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ESG for SMEs: Can the Proposal 2021/0104 for a European Directive Help in the Early Detection of a Crisis?

In: Corporate Governance - Recent Advances and Perspectives

Author

Listed:
  • Patrizia Riva
  • Maurizio comoli
  • Ambra Garelli

Abstract

With the proposal for a European Directive 2021/0104, the number of entities who will be required to prepare a non-financial statement (NFS) has been broadened. The directive provides that small and medium-sized enterprises (SMEs) may also voluntarily opt for drawing up a non-financial statement. It is therefore important to identify reporting standards containing key performance indicators (KPIs), tailored to the characteristics and structure of SMEs. In addition to the potential advantages in terms of improvement in relationships with stakeholders, NFI could be relevant for an early diagnosis of crisis signals therefore, an early warning behavior. This paper, therefore, aims to analyze how non-financial information can be a valuable aid to all governance players in identifying those first signs of crisis. In Italy, Organismo Italiano Business Reporting (OIBR) is drafting a document that promotes the use and communication of non-financial information on the part of SMEs with the dual objective of demonstrating that corporate governance structure on the one hand, and management and accounting tools on the other should be adequately designed and functioning so as to prevent a company's exposure to the risk of failing to operate as a going concern.

Suggested Citation

  • Patrizia Riva & Maurizio comoli & Ambra Garelli, 2022. "ESG for SMEs: Can the Proposal 2021/0104 for a European Directive Help in the Early Detection of a Crisis?," Chapters, in: Okechukwu Lawrence Emeagwali & Feyza Bhatti (ed.), Corporate Governance - Recent Advances and Perspectives, IntechOpen.
    • Handle: RePEc:ito:pchaps:243512
    DOI: 10.5772/intechopen.101234
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    Keywords

    non-financial reporting directive--NFRD; sustainability financial disclosure; non-financial disclosure; non-financial KPIs; crisis; Italian civil (IC)-code; Italy; early warning system; SMEs; family firm; going concern; corporate governance; ESG risks;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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