Abstract
In this study we concentrate on the segment of small companies in the financial sector in Europe. Services in this sector are developing rapidly and are not necessarily provided only by traditional banks and financial companies. Many nonfinancial companies provide financial services, and this may open the sector to additional risk. In this context, the aspects of both financial and nonfinancial reporting are important and need to be taken into consideration as a whole to provide a complex picture of a particular institution. The goal of this paper is to analyze sustainability reporting according to the Global Reporting Initiative (GRI) by European financial services small and medium-sized enterprises (SMEs). First, we conducted a descriptive analysis of the features of nonfinancial information and its assurance, studying a sample of all European SMEs reporting according to the GRI from 2016 to 2018. Then, we chose only financial services SMEs to apply lexical analysis to their narrative reporting based on a corpus of 102,056 words. We conclude that nonfinancial information does not have the same importance as traditional financial information, and this sustainability reporting only complies with the minimum requirements. Thus, there is still a long way to go in this field.
Highlights
Disclosure of nonfinancial information was voluntarily assumed by companies, mainly large global ones
The first contribution of this paper is to show which European small and medium-sized enterprises (SMEs) are disclosing sustainability reports according to the Global Reporting Initiative (GRI) voluntarily, which will add important knowledge to this field of research traditionally based on large companies
It does not seem logical to prepare nonfinancial information according to GRI using the mother tongue in response to the market and stakeholders, but we must bear in mind that we focus on SMEs, and their goals in disclosing this information may not be so global
Summary
Disclosure of nonfinancial information was voluntarily assumed by companies, mainly large global ones. The European Commission highlights these difficulties and promotes the provision of suitable alternatives to bank loans, so it enacted a specific regulation “to make SMEs more visible to investors and markets more attractive and accessible for SMEs. Regulatory changes will keep the right balance between prudential regulation and financing of SMEs, and between investor protection and tailored measures for SMEs” [3]. We focused our study on European financial services SMEs that provide sustainability reports according to GRI standards The development of this sector is linked to economic growth [5], and the effect of the recent crisis on bank credit has increased the importance of other types of financial resources, such as trade credit [6]. By extension, financial services companies are expected to approach climate risks and other risks related to sustainability in the same way that they approach any other financial risks [8]
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