Assessment of the Mandatory Non-Financial Reporting of Romanian Companies in the Circular Economy Context.

Camelia-Daniela Hategan,Nicoleta-Daniela Milu,Ruxandra-Ioana Pitorac

doi:10.3390/ijerph182412899

Camelia-Daniela Hategan, Nicoleta-Daniela Milu + Show 1 more

Open Access

https://doi.org/10.3390/ijerph182412899

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Abstract

Between the circular economy and corporate social responsibility, there is an ever-closer connection. Non-financial reporting of social responsibility actions is based on the circular economy concept, so reporting contributes to increasing the level of disclosure of circular strategies. In this context, large companies are required to report non-financial information to understand their activities better. The paper’s objective is to assess the mandatory non-financial reporting of Romanian companies active in the non-financial sector for 2017–2019. The empirical analysis consisted of creating and awarding an evaluation score to the reports of the companies. An econometric model was tested using a feasible generalized least squares (FGLS) regression to identify the link of the obtained Score with a series of variables representing the characteristics of the companies: Information on a website (I), Foreign ownership (F), Private ownership (P), Listed company (L), Return on assets (ROA), and Return on equity (ROE). Research results highlight a positive correlation between Score and all variables statistically significant in the model. Our study empirically validated the link between non-financial reporting and financial performance. The practical implications for managers can be to focus on improving the quality of non-financial reporting by better presenting the sustainability actions in a circular economy context.

Highlights

The financial situation expressed by Return on equity (ROE) showed that the average ROE was negative (−0.18), which means that the loss of companies significantly diminished their equity, the negative influence being mainly due to some state-owned companies
Previous research shows a high level of integration between corporate social responsibility and the circular economy that can benefit companies by reducing costs, access to capital, customer relations and innovation [66]
The EC builds on the sustainable concepts of corporate social responsibility (CSR) and turns them into practices [68]

Summary

Introduction

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Companies worldwide have begun making increasing efforts to sustain the economic chain concerning sustainability regulations. As natural resources are increasingly scarce, air quality is deteriorating, water and soil are increasingly polluted, and international companies are more concerned with waste management using the best technologies. Bautista-Lazo and Short [1] consider that it is necessary for entities “to accept an economic model in which materials and energy from waste products are reintroduced into the economic system”. The concepts of “circular economy” and “sustainability” describe the extended framework for sustainable development, ensuring the company achieves healthy growth, both for itself and for society, by addressing environmental issues, degradation and lack of resources [2]

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