Motivations Behind Non-Financial Disclosure – An Interview-Based Research about the Organizational Communication of Public Interest Entities

Abstract

THE AIM OF THE PAPER

One channel of communication with stakeholders about environmental, social and governance (ESG) information is the non-financial report. Publication of such reports is compulsory for public interest entities in the European Union from the 2017 business year onwards. In our present research, we examined this regulation and the reporting-related motivations and decisions of the companies listed on the Hungarian stock exchange subject to Directive 2014/95/EU. The aim of our study is to identify the factors influencing the content and format of sustainability-related disclosures.

METHODOLOGYIn the course of our research, we conducted expert interviews with communication professionals of reporting companies, an auditor, and an institutional investor. Corporate communication related to sustainability is an integral part of the work of all our interviewees, whether they are responsible for producing of such data or are present as users of ESG information.MOST IMPORTANT RESULTSThe motivating role of the information needs of the stakeholders formulated in the literature has been proved: key roles are primarily played by investors, as well as employees and customers. The best-known standard is the GRI, and entities follow the requirements of a number of rating agencies when compiling reports. The interviews revealed that it is a challenge for reporting firms and stakeholders to produce good-quality data and to evaluate those as a consequence of the diversity of non-financial information.

RECOMMENDATIONS

Due to the diversity of non-financial information and the wide range of forms of communication, it is difficult for stakeholders to compare the non-financial performance of individual companies. It is therefore recommended for entities to use one of the widely accepted standards (e.g. GRI). In the interests of stakeholders, regulators are encouraged to consider a standardized format for reporting purposes.

Acknowledgements: This research was supported by the project nr. EFOP-3.6.2-16-2017-00007, titled Aspects on the development of intelligent, sustainable and inclusive society: social, technological, innovation networks in employment and digital economy. The project has been supported by the European Union, co-financed by the European Social Fund and the budget of Hungary.