From voluntary to mandatory non-financial disclosure following Directive 2014/95/EU: an Italian case study

Posted by Blerita Korca - Jun 16, 2021

Non-financial disclosure (or sustainability disclosure) in the European Union (EU) has been mandatory for few years now. The Directive 2014/95/EU requires large firms to report information covering aspects such as environmental, social and employee-related matters, respect for human rights, and anti-corruption and bribery concerns. Did this regulation improve the disclosure of non-financial information as aimed? 

In our article "From voluntary to mandatory non-financial disclosure following Directive 2014/95/EU: an Italian case study" published in Accounting in Europe (, we (with co-authors Ericka Costa and Federica Farneti) explore how the quality and quantity of non-financial diclsosure evolves in two reporting regimes (voluntary and mandatory) over a period of eight years. The paper relies on both primary and secondary data sources and results are interpreted in the light of institutional theory and production of normativity.  The use of institutional theory in this study is extended to not only explain the different reporting regimes but to also explain the different development level of disclosure themes.

Results show that the regulation caused the quantity of information to increase, but the quality instead was enhanced only for topics seen as important by the organisation. The banking group analyzed in this study considered social-related matters more relevant than their direct environmental impacts, as they consider their operational nature closely tied to people and not very detrimental to the environment. As a result, there is more high-quality disclosure on social matters than environmental ones.

Different institutional mechanisms co-existed in the evolution of disclosure during two reporting regimes. However, it must be noted that normativity was not achieved by the regulation alone. Voluntary reporting experience, mandatory disclosure, and the sense of “appropriateness” caused the organisation to disclose high-quality information for the topics they feel most accountable for.