Voluntary assurance on sustainability reporting in European companies prior to CSRD implementation

• Authors: Macuda Małgorzata , Zieniuk Paweł

Title variants

PL

Dobrowolna atestacja sprawozdawczości zrównoważonego rozwoju w spółkach europejskich przed wdrożeniem CSRD

• Languages of publication: EN

Abstracts

EN

Purpose: The paper presents the practices of voluntary assurance on sustainability information disclosure in European companies before the implementation of the Corporate Sustainability Reporting Directive (CSRD). It attempts to determine the factors that influence decisions related to verifying independent reports. Methodology/approach: The research sample comprises 576 European companies whose sustainability reports, prepared according to the GRI guidelines, were available from the GRI Sustainability Disclosure Database. Logit regression was used to determine factors that influence companies' decisions on voluntary assurance. Findings: There is a statistically significant positive relationship between a company's decision to pursue voluntary assurance on sustainability reporting and (1) company specific characteristics, (2) previous experience with sustainability reporting, (3) selected sustainability reporting practices (e.g., reporting on Sustainable Development Goals) and (4) country-specific factors (e.g., the strength of auditing standards in the company's operating environment). Research limitations/implications: In light of CSRD requirements, which introduced mandatory limited assurance from 2024, transitioning to reasonable assurance over time, the study provides valuable insights into the extent to which companies use assurance services. These findings may be useful for practitioners and standards setters. Originality/value: The paper adds to the understanding of the choices made by individual companies regarding the assurance of sustainability information disclosure. The study considers different influencing factors and examines a time horizon that precedes the implementation of mandatory assurance.

PL

Cel: W artykule przedstawiono praktyki związane z dobrowolną atestacją informacji dotyczących zrównoważonego rozwoju w spółkach europejskich przed wdrożeniem dyrektywy w sprawie raportowania zrównoważonego rozwoju przedsiębiorstw (CSRD) oraz podjęto próbę określenia czynników wpływających na decyzje związane z niezależną weryfikacją tych raportów. Metodyka/podejście badawcze: Próba badawcza obejmuje 576 europejskich spółek, których raporty dotyczące zrównoważonego rozwoju, przygotowane zgodnie z wytycznymi GRI, były dostępne w bazie danych GRI Sustainability Disclosure Database. Do określenia czynników wpływających na decyzje przedsiębiorstw dotyczące dobrowolnej atestacji sprawozdań zastosowano model logitowy. Wyniki: Weryfikacja postawionych hipotez badawczych pozwala na sformułowanie następujących wniosków: Istnieje statystycznie istotny pozytywny związek pomiędzy decyzjami spółek o dobrowolnej atestacji raportów zrównoważonego rozwoju a (1) czynnikami specyficznymi dla spółek, (2) wcześniejszym doświadczeniem w raportowaniu zrównoważonego rozwoju, (3) wybranymi praktykami raportowania (np. raportowanie celów zrównoważonego rozwoju) oraz (4) czynnikami specyficznymi dla kraju działalności (np. siła standardów audytu). Ograniczenia/implikacje badawcze: W kontekście wymogów CSRD wprowadzających od 2024 roku obowiązkową atestację o ograniczonej pewności, wraz ze stopniowym przechodzeniem do racjonalnej pewności, przeprowadzone badanie empiryczne pozwala na ocenę skali korzystania przez spółki z usług atestacyjnych, co może być przydatne dla praktyków i osób ustalających standardy. Oryginalność/wartość: Artykuł przyczynia się do zrozumienia wyborów dokonywanych przez poszczególne spółki dotyczące atestacji sprawozdań zrównoważonego rozwoju. W badaniu uwzględniono różne czynniki, a jego horyzont czasowy obejmuje okres tuż przed wprowadzeniem obowiązkowej atestacji.

Keywords

EN

voluntary assurance; mandatory assurance; CSRD Directive; sustainability reporting; ESG reporting

PL

dobrowolna atestacja; obowiązkowa atestacja; dyrektywa CSRD; raportowanie zrównoważonego rozwoju; raportowanie ESG

• Publisher: Stowarzyszenie Księgowych w Polsce
• Journal: Zeszyty Teoretyczne Rachunkowości
• Year: 2024
• Issue: 48(4)
• Pages: 53-73

Contributors

author

Macuda Małgorzata

• Poznań University of Economics and Business, Department of Management Accounting

author

Zieniuk Paweł

• Krakow University of Economics, Financial Accounting Department

References

• Aragòn-Correa J.A., Marcus A.A., Vogel D. (2020), The effects of mandatory and voluntary regulatory pressures on firms’ environmental strategies: A review and recommendations for future research, “Academy of Management Annals”, 14 (1), pp. 339–365; https://doi.org/10.5465/annals.2018.0014.
• Branco M.C., Delgado C., Gomes S.F., Eugénio T.C.P. (2014), Factors influencing the assurance of sustainability reports in the context of the economic crisis in Portugal, “Managerial Auditing Journal”, 29 (3), pp. 237–252; https://doi.org/10.1108/MAJ-07-2013-0905.
• Casey R.J., Grenier J.H. (2015), Understanding and contributing to the enigma of corporate social responsibility (CSR) assurance in the United States, “Auditing: A Journal of Practice & Theory”, 34 (1), pp. 97–130; https://doi. org/10.2308/ajpt-50736.
• Cohen J., Simnett R. (2015), CSR and assurance services: A research agenda, “Auditing: A Journal of Practice & Theory”, 34 (1), pp. 59–74; https://doi.org/10.2308/ajpt-50876.
• Cho C.H., Michelon G., Patten D.M., Roberts R.W. (2014), CSR report assurance in the USA: An empirical investigation of determinants and effects, “Sustainability Accounting, Management and Policy Journal”, 5 (2), pp. 130–148; https://doi.org/10.1108/SAMPJ-01-2014-0003.
• Clarkson P., Li Y., Richardson G., Tsang A. (2019), Causes and consequences of voluntary assurance of CSR reports: International evidence involving Dow Jones Sustainability Index Inclusion and Firm Valuation, “Accounting, Auditing and Accountability Journal”, 32 (8), pp. 2451–2474; https://doi.org/10.1108/AAAJ-03-2018-3424.
• Datt R.R., Luo L., Tang Q. (2019), The impact of legitimacy threat on the choice of external carbon assurance: Evidence from the US, “Accounting Research Journal”, 32 (2), pp. 181–202; https://doi.org/10.1108/ARJ-03-2017-0050.
• DeFond M., Zhang J. (2014), A review of archival auditing research, “Journal of Accounting and Economics”, 58, pp. 275–326; http://dx.doi.org/10.1016/j.jacceco.2014.09.002.
• Del Gesso C., Lodhi R.N. (2024), Theories underlying environmental, social and governance (ESG) disclosure: A systematic review of accounting studies, “Journal of Accounting Literature”, [ahead-of-print]; https://doi.org/10.1108/JAL-08-2023-0143.
• Dumitru M., Dyduch J., Gușe R.G., Krasodomska J. (2017), Corporate Reporting Practices in Poland and Romania – An Ex-ante Study to the New Non-financial Reporting European Directive, “Accounting in Europe”, 14 (3), pp. 279–304; https://doi.org/10.1080/17449480.2017.1378427.
• Dutta P. (2019), Determinants of voluntary sustainability assurance: The importance of corporate environmental performance. “Social Responsibility Journal”, 16 (8), pp. 1403–1414; https://doi.org/10.1108/SRJ-06-2019-0213.
• Farooq M.B., de Villiers C. (2017), The market for sustainability assurance services: A comprehensive literature review and future avenues for research, “Pacific Accounting Review”, 29 (1), pp. 79–106; https://doi-1org-13l5a4e0s0004.han3.ue.poznan.pl/10.1108/PAR-10-2016-0093.
• Fernandez-Feijoo B., Romero S., Ruiz Blanco S. (2019), Regional differences in industry specialization in the sustainability assurance market, “Management Decision”, 57 (3), pp. 669–687; https://doi.org/10.1108/ MD-06-2017-0598.
• Freeman R.E. (1984), Strategic Management: A Stakeholder Approach, Pitman, Boston.
• Gillet-Monjarret C., Rivière-Giordano G. (2017), La vérification sociétale: une revue de la littérature, “Comptabilité – Contrôle – Audit”, 23 (2), pp. 11–62; https://doi.org/10.3917/cca.232.0011.
• Green W., Zhou S. (2013), An international examination of assurance practices on carbon emissions disclosures, “Australian Accounting Review”, 23 (1), pp. 54–66; https://doi.org/10.1111/j.1835-2561.2012.00186.x.
• Kao M.-F., Jian C.-H., Tseng C.-H. (2024), Managerial ability and voluntary ESG disclosure and assurance: Evidence from Taiwan, “Sustainability Accounting, Management and Policy Journal”, 15 (1), pp. 207–231; https://doi.org/10.1108/SAMPJ-08-2022-0428.
• Kend M. (2015), Governance, firm-level characteristics and their impact on the client’s voluntary sustainability disclosures and assurance decisions, “Sustainability Accounting, Management and Policy Journal”, 6 (1), pp. 54–78; https://doi.org/10.1108/SAMPJ-12-2013-0061.
• Krasodomska J., Simnett R., Street D.L. (2021), Extended External Reporting Assurance: Current Practices and Challenges, “Journal of International Financial Management and Accounting”, 32 (1), pp. 104–142; https://doi.org/10.1111/jifm.12127.
• Krasodomska J., Zarzycka E., Zieniuk P., (2024), Voluntary Sustainability Reporting Assurance in the European Union before the Advent of the Corporate Sustainability Reporting Directive: the Country and Firm-level Impact of Sustainable Development Goals, “Sustainable Development”, 32 (3), pp. 1652–1664; https://doi.org/10.1002/sd.2744.
• Krasodomska J., Zieniuk P. (2021), Atestacja informacji niefinansowych: podstawy teoretyczne, standardy i praktyki spółek działających w Europie Zachodniej i Wschodniej, “Zeszyty Teoretyczne Rachunkowości”, 45 (1), pp. 53–74; http://dx.doi.org/10.5604/01.3001.0014.8350.
• Kuo L.-C. Lee, C.-L., Lee Y.-T. (2022), The impact of voluntary assurance of CSR reports on firms’ operating performance: Evidence from Taiwan, “Managerial and Decision Economics”, 43(8), 4041–4054. https://doi.org/10.1002/mde.3645.
• Maroun W. (2020), A Conceptual Model for Understanding Corporate Social Responsibility Assurance Practice, “Journal of Business Ethics”, 161 (1), pp. 187–209; https://doi.org/10.1007/s10551-018-3909-z.
• Martínez-Ferrero J., García-Sánchez I.M. (2017), Coercive, normative and mimetic isomorphism as determinants of the voluntary assurance of sustainability reports, “International Business Review”, 26 (1), pp. 102–118; https://doi.org/10.1016/j.ibusrev.2016.05.009.
• Mayhew B.W., Schatzberg J.W., Sevcik G.R. (2001), The effect of accounting uncertainty and auditor reputation on auditor objectivity, “Auditing: A Journal of Practice & Theory”, 10 (2), pp. 49–70.
• Meutia I., Kartasari S., Daud R. (2022), Voluntary Assurance of Sustainability Reports: Evidence from Indonesia, “Accounting Analysis Journal”, 11 (1), pp. 44–53; https://doi.org/10.15294/aaj.v11i1.58810.
• Mock T.J., Rao S.S., Srivastava R.P. (2013), The development of worldwide sustainability reporting assurance, “Australian Accounting Review”, 23 (4), pp. 280–294; https://doi.org/10.1111/auar.12013.
• Sierra L., Zorio A., Garcia-Benau M.A. (2013), Sustainable development and assurance of corporate social responsibility reports published by Ibex-35 companies, “Corporate Social Responsibility and Environmental Management”, 20 (6), pp. 359–370; https://doi.org/10.1002/csr.1303.
• Simnett R., Trotman T.K. (2018), Twenty-Five-Year Overview of Experimental Auditing Research: Trends and Links to Audit Quality, “Behavioral Research in Accounting”, 30 (2), pp. 55–76; https://doi.org/10.2308/bria-52138.
• Simnett R., Vanstraelen A., Chua W.F. (2009), Assurance on sustainability reports: An international comparison, “Accounting Review”, 84 (3), pp. 937–967; https://doi.org/10.2308/accr.2009.84.3.937.
• Simnett R., Carson E., Vanstraelen A. (2016), International Archival Auditing and Assurance Research: Trends, Methodological Issues, and Opportunities, “Auditing: A Journal of Practice & Theory”, 35 (3), pp. 1–32; https://doi.org/10.2308/ajpt-51377.
• Simoni L., Bini L., Bellucci M. (2020), Effects of social, environmental, and institutional factors on sustainability report assurance: Evidence from European countries, “Meditari Accountancy Research”, 28(6), 1059–1087, https://doi.org/10.1108/MEDAR-03-2019-0462.
• Vander Bauwhede H., Van Cauwenberge P. (2022), Determinants and Value Relevance of Voluntary Assurance of Sustainability Reports in a Mandatory Reporting Context: Evidence from Europe, “Sustainability”, 14 (15), 9795; https://doi.org/10.3390/su14159795.
• Velte P., Stawinoga M., (2017), Empirical research on corporate social responsibility assurance (CSRA): A literature review, “Journal of Business Economics”, 87, pp. 1017–1066; https://doi-1org-13l5a4ebx0036.han3.ue.poznan.pl/10.1007/s11573-016-0844-2.
• Venter E.R., van Eck L. (2021), Research on Extended External Reporting Assurance: Trends, Themes, and Opportunities, “Journal of International Financial Management and Accounting”, 32 (1), pp. 63–103; https://doi.org/10.1111/jifm.12125.
• Watts R., Zimmerman J.L. (1986), Positive accounting theory, Prentice-Hall, Englewood Cliffs N.J.
• Zorio A., García-Benau M.A., Sierra, L. (2013), Sustainability development and the quality of assurance reports: Empirical evidence, “Business Strategy and the Environment”, 22 (7), pp. 484–500; https://doi.org/10.1002/ bse.1764.
• Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, Official Journal of the European Union, L 187/14.
• CSRD, Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, Official Journal of the European Union, L 322/15.
• European Commission (2021), EU Taxonomy, Corporate Sustainability Reporting, Sustainability Preferences and Fiduciary Duties: Directing finance towards the European Green Deal, COM (2021) 188 final, Brussels.
• NFRD, Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, Official Journal of the European Union, L 330/1.
• Accountancy Europe (2020), Towards reliable non-financial information across Europe, https://www.accountancyeurope.eu/wp-content/uploads/Accountancy-Europe-NFI-assurance-practice_facthseet.pdf (access 16.06. 2024).
• IFAC, AICPA & CIMA (2023), The State of Play: Sustainability Disclosure & Assurance 2019–2021. Trends & Analysis, www.ifac.org.
• IFAC, AICPA & CIMA (2024), The State of Play: Sustainability Disclosure & Assurance 2019–2022. Trends & Analysis, www.ifac.org.
• KPMG (2017), The Road Ahead. The KPMG Survey of Corporate Responsibility Reporting 2017, https://assets.kpmg.com.pdf.