Chapter 1: Key Tools and Frameworks for Sustainability Disclosure

Currently, the traditional role of company’s corporate reporting is being extended not only to financial information but also to social and environmental ones.

According to Gray, Owen, and Adams (1996), such an extension is predicted on the assumption that companies do have wider responsibilities than simply making money for their shareholders. Companies’ failure to report on these matters will cause them to be unable to be accountable towards their stakeholders.

Corporate social disclosure (CSD) may be identified as the complex of information, mainly not financial, that a company decides to publish in order to communicate its performances concerning the impact on and relationship with the environment and the society. CSD is voluntary for companies even though sometimes it is requested as mandatory by regulators. For instance, the Directive 2014/95/EU on disclosure of nonfinancial and diversity information by certain large undertakings and groups requires companies to disclose in their management reports information on policies, risks, and outcomes referring to environmental matters, social and employee issues, respect for human rights, anticorruption and bribery issues, and diversity in their board of directors. This will provide investors and other stakeholders with a more comprehensive picture of a company’s performance. The new rules will only apply to large companies with more than 500 employees. This includes listed companies as well as other public interest entities, such as banks, insurance companies, and other companies that are so designated by Member States because of their activities, size, or number of employees. The scope includes approximately 6,000 large companies and groups across the European Union (EU).