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This paper introduces the special issue “Rebuilding trust: Sustainability and non-financial reporting, and the European Union regulation”. Inspired by the studies published in the special issue, this study aims to examine the concept of accountability within the context of the European Union (EU) Directive on non-financial disclosure (hereafter the EU Directive) to offer a critique and a novel perspective for future research into mandatory non-financial reporting (NFR) and to advance future practice and policy.

The authors review the papers published in this special issue and other contemporary studies on the topic of NFR and the EU Directive.

Accountability is a fundamental concept for building trust in the corporate reporting context and emerges as a common topic linking contemporary studies on the EU Directive. While the EU Directive acknowledges the role of accountability in the reporting practice, this study argues that regulation and practice on NFR needs to move away from an accounting-based conception of accountability to promote accountability-based accounting practices (Dillard and Vinnari, 2019). By analysing the links between trust, accountability and accounting and reporting, the authors claim the need to examine and rethink the inscription of interests into non-financial information (NFI) and its materiality. Hence, this study encourages research and practice to broaden mandatory NFR practice over the traditional boundaries of accountability, reporting and formal accounting systems.

Considering the challenges posed by the COVID-19 crisis, this study calls for further research to investigate the dialogical accountability underpinning NFR in practice to avoid the trap of focusing on accounting changes regardless of accountability. The authors advocate that what is needed is more timely NFI that develops a dialogue between companies, investors, national regulators, the EU and civil society, not more untimely standalone reporting that has most likely lost its relevance and materiality by the time it is issued to users.

By highlighting accountability issues in the context of mandatory NFR and its linkages with trust, this study lays out a case for moving the focus of research and practice from accounting-based regulations towards accountability-driven accounting change.

This paper discusses the current state of research into Directive 2014/95/EU and non-financial disclosure (NFD), with the aim of offering a future research agenda.

The authors have conducted a systematic literature review of 78 studies spanning seven years (2014–2020) that address Directive 2014/95/EU.

The literature review revealed four main avenues for future research. First, future studies could focus on addressing issues related to the EU Directive's potential impacts, both in terms of NFD and companies' financial performance. Second, because context plays an important role in defining the regulation's impact, future research should consider these contextual factors in NFD. Third, further research should investigate the interplay between the binding requirements of the Directive and the non-binding guidelines suggested to implement it. Finally, future research would do well to employ additional theoretical approaches in order to interpret the Directive's diverse effects for various countries, organisations and timelines.

This research agenda is intended to help scholars in this field to understand what has yet to be known in order to develop a complete understanding of the EU Directive on non-financial information disclosure.

Focussing on the Directive's implementation across countries and organisations with a longitudinal approach, this paper could indicate whether or not mandatory reporting enhances non-financial information disclosure and consequently, organisational actions. This work could inform both companies' and policymakers' approach to disclosure, whether mandatory or otherwise.

To date, many studies have focussed on specific issues regarding the EU Directive. This paper, however, presents the first systematic literature review considering the current state of research into the EU Directive, thus drawing a future research agenda.

Motivated by claims that the International Integrated Reporting Framework (IRF) can be used to comply with Directive 2014/95/EU (the EU Directive) on non-financial and diversity disclosure, the purpose of this study is to examine whether companies can comply with corporate reporting laws using de facto standards or frameworks.

The authors adopted an interpretivist approach to research along with current regulatory studies that aim to investigate business compliance with the law using private sector standards. To support the authors’ arguments, publicly available secondary data sources were used, including newsletters, press releases and websites, reports from key players within the accounting profession, public documents issued by the European Commission and data from corporatergister.com.

To become a de facto standard or framework, a private standard-setter requires the support of corporate regulators to mandate it in a specific national jurisdiction. The de facto standard-setter requires a powerful coalition of actors who can influence the policymakers to allow its adoption and diffusion at a national level to become mandated. Without regulatory support, it is difficult for a private and voluntary reporting standard or framework to be adopted and diffused. Moreover, the authors report that the <IRF> preferences stock market capitalism over sustainability because it privileges organisational sustainability over social and environmental sustainability, emphasises value creation over holding organisations accountable for their impact on society and the environment and privileges the entitlements of providers of financial capital over other stakeholders.

The authors question the suitability of the goals of both the <IRF> and the EU Directive during and after the COVID-19 crisis. The planned changes to both need rethinking as we head into uncharted waters. Moreover, the authors believe that the people cannot afford any more reporting façades.

The authors offer a critical analysis of the link between the <IRF> and the EU Directive and how the <IRF> can be used to comply with the EU Directive. By questioning the relevance of the compliance question, the authors advance a critique about the relevance of these and other legal and de facto frameworks, particularly considering the more pressing needs that must be met to address the economic, social and environmental implications of the COVID-19 crisis.

Motivated by the enactment of non-financial reporting regulations by the European Parliament, this paper aims to investigate the impact of European Union (EU) directive 2014/95/EU on the quantity of environmental, social and governance (ESG) disclosures by the S&P Europe 350 index firms. This study also investigates whether the implementation of the non-financial information (NFI) reporting regulations influences the association between ESG disclosures and firms’ earnings risk.

To measure the impact of mandatory regulations on the quantity of ESG disclosures, this study estimates the average treatment effects using a propensity weighted sample. Then this study uses the difference-in-differences method to estimate the differences in the association between ESG disclosures and earning risk before and after implementation of the EU directive.

The results show a significant positive impact of the EU directive on the quantity of ESG disclosures for the sample European public-interest entities, which indicates that the mandatory NFI reporting requirements could boost the availability of increasingly demanded ESG related information. The enhanced association between the ESG disclosures and firms’ earnings risk during the post-directive period reveals that mandating NFI reporting also increases the quality of ESG disclosures.

Using the legitimacy and decision-usefulness theories, this study provides novel evidence concerning the impact of the EU directive on the quantity and quality of ESG disclosures.

This paper aims to investigate how firms disclose the presentation and content of business model (BM) information in corporate reports to manage their legitimacy in response to European Directive 2014/95.

Legitimacy theory is used to identify disclosure strategies pursued by firms in reaction to the new regulation. To understand how firms adopt these strategic responses, semiotic analysis is applied to a sample of European companies’ reports through Crowther’s (2012) framework, which is based on a mechanism of binary oppositions.

Half of the sample strategically choose to comply with the European Union (EU) Directive regarding BM information through the use of non-accounting language, figures, and diagrams. Other firms did not disclose any substantive information but managed the impression of compliance with the regulation, while the remainder of the sample dismissed the regulation altogether.

This study demonstrates how organisations use the disclosure of BM information in their corporate reports to control their legitimacy. The results support the idea that firms can acquire legitimacy by complying with the law or giving the impression of compliance with the regulation. This study provides evidence on the first-time adoption of the EU Directive, and therefore, future research can enlarge the sample and conduct the analysis over a broader time frame.

A more precise indication of the EU Directive regarding “where” firms should report BM information, “how” the description of a BM should refer to the environmental, social, governance (ESG) factors, and a set of performance measures to track the evolution of a company’s BM overtime is needed.

While there has been a notable amount of research that has applied content analysis methodologies to investigate the thematic and syntactic aspects of BM disclosure in corporate reports, only a few studies have investigated BM disclosures in relation to the EU Directive. Furthermore, the application of semiotic analysis extends beyond traditional content analysis methodologies because it considers the structure of the story at many levels, thus developing a more complete textual picture of how BMs are described, allowing an analysis of the reasons behind the disclosure strategies pursued by firms.

This paper aims to examine the European Union (EU) 95/2014 Directive’s impact on large public companies. It chose Italy as a pivotal country that made non-financial information assurance mandatory, going beyond the EU Directive’s original requirements. Specifically, it investigates how the UE Directive fosters institutionalisation of the non-financial reporting (NFR) process in organisations.

Two large public companies in Italy are used as case studies. Data are gathered from annual and integrated reports, institutional websites and semi-structured interviews with the managers and employees involved in different organisational positions. The authors adopted the neo-institutional theory as a theoretical lens to identify the organisations’ response to the (external) institutional pressures influencing corporate reporting practices.

The findings demonstrate how the EU Directive fostered changes to large public companies’ reporting practices and external pressures contributed to influencing changes to internal organisational practices in terms of new internal processes, procedures and structures. These changes are motivated by the companies’ need to guarantee reliable information to be produced in their non-financial reports.

This paper helps academics and policymakers to advance NFR practices by understanding regulatory factors that can foster changes in the internal reporting process and responsibility within organisations.

The findings provide some empirical insights to foster reflections on the EU Directive’s effectiveness in changing reporting practices. This paper contributes to enriching the literature on institutional theory in shaping mandatory non-financial disclosure by identifying the institutional pressures influencing the effectiveness of regulations to change NFR practices.

This paper examines the gap between reporting and managers’ behaviour to challenge the current theoretical underpinnings of intellectual capital (IC) disclosure practice and research. The authors explore how the key features from IC and integrated reporting can be combined to develop an extended model for companies to comply with EU Directive 2014/95/EU and increase trust in corporate disclosures and reports.

This essay relies on academic literature and examples from practice to critique the theories that explain corporate disclosure and reporting but do not change management behaviour. Based on this critique, the authors argue for a change in the fundamental theories of stewardship to frame a new concept for corporate disclosure incorporating using a multi-capitals framework.

We argue that, while the inconsistency between organisations’ reporting and behaviour persists, increasing, renewing or extending the information disclosed is not enough to instil trust in corporations. Stewardship over a company’s resources is necessary for increasing trust. The unanticipated consequences of dishonest behaviour by managers and shareholders compels a new application of stewardship theory that works as an overarching guide for managerial behaviour and disclosure. Emanating from this new model is a realisation that managers must abandon agency theory in practice, and specifically the bonus contract.

We call for future empirical research to explore the role of stewardship theory within the dynamics of corporate disclosure using the approach. The research implications of those studies should incorporate the potential impacts on management behaviours within a stewardship framework and how those actions, and their outcomes, are disclosed for rebuilding public trust in business.

The implications for integrated reporting and reports complying with the new EU Directive are profound. Both instruments rely on agency theory to coax managers into reducing information asymmetry by disclosing more. However, agency theory only re-affirms the power managers have over corporate information. It does not change their behaviour, nor to act in the interest of all stakeholders as the stewards of an organisation’s resources.

We advocate that, in business education, greater emphasis is needed on how stewardship has a more positive impact on management behaviour than agency, legitimacy and stakeholder theories.

We reflect on the current and compelling issues permeating the international landscape of corporate reporting and disclosure and explain why current theories which explain corporate disclosures do not change behaviour or engender trust in business and offer an alternative disclosure model based on stewardship theory.

The 1995 EU Directive on data protection legislation (DPL) ensures free flow of data within the EU. However, the transfer to countries without adequate DPL is generally forbidden. The effect of this Directive on the business of MNCs is still unknown but a few authors foresee major problems for MNCs doing business in Europe. On the eve of the implementation of the new EU data protection directive this preliminary study investigated some of the effects the new DPL Directive might have on MNCs doing business in Europe as seen by representatives of European and US MNCs. The study found that especially those companies transferring customer data across national boundaries are most affected by strict DPL. However, the effects mentioned by interviewees were, in contrast with popular literature on this topic, not exclusively negative. Several positive effects of strict privacy guidelines for MNCs could also be identified.

This paper investigates the quality and quantity of climate-related information disclosed by public interest entities (PIEs) in the non-financial disclosure scenario. Thus, this paper aims at drafting the state of the art on what is climate-related information disclosed by PIEs in the changing EU non-financial regulation assuming the Italian scenario and the industrial industry as significant in achieving the research aims.

The authors used the content analysis composing the sample of 34 large listed companies (i.e. PIEs) belonging to the industrial sector in Italy. The authors choose the Italian PIEs’ sustainability reports published in 2019 after the adoption of the EU directive and its guidelines. The authors adopted a coding and classification system, investigating the climate-related information through a systematic, objective and reliable method. The authors defined 99 indicators along the structure of the European Commission's guidelines and the indicator of disclosure, climate-related information indicator (CII). The framework mainly derives from the corporate disclosure theory and legitimacy and stakeholders' theories.

The results show the lack of several required climate-related information or a not in-depth presentation of information. Thus, findings are interesting in emphasizing that the current climate-related disclosure is at an early stage in complying with the European Commission's guidelines. Additionally, the findings enlarge previous theories on corporate disclosure, proposing new insights in the light of the recent interest in climate-related information.

Evidence contributes to extending the existing literature, drafting the state of the art of what is the quality and the quantity of the climate-related information in the corporate disclosure in the European scenario.

This paper is directed to propose the state of the climate-related disclosure following the EU directive guidelines, proposing some evidence to support the path toward the integrations of information by several parts (e.g. companies, regulators and so on).

The paper is a useful baseline for academics, practitioners, policy-makers and regulators in understanding actions to adopt in the climate-related disclosure and what could be the impact of forthcoming regulations in the field, also having some metrics (e.g. score value of disclosure, the indicator of climate-related information disclosure – CII).

This paper aims to investigate how relational connectivity can enhance accountability through non-financial reporting regulation in Europe. The paper contributes to the mandatory disclosure literature and provides practical implications for the application of the EU Directive 2014/95/EU.

A case study research methodology is used, analyzing how a listed Italian insurance company embraces a dialogic communication approach with stakeholders along 2018.

From a theoretical standpoint, this paper enhances the scholarly understanding of the relevance and role of the concept of relational connectivity as a mean for effectively enhancing accountability, providing some prerequisites for effectively implementing relational connectivity. From a practical perspective, results address the criticism related to the directive 2014/95/EU guidelines in effectively helping the organization toward enhancing accountability. Through a case study, results show how companies can achieve in practice the goal of enhancing corporate accountability.

The paper is original, as it addresses the topic of relational connectivity applied to the EU Directive 2014/95/EU. Results contribute to the development of the understanding of the mandatory disclosure in a dialogic perspective. Additionally, the paper addresses a case study showing how the analyzed company used relational connectivity to engage an effective dialogue with stakeholders.