The expansion of non-financial reporting: an exploratory study

Figures & data

Table 1. Heterogeneity in non-financial reporting concepts and definitions.

Reporting	Definition	Guidelines	Keywords
Sustainability reporting	‘An organization’s practice of reporting publicly on its economic, environmental, and/or social impacts, and hence its contributions – positive or negative – towards the goal of sustainable development’ (Global Sustainability Standards Board 2016)	Global Reporting Initiative^a	Economic impact Environmental impact Social impact Sustainable development
Sustainability	‘Sustainability refers to environmental, social and governance (ESG) dimensions of a company’s operation and performance. More specifically, sustainability includes both the management of a corporation’s environmental and social impacts, as well as the management of environmental and social capitals necessary to create long-term value. It also includes the impact of environmental and social factors on innovation, business models, and corporate governance’ (Sustainability Accounting Standards Board 2013, p. 7).	–	Environmental Social Governance Long-term value Innovation Business models
Corporate social responsibility [reporting]	‘Concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’ (European Commission 2001, p. 6). Corporate social responsibility is ‘the responsibility of enterprises for their impacts on society’ (European Commission 2011, p. 6).	–	Social concerns Environmental concerns Responsibility Impact on society
Integrated report	‘An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term’ (International Integrated Reporting Council 2013, p. 8).	Integrated Reporting Framework (IIRC)^b	Strategy Governance Performance Prospects Value creation
Integrated reporting	‘Process of building an integrated report by combining financial statements and sustainability reports into a coherent whole that explains company’s ability to create and sustain value’ (Deloitte 2015).	–	Financial statements Sustainability Value creation
Non-financial reporting	Non-financial [consolidated] statement: ‘information to the extent necessary for an understanding of the group’s development, performance, position and impact of its activity, relating to, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters including: a brief description of the group’s business model; a description of the policies pursued by the group in relation to those matters, including due diligence processes implemented; the outcome of those policies; the principal risks related to those matters linked to the group’s operations including, where relevant and proportionate, its business relationships, products or services which are likely to cause adverse impacts in those areas, and how the group manages those risks; non-financial key performance indicators relevant to the particular business’. (European Union 2014, articles 19a and 29a)	–	Development Performance Position Impact Environmental matters Social matters Employee matters Human rights Anti-corruption Bribery Business model

^aSee https://www.globalreporting.org/.

^bSee https://integratedreporting.org/.

Table 2. List of countries – DJSI World Index.

	N	%
Australia	17	5.8
Belgium	2	0.7
Brazil	6	2.1
Canada	8	2.7
Chile	1	0.3
Colombia	4	1.4
Denmark	3	1.0
Finland	2	0.7
France	24	8.2
Germany	19	6.5
Great Britain	32	11.0
India	3	1.0
Ireland	1	0.3
Italy	9	3.1
Japan	20	6.9
Korea	21	7.2
Netherlands	14	4.8
Norway	2	0.7
Portugal	2	0.7
Singapore	2	0.7
South Africa	6	2.1
Spain	16	5.5
Sweden	6	2.1
Switzerland	11	3.8
Taiwan	7	2.4
Thailand	5	1.7
USA	48	16.5
Total	291	100.0

Note: This table presents the number of analysed DJSI World Index constituents in 2015 per country.

Table 3. Titles of the reports published by DJSI World Index constituents.

	N	%
	Number of firms publishing a report with this title	of total number of firms
Annual report	219	75.3%
Financial report	33	11.3%
Annual and/or financial report total (number of firms)^a	250	85.9%
Annual report including a Sustainability report^b	33	11.3%
Sustainability report	105	36.1%
Sustainable development report	6	2.1%
Annual review (equivalent to sustainability report)	1	0.3%
GRI report	1	0.3%
Sustainability report total (number of firms)	113	38.8%
Corporate responsibility report	94	32.3%
Responsibility report	1	0.3%
CSR report total (number of firms)	95	32.6%
Integrated report	19	6.5%
Number of firms	291	100.0%

Notes: This table presents statistics of the reports published in 2014 by DJSI World Index constituents in 2015.

^aA few firms publish both reports, which explains the difference between 250 and 252.

^bThese numbers are coincidently identical to those for ‘Financial report’.

Table 4. Report title terminology (South Africa).

Firms	2006		2011			2016
Anglo American	Annual report		Annual report	Sustainable development report		Annual report	Sustainability report
Barclays Africa Group	Shareholder report		Annual consolidated and separate financial statements	Integrated annual report		Annual consolidated and separate financial statements	Integrated report
Kumba Iron Ore	Annual report		Annual financial statements	Integrated report	Sustainable development report	Annual financial statements	Integrated report	Sustainability report
Liberty Holdings	Annual financial statements		Integrated annual report, including audited annual financial statements	Annual financial results		Annual financial statement and supporting information	Integrated report
Nedbank	Annual report		Integrated report			Consolidated and separate annual financial statements	Integrated report	Sustainability review
Oceana Group	Annual report		Integrated report			Annual financial statements	Integrated report	Sustainability report
Redefine Properties	Annual report		Integrated annual report			Group annual financial statements	Integrated report	Social, ethics and sustainability report	Corporate governance report
Sasol	Annual financial statements	Annual review	Annual financial statements	Integrated annual report	Sustainable development report	Annual financial statements	Integrated report	Sustainability reporting supporting information to Integrated Report
Trutworths International	Annual report		Audited annual financial statements	Integrated annual report		Group audited annual financial statements	Social and environmental report	Integrated report
Vodacom Group	Annual report		Integrated report			Consolidated annual financial statements	Integrated report	Sustainability report

Table 5. Change in the content of South African reports from 2006 to 2016.

	N	2006	2006	2011	2011	2011 vs. 2006	2011 vs. 2006	2016	2016	2016 vs. 2011	2016 vs. 2011
		Mean	Median	Mean	Median	Mean difference (p-value)	Median difference (p-value)	Mean	Median	Mean difference (p-value)	Median difference (p-value)
Panel A – Statistical significance of changes in number of reports and length of reports from 2006 to 2016
Number of reports	10	1.1	1	1.7	1.5	0.6 (0.045)	0.5 (0.049)	2.8	3	1.1 (0.004)	1.5 (0.007)
Total number of pages	10	178.7	178.5	297.3	309.5	118.6 (0.021)	131 (0.031)	305.8	309	8.5 (0.841)	−0.5 (0.880)
	N	2006	2006	2011	2011	2011 vs. 2006	2011 vs. 2006	2016	2016	2016 vs. 2011	2016 vs. 2011
		Mean	Median	Mean	Median	p-value (t-test for mean difference)	p-value (Mann–Whitney Rank test)	Mean	Median	p-value (t-test for mean difference)	p-value (Mann–Whitney Rank test)
Panel B – Statistical significance of changes in number of pages per category of information from 2006 to 2016
Financial statements	10	90.4	89.5	118.5	92.0	0.283	0.384	121.4	117.3	0.909	0.705
Business	10	17.5	16.0	18.4	13.0	0.907	0.819	11.0	7.5	0.324	0.620
Environment	10	2.7	2.0	8.4	5.0	0.108	0.348	8.7	10.0	0.936	0.672
Governance	10	16.6	10.5	23.1	18.0	0.236	0.130	29.0	24.5	0.281	0.119
Human resources	10	2.7	1.0	12.6	14.0	0.002	0.002	9.8	11.0	0.316	0.324
Performance	10	6.3	3.5	27.5	13.0	0.030	0.037	28.6	27.5	0.906	0.384
Risk management	10	5.1	0.5	17.6	9.5	0.168	0.014	10.8	6.0	0.469	0.518
Shareholders information	10	2.3	1.3	3.9	1.0	0.565	0.699	1.4	1.5	0.370	0.969
Society	10	2.5	1.0	9.2	3.5	0.161	0.302	8.0	7.0	0.806	0.382
Strategy	10	0.9	0.0	18.0	6.0	0.012	0.001	18.5	17.5	0.949	0.849
Value creation	10	0.0	0.0	3.7	0.5	0.103	0.013	15.7	15.0	0.057	0.069
Administration and general	10	7.6	4.0	8.9	7.0	0.694	0.287	6.0	4.0	0.278	0.147
	N	2006	2006	2011	2011	2011 vs. 2006	2011 vs. 2006	2016	2016	2016 vs. 2011	2016 vs. 2011
		Mean	Median	Mean	Median	p-value (t-test for mean difference)	p-value (Mann–Whitney Rank test)	Mean	Median	p-value (t-test for mean difference)	p-value (Mann–Whitney Rank test)
Panel C – Statistical significance of changes in the percentage of pages per category of information from 2006 to 2016
Financial statements	10	0.505	0.445	0.388	0.393	0.065	0.059	0.396	0.353	0.892	0.880
Business	10	0.093	0.097	0.078	0.053	0.709	0.223	0.037	0.023	0.248	0.446
Environment	10	0.020	0.009	0.026	0.025	0.637	0.755	0.029	0.031	0.771	0.818
Governance	10	0.088	0.076	0.083	0.080	0.761	1.000	0.097	0.087	0.408	0.705
Human resources	10	0.016	0.007	0.046	0.044	0.010	0.023	0.032	0.035	0.160	0.174
Performance	10	0.033	0.026	0.083	0.050	0.076	0.059	0.094	0.092	0.668	0.226
Risk management	10	0.020	0.002	0.050	0.025	0.194	0.042	0.034	0.020	0.506	0.705
Shareholders information	10	0.014	0.009	0.010	0.005	0.584	0.361	0.005	0.005	0.385	0.939
Society	10	0.015	0.004	0.030	0.009	0.306	0.526	0.026	0.025	0.764	0.448
Strategy	10	0.004	0.000	0.070	0.021	0.019	0.001	0.060	0.060	0.726	0.880
Value creation	10	0.000	0.000	0.011	0.001	0.060	0.013	0.051	0.044	0.049	0.045
Administration and general	10	0.041	0.029	0.034	0.026	0.641	0.880	0.020	0.013	0.138	0.112
Category	Keywords
Panel D – Definition of categories
Administrative and general Information	Glossary; Administration; Index; Feedback form; Form of proxy; Corporate information; Abbreviations and definitions; Contact details.
Business	Our business; Business; Business model; Our business principles; Our context; Group at a glance; Operational activities; The company.
Environment	Environment; Our environment; Environmental sustainability; Environmental Impact ; Water; Energy.
Financial statements	Financial statements; Summarized financial statements; Notes to the financial statements.
Governance	Governance; Leadership and governance; Our governance structure; Remuneration report; Remuneration report; Board composition; Management structure; Corporate governance.
Human resources	Human resources; Human capital; Our people; Our employees; Investing in our staff; Workplace safety; Safety; Health; Remuneration policy.
Performance	Performance; Scorecard; Performance review; Delivering on our strategy; Key performance indicators; Scores; Delivering value; [Year X] data; [Year X] review; Delivering in [Year X].
Risk management	Risk management; Risk and opportunities; Our principal risk.
Shareholders information	Shareholders information; Shareholders details; Share information; Shareholders’ analysis; Ownership profile; Share analysis; Unitholder analysis; Ownership.
Society	Society; Social; BBBEE (Broad-Based Black Economic Empowerment, cf. BBBEE Amendment Act of 2013); Our communities; Empowerment; Fight against corruption; Product responsibility; Cultural sustainability; Social sustainability.
Strategy	Strategic matter; Group strategy; Operating context; Strategic context; Vision, mission and strategy.
Value creation	Value creation; Creating shared value; How we create value; How we sustain value.

Notes: p-values for mean differences are based on t-test. p-values median differences are based on Mann–Whitney Rank test. Significant changes (at less than 10%, two-sided) between periods are presented in bold characters.

Figure 1. Percentage of firms reporting CSR/sustainability information from 2002 to 2015 in the U.S. and in Europe. Source: Thomson Reuters Asset4.

Table

CSRreport	=	1 if the firm publishes a separate CSR/sustainability report or publishes a section in its annual report on sustainability, 0 otherwise
S&P500	=	1 if the firm is a constituent of the S&P500 stock index, 0 otherwise.
Sensitive_Industry	=	1 if the firm is in the following two-digit SIC codes: 10 ‘Metal Mining’, 13 ‘Oil and Gas Extraction’, 26 ‘Paper’, 28 ‘Chemical and Allied Products’, 29 ‘Petroleum Refining’, 33 ‘Metals’, 49 ‘Electric, Gas and Sanitary Services’ (Cho and Patten 2007).
PPE	=	property, plant and equipment divided by lagged total assets.
CSR_Score	=	sum of Asset 4 environmental score and social performance score.
SIZE	=	natural logarithm of total assets.
ROA	=	earnings before extraordinary items divided by total assets.
LEV	=	total debt divided by total assets.
MTB	=	firm market-to-book ratio.

Table 6. CSR/sustainability reporting in Europe vs. the U.S.

	S&P500				Eurostoxx600
	N	Mean	Median	St. Dev	N	Mean	Median	St. Dev	Diff Mean
Panel A: Descriptive statistics
CSR_Reporting	5,007	0.384	0.000	0.487	5,500	0.638	1.000	0.481	−0.253	***
Sensistive_Industry	5,007	0.234	0.000	0.423	5,500	0.223	0.000	0.416	0.011
PPE	5,007	0.461	0.334	0.410	5,500	0.431	0.321	0.390	0.030	***
CSR_Score	5,007	107.794	108.400	56.970	5,500	142.983	162.815	49.021	−35.189	***
SIZE	5,007	9.534	9.447	1.326	5,500	9.486	9.243	1.783	0.048
ROA	5,007	0.062	0.057	0.074	5,500	0.055	0.044	0.084	0.007	***
LEV	5,007	0.255	0.235	0.176	5,500	0.241	0.229	0.163	0.015	***
MTB	5,007	1.779	1.385	1.404	5,500	1.397	1.029	1.876	0.382	***
	Coeff.	St.Error	p-value
Panel B – Determinants of CSR/sustainability reporting
S&P500	−1.319	0.072	0.000
[Marginal effect]	[−31.5%]
Sensitive_Industry	0.247	0.082	0.003
[Marginal effect]	[ + 6.1%]
PPE	0.273	0.085	0.001
CSR_Perf	0.036	0.001	0.000
SIZE	0.143	0.027	0.000
ROA	0.952	0.522	0.068
LEV	0.069	0.201	0.733
MTB	−0.054	0.028	0.051
Year fixed Effects		Yes
Constant	−9.625	0.387	0.000
N		10,507
Pseudo R²		0.584

Notes: ***, ** and * denote significance (two–tailed) at the .01, .05 and .10 levels, respectively. Marginal effects are included in brackets for dummy variables. CSR_Reporting = 1 if the firm publishes a separate sustainability report or publishes a section in its annual report on sustainability, 0 otherwise. S&P500 = 1 if the firm is a constituent of the S&P500 stock index, 0 otherwise. Sensitive_Industry = 1 if the firm is in the following two-digit SIC codes: 10 ‘Metal Mining’, 13 ‘Oil and Gas Extraction’, 26 ‘Paper’, 28 ‘Chemical and Allied Products’, 29 ‘Petroleum Refining’, 33 ‘Metals’, 49 ‘Electric, Gas and Sanitary Services’ (Cho and Patten 2007). PPE = property, plant and equipment divided by lagged total assets. CSR_Score = sum of Asset 4 environmental score and social performance score. SIZE = natural logarithm of total assets. ROA = earnings before extraordinary items divided by total assets. LEV = total debt divided by total assets. MTB = Firm market-to-book ratio.

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