The transition toward mandatory non‐financial disclosure: a systematic literature review

In the current socio‐economic context, an increasing number of companies are paying attention to the repercussions that their production activity has on the community and the environment. In the wake of this global trend, the non‐financial information that companies disclose to their stakeholders has assumed and is assuming a pivotal importance. For many years, non‐financial information disclosure has been conducted on the basis of voluntary initiatives carried out autonomously by various companies; this has led to the spread of different reporting practices and standards, which make the comparison of the different approaches adopted and the related results. Furthermore, this kind of voluntary reporting has not always succeeded in preventing information asymmetries and opportunistic behaviors by the companies’ top management. The reasons are mainly related to the fact that, being not mandatory some companies may have decided to report exclusively economic and financial information or, in other cases, they may have omitted information regarding the negative impacts of the organization on the environment and the society. Non‐financial disclosure, however, should be aimed to make social and environmental performance easily accessible to investors and consumers, harmonizing it with the economic and financial one. In this context, the European directive 2014/95 / EU, of 22 October 2014, imposes to the company a key novelty, i.e., making non‐financial reporting mandatory by law. It is evident that the transition from voluntary to mandatory non‐financial disclosure is greatly fueling this line of research. On this point, academics and policy makers have started to discuss the difficulty for companies to adopt a business model based on a mandatory sustainable paradigm.