Given the growing importance of reports with non-financial information, the aim of this study is to assess integrated reports (IR) published by Portuguese companies. The assessment was carried out considering the compliance (or not) with the current international standards for reporting. To achieve this goal, an analysis of 23 integrated reports published by seven Portuguese companies between 2016 and 2019 from different activity sectors were analyzed using the content analysis methodology and through the construction of a working tool based on the essential contents disclosed by the International Integrated Reporting Council (IIRC) and by the European Commission Recommendation. In all the IRs analyzed, several topics that are considered as essential for inclusion by IIRC and the European Commission - COM 2017/C 215/01 were not disclosed by companies. This reveals that the need persists to develop the contents to be included in the IRs. The level of compliance is low, which demands greater consideration regarding the effect of standards for reporting practices.
TopIntroduction
As pointed out by Kumar et al. (2021) corporate sustainability is now considered imperative to contribute toward sustainable development by organizations all around the world. With the evolution of the corporate world, globalization, and worldwide competition, the information disclosed by companies to comply with legal obligations has become ever more important, as needs to make the comparability of that information easier. Both of these issues demand the standardization of procedures. Issues related to corporate social responsibility, clarity, and transparency of information are topics that are little explored in traditional accounting. Adams (2015) describes as main shortfalls in the information provided by companies the lack of strategic information, lack of disclosure of risks, goals, and forecasts of future performance, as well as the lack of proper descriptions of the relationship between financial and non-financial indicators.
Integrated reporting gained considerable attention in the last few years as an evolutionary approach to corporate communication (Camodeca et al. 2018). This kind of report emerges as an attempt to help overcome this shortcoming to the extent that it compiles information of financial and non-financial nature. The aim is to provide useful information that allows key stakeholders to make decisions in a more conscious and informed manner. According to Melloni et al. (2017), integrated reporting (IR) is an international attempt to link financial performance with a company's environmental, social, and governance performance. In 2010 the International Integrated Reporting Council (IIRC) emerged, identifying the need for financial reporting to keep up with the evolution occurring in companies, and creating a framework to help organizations produce their Integrated Reports according to guidelines for essential contents. Different authors call for attention to the importance of the integrated reports (Abhayawansa et al., 2019; Aceituno, 2013; Owen, 2013).
Leocádio (2017) mentions the importance of non-financial reporting as now recognized by numerous international organizations, notably including the United Nations Global Compact and the guidelines developed by the Global Reporting Initiative (GRI). The European Union recognizes the importance of this type of reporting through Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU, about the disclosure of non-financial information and information on diversity by certain large companies and groups. This Directive was published to increase the clarity of disclosure of non-financial information and environmental and social performance. In 2017 a Communication was also published by the European Commission (COM 2017/C 215/01) seeking to guide non-financial disclosure in the environmental, social, and governance domain. Due to the importance of this topic, the European Commission hosted a public meeting between February and June 2020 on the revision of the Non-Financial Reporting Directive (NFRD), to strengthen the foundations for sustainable investment.
The current study evaluates integrated reporting in Portugal and assesses whether it is in line with the essentials prescribed by IIRC and the European Commission - COM 2017/C 215/01. This topic has special importance nowadays, given the current debate on future guidelines for the reporting of non-financial information and the possibility of the publication of International Non-financial Reporting Standards by the IASB. Our analysis will identify the themes that are most often disclosed by Portuguese companies in their IRs and the issues that need to be further developed. The content analysis technique was used to examine the 23 Integrated Reports of the Portuguese companies that comprise the sample.
Since there are few studies on how Portuguese companies are using integrated reporting or empirical studies that demonstrate the reality of Portuguese companies vis-à-vis international guidelines, this study makes a valuable contribution to the literature.