEc:eme:medarp:medar-12-2021-1530
    DOI: 10.1108/MEDAR-12-2021-1530
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/MEDAR-12-2021-1530/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/MEDAR-12-2021-1530/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://libkey.io/10.1108/MEDAR-12-2021-1530?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steven F. Cahan & Charl De Villiers & Debra C. Jeter & Vic Naiker & Chris J. Van Staden, 2016. "Are CSR Disclosures Value Relevant? Cross-Country Evidence," European Accounting Review, Taylor & Francis Journals, vol. 25(3), pages 579-611, September.
    2. Christopher Marquis & Michael W. Toffel & Yanhua Zhou, 2016. "Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing," Organization Science, INFORMS, vol. 27(2), pages 483-504, April.
    3. Cedric Dawkins & John Fraas, 2011. "Coming Clean: The Impact of Environmental Performance and Visibility on Corporate Climate Change Disclosure," Journal of Business Ethics, Springer, vol. 100(2), pages 303-322, May.
    4. Kim Ceulemans & Rodrigo Lozano & María Del Mar Alonso-Almeida, 2015. "Sustainability Reporting in Higher Education: Interconnecting the Reporting Process and Organisational Change Management for Sustainability," Sustainability, MDPI, vol. 7(7), pages 1-23, July.
    5. Guangming Gong & Si Xu & Xun Gong, 2018. "On the Value of Corporate Social Responsibility Disclosure: An Empirical Investigation of Corporate Bond Issues in China," Journal of Business Ethics, Springer, vol. 150(1), pages 227-258, June.
    6. A.H. Fatima & Norhayati Abdullah & Maliah Sulaiman, 2015. "Environmental disclosure quality: examining the impact of the stock exchange of Malaysia’s listing requirements," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 11(4), pages 904-922, October.
    7. Mahoney, Lois S. & Thorne, Linda & Cecil, Lianna & LaGore, William, 2013. "A research note on standalone corporate social responsibility reports: Signaling or greenwashing?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(4), pages 350-359.
    8. Solomon, Jill F. & Solomon, Aris & Joseph, Nathan L. & Norton, Simon D., 2013. "Impression management, myth creation and fabrication in private social and environmental reporting: Insights from Erving Goffman," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 195-213.
    9. de Villiers, Charl & van Staden, Chris J., 2006. "Can less environmental disclosure have a legitimising effect? Evidence from Africa," Accounting, Organizations and Society, Elsevier, vol. 31(8), pages 763-781, November.
    10. Fabienne Fortanier & Ans Kolk & Jonatan Pinkse, 2011. "Harmonization in CSR Reporting," Management International Review, Springer, vol. 51(5), pages 665-696, October.
    11. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    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. Urska Kosi & Paula Relard, 2024. "Are firms (getting) ready for the corporate sustainability reporting directive?," Sustainability Nexus Forum, Springer, vol. 32(1), pages 1-14, December.
    2. Marco Papa & Monika Wieczorek-Kosmala & Anna Losa & Aleksandra Swałek, 2024. "The Impact of ESG Regulation on Environmental Decoupling—An Exploratory Study on Polish Listed Companies," Sustainability, MDPI, vol. 16(17), pages 1-11, August.
    3. Anastasia O. Volodina & Marina B. Trachenko, 2024. "Financial Indicators of Value Dynamics of ESG-oriented Companies in China," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 88-103, April.
    4. Serhiy Zabolotnyy, 2024. "Investigating the Nexus Between Energy Transition Reporting Practices and Corporate Efficiency in the European Agri-Food Sector," Energies, MDPI, vol. 17(21), pages 1-19, November.

    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. Silvia Romero & Silvia Ruiz & Belen Fernandez‐Feijoo, 2019. "Sustainability reporting and stakeholder engagement in Spain: Different instruments, different quality," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 221-232, January.
    2. Maria Aluchna & Maria Roszkowska‐Menkes & Sana Khan, 2024. "Corporate governance perspective on environmental reporting: Literature review and future research agenda," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1550-1577, May.
    3. Abeer Mohamed Hassan & Lee Roberts & Jill Atkins, 2020. "Exploring factors relating to extinction disclosures: What motivates companies to report on biodiversity and species protection?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1419-1436, March.
    4. Claudia Arena & Saverio Bozzolan & Claudia Imperatore, 2024. "Enhancing environmental reporting: A study on the role of narrative disclosure, firm‐ and country‐level incentives," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3414-3428, July.
    5. Francesca Bernini & Fabio La Rosa, 2024. "Research in the greenwashing field: concepts, theories, and potential impacts on economic and social value," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(2), pages 405-444, June.
    6. María Luisa Pajuelo Moreno & Teresa Duarte-Atoche, 2019. "Relationship between Sustainable Disclosure and Performance—An Extension of Ullmann’s Model," Sustainability, MDPI, vol. 11(16), pages 1-33, August.
    7. Bouten, Lies & Everaert, Patricia, 2015. "Social and environmental reporting in Belgium: ‘Pour vivre heureux, vivons cachés’," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 24-43.
    8. My Hanh Doan & Remmer Sassen, 2020. "The relationship between environmental performance and environmental disclosure: A meta‐analysis," Journal of Industrial Ecology, Yale University, vol. 24(5), pages 1140-1157, October.
    9. Denis Cormier & Michel Magnan, 2015. "The Economic Relevance of Environmental Disclosure and its Impact on Corporate Legitimacy: An Empirical Investigation," Business Strategy and the Environment, Wiley Blackwell, vol. 24(6), pages 431-450, September.
    10. Zhang, Ziqi & Su, Zhi & Wang, Ke & Zhang, Yongji, 2022. "Corporate environmental information disclosure and stock price crash risk: Evidence from Chinese listed heavily polluting companies," Energy Economics, Elsevier, vol. 112(C).
    11. Lee Roberts & Monomita Nandy & Abeer Hassan & Suman Lodh & Ahmed A. Elamer, 2022. "Corporate Accountability Towards Species Extinction Protection: Insights from Ecologically Forward-Thinking Companies," Journal of Business Ethics, Springer, vol. 178(3), pages 571-595, July.
    12. Islam, Muhammad Azizul & van Staden, Chris J., 2018. "Social movement NGOs and the comprehensiveness of conflict mineral disclosures: evidence from global companies," Accounting, Organizations and Society, Elsevier, vol. 65(C), pages 1-19.
    13. Nagore Aranguren Gómez & Stella Maldonado García, 2023. "Building Corporate Reputation Through Corporate Social Responsibility Disclosures. The Case of Colombian Companies," Corporate Reputation Review, Palgrave Macmillan, vol. 26(4), pages 279-303, November.
    14. Dong Ding & Bin Liu & Millicent Chang, 2023. "Carbon Emissions and TCFD Aligned Climate-Related Information Disclosures," Journal of Business Ethics, Springer, vol. 182(4), pages 967-1001, February.
    15. Karaman, Abdullah S. & Orazalin, Nurlan & Uyar, Ali & Shahbaz, Muhammad, 2021. "CSR achievement, reporting, and assurance in the energy sector: Does economic development matter?," Energy Policy, Elsevier, vol. 149(C).
    16. Matthew Wegener & Réal Labelle, 2017. "Value Relevance of Environmental Provisions Pre‐ and Post‐IFRS," Accounting Perspectives, John Wiley & Sons, vol. 16(3), pages 139-168, September.
    17. Roszkowska-Menkes, Maria & Aluchna, Maria & Kamiński, Bogumił, 2024. "True transparency or mere decoupling? The study of selective disclosure in sustainability reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 98(C).
    18. Radhakrishnan, Suresh & Tsang, Albert & Liu, Rubing, 2018. "A Corporate Social Responsibility Framework for Accounting Research," The International Journal of Accounting, Elsevier, vol. 53(4), pages 274-294.
    19. Patrick J. Ferguson & Jane Hronsky & Matt Pinnuck, 2023. "Who pays attention to sustainability reports and why? Evidence from Google search activity," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3519-3551, September.
    20. Dolores Gallardo-Vázquez & María J. Barroso-Méndez & María L. Pajuelo-Moreno & Julio Sánchez-Meca, 2019. "Corporate Social Responsibility Disclosure and Performance: A Meta-Analytic Approach," Sustainability, MDPI, vol. 11(4), pages 1-33, February.

    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:eme:medarp:medar-12-2021-1530. 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: Emerald Support (email available below). General contact details of provider: .

    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.