Conceptual foundations for implementing European and international non-financial reporting standards

Abstract

Throughout the current years, non-financial reporting has undergone rapid development, manifesting both in international frameworks by non-governmental organizations and via national or regional (European) standards. However, internationallystandardised reporting standards play a crucial role in ensuring the efficiency of international capital markets and satisfying users’ needs for data comparability. This article aims to examine the theoretical foundations and principles underlying the implementation of non-financial reporting standards in the EU and at the international level. The study explores the nuances of incorporating sustainable development components into non-financial reporting standards.The significance of materiality is defined for prioritizing information from the financial aspect and ESG concerns. It has been contemplated that the scope of reporting encompasses activities, products, services, and risks extending beyond a company, encouraging the consideration of value creation chains. Emphasis is placed on the potential to present non-financial information at various levels of consolidation, aiming for relevance and compatibility. Types of information subject to disclosure are disclosed.Crucial principles of sustainable reporting are highlighted, considering a focus on essential information and stakeholder orientation. Global policy priorities are noted to expect business contributions towards achieving sustainable development goals and corporate social responsibility. Standards and frameworks are shown to be pivotal in presenting non-financial information related to sustainable development, facilitating its digitization. It has been accentuated that the assessment of materiality defines the content of non-financial reports, yet challenges arise due to the absence of recommendations and stakeholder perspectives. Sustainability information should encompass the company’s value creation chain with guidance for priorities and impact assessment to enhance the effectiveness of actions and reporting. General scientific and special methods are used: analysis and synthesis, theoretical-applied analysis of sources, inductive-deductive approach, generalization and abstraction, ascent from the abstract to the concrete. The contribution of business to the global policy of sustainable development and the role of corporate social responsibility are also considered. It is substantiated that the assessment of materiality determines the content of non-financial reports, but challenges arise due to the lack of recommendations and taking into account the perspective of interested parties. The current research stimulates further scientific developments in the field of NFZ.