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Purpose/Aim: Over the last quarter of a century, several voluntary frameworks and non-financial reporting standards have been developed by various initiatives and organisations. Especially after the 2008 financial crisis, which deepened into values crises, the need for evaluating social, environmental, and economic consequences and herein for non-financial disclosures accrued. This chapter aims to outline the current state in the ecosystem for non-financial reporting and its projected future developments and suggests further developments in this field. Since financial institutions played a negative role in the crises and will be important in future responsible investing, the authors also addressed some financial institutions’ specific non-financial issues.

Method: In search of an answer to our questions about whether existing non-financial reporting pronouncements meet (various) stakeholders’ expectations and whether international pronouncements are needed, we rely on triangulation. We start with the identification of phenomena of non-financial reporting. Description of phenomena is further on supplemented with a literate overview. Based on a review of prior research and study of the current framework’s pros and cons, we present a possible path of further development in non-financial reporting. Making that mixed-methodological approach is used (i.e. deductive and inductive reasoning).

Results/Findings: The authors deduce that there has been a substantial increase in demand for non-financial information, social responsibility ratings and other non-financial information services on behalf of preparers, users of such reports and the public. The authors particularly highlight the shortcomings that currently exist and outline the characteristics that future international non-financial reporting frameworks would have to meet with the awareness that such framework or standards will have their advantages and disadvantages. As seen by the authors, the main problem is how to achieve political consensus and then general acceptance by users.

Originality/Significance: The International Financial Reporting Standards (IFRS) Foundation has become active in the field of non-financial reporting and started a project to become an internationally recognised standard-setter. However, with many mandatory or voluntary initiatives being started in this field, IFRS Foundation will need to address many challenges and ambiguities to become a leading organisation in non-financial reporting. Therefore, the research question is whether a new board, comparable to the International Accounting Standards Board, with the straightforward task of setting non-financial reporting standards would be needed in the future.

This study aims to verify whether non-financial disclosure in the construction industry (CI) responds to stakeholders’ information needs and explores the most frequent topics disclosed in terms of the environmental, social and governance (ESG) pillars.

This study uses a bag-of-words method and latent Dirichlet allocation to match stakeholders’ expectations with information disclosed by companies. This paper assesses the publicly available non-financial disclosure of the 46 European CI companies covered by the Refinitiv database with ESG scores.

This study provides two main findings. First, it shows the mismatch between stakeholders’ information needs and what they get in non-financial reporting. Despite non-financial information in CI disclosure, the information disclosed by many CI companies does not meet their users’ information needs. CI companies commonly focus on their sustainable products and health policy while omitting other topics of interest – the circular economy, unethical business behaviour, migrant policy and human trafficking. Second, this study indicates the defects of simple disclosure analysis based on keywords and highlights the importance of context in information analysis.

The proposed novel approach to text analysis offers several practical applications. It is a more effective tool for evaluating companies’ sustainability performance. It may be especially important to ESG rating providers. Additionally, the results may be of interest to companies wishing to improve their communication, and, in particular, to regulators and standard setters in two matters. The first is the need for more pressure to increase awareness among issuers to shift from disclosing large amounts of non-financial information to disclosing good quality non-financial information, which would be appropriate for meeting stakeholders’ expectations. The second is the necessity for deepening issuers’ understanding of the diverse stakeholders’ information needs, considering the substantial differences among industries and improving communication to meet them.

This study introduces text analysis that, apart from keywords, considers the context of these keywords’ appearances in a report’s narration. It allows a significantly improved understanding of the information disclosed and a more stable grounding for reasoning, leading to better and informed decisions. Moreover, this study verifies how the information disclosed matches stakeholders’ needs. Finally, it enriches the literature on sectoral analysis concerning non-financial disclosure.

Research has called for increased relevance of business reporting. A step towards that goal is an increased disclosure of non‐financial information. At the present time, non‐financial information is mostly provided on a voluntary basis.

Valuation relevance of non‐financial information is studied by examining the information content of 200 analyst reports written on a respective number of firms listed in the S&P 500 index, while simultaneously performing a disclosure study of non‐financial information by the same 200 firms in their annual reports.

We found the valuation relevance of non‐financial information to be related to the size of the target firm. Further, analysts’ use of non‐financial information is related to the level of non‐financial information in the 10‐k report of the target firm. Finally, analysts tend to rely more heavily on forward‐looking non‐financial information than on historical non‐financial information.

The findings in this paper have implications for policy makers, preparers of business reporting, and others having to make judgments on information usefulness.

This study looks at the valuation relevance of non‐financial information, as opposed to earlier studies that have judged the usefulness of non‐financial information by measuring its value relevance. Information is regarded to have valuation relevance if it is used by analysts in the valuation process. Hence, valuation relevance offers an alternative way of measuring information usefulness.

This study aims to provide evidence of how budget officers use non-financial and accrual-based cost information in the budgeting process and how the usage of this information is influenced by financial constraints.

A randomized survey-based field experiment investigating budget officers in 546 Japanese local governments (LGs) was conducted. This allowed us to identify the budget officers' decision-making in the public sector budgeting process by creating and analyzing primary data with regression models.

We found that budget officers suppress budget amounts based on non-financial information of good performances. Under fiscal constraints, officers further reduce budget amounts using information on high accrual-based costs and poor non-financial performance.

Our survey-based field experiment allowed us to obtain primary data from officers making budget decisions. To the best of our knowledge, this study provides the first evidence that non-financial good and poor performance information and accrual-based cost information affect budget officers' decision-making under financial constrain.

The purpose of this paper is to analyse the management teams' views regarding different aspects related to the disclosure of non‐financial information in the annual report. The focus is on the following aspects: incentive, quantity, focus, use of non‐financial key performance indicators (KPIs) and trends.

The data are based on a comprehensive questionnaire survey addressed to investor‐relation managers (IRMs) at the largest companies listed on the Stockholm Stock Exchange.

The study confirms an increasing focus of non‐financial information related to intangible assets in corporate disclosure. This increase appears to be both regulatory and demand driven. Encouraging indeed is that management teams seem to have acknowledged the importance not only to describe the less tangible values per se, but also to explain the roles they play in the value‐creation process and in corporate strategy. Furthermore, the study reveals a trend shift from research and development (R&D) and relational information towards corporate social responsibility (CSR) and employee‐related information, an increasing number of non‐financial KPIs and a positive attitude to mandatory requirements. Overall, the findings indicate that voluntary disclosure compensates for the deficiencies of financial statements to properly disclose intangible assets. This may lessen the risk of the argued impairment of the efficient allocation of resources on the stock market.

The findings reveal that quite a few challenges lie ahead in shaping efficient corporate disclosures where also intangible assets are in focus. The most critically relate to dealing with the concerns of reliability and comparability associated with disclosures of intangible assets and their related non‐financial KPIs. This needs to be taken on promptly by management teams, policy makers and financial market regulators if the corporate‐disclosure process shall function efficiently and facilitate decreased information asymmetry and uphold an efficient allocation of resources on the stock market.

Herein not only one aspect related to disclosure of non‐financial information is being analysed, but also several and from a management‐team perspective, which is a perspective often neglected for the sophisticated‐user perspective.

The purpose of this paper is to link the fields of research on strategic decision (SD) making and integrated reporting (IR) and advances knowledge of the concept of integrated thinking by describing how financial information and non-financial environmental, social and governance (ESG) information are used in different phases of the strategic decision-making process (SDMP).

In total, 15 senior executives from twelve different industries were asked about the importance of different types of information within SDMPs. The data were analyzed by means of content analysis.

The authors derive a four-phase model and explicate the utilization of financial information and non-financial ESG information within each phase. The findings show that both types of information affect SDMPs, but the importance of each type differs among the phases.

This study offers practitioners a yardstick against which to compare how they use different types of information throughout the SDMP.

This paper provides a conceptual model of integrated thinking in SD making by connecting two separate fields of research. This connection will permit deeper study of the field of information and its implications for SD making. The present investigation shows that IR can promote integrated thinking in companies, as the broader range of information at hand allows companies to form a holistic picture of internal management questions and incorporate information that has not been previously prepared or associated with existing information.

The purpose of this paper is to evaluate blockchain’s enabling role for sustainability reporting. This study extends the scientific knowledge about the impacts related to the notarisation of mandatory sustainability reports through a publicly available blockchain.

Building on the idea journey framework, this paper presents the case study of Banca Mediolanum in Italy, a first-mover who notarised its non-financial declaration on a public blockchain to mitigate the information asymmetries that negatively impact stakeholder engagement.

The analysis reveals that the notarisation of the non-financial reports through a publicly available blockchain can represent a tool useful to mitigate the asymmetric information between organisations and stakeholders.

Although academics and practitioners have observed the benefits of its implementation, only a few companies have adopted blockchain systems to ensure their information’s reliability. The findings underline the opportunity for socially responsible organisations to signal their orientation towards sustainable development through the adoption of an innovative tool.

The proliferation of non-financial reports prepared on mandatory basis mitigated the signalling effects related to the disclosure of non-financial information. The case study underlines the opportunity for socially responsible organisations to overcoming this criticism through notarisation.

To the best of the authors’ knowledge, this is the first study about sustainability reporting practices and blockchain. This research contributes to the currently scarce discussion about the role of blockchain in non-financial reporting. In addition, the authors contribute to the scientific conversation about the need to rethink assurance in non-financial reporting practices.

This paper aims to investigate whether managers use impression management through the presentation of non-financial information in an integrated reporting setting.

The authors performed an experiment with experienced professional controllers and part-time students enrolled in the executive master’s degree in finance and control at universities in the Netherlands. In this experiment, we manipulated the financial performance to test if managers present non-financial information differently based on the firm’s financial performance.

This study found that impression management is not applied by including or excluding non-financial key performance indicators (KPIs) in the integrated report, but by using more prominent presentation forms for positive non-financial performance and non-prominent ones for negative non-financial performance. However, the use of impression management through the presentation form decreased when the firms’ financial performance was positive. In that instance, this study noted that managers statistically significantly more often decided to present poor non-financial performance in a prominent presentation format in comparison to managers who were not aware of the financial performance.

A limitation of this paper is that the authors focused on only two impression management strategies: opportunistic/under-reporting and the presentation form. This analysis shows that the use of impression management mainly seems to occur through the presentation format. Future research could investigate other impression management strategies in an integrated reporting setting.

The results of this study are of importance for users of integrated reports, because it will provide more insight into whether firms are truly transparent in their integrated reports. Furthermore, the theoretical implication of this study is relevant to regulatory authorities, because it sheds light on the different forms of impression management used in integrated reporting and the influence of positively or negatively performing KPIs on the decisions of preparers of integrated reports.

Therefore, in this study, the authors add to prior literature by investigating the concept of impression management in an integrated reporting setting. More specifically, the authors perform an experiment and focus on different forms of impression management (the presentation format and under-reporting) through non-financial KPIs in an integrated reporting setting and link it to firm financial performance.

The purpose of this paper is to evaluate the effectiveness of the comply-or-explain principle in the Italian context. In particular, the analysis will evaluate, which factor impact on firms' voluntary adoption of this tool to adequate their non-financial reports to the legal requirements of Directive 95/2014/EU.

The methodology consists of two different levels of analysis. The first part is statistical descriptive, and it consists of a rhetorical analysis on the justifications provided by the firms about their omissions to comply with Directive 95/2014/EU. The second part is inferential and its aim is to evaluate, which factors impact on comply-or-explains adoption.

The findings reveal how the comply-or-explain application in Italy has been characterized by several criticisms. The result highlight how the justifications adopted by the firms is influenced by their sector of activity and omission's type. Moreover, the analysis suggests how the sector of activity and the level of adherence to global reporting initiative influenced the average number of omissions.

The limitations of the research are represented by the focuses on a single country and by the short period of analysis. In this sense, future research could be addressed to the analysis of countries different from Italy. Moreover, accounting scholars could provide further contributions to the political debate through the evolution of the “comply-or-explain” principle’s strategies over the years.

The practical implications connected to the present research are twofold. The first one is represented by the possibility for policymakers to increase the degree of attention about the use of comply-or-explain as legitimization's tool. The second one is represented by the possibility for practitioners to identify a new reporting framework.

The social implications are represented by the possibility for stakeholders to evaluate the reliability's degree of the disclosure produced by Italian public interest entities after the implementation of Directive 95/2014/EU.

Despite the growing attention paid by academics regard Directive 95/2014/EU, this is the first attempt to analyze the comply-or-explain from a rhetorical perspective.

Research dealing with non-financial reporting formats in public sector organizations is progressively expanding. This paper systematizes the existing literature with the aim of understanding how research is developing and identifying the gaps in need of further investigation.

A structured literature review was conducted by rigorously following the steps defined in previous studies. The structured nature of the literature review paves the way for a solid understanding and critical analysis of the state of the art of research on non-financial reporting formats in public sector organizations.

The critical analysis of the literature shows that most existing studies have focused on sustainability reporting in higher education institutions, local governments and state-owned enterprises, while remaining silent on the healthcare sector. Additional theoretical and empirical approaches should feed future research. Several areas deserve further investigations that might impactfully affect public sector organizations, standard setters, practitioners and scholars.

This paper offers a comprehensive review of the literature on different reporting formats that public sector organizations adopt to report various dimensions of their performance to both internal and external stakeholders. The structured literature review enables the identification of future directions for the literature in this field.