sustainability

Article
Ensuring More Sustainable Reporting in Europe
Using Non-Financial Disclosure—De Facto
and De Jure Evidence
Francesca Manes-Rossi 1, * ID
, Adriana Tiron-Tudor 2 ID
, Giuseppe Nicolò 1 ID

and Gianluca Zanellato 2

1 Department of Management and Innovation Systems, University of Salerno, Via Giovanni Paolo II, 132,
84084 Fisciano (SA), Italy; [email protected]
2 Faculty of Economics and Business Administration, Babes-Bolyai University, Strada Teodor Mihali, Nr. 58-60,
Campus FSEGA, 400591 Cluj-Napoca, Romania; [email protected] (A.T.-T);
[email protected] (G.Z.)
* Correspondence: [email protected]; Tel.: +39-089-96-31-31




Received: 18 March 2018; Accepted: 10 April 2018; Published: 13 April 2018


Abstract: Non-financial disclosure has become increasingly popular, as it can satisfy the information
needs of a growing range of stakeholders. Because traditional financial reports cannot provide
comprehensive accountability, several frameworks and guidelines for facilitating non-financial
information disclosure have been developed. Recently, the European Union issued Directive
2014/95/EU (EU Directive) and subsequent guidelines (EU Guidelines 2017/C215/01 [EUG]) to
mandate European entities of public interest to convey non-financial information to improve such
organizations’ accountability toward their stakeholders. This paper studies the European stage of
non-financial reporting from a regulatory and practical point of view. To this end, the first research
objective is to analyze the elements that the EUG have in common with the IIRF and the GRI
4 guidelines. Second, the paper proposes a first analysis to assess the compliance to the EUG by
performing a content analysis on a sample of annual reports and integrated reports (IR) drafted by
the 50 biggest European companies. The results highlight that the content elements required by
the Directive exceed the requirements of the two frameworks and that there is already a high level
of compliance by European big companies with the EUG. More specifically, particular attention is
devoted to Social, Employee and Environmental Matters. Accordingly, the companies demonstrated a
common awareness of the necessity to provide an exhaustive amount of social and environmental
disclosure in order to maintain legitimacy. Also the disclosure on Principal Risks and Their Management
is widespread to meet investors’ and stakeholders’ requirements in recent years with respect to the
general level of risk disclosure provided by companies.

Keywords: integrated reporting; sustainability reporting; European Directive 2014/95/EU;

European companies; content analysis

1. Introduction
The financial crises and growing concerns regarding the social and environmental consequences
of companies’ activities have dramatically increased the external pressure on companies to be more
accountable toward and more transparent with their investors and stakeholders [1–6].
In this context, current accounting systems, which are mainly based on retrospective financial
data, have been considered inadequate for satisfying the information needs of investors and other
stakeholders and thus for providing an acceptable level of transparency and accountability [3,7–9].

Sustainability 2018, 10, 1162; doi:10.3390/su10041162 www.mdpi.com/journal/sustainability

Sustainability 2018, 10, 1162 2 of 20

Indeed, investors and stakeholders increasingly require more non-financial information about
companies’ risk, governance and social and environmental issues in a more connected and
comprehensive manner [10–12].
In particular, after the Earth Summit in 1992 and the advent of the Kyoto protocol in 1997, which shed
light on climate changes and other associated environmental risks, the theme of sustainability and
sustainable development have acquired pivotal importance as the “development that meets the needs
of the present without compromising the ability of future generations to meet their own needs” [13]
(p. 234).
The relevance of Corporate Social Responsibility (CSR) emerged consistently, representing its
logical extension to business’ responsibility to contribute in a positive way to society’s well-being,
beyond a narrow focus on profit maximization [2,14,15].
According to Guthrie and Parker [16] (p. 67), CSR disclosure is deemed as essential in reducing
information asymmetries between stakeholders and management and reducing the market risk of
capital investments.
In line with CSR discourse, non-financial disclosure has acquired a fundamental role in expanding
the magnitude of companies beyond the financial account for shareholders, embracing a broader
perspective including the different dimensions linked to the social, environmental, ethical, risk and
governance aspect that are of interest of all stakeholders [16–18].
As Solomon and Maroun state [19] (p. 6), “companies are expected to achieve integration of
sustainability and governance information within the annual report. Such integration is deemed essential if
businesses are to embed stakeholder accountability into the heart of their operations in a meaningful way.”
Nevertheless, sustainability reports, although based on the Global Reporting Initiative (GRI)
guidelines, tend to disclose social, environmental and governance information separately from financial
information, without providing an integrated and comprehensive picture of these issues and of their
interconnections [5,13,19]. For this reason, “non-financial information fails to provide stakeholders
with necessary links and connections to effectively evaluate business performance strategy and future
value creation”, according to Wild and van Staden [7] (p. 6).
To address the missing linkages and lack of connectivity of previous reports, a new trend in
corporate reporting emerged to convey financial and non-financial information in one document
known as an Integrated Report (IR) [19–21]. The International Integrated Reporting Council (IIRC)
issued in 2013 a specific framework (International Integrated Reporting Framework [IIRF]) to support
entities in the preparation of the document. An Integrated Report aims to expose “a holistic picture of
the combination, interrelatedness and dependencies between the factors that affect the organization’s
ability to create value over time” [22]. Although Integrated Reporting caught the interest of many
companies, it remains voluntary in all countries besides South-Africa [10].
In recent years, the European Union (EU) has taken a step forward to address investors’ and
stakeholders’ information needs regarding long-term risks as well as environmental and social
sustainability. To this end, the EU issues the Directive 2014/95/EU (EU Directive) [23] to require
large entities of public interest to disclose financial information, and EU Guidelines 2017/C215/01
(EUG) [24] to support organizations in providing this disclosure. The EU Directive aims to ensure
that organizations provide at least a ‘package’ of information that is considered unavoidable and
comprehensive non-financial information. Moreover, the specific purpose of the EUG [24] (p. 4)
is to “help companies disclose high quality, relevant, useful, consistent and more comparable
non-financial (environmental, social and governance-related) information in a way that fosters resilient
and sustainable growth and employment, and provides transparency to stakeholders [ . . . ]. They are
intended to help companies draw up relevant, useful concise non-financial statements according to the
requirements of the Directive.”
Grounded on this theoretical and legislative background, the study has two related research aims:
first, the study aims to investigate what the EUG, IIRF, and GRI 4 guidelines have in common to
determine to what extent these frameworks meet the requirements of the Directive. Second, because
Sustainability 2018, 10, 1162 3 of 20

the EU Directive together with the EUG will become mandatory for certain types of companies,
this study aims to evaluate big companies’ readiness for change. To this end, we run a first analysis to
assess the compliance to the EUG by performing a content analysis on a sample of annual reports and
integrated reports (IR) drafted by the 50 biggest European companies selected on the basis of market
capitalization. An un-weighted disclosure index is developed to analyze the selected companies’
level of compliance with the EUG. All the sampled firms can be considered entities of public interest
according to EU directives, including listed companies, banks and assurance companies with more
than 500 employees, and are selected because they are considered as recipients of the EU Directive.
The results of the research may be useful for detecting organizations’ state of readiness for change
regarding non-financial information disclosure and for identifying whether the biggest European
companies, which fit the definition of entities of public interest provided by the EU directive, are already
compliant with the EUG. Moreover, this study may contribute to research regarding non-financial
information practices and offer useful recommendations for standard setters and policy-makers to
improve the quality of non-financial information.
The paper proceeds as follows: Section 2 provides a detailed literature review on non-financial
information that focuses on previous compliance research regarding the IIRF, GRI 4 guidelines and
EUG. Section 3 presents the theoretical framework of the study and illustrates the research methodology,
while Section 4 discusses the results of the study. Section 5 discusses the implications of the study and
provides suggestions for future research.

2. Literature Review and Theoretical Background

CSR and sustainability themes have progressively gained momentum as strategic factors for
firm’s survival and success [2,4,6,12,14,25].
Accordingly, a firm’s survival can no longer be traced back only to an economic dimension of
profit maximization, but it has to be included in a broader discourse encompassing the way in which
the firm manages the risks arising from the social and environmental impacts of its activities in the
medium and long term and demonstrates to be socially responsible [14,26].
As a result, researchers, practitioners and standard setters have become increasingly interested
in the inclusion of non-financial information in annual reports. Non-financial information refers to a
broad range of themes and issues such as environmental and social policies and impacts (e.g., resource
and energy use, greenhouse gas emissions, pollution, biodiversity, climate change, waste treatment,
health and safety of employees, gender equality, education) and is pivotal to improve accountability
and transparency towards stakeholders [2,14–18,27].This emerging trend of reporting non-financial
information has led to wider adoption of sustainability reports to provide stakeholders with “financial
and non-financial information relating to an organization’s interaction with its physical and social
environment, as stated in corporate annual reports or separate social reports” [26] (p. 78). According
to Nolan [28] (p. 7), this extended reporting model “aims to highlight the view that a company’s
consideration of only financial matters as an indicator of its success is inadequate.”
Sustainability reports allow companies to demonstrate that they are socially responsible and are a
powerful tool for improving communication with stakeholder groups by enhancing the transparency
and accountability of non-financial information [29].
Empirical studies on sustainability originate in the 70s with the seminal survey conducted by
Ernst and Ernst in 1977 on a sample of 500 USA companies and are based on understanding accounting
as a social phenomenon [16] (p. 343). These studies continued in the 80s and 90s in the UK [17,30],
Australia [16,31,32], and New Zealand [26].
These studies, which were primarily conducted on annual reports, have revealed similar
results [30,33,34]. First, the non-financial information provision was mainly an isolated phenomenon
and not a systematic activity, with a higher prevalence in the USA, the UK, New Zealand,
and Australia [26,30]. Most of the non-financial information that was disseminated concerned human
resources and community involvement issues with minor references to environmental issues. Only in
Sustainability 2018, 10, 1162 4 of 20

certain critical industry sectors belonging to primary and secondary industries, such as mining, oil
and steel companies, environmental disclosure obtain greater diffusion [26]. Other common patterns
include the prevalence of a qualitative rather than a quantitative disclosure, the tendency to emphasize
only the good news by disclosing the information in a “self-laudatory” way and the positive association
between the extent of non-financial disclosure and the firm’s size [31].
These studies were mainly framed under the theoretical lens of the legitimacy theory. In this
context, the disclosure on sustainability issues represents a response to social and political pressures
deriving from the external environment. Disclosure is considered as a suitable instrument to
disseminate a good public image and demonstrate that the company is operating within the boundaries
and norms established by the society in which it is rooted [16,32,34–37]. The legitimacy is “a status,
which exists when an entities value system is congruent with the value system of the larger social
system of which the entity is a part. When a disparity, actual or potential, exists between the two value
systems, there is a threat to the entities’ legitimacy” [35] (p. 2).
Using this theoretical framework, most studies regarding sustainability reporting examine the
relationship between particular environmental and social events and incidents or negative media
attention and the extent of sustainability disclosure by obtaining results that confirm the usefulness of
non-financial disclosure to gain legitimacy [16,33,36,38].
In more recent years, the development and establishment of the GRI guidelines have influenced
non-financial disclosure practices to change from a sporadic phenomenon to a systematic activity that
involves further strategic aspects, such as firms’ risk and opportunities, anti-corruption, corporate
governance, and fraud matters management [14,38,39].
As the GRI states, “by using the GRI guidelines, reporting organizations disclose their most critical
impacts—be they positive or negative—on the environment, society and the economy. They can generate
reliable, relevant and standardized information with which to assess opportunities and risks, and enable
more informed decision-making—both within the business and among its stakeholders” [40] (GRI website).
According to the GRI guidelines, firms have started to prepare stand-alone reports, and, in recent years,
the number of these individual reports has dramatically grown [3,29,41].
As a response, several studies have aimed to determine whether companies’ reports meet
the need for accountability by analyzing the level of voluntary disclosure regarding social and
environmental issues [29,38,41–43], as well as risks and opportunities [44–46]. More specifically,
Cho and Patten [38] investigate a sample of 100 USA listed companies in order to examine the relation
between environmental performance and disclosure. Their findings reveal that firms operating in
environmentally sensitive industries (e.g., mining, extractive, oil and steel companies) tend to disclose
more environmental information than other firms, to obtain legitimacy in their social community.
Cho et al. [41] analyzed a sample of 120 sustainability reports issued by firms from six different
countries, in order to test the use of graphs to enhance a positive image and to obfuscate negative
trends. Their results confirm the hypothesis on the use of stand-alone sustainability reports as
“legitimacy tools”. In the same vein, Patten and Zhao [29], have conducted an empirical study on a
sample of standalone CSR reports within the U.S. retail industry. Sampled companies disclose more
environmental than social information, and they tend to focus on discussing programs and initiatives,
sometimes neglecting the publication of relevant performance data. Their results provide further
empirical evidences on the use of stand-alone CSR reports as an image/reputation enhancement tool
rather than as a significant accountability tool [29]. Skouloudis et al. [47] investigate a sample of
16 Greek companies drafting the sustainability reports. They find that reports vary significantly in
terms of materiality and completeness of information disclosed and that there is only a partial level of
compliance with the GRI guidelines.
Guthrie et al. [42,43] conduct similar studies by focusing the attention on the Australian Food
and Beverage Industry (AFBI), in order to examine the level of CSR disclosure provided according
to GRI guidelines through different reporting media (annual reports and websites) [43] and the level
of CSR disclosure provided according to two different frameworks (GRI and AFBI Industry-specific
Sustainability 2018, 10, 1162 5 of 20

framework) [42]. They find that websites are more suitable than annual reports in disseminating social
and environmental information [43] and that GRI guidelines do not capture all the facets of social and
environmental issues within specific industry sectors, needing to be enriched and refined [42].
Abraham and Cox [44] narrow the attention on the risk dimension and its determinants,
by analyzing the level of risk disclosure provided by a sample of 71 UK listed companies through
the annual reports. They find that risk disclosure is focused on financial risk information and
that corporate risk reporting is negatively related to share ownership by long-term institutions
and positively associated with both the number of executives and the number of independent
directors. Also Moolman et al. [45] investigate the risk dimension by analyzing whether integrated
reporting has brought changes in the disclosure of risks and opportunities. They find that most of the
sampled companies are compliant with all the IIRF requirements for the content element “risks and
opportunities” except for the disclosure of the assessment of risks.
Other studies [3,6] also highlighted the choice to voluntarily submit reports to independent
assurance to enhance the credibility and perceived quality of the firms’ disclosed non-financial
information, as doing so consolidates the reputation and legitimacy of the firms within the
stakeholders’ communities.
In this regard, Guthrie et al. [48] (p. 256) underline that the legitimacy theory presupposes the
existence of a sort of “social contract” between the firm and the society in which it is rooted. This ideal
social contract regulates the behavior of the company and establishes how it must act in compliance
with the society’s expectations and values. Thus, an adequate amount of disclosure that evidences
how the firm is fully involved in addressing social and environmental issues according to socially
acceptable behaviors established by the society is a useful tool for satisfying the society’s expectations
and information needs [49,50].
However, as already underlined, many scholars [29,37,38] consider that non-financial disclosure
conveyed through sustainability reports is mainly oriented to improve the company’s image and
reputation in a legitimacy perspective rather than to provide a clear and detailed analysis of social and
environmental performance as well as the resulting impacts. Consistently, as argued by Patten and
Zhao [29] (p. 1), the use of a standalone sustainability report can be criticized because it represents
“an exercise designed not for transparent accountability, but instead for nothing more than image
enhancement.” Moreover, these documents are limited in that they are not mandatory and are not
integrated with economic and financial information [5,13].
In this vein, the introduction of the IR framework represents a possible solution, as it requires a
more cohesive and integrated approach to corporate reporting through the disclosure of the six capitals
(Financial, Manufactured, Intellectual, Human, Social & Relational and Natural), which should cover
all resources involved in firms’ value creation and their interconnections [8,19]. However, except for in
South Africa, IR is not mandatory in any country [5] Some criticism have been raised towards IR since
it is focused on the concept of value-to-investors, mainly addressing the information needs of financial
capitals providers [9,10,51,52]. Moreover, Flower blames the IIRF as it considers mainly the prosperity
of the entity, rather than of the society [51] Milne and Gray [53] (p. 20), commenting the IIRF, state:
“Despite its claims for sustainable development and sustainability, it is exclusively investor focused
and it has virtually nothing—and certainly nothing substantive—to say about either accountability
or sustainability”.
Another push toward harmonized non-financial disclosure is the European Directive 2014/95/EU.
The EU Directive establishes that entities of public interest are required to place non-financial disclosure
in a management report or separate statement that focuses on the “development, performance, position
and impact of its activity, relating to, as a minimum, environmental, social and employee matters,
respect for human rights, anti-corruption and bribery matters.” The report should include five pieces
of information: “(a) a brief description of the undertaking’s business model; (b) a description of the
policies pursued by the undertaking in relation to those matters, including due diligence processes
implemented; (c) the outcome of those policies; (d) the principal risks related to those matters
Sustainability 2018, 10, 1162 6 of 20

linked to the undertaking’s operations including, where relevant and proportionate, its business
relationships, products or services which are likely to cause adverse impacts in those areas, and how
the undertaking manages those risks; (e) non-financial key performance indicators relevant to the
particular business” [23] (pp. 4–5).
The introduction of the EU Directive is pivotal to the improvement of non-financial disclosure.
Besides its ability to enhance legitimacy, non-financial disclosure can be beneficial for stakeholders
who in recent years, due to crises and scandals, have lost confidence in the market and society [54].
Disclosure regarding risk management and sustainability issues improves firms’ evaluation processes
and produces positive effects on the market value and equity cost [44,55,56]. However, the voluntary
nature of this information has mitigated these benefits due to credibility, transparency, and irrelevance
drawbacks [57,58].
In this sense, the introduction of mandatory requirements by the Directive 2014/95/EU and
the related guidelines issued in 2017 that operationalize how to prepare mandatory information can
improve the quality and credibility of non-financial information and increase the comprehensiveness
of non-financial information [6].
Some researchers have started to investigate the level of compliance of annual reports with the
EUG. More specifically, Guse et al. [59] analyzed the annual reports of 20 Romanian-listed companies
for the year 2015 to determine to what extent these companies were prepared to implement the
Directive. Their results indicate medium levels of compliance, as most of the content elements were
disclosed by about 50% of the sampled firms. More specifically, regarding the Social and Employee
Matters, Guse et al. [59] obtained high compliance levels only for some sub-contents, such as working
conditions and respect for the rights of workers, while, they found high values for Environmental Matters,
only for some sub-contents related to the impacts on the environment.
In the case of Polish-listed companies, Dyduch and Krasodomska [54] explored 60 annual reports
to examine the level of non-financial disclosure provided according to the Directive and factors
that may determine the disclosure. They find that more than half of companies do not disclose any
environmental information in their annual reports and that some factors such as capital turnover, duration
of the stock exchange listing, industry environmental sensitivity, and reputation significantly influence the
non-financial disclosure provided in accordance to the EU Directive. Even in the Polish context,
Matuszak and Różańska [57] analyze a sample of 150 listed companies focusing on annual reports,
CSR reports and companies’ websites in order to examine the quality and the extent of CSR disclosure
provided as well as the level of compliance with the new requirements of the Polish Accounting Act
(PAA) on non-financial disclosure, in accordance with Directive 2014/95/EU. Their study reveals that
companies prefer annual reports to communicate voluntary CSR disclosures and that there is a scarce
level of compliance with the new PAA requirements on non-financial disclosure. In particular, sampled
companies placed little emphasis on reporting about human rights and anti-corruption.
In Italy, Venturelli et al. [58] focused on a sample of 223 large companies considered entities
of public interest by analyzing non-financial information disclosed in the mandatory and voluntary
reports for the year 2015 and identified a medium level of compliance. In particular, the highest levels
of compliance were achieved with regard to two content elements, business model and sustainability
policies, while, there was an insufficient level of compliance regarding diversity policies.
Other studies compare the IIRF and the GRI 4 guidelines [60] as well as the IIRF and the EU
Directive [61]. Idowu et al. [25] conducted a comparison between the IR framework, ISO 26000 and GRI
G4. They found that most of the terms and definitions, elements and principles from ISO 26000 and
GRI G4 are found in the IR framework, but in a much broader sense and with the provision of a more
in-depth understanding regarding what companies should report and how the disclosed information
should be organized in the annual corporate report. Moreover, Paternostro [62] explores the relationship
between IR and other reports, such as: Financial Statement, the Management Commentary, Social and
Environmental Report, the Corporate Governance Report, and Intellectual Capital Report, proposing
three different approaches to prepare IR, favoring the respect of the connectivity principle.
Sustainability 2018, 10, 1162 7 of 20

Nevertheless, there is a lack of research that compares the non-financial disclosure information
provided by large companies located in different European regions in terms of the compliance of the
companies’ reports with the EUG.
Filling the gap, this research contributes to the literature in a twofold manner. First, by comparing
the EUG with the IIRF and the GRI guidelines, the study highlights the differences and similarities
between the three frameworks. Second, the analysis of the reports published by the 50 largest European
Companies for the year 2016 allows for assessing, using legitimacy theory perspective, the level of
compliance with EUG and, more broadly, for identifying the readiness for change.

3. Research Methodology
The comparison between the EUG, IIRF, and GRI guidelines requires analysis of the three
frameworks by referring to the key principles and contents as required by the EUG. From a
methodological point of view, according to previous studies [25,60,61], the comparison of the
frameworks has been carried out through an in-depth analysis of the frameworks, which were obtained
from the frameworks’ official websites [22,24,40].
The comparison focuses on the EUG, GRI 4, and IIRF because they can be considered as the most
commonly used and influential framework for non-financial information [5,25,58,61,63]. We focus on the
GRI 4 Guidelines because the research analyzes the reports published in 2016, while the new guidelines
issued by the GRI in 2016, the GRI Sustainability Reporting Standards (GRI Standards), will be applicable
only by 2018. Furthermore, we conduct an analysis of the reports published by the 50 biggest European
public companies per market capitalization, selected by the Forbes 2000 classification.
All the sampled firms can be considered entities of public interest according to article 2 of the EU
Directive [64]. The sampled firms include listed companies, banks and assurance companies that have
more than 500 employees and were selected because they are considered recipients of the EU Directive.
Moreover, the selection of these companies can be explained by the need to analyze to what extent
the key contents of the EUG are already included in the companies’ reports and thus determine the
companies’ readiness for change.
The sampled firms were grouped in industry sectors according to Venturelli et al. [58],
who classified 223 Italian companies in nine broad categories: Basic Materials, Consumer Goods,
Consumer Services, Health care, Industrial, Oil and Gas, Telecommunications, Banks and Financial Services
and Insurance. However, because this study is based on a smaller sample, the classification proposed
by Venturelli et al. [58] was partially modified by merging the categories of Banks and Financial Services
and Insurance into a unique category: Financial Services. Moreover, the category of Basic Materials was
removed, as no company belongs to this sector.
Annual reports presented by the companies included in the sample were collected to analyze
the compliance of non-financial disclosure to the EUG. However, 10 out of the 50 companies in
2016 published IR as annual reports. Thus, the final sample consists of 40 annual reports and 10 IR.
Table 1 presents the sample and groups the number of companies by country and sector.

Table 1. Study sample in terms of countries and sectors.

Consumer Consumer Financial Health Oil &

Country Industrial Telecommunications Tot.
Goods Services Services Care Gas
Belgium 0 1 0 0 0 0 0 1
Denmark 0 0 0 1 0 0 0 1
France 2 0 2 1 1 1 0 7
Germany 4 0 1 1 3 0 2 11
Ireland 0 1 0 2 0 0 1 4
Italy 0 1 0 0 0 1 0 2
Netherlands 1 0 1 0 1 1 0 4
Spain 1 1 2 0 0 0 1 5
Sweden 0 0 1 0 0 0 0 1
UK 4 2 4 1 0 2 1 14
Total 12 6 11 6 5 5 5 50
Sustainability 2018, 10, 1162 8 of 20

Table 2 groups the companies in the sample by sector and indicates the average number of
employees and the average market value at the end of 2016.

Table 2. Study sample in terms of sector, number of companies, employees and market value.

Sector N. Average Employees Average Market Value (Billion $)

Consumer Goods 12 142,026.42 81.51
Consumer Services 6 66,428.33 85.05
Financial Services 11 118,080.55 71.35
Health Care 6 68,408.33 85.75
Industrial 5 146,091.80 82.30
Oil & Gas 5 70,110.40 120.54
Telecommunications 5 185,106.20 80.08

Data Analysis
Content analysis was performed to identify whether the 50 biggest European companies are
disclosing the key content required by the EUG.
Content analysis is defined as “a research technique for making replicable and valid inferences
from texts (or other meaningful matter) to the contexts of their use” [65] (p. 18). It is one of the most
utilized research methods in disclosure studies [8,57–59]. According to Setia et al. [8], one of the most
commonly employed variants of content analysis is based on the simple analysis of the presence or
absence of particular items and on the subsequent development of a disclosure index that allows for
quantifying the information gathered through the content analysis.
In the present study, the content analysis was performed manually by reading the reports in their
entirety [8,58]. To quantify the necessary information, a dichotomous coding system was applied by
attributing scores of 0/1 for the absence/presence of information [8,58,59,66]. Then, an un-weighted
disclosure index was employed to quantify the level of compliance of the reports with the EUG.
The rationale for the use of an un-weighted index is related to the aim of investigating whether the
content elements required by the Directive are included in the report, not at what level those contents
are disclosed [18].
More specifically, the reports were analyzed to identify whether the principal content elements
required by the EUG regarding non-financial information are provided.
The key contents required by the EUG are the following [24]:

- Business Model
- Policies and Due Diligence
- Outcome
- Principal Risks and Their Management
- Key Performance Indicators
- Environmental Matters
- Social and Employee Matters
- Respect for Human Rights
- Anti-Corruption and Bribery Matters
- Reporting Frameworks
- Board Diversity Disclosure.

The compliance index (CI) has been structured as follows:

∑im=1 d
CI =
m
Sustainability 2018, 10, 1162 9 of 20

m
where ∑ d is the sum of the content found in the analyzed reports according to the EUG, and m is the
i =1
maximum number of content obtainable (11).
To assure the accuracy and reliability of the content analysis, the reports were analyzed separately
by two researchers, the results were compared and discussed, and the final scores were assigned.

4. Results and Discussion

The following sections first present the results obtained by comparing the three documents
(the EUG, IFR, and GRI 4 guidelines) and then present the results of the compliance analyses on the
reports published by the companies included in the sample.

4.1. Comparing the Frameworks

This section outlines the similarities as well as the differences related to the key principles and the
content elements required by the EUG, IIRF and GRI 4 guidelines.
As already underlined, the EU Directive requires large undertakings to disclose non-financial
information or in the management commentary, as explained in article 4 of the EUG, or to include the
required information “in a separate report”, as written in the EUG [24] (p. 2). The GRI suggests to prepare
a Sustainability Report, by following principles provided in its standards. Essentially, both the EUG
and the GRI consider the disclosure of non-financial information separately from financial information.
A different viewpoint is given by the IIRF, which requires companies to issue a combined report about
“how an organization’s strategy, governance, performance and prospects, in the context of its external
environment, lead to the creation of value over the short, medium and long-term” [22] (p. 8). Following
the approach suggested by the IIRC, a combination of financial and non-financial information of a
company’s performance should be provided [67] by preparing a report that “comprises both financial
and non-financial information” [68] (p. 299).
Although all the frameworks focus on non-financial information, they differ in terms of the
audience they address. The EUG and GRI are stakeholder-oriented, while the IIRF focuses on providers
of financial capital [53].
More specifically, the aim of the EUG is “to help companies disclose high quality, relevant,
useful, consistent and more comparable non-financial (environmental, social and governance-related)
information in a way that fosters resilient and sustainable growth and employment, and provides
transparency to stakeholders” [24] (p. 4). In the same vein, the purpose of the GRI 4 guidelines is to
“offer Reporting Principles, Standard Disclosures and an Implementation Manual for the preparation of
sustainability reports by organizations, regardless of their size, sector or location. The GRI guidelines
also offer an international reference for all those interested in the disclosure of governance approach
and of the environmental, social and economic performance and impacts of organizations” [40]
(p. 5). Differently, the IIRF focuses on investors and aims to improve the “quality of information
available to providers of financial capital to enable a more efficient and productive allocation of
capital” [22] (p. 3). This orientation of the IIRF on capital providers has been identified as a limitation
by several scholars [51–53,69]. In particular, regarding the IR framework, Milne and Gray [53] (p. 20)
underline that “[d]espite its claims for sustainable development and sustainability, it is exclusively
investor focused and it has virtually nothing—and certainly nothing substantive—to say about
either accountability or sustainability”. Flower [51] argues that although several stakeholders have
been engaged in the development of the IIRF, social and environmental stakeholders have not been
adequately represented.
The most “demanding” [47] framework seems to be the one proposed by the GRI because it
contains a long list of requirements that must be fulfilled by the preparers. The other two frameworks
are not setting detailed requirements about the information given, such as strict lists about the content to
be inserted in the report. “The Commission encourages companies to avail themselves of the flexibility
under the Directive when disclosing nonfinancial information . . . ” [24] (p. 3). Discussing the approach
Sustainability 2018, 10, 1162 10 of 20

followed by IIRF, scholars already recognize that it “sets out definitions for key concepts and principles
that are intended to underpin the content and presentation of integrated reports, and guidelines for the
structure and presentation of the reports” [7], and “it is designed to provide guidance for organizations
that prepare integrated reports and enable consistency in reporting approaches and content” [70].
Taking stock of the aforementioned similarities and differences, this section compares the key
principles and contents of the EUG with those of the IIRF and GRI.
In general, a prevailing convergence between the key principles and content elements required by
the three frameworks emerges. However, there are some differences which deserve attention.
Table 3 summarizes the comparison of the frameworks in terms of key principles.

Table 3. Key principles of non-financial disclosure.

Key Principles
European Guidelines IIRF GRI 4 Guidelines
Disclose Material Information 3 6=
Fair, Balanced and Understandable 3 3
Comprehensive but Concise 3 6=
Strategic and Forward-Looking 3 3
Stakeholder Orientated 3 3
Consistent and Coherent 3 3
Whether the key principles are converging with the other frameworks the symbol (3) has been inserted; whether the
frameworks have different approaches, viewpoints or offer different processes to overcome similar requirement the
symbol (6=) has been introduced.

The similarities between the frameworks are related to the following key principles: Fair, Balanced
and Understandable; Strategic and Forward-Looking; Stakeholder Orientated; and Consistent and Coherent.
Conversely, there are differences that occur in relation to Disclose Material Information and Comprehensive
but Concise.
Moreover, a principle that deserves specific attention is materiality. According to the GRI
4 guidelines [40] (p. 17), materiality includes those aspects that reflect the organization’s significant
economic, environmental and social impacts or substantively influence the assessments and decisions
of stakeholders. These requirements presuppose the concept of materiality as a threshold for the
disclosure of information based on a “wide range of impacts and stakeholders” [63] (p. 4). The IIRF
has instead led to a change in the process of determining the materiality of information by focusing on
“fewer and more strategic issues” [71] (p. 1083) with respect to the GRI 4 guidelines and proposing
a four-step process of identification of those relevant matters that have, or may have, an effect on
the organization’s ability to create value by considering their effects on the organization’s strategy,
governance, performance or prospects [22] (p. 18). Consequently, the process of implementation of
the materiality principle in the IIRF perspective is strictly connected with the specificity of the firm as
well as of the industry in which it operates by overcoming the “one size fits all” approach of GRI [71]
(p. 1083). The concept of materiality reported in the EUG seems to be much more similar to that
expressed in the IIRF, as it refers to the relevance of the impact (positive or adverse) on the company’s
activity and it requires consideration of the specific company’s context and circumstances.
Also, there were relevant differences between the frameworks in terms of the Comprehensive but
Concise principle. The GRI 4 guidelines have a different point of view than the EUG, as the GRI
4 guidelines give preparers the possibility to choose “two options for an organization to prepare
its sustainability report in accordance with their requirements. The two options are Core and
Comprehensive” [40] (p. 7), while the EUG and IIRF require companies to issue a concise, understandable
report [22,24].
Table 4 shows the comparison of the EUG with the IIRF and GRI 4 guidelines in terms of
content elements.
Sustainability 2018, 10, 1162 11 of 20

Table 4. Content elements of non-financial disclosure.

Content Elements
European Guidelines IIRF GRI 4 Guidelines
Business Model 3 6=
Policies and Due Diligence 6= 3
Outcomes 3 3
Principal Risks and Their Management 3 3
Key Performance Indicators 3 6=
Environmental Matters 3 3
Social and Employee Matters 3 3
Respect for Human Rights 3 6=
Anti-Corruption and Bribery Matters 8 3
Board Diversity Disclosure 3 3
Whether the content are converging with the other frameworks the symbol (3) has been inserted; whether the
frameworks have different approaches, viewpoints or offer different processes to overcome similar requirement the
symbol (6=) has been introduced. The symbol (8) has been used in case content are missed.

The business model has been defined as the “DNA of business” [72] (p. 15) because of its crucial
importance when improving sustainability [73]. However, the GRI 4 guidelines do not accord the same
importance to a company’s business model as the other two frameworks do. In fact, while the EUG and
the IIRF require disclosing information about how the company is creating value over time, the GRI
4 guidelines require preparers to provide a long list of information about the “Organization Profile” [40].
In addition to the consideration of a company’s business model, the frameworks differed in terms
of Policies and Due Diligence. While EUG and GRI 4 guidelines require companies to provide this
information in a specific section, the IIRF asks companies to consolidate non-financial policies and
their outcomes in the same content element (Performance). This approach can be traced back to the
principle of Connectivity of Information, which strongly informs the IIRF while requiring entities to
“show a holistic picture of the combination, interrelatedness and dependencies between the factors
that affect the organization’s ability to create value over time” [22] (p. 6).
The connectivity principle has already been discussed by Paternostro [62] who identifies three
approaches useful for the combination of the information from partial reports. He recognizes that the
concept of connectivity of information is well-developed when explaining the value creation process
while is not enough considered when exposing the notion of performance, to this extent the author
outlines an important role in the use of the Web for increasing the level of connectivity through the
creation of customized IR. Paternostro [62] concludes that the best process for connecting information
is “integration in a narrow sense”, rather than simply adding all information generally disclosed in
separate reports in one document. In doing so, only relevant information should be selected and
included in the integrated report to comply with the conciseness principle.
Moreover, differences between the EUG and the GRI 4 guidelines can be identified in the content
elements of Key Performance Indicators and Respect for Human Rights. The two divergences toward
those two concepts are similar because the GRI 4 Guidelines offer a long list of KPIs (Key Performance
Indicators) that can be adopted and detailed information regarding human rights policies. Such an
approach reduces flexibility by preparers in comparison with what has been suggested by the EUG and
IIRF, enforcing the concept of a “demanding framework”, as stated by Skouloudis [47]. Consistently,
insights from the practice recognizing that the GRI 4 has too many indicators [74].
Furthermore, while the EUG and GRI 4 guidelines require information regarding Corruption and
Anti-Bribery Matters, the IIRF does not. However, the IIRC will take such information into consideration
to adjust the IIRF. Information regarding corruption is required not just by the EUG and GRI 4, but also
by other frameworks such as the United Nations Global Compact and The Economics of Ecosystems &
Biodiversity [75]. This content element is considered pivotal in Europe because corruption, according
to the President of the World Bank, Robert B. Zoellick, is a “cancer that steals from the poor, eats away
Sustainability 2018, 10, 1162 12 of 20

at governance and moral fiber, and destroys trust” [76]. An environment free of corruption can reduce
barriers of foreign investments, promote economic growth and encourage the development in evolving
countries [77].
Although some scholars consider the EU Directive and the IIRF as “competing frameworks” [61],
others view the IIRF as an evolution of the GRI 4 [60]. The present study identifies several close
similarities and few differences between the requirements of the three frameworks.
Previous studies, in line with our findings, consider the IIRF “to be the best way to communicate
the overall performance of the company to stakeholder” [78] (p. 287).
As already mentioned, European entities are free to adopt the IIRF or GRI 4 guidelines to provide
non-financial information. However, to meet the requirements of the EU Directive, entities which will
decide to adopt the IIRF should provide information about adopted policies and related outcomes in a
separate manner and add data on anti-corruption policies, while entities that will choose to adopt the
GRI 4 guidelines should provide additional information on the Business Model.

4.2. Compliance Analysis

The second research objective is to analyze 50 of the biggest European companies’ readiness for
change in terms of non-financial information disclosure. The sample of companies was selected based
on market capitalization.
To achieve the research objective, a compliance analysis of annual reports (40) and IR (10) with
the EUG was conducted, considering the 11 contents requested by the Directive.
Table 5 introduces the compliance analysis by offering a brief overview of the analyzed reports,
specifically in terms of the documents’ length.

Table 5. Length of report, on average, per sector.

Reporting Length
Sector Mean Min Max
Financial Services 270.6 39 472
Oil and Gas 252.2 95 388
Telecommunication 247.6 188 362
Consumer Services 241.5 100 457
Industrial 239.6 138 344
Consumer Good 230.5 60 422
Health Care 217.5 54 339
Total Average 242.79 96.29 397.71

The reporting length ranges from a minimum of 39 pages to a maximum of 457 pages. The average
number of reporting pages is 243.5. The industrial sector with the highest average number of reporting
pages is Financial Services with a mean of 270.6 pages per reports, followed by Oil and Gas (252.2) and
Telecommunication (247.6). On the other hand, the Health Care sector shows the lowest average number
of pages in a report with a mean of 217.5. As already noted, 204 pages should be enough to contain all
the necessary information that an investor needs [79].
Moreover, the analysis shows that 16% of the analyzed companies disclose their materiality matrix
inside their report by adding value to the non-financial disclosure.
Table 6 shows the level of compliance with the EUG of the reports drafted by the 50 companies
included in the sample. On average, each firm discloses 7.86 out of 11 content elements. Moreover,
the analysis demonstrates a fair level of compliance with the EUG, as the average value of the
Compliance Index is 0.71. Only one company had the minimum score of 0.18 (2 content disclosed),
while four companies had the maximum score of 1 (all the content elements were disclosed according
to the Directive).
Sustainability 2018, 10, 1162 13 of 20

Table 6. The general compliance levels.

Minimum Maximum Mean Standard Dev

N. Content 2 11 7.86 1.97
Compliance Index 0.18 1 0.71 0.18

These values are higher than those obtained by Venturelli et al. [58] in their similar compliance
research, which was conducted on a sample of 223 Italian large companies as well as by Dyduch and
Krasodomska [54] in their research, which was carried out in the Polish context.
Table 7 shows the results of the compliance analysis for each content element required by the EUG.
The most disclosed is Social and Employee Matters, with a score of 0.98 (49 companies out of 50 report
this item on their reports), followed by Environmental Matters, with a score of 0.94.

Table 7. The compliance level for content.

Content N. Compliance Index

Business Model 31 0.62
Policies and Due Diligence 27 0.54
Outcome 15 0.30
Principal Risks and Their Management 45 0.90
Key Performance Indicators 39 0.78
Environmental Matters 47 0.94
Social and Employee Matters 49 0.98
Respect for Human Rights 34 0.68
Anti-Corruption and Bribery Matters 37 0.74
Reporting Frameworks 20 0.40
Board Diversity Disclosure 41 0.82
N = Number of firms disclosing the content.

These values are higher than those obtained in previous similar studies [54,59]. Unlike the studies
conducted by Dyduch and Krasodomska [54] and Guse et al. [59], which focus on a single country,
the present research examines a sample composed of the biggest European companies from 10 different
countries. Most of the sampled companies are based in countries where mandatory regulations for
non-financial disclosure have been required well before the EU Directive was issued (e.g., France,
Denmark, Spain, Sweden, UK) [58].
Moreover, all of the sampled companies can be considered entities of public interest. Therefore,
it was reasonable to expect a high level of compliance with the EUG, especially in relation to Social
and Employee Matters. Indeed, being all large firms, the companies included in the sample are subject
to great external social and political pressures concerning the environmental effects of their activities
and the implications for social communities [31]. According to the legitimacy theory, a good level of
social and environmental disclosure can lead to gains and consolidate the legitimacy within society
by demonstrating great compliance with social values, norms, and expectations [16,31]. Disclosure
represents a concrete attempt to improve the reputation and the image of the firms within the
environment in which they are rooted by mitigating the external pressures exerted by several groups
of stakeholders [29].
Furthermore, one the most disclosed content elements is Principal Risks and Their Management,
with a score of 0.90 (45 companies out of 50 report this item). Also, this value is higher than the values
obtained in previous research [58,59] and can be read in light of the dissatisfaction shown by investors
and stakeholders in recent years regarding several corporate scandals and failures, such as those
of Enron, Worldcom, and Adelphia, with respect to the general level of risk and risk management
disclosure provided by the companies [44,79,80]. Indeed, for investors and stakeholders, a higher
Sustainability 2018, 10, 1162 14 of 20

level of risk disclosure allows for conducting a better assessment of the risk profile of a company by
reducing the equity cost and improving the market efficiency [44,46,81].
Further, there was a good level of compliance in terms of Board Diversity Disclosure (score of 0.82;
41 companies report this content), Key Performance Indicators (score of 0.78; 39 companies include
this item in their reports) and Anti-Corruption and Bribery Matters (score of 0.74; 37 companies report
this item), while there was a minimum level of compliance in terms of content related to Outcome,
with a score of 0.30 (only 15 companies out of a total of 50 discuss this item in their reports).
Finally, Table 8 shows the results of the compliance analysis for each of the content elements
required by the EUG in terms of the sectors in which the sampled companies were grouped.
Unlike in the previous study of Matuszak and Rózanska [57] and consistent with the study of
Guse et al. [59], this study presents low variation among the sectors in terms of level of compliance.
This result indicates that there is a common awareness among firms that they must provide an
exhaustive amount of social and environmental disclosure through their non-financial reports in order
to maintain legitimacy within the different environments in which the firms are rooted. The compliance
with the EUG and specifically with the Social and Employee Matters and Environmental Matters among
the different industries is a clear signal of a widespread behavior to obtain legitimacy based on respect
for the social contract signed with the stakeholders.
However, unlike in previous studies [59], in this study the Industrial sector displayed the maximum
Compliance Index score of 0.78, and the Health Care sector demonstrated a score of 0.77. Furthermore,
the minimum Compliance Index score was obtained by the Consumer Services sector, with a score
of 0.64. An explanation for this result derives from the nature of the Industrial sector, which can
be considered environmentally sensitive and socially exposed, as the sector is composed of firms
carrying out activities that have deep impacts on the external environment. Consistent with legitimacy
theory, firms belonging to environmentally sensitive industries tend to provide massive social and
environmental disclosure regarding the effects of their activities in order to reduce external pressures
and protect themselves from possible threats to their legitimacy [29,31,37,38,42,43]. In doing so, these
firms increase their transparency and accountability toward the social community in which they are
rooted by reducing concerns about the potential negative effects of their business [31].
Sustainability 2018, 10, 1162 15 of 20

Table 8. The compliance level for industry sectors.

Policies and Principal Risk Social and Respect for Board Total
Business Environmental Anti-Corruption Reporting
Industry N. Due Outcome and their KPIs Employee Human Diversity Compliance
Model Matters and Bribery Framework
Diligence Management Matters Rights Disclosure Index Score
Consumer Goods 12 0.67 0.58 0.33 0.92 0.90 0.92 1.00 0.83 0.58 0.25 0.83 0.70
Consumer Services 6 0.67 0.33 0.00 0.83 0.67 1.00 1.00 0.50 0.83 0.33 0.83 0.64
Financial Services 11 0.55 0.73 0.40 1.00 0.73 1.00 1.00 0.70 0.91 0.18 0.82 0.72
Health Care 6 1.00 0.50 0.33 0.83 1.00 1.00 1.00 0.83 0.83 0.50 0.67 0.77
Industrial 5 0.80 0.60 0.40 1.00 0.80 1.00 1.00 0.60 0.80 0.60 1.00 0.78
Oil & Gas 5 0.60 0.40 0.40 1.00 0.80 1.00 1.00 0.60 0.80 0.60 0.80 0.73
Telecommunications 5 1.00 0.40 0.00 1.00 0.80 0.60 0.80 0.60 0.80 0.60 1.00 0.69
Total 50 0.72 0.54 0.29 0.94 0.81 0.94 0.98 0.69 0.78 0.38 0.84 0.71
(Source: Authors’ compilation).
Sustainability 2018, 10, 1162 16 of 20

Table 9 concludes the analysis. It shows that 15 firms out of the 50 sampled firms receive external
assurance for the non-financial information they disclose. Among these, 11 of the firms selected a
Big 4 accounting firm as an external assurance provider. This result offers interesting insights in
terms of legitimacy theory. Specifically, external assurance represents an effective instrument for
improving the credibility and perceived quality of non-financial information provided in the reports.
Consequently, the choice to select an external provider to assure the non-financial information disclosed
in annual reports signals to stakeholders the firm’s commitment to sustainability by ensuring more
legitimacy [3,6].

Table 9. External Assurance.

External Assurance
Yes
No
Big 4 Not Big 4
11 4 35

5. Conclusions
The growing attention on environmental and social sustainability, as well as to CSR, led the
European Union to issue a specific Directive in 2014 [23] and related guidelines [24] to mandate
European entities of public interest to provide adequate information that meets stakeholders’
information needs. The final aim of the Directive is to the expand the process of harmonization from the
disclosure of financial data—already provided in accordance with the IFRS by listed companies in all
European Countries—to the disclosure of non-financial information. However, non-financial disclosure
has been traditionally voluntary in nature. Thus, the European Union has allowed companies to choose
the framework they wish to adopt to provide the information required by the Directive. Considering
the European context and adopting a legitimacy theory perspective, the present study demonstrates
de jure and de facto evidence to understand the readiness for change of European companies of public
interest. First, an analysis of the coherence between the EUG and the two main frameworks related
to non-financial disclosure, the GRI 4 guidelines and the IIRF, was conducted. Moreover, to assess
the readiness for change of the 50 biggest European companies selected on the basis of market
capitalization, a compliance analysis, which compared annual reports published by the sampled
companies with the EUG, was conducted.
The results of the study offer interesting insights. First, the comparison of the EUG with IIRF and
GRI 4 guidelines highlights that some content elements required by the Directive are not included in
the requirements of the other two frameworks. Thus, companies wishing to adopt the IIRF or the GRI
4 must bear in mind that some specific information must be included in their reports to comply with
the requirements of the Directive. More specifically, in case the company adopts the GRI 4, managers
need to be aware about the need to include information on the business model and on the Respect of
Human Rights. Conversely, whenever the company has adopted the IIRF, information on Policies and
Due Diligence and on anti-corruption and bribery matters need to be added.
The content analysis of the reports collected by the 50 sampled companies reveals that there is
already a high level of compliance by big European companies with the EUG. This behavior testifies
how big undertakings look for legitimacy in a market—as Europe is—aware of environmental and
sustainability issue. Some of the slight differences that were found among companies that belong to
different sectors can be explained by the greater attention to disclosure paid by those entities operating
in environmentally sensitive industries. Consistent with a legitimacy approach, firms belonging to
environmentally sensitive industries tend to provide more comprehensive social and environmental
disclosure regarding the impact produced by their business to reduce the potential concern by the
communities in which they are rooted and to gain respect on the market and thus legitimize their
Sustainability 2018, 10, 1162 17 of 20

actions. Moreover, the analysis found that companies are increasingly using integrated reports to
consolidate financial and non-financial information and disclose them in a more concise manner.
Managers in the future may consider the possibility to prepare integrated reports, adding those
information required by the EUG. Meanwhile standard setters—in particular the IIRC—may consider
to include in their framework the non-financial information required by the EUG.
Furthermore, the high level of compliance emerged by analyzing the first 50 companies in Europe
may suggest to the European legislator to mandate the adoption of the EUG to all listed companies in
the European market.
To expand on the results of the current analysis, future studies can include other companies and
other countries in their samples to further investigate the determinants of non-financial disclosure.
In fact, one of the limitations of the current study is the limited number of companies included in the
sample. Moreover, an analysis that covers more years may shed light on the evolution of non-financial
disclosure in Europe.

Author Contributions: All authors wrote the paper, but their primary individual contributions were as follows:
Section 1 is to be ascribed to Francesca Manes-Rossi, Sections 2 and 3 are to be ascribed to Giuseppe Nicolò,
Section 4 is to be ascribed to Gianluca Zanellato, and Section 5 is to be ascribed to Adriana Tiron-Tudor.
Conflicts of Interest: The authors declare no conflict of interest.

References
1. Guthrie, J.; Farneti, F. GRI sustainability reporting by Australian public—Sector Organizations. Public Money Manag.
2008, 28, 361–366. [CrossRef]
2. Kolk, A. Sustainability, accountability and corporate governance: Exploring multinationals’ reporting
practices. Bus. Strategy Environ. 2008, 17, 1–15. [CrossRef]
3. Simnett, R.; Vanstraelen, A.; Chua, W.F. Assurance on sustainability reports: An international comparison.
Account. Rev. 2009, 84, 937–967. [CrossRef]
4. Stojanović-Blab, M.; Blab, D.; Spasić, D. Sustainability reporting-a challenge for Serbian companies. TEME
2016, 4, 1349–1366.
5. De Villiers, C.; Hsiao, P.-C.K.; Maroun, W. Developing a conceptual model of influences around integrated
reporting, new insights and directions for future research. Meditari Account. Res. 2017, 25, 450–460. [CrossRef]
6. Ioannou, I.; Serafeim, G. The Consequences of Mandatory Corporate Sustainability Reporting; Harvard Business
School: Boston, MA, USA, 2017; pp. 1–100.
7. Wild, S.; van Staden, C. Integrated reporting: Initial analysis of early reporters—An institutional theory
approach. In Proceedings of the 7th Asia Pacific Interdisciplinary Accounting Research Conference,
Kobe, Japan, 26–28 July 2013; pp. 1–38.
8. Setia, N.; Abhayawansa, S.; Joshi, M.; Vu Huynh, A. Integrated reporting in South Africa: Some initial
evidence. Sustain. Account. Manag. Policy J. 2015, 6, 397–424. [CrossRef]
9. Dumay, J.; Dai, T. Integrated thinking as a cultural control? Meditari Account. Res. 2017, 25, 574–604.
[CrossRef]
10. De Villiers, C.; Rinaldi, L.; Unerman, J. Integrated Reporting: Insights, gaps and an agenda for future
research. Account. Audit. Account. J. 2014, 27, 1042–1067. [CrossRef]
11. Raemaekers, K.; Maroun, W.; Padia, N. Risk disclosures by South African listed companies post-King III.
S. Afr. J. Account. Res. 2016, 30, 41–60. [CrossRef]
12. Truant, E.; Corazza, L.; Scagnelli, S.D. Sustainability and risk disclosure: An exploratory study on sustainability
reports. Sustainability 2017, 9, 636. [CrossRef]
13. Marx, B.; Mohammadali-Haji, A. Emerging trends in reporting: An analysis of integrated reporting practices
by South African top 40 listed companies. J. Econ. Financ. Sci. 2014, 7, 231–250.
14. Milne, M.J.; Gray, R. Future prospects for corporate sustainability reporting. Sustain. Account. Account. 2007,
1, 184–207.
15. Bebbington, J.; Unerman, J.; O’Dwyer, B. Sustainability Accounting and Accountability; Routledge: New York,
NY, USA, 2014.
Sustainability 2018, 10, 1162 18 of 20

16. Guthrie, J.; Parker, L.D. Corporate social reporting: A rebuttal of legitimacy theory. Account. Bus. Res. 1989,
19, 343–352. [CrossRef]
17. Gray, R.; Owen, D.; Maunders, K. Corporate Social Reporting: Accounting and Accountability; Prentice-Hall
International: Upper Saddle River, NJ, USA, 1987.
18. Guthrie, J.; Parker, L.D. Corporate social disclosure practice: A comparative international analysis. Adv. Public
Interest Account. 1990, 3, 159–175.
19. Solomon, J.; Maroun, W. Integrated Reporting: The Influence of King III on Social, Ethical and Environmental
Reporting; The Association of Chartered Certified Accountants: London, UK, 2012.
20. Eccles, R.G.; Krusz, M. One Report: Integrated Reporting for a Sustainable Strategy; John Wiley & Sons, Inc.:
Hoboken, NJ, USA, 2010.
21. Churet, C.; Eccles, R.G. Integrated reporting, quality of management, and financial performance. J. Appl.
Corp. Financ. 2014, 26, 56–64.
22. Integrated Reporting. International Integrated Reporting Framework. 2013. Available online: www.
integratedreporting.org/resource/international-ir-framework/ (accessed on 23 January 2018).
23. EU Commission. Directive 2014/95/EU of the European Parliament and the Council of 22 October 2014
amending Directive 2013/34/EU as Regards Disclosure of Non-Financial and Diversity Information by Certain
large Undertakings and Groups; EU Commission: Brussels, Belgium, 2014; pp. 1–9.
24. European Commission. Guidelines on Non-Financial Reporting (Methodology for Reporting Non-Financial Information)
(2017/C 215/01); European Commission: Brussels, Belgium, 2017; Available online: www.ec.europa.eu/anti-
trafficking/sites/antitrafficking/files/guidelines_on_non-financial_reporting.pdf (accessed on 23 January 2018).
25. Idowu, S.O.; Dragu, I.M.; Tiron-Tudor, A.; Farcas, T.V. From CSR and sustainability to integrated reporting.
Int. J. Soc. Entrepreneurship Innov. 2016, 4, 134–151. [CrossRef]
26. Hackston, D.; Milne, M.J. Some determinants of social and environmental disclosures in New Zealand
companies. Account. Audit. Account. J. 1996, 9, 77–108. [CrossRef]
27. Prado-Lorenzo, J.M.; Rodríguez-Domínguez, L.; Gallego-Álvarez, I.; García-Sánchez, I.M. Factors influencing
the disclosure of greenhouse gas emissions in companies world-wide. Manag. Decis. 2009, 47, 1133–1157.
[CrossRef]
28. Nolan, J. Corporate Accountability and Triple Bottom Line Reporting: Determining the Material Issues for
Disclosure. In Enhancing Corporate Accountability: Prospects and Challenges Conference Proceedings; University
of New South Wales: Kensington, Australia, 2007.
29. Patten, D.M.; Zhao, N. Standalone CSR reporting by U.S. retail companies. Account. Forum 2014, 38, 132–144.
[CrossRef]
30. Gray, R.; Kouhy, R.; Lavers, S. Corporate social and environmental reporting: A review of the literature and
a longitudinal study of UK disclosure. Account. Audit. Account. J. 1995, 8, 47–77. [CrossRef]
31. Deegan, C.; Gordon, B. A study of the environmental disclosure practices of Australian corporations.
Account. Bus. Res. 1996, 26, 187–199. [CrossRef]
32. Deegan, C.; Rankin, M. Do Australian companies report environmental news objectively? An analysis of
environmental disclosures by firms prosecuted successfully by the Environmental Protection Authority.
Account. Audit. Account. J. 1996, 9, 50–67. [CrossRef]
33. Patten, D.M. Intra-industry environmental disclosures in response to the Alaskan oil spill: A note on
legitimacy theory. Account. Organ. Soc. 1992, 17, 471–475. [CrossRef]
34. Roberts, R.W. Determinants of corporate social responsibility disclosure: An application of stakeholder
theory. Account. Organ. Soc. 1992, 17, 595–612. [CrossRef]
35. Lindblom, C.K. The Implications of Organizational Legitimacy for Corporate Social Performance and Disclosure;
Conference Paper, Critical Perspectives on Accounting Conference, New York; Scientific Research Publishing:
Wuhan, China, 1994.
36. Deegan, C.; Rankin, M.; Tobin, J. An examination of the corporate social and environmental disclosures of
BHP from 1983–1997: A test of legitimacy theory. Account. Audit. Account. J. 2002, 15, 312–343. [CrossRef]
37. Cho, C.H.; Michelon, G.; Patten, D.M.; Roberts, R.W. CSR disclosure: The more things change . . . ? Account. Audit.
Account. J. 2015, 28, 14–35. [CrossRef]
38. Cho, C.H.; Patten, D.M. The role of environmental disclosures as tools of legitimacy: A research note.
Account. Organ. Soc. 2007, 32, 639–647. [CrossRef]
Sustainability 2018, 10, 1162 19 of 20

39. Patten, M.D.; Ren, Y.; Zhao, N. Standalone corporate social responsibility reporting in China: An exploratory
analysis of its relation to legitimation. Soc. Environ. Account. J. 2015, 35, 17–31. [CrossRef]
40. Global Reporting Initiative. G4 Guidelines–Reporting Principles and Standard Disclosures. 2013. Available online:
www.globalreporting.org (accessed on 20 January 2018).
41. Cho, C.H.; Michelon, G.; Patten, D.M. Enhancement and obfuscation through the use of graphs in
sustainability reports: An international comparison. Sustain. Account. Manag. Policy J. 2012, 3, 4–88.
[CrossRef]
42. Guthrie, J.; Cuganesan, S.; Ward, L. Industry specific social and environmental reporting: The Australian
food and beverage Industry. Account. Forum 2008, 32, 1–15. [CrossRef]
43. Guthrie, J.; Cuganesan, S.; Ward, L. Disclosure media for social and environmental matters within the
Australian food and beverage industry. Soc. Environ. Account. J. 2008, 28, 33–44. [CrossRef]
44. Abraham, S.; Cox, P. Analysing the determinants of narrative risk information in UK FTSE 100 annual
reports. Br. Account. Rev. 2007, 39, 227–248. [CrossRef]
45. Abraham, S.; Shrives, P.J. Improving the relevance of risk factor disclosure in corporate annual reports.
Br. Account. Rev. 2014, 46, 91–107. [CrossRef]
46. Moolman, J.; Oberholzer, M.; Steyn, M. The effect of integrated reporting on integrated thinking between
risk, opportunity and strategy and the disclosure of risks and opportunities. S. Afr. Bus. Rev. 2016, 20,
600–627.
47. Skouloudis, A.; Evangelinos, K.; Kourmousis, F. Development of an evaluation methodology for triple bottom
line reports using international standards on reporting. Environ. Manag. 2009, 44, 298–311. [CrossRef]
[PubMed]
48. Guthrie, J.; Petty, R.; Ricceri, F. The voluntary reporting of intellectual capital: Comparing evidence from
Hong Kong and Australia. J. Intellect. Cap. 2006, 7, 254–271. [CrossRef]
49. Deegan, C. Introduction: The legitimising effect of social and environmental disclosures—A theoretical
foundation. Account. Audit. Account. J. 2002, 15, 282–311. [CrossRef]
50. García-Sánchez, I.M.; Rodríguez-Ariza, L.; Frías-Aceituno, J.V. The cultural system and integrated reporting.
Int. Bus. Rev. 2013, 22, 828–838. [CrossRef]
51. Flower, J. The international integrated reporting council: A story of failure. Crit. Perspect. Account. 2015, 27,
1–17. [CrossRef]
52. Dumay, J.; Bernardi, C.; Guthrie, J.; La Torre, M. Barriers to implementing the International Integrated
Reporting Framework: A contemporary academic perspective. Meditari Account. Res. 2017, 25, 461–480.
[CrossRef]
53. Milne, M.J.; Gray, R. W(h)ither ecology? The triple bottom line, the global reporting initiative, and corporate
sustainability reporting. J. Bus. Ethics 2013, 118, 13–29. [CrossRef]
54. Dyduch, J.; Krasodomska, J. Determinants of corporate social responsibility disclosure: An empirical study
of Polish listed companies. Sustainability 2017, 9, 1934. [CrossRef]
55. Michelon, G.; Pilonato, S.; Ricceri, F. CSR reporting practices and the quality of disclosure: An empirical
analysis. Crit. Perspect. Account. 2015, 33, 59–78. [CrossRef]
56. Kristofik, P.; Lament, M.; Musa, H. The reporting of non-financial information and the rationale for its
standardisation. Econ. Manag. 2016, 19, 157. [CrossRef]
57. Matuszak, Ł.; Różańska, E. CSR disclosure in Polish-listed companies in the light of Directive 2014/95/EU
requirements: Empirical evidence. Sustainability 2017, 9, 2304. [CrossRef]
58. Venturelli, A.; Caputo, F.; Cosma, S.; Leopizzi, R.; Pizzi, S. Directive 2014/95/EU: Are Italian companies
already compliant? Sustainability 2017, 9, 1385. [CrossRef]
59. Guse, R.G.; Almasan, A.; Circa, C.; Dumitru, M. The role of the stakeholders in the institutionalization of the
CSR reporting in Romania. Account. Manag. Inf. Syst. 2016, 15, 304–340.
60. Mio, C.; Fasan, M. The Determinants of Materiality Disclosure in Integrated Corporate Reporting; Ca’ Foscari
University of Venice: Venice, Italy, 2014.
61. Monciardini, D.; Dumay, J.; Biondi, L. Integrated Reporting and EU Law. Competing, Converging or
Complementary Regulatory Frameworks? University of Oslo Faculty of Law Research Paper No. 2017-23;
University of Oslo Faculty of Law: Oslo, Norway, 2017; Available online: https://ssrn.com/abstract=2981674
(accessed on 27 December 2017).
Sustainability 2018, 10, 1162 20 of 20

62. Paternostro, S. The connectivity of information for the integrated reporting. In Integrated Reporting. Concepts
and Cases that Redefine Corporate Accountability; Busco, C., Frigo, M.L., Riccaboni, A., Quattrone, P., Eds.;
Springer: London, UK, 2013; pp. 59–78.
63. Lai, A.; Melloni, G.; Stacchezzini, R. What does materiality mean to integrated reporting preparers?
An empirical exploration. Meditari Account. Res. 2017, 25, 533–552. [CrossRef]
64. European Commission. Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on
Statutory Audits of Annual Accounts and Consolidated Accounts, Amending Council Directives 78/660/EEC and
83/349/EEC and Repealing Council Directive 84/253/EEC; European Commission: Brussels, Belgium, 2006.
65. Krippendorff, K. Content Analysis: An. Introduction to Its Methodology; Sage Publications, Inc.: Thousand
Oaks, CA, USA, 1980.
66. Incollingo, A.; Bianchi, M. The connectivity of information in integrated reporting. Empirical evidence from
international context. Financ. Rep. 2016, 2, 55–78. [CrossRef]
67. Eccles, R.G.; Saltzman, D. Achieving sustainability through integrated reporting. Stanf. Soc. Innov. Rev. 2011,
9, 56–61.
68. Jensen, J.C.; Berg, N. Determinants of traditional sustainability reporting versus integrated reporting.
An institutionalist approach. Bus. Strategy Environ. 2012, 21, 299–316. [CrossRef]
69. Dumay, J.; Bernardi, C.; Guthrie, J.; Demartini, P. Integrated reporting: A structured literature review.
Account. Forum 2016, 40, 166–185. [CrossRef]
70. Lodhia, S.; Stone, G. Integrated reporting in an internet and social media communication environment:
Conceptual insights. Aust. Account. Rev. 2017, 27, 17–33. [CrossRef]
71. Stubbs, W.; Higgins, C. Integrated reporting and internal mechanisms of change. Account. Audit. Account. J.
2014, 27, 1068–1089. [CrossRef]
72. Elkington, J. Enter the triple bottom line. In The Triple Bottom Line, Does it All Add Up? Henriques, A.,
Richardson, J., Eds.; Earthscan Publications: London, UK, 2004; pp. 1–16.
73. Schaltegger, S.; Lüdeke-Freund, F.; Hansen, E.G. Business cases for sustainability: The role of business model
innovation for corporate sustainability. Int. J. Innov. Sustain. Dev. 2012, 6, 95–119. [CrossRef]
74. Adams, C.A.; McNicholas, P. Making a difference: Sustainability reporting, accountability and organisational
change. Account. Audit. Account. J. 2007, 20, 382–402. [CrossRef]
75. Abeysekera, I. A template for integrated reporting. J. Intellect. Cap. 2013, 14, 227–245. [CrossRef]
76. PwC. PricewaterhouseCoopers: “Confronting Corruption: The Business Case for an Effective Anti-Corruption
Programme”; PwC: London, UK, 2008; Available online: www.pwc.com/th/en/publications/assets/
confronting_corruption_printers.pdf (accessed on 29 January 2018).
77. Hess, D.; Dunfee, T. Taking responsibility for bribery: The multinational corporation’s role in combating
corruption. Bus. Hum. Rights 2003, 260–271. [CrossRef]
78. Sierra-García, L.; Zorio-Grima, A.; García-Benau, M.A. Stakeholder engagement, corporate social responsibility
and integrated reporting: An exploratory study. Corp. Soc. Responsib. Environ. Manag. 2015, 22, 286–304.
[CrossRef]
79. Enslin, Z.; Bruwer, W.; Viljoen, C. Enhancing risk-related disclosure in South Africa: A study on guidelines
and current practices. J. Econ. Financ. Sci. 2015, 8, 261–280.
80. Saggar, R.; Singh, B. Corporate governance and risk reporting: Indian evidence. Manag. Audit. J. 2017, 32,
378–405. [CrossRef]
81. Haller, A.; van Staden, C. The value-added statement—An appropriate instrument for Integrated Reporting.
Account. Audit. Account. J. 2014, 27, 1190–1216. [CrossRef]

© 2018 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access
article distributed under the terms and conditions of the Creative Commons Attribution
(CC BY) license (http://creativecommons.org/licenses/by/4.0/).