Regulations on Non-Financial Disclosure in Corporate Reporting: A Thematic Review

Abstract

There is a growing call globally for corporations to improve transparency in corporate reporting, along with the surge of enhancing disclosure of non-financial information. Companies are seen as agents for contributing to a better future, and hence could assist in achieving the sustainable development goals (SDGs) 2030, via transparent non-financial disclosure. This review paper is premised on the fact that laws on non-financial disclosure may be useful in enhancing the transparency of companies’ conducts. Hence, this systematic review aims to synthesize the literature from 2014 to 2021 on the patterns and trends relating to regulations on non-financial disclosure in corporate reporting by companies. A keyword search followed by filters provided by the Web of Science Core Collection and SCOPUS databases resulted in a total of 369 documents being found. A total of 62 articles were reviewed after manual filtering and exclusion. A thematic review of these 62 articles identified 20 initial codes, which were then grouped into eight clusters: Directive 2014/95/EU, disclosure approaches, fiduciary duties of directors, stakeholder engagement, the effectiveness of disclosure regulations, the impacts of rules, the role of different actors and corporate accountability. The paper finds that the patterns and trends in the review set the path for future research on laws of non-financial disclosure, as they serve as a guideline for researchers for future studies.

1. Introduction

Corporate reporting is a mechanism for improving companies’ transparency regarding non-financial information and for continuously engaging with the stakeholders [1]. Companies worldwide are now required or encouraged to disclose non-financial information, accentuating the significance of reporting. The accountability of companies extends towards the other stakeholders via non-financial disclosure obligations [2]. Furthermore, disclosure could assist the stakeholders in monitoring companies’ conduct and actions. The stakeholders also demand companies’ assistance in achieving sustainable development goals (SDGs) [3], indicating the importance of companies’ contributions towards a sustainable future. The SDGs were introduced in 2015 to ensure a sustainable future for all, and they are interconnected goals intended to address social, economic and environmental challenges, and attain sustainable development [4]. Involvement of all members of society, especially companies, is needed to ensure the successful implementation of the SDGs agenda [5,6]. To achieve sustainability through SDGs, companies are vital and necessary actors because of their impact on society, the economy and the environment [7]. The SDG framework provides guidelines for companies aligning their business practices towards sustainable development [6]. Hence, this provides opportunities for companies to contribute to successfully addressing sustainable development challenges [4]. This is because SDGs entail companies incorporating sustainability considerations into their decision-making, creating awareness among the stakeholders on their corporate contribution to SDGs [4,8].

The SDG Compass listed reporting as one of the five vital steps to ensure the successful implementation of the SDG Agenda [9]. Costa et al. [4] highlighted the necessity of guiding companies towards transparency in SDGs reporting, in presenting their contributions towards sustainable development. Elalfy et al. [6] also emphasize the need for more research regarding factors that can affect SDG reporting. Another study indicates regulatory enforcement’s significance in ensuring satisfactory SDG disclosure [10]. This evidence supports the role of regulations in managing issues relating to non-financial information disclosures. In addition, a study found that a clear legal requirement on sustainability reporting is needed to ensure better compliance [11], emphasizing the relevancy of the law in governing non-financial disclosures.

Amongst the SDGs that have been recognized by scholars that companies could contribute are Decent Work and Economic Growth (SDG 8), Responsible Consumption and Production (SDG 12) and Climate Action (SDG 13 [7,12,13]. Countries around the world have taken action regarding sustainable development. For example, companies in France must disclose information regarding their conduct towards the environment and society [14]. Berger-Walliser and Shrivastava [14] observed that in the United Kingdom, large companies are obligated to disclose information about their conduct affecting the environment, social, community, and human rights issues in addition to the strategies to address those matters. In India, the government requires that companies develop corporate social-responsibility policies, and failing to adhere to the minimum requirements would subject them to clarification [15]. In Malaysia, the stock exchange, Bursa Malaysia, has required publicly listed companies to publish a sustainability statement in their annual report, which encompasses “a narrative statement of the listed issuer’s management of material economic, environmental and social risks and opportunities”. In this sense, it is also essential to see the significant role of integrated reporting, since it offers holistic financial and non-financial information. Adopting integrated reporting improves information transparency, boosts brand value and reputation, decreases financial asymmetries, and increases the organization’s market worth [16].

Review studies on non-financial information have focused on providing a general view of the current state of academic study on this topic, such as the principal subjects of non-financial research, the methodologies employed, and the changes in the literature regarding non-financial information [17,18,19]. Some studies reviewed the literature from a specific aspect, such as the relationship between stakeholder engagement and non-financial disclosure [20], the benefits of reporting non-financial information [21] and the quality of non-financial disclosure [22]. Nevertheless, reviews that aim to provide focused findings under the theme of regulations on non-financial information are currently lacking. This statement is evidenced by a bibliometric analysis that presents the six most examined subjects under the topic of non-financial information: determinants, essence, reporting practices, integrated reporting, environmental disclosures, and consequences of reporting. The findings presented show that there is an evident lack of review studies that focus specifically on finding the current state of the art under the topic of regulations for non-financial information.

Therefore, a thematic review is conducted to synthesize literature from 2014 until early 2021 on the patterns and trends relating to regulations for non-financial information in corporate reporting by companies, based on the premise that they may be useful in improving the transparency of companies’ conduct, ensuring the achievement of the SDGs agenda. This thematic review aims to synthesize the literature on non-financial disclosure regulations, to determine the themes for future studies by considering its importance in ensuring the successful implementation of SDGs. A thematic review of 62 articles identified 20 initial codes, which were then grouped into eight clusters: Directive 2014/95/EU, disclosure approaches, fiduciary duties of directors, stakeholder engagement, the effectiveness of disclosure regulations, the impacts of rules, the role of different actors and corporate accountability, setting the path for future studies. The focus on the literature that discusses regulations of non-financial information is beneficial because of the fact that it provides a clear direction regarding underexplored issues within this theme. This paper offers a narrow and focused view of disclosure regulations, rather than a broad view of what has been researched relating to non-financial information. Hence, this paper is unique, as it focuses on the underexplored aspect of non-financial information from the regulation perspective rather than providing a general review of what is in the literature.

The remainder of this paper is structured as follows. Section 2 discusses the research background and, consequently, the research question. Section 3 explains the research methodologies. Section 4 discusses the findings, while Section 5 proceeds with the discussion and potential future studies. Finally, Section 6 concludes the study.

2. Research Background and Research Question

Non-financial disclosure is usually considered a voluntary obligation by nature, which could lead to mitigated benefits of disclosure, owing to transparency and irrelevancy disadvantages [5]. Venturelli et al. [5] confirm that regulation enhances the quality of non-financial disclosure. It is also widely accepted in the literature that regulation could improve the quality of non-financial disclosure [23]. Regulation is desirable for voluntary disclosure, since the latter may lack accuracy, neutrality and comparability [24,25]. A study has shown that disclosure in countries with regulation regarding non-financial information, such as France, is of higher quality than in those without regulation [25].

Another study exploring how the top 50 Australian companies disclose their commitment to addressing SDGs highlighted the potential need for regulation in administering non-financial information disclosure [26]. A study by Mion and Adaui [27] that conducted a content analysis of the sustainability-reporting practices of Italian and German companies in the lists of top stock exchanges found that regulation does enhance the quality of sustainability reporting [27]. Muserra et al. [23] concluded that regulation for mandatory non-financial disclosure, in this context, the Italian decree, has the potential to support information transparency and shift to sustainable business models. A study that investigated how Directive 2014/95/EU may influence the listed Italian companies’ corporate practices found that the non-financial reporting obligations can facilitate a company’s sustainability path, guaranteeing transparency and greater stakeholder-engagement [24]. In another study, the researchers demonstrated that the French parliamentary regime is more successful in prompting environmental disclosures than the Canadian market mechanisms [25]. In addition, Steuer and Troger [28] contended that regulations could support sustainable transition, since they can compel uniform and comparable disclosure of raw data.

Furthermore, Ho and Park [29] claimed that disclosure laws should be considered when developing the best approaches for enhancing the quality and value of non-financial information. Another study in China provided an interesting perspective, as their results demonstrate that firms in polluting industries considerably improved their financialization behaviors due to implementing the new Environmental Protection Law [30]. These findings provide impetus for further research in understanding the role of regulation in non-financial disclosure [31]. Therefore, in light of the above, we can assume that regulations encourage transparency and quality of non-financial information, which supports SDG attainment and responsible investing.

To reiterate, there is a need for further research relating to regulations governing non-financial disclosure. It is pertinent to see the patterns of potential research relating to non-financial disclosure regulation to see the gap or where more research should be conducted in the future. It is essential to provide consistent findings in studies on non-financial disclosure regulations, as this will act as a guideline for countries in deciding whether to adopt a mandatory or voluntary approach when it comes to the disclosure of non-financial information. Furthermore, the stakeholders are increasingly interested in how companies align their business strategies with the SDGs [32]. Disclosure on these matters is essential, because it provides monitoring power on the part of the stakeholders of companies’ contributions towards sustainable development [32]. Hence, with the aim to synthesize the literature on non-financial information regulations to identify underexplored themes under this subject, we formulate the following research question:

RQ: What are the patterns and trends in the literature relating to regulations on non-financial information in corporate reporting by companies, from 2014 to early 2021?

The term “non-financial information” has no widely agreed definition, and is thus open to interpretations [33]. However, for the purposes of this paper, we concur with Tarquinio and Posadas’ [33] findings that this term is frequently used to refer to information about society and the environment, including corporate social responsibility (CSR) issues, information about intellectual capital, and information that is not included in financial statements.

3. Materials and Methods

This paper adopts a thematic review of articles with the help of ATLAS.ti version 9 software, as introduced by Zairul [34], applying thematic analysis to the literature. Thematic analysis generates codes and later themes [35], due to the synthesis review of the relevant literature. Themes indicate broader context patterns that could help answer the research-question themes [35] and better understand a particular phenomenon. These themes assist in structuring the presentation of findings in a research theme [35]. The appeal of thematic analysis is that it gives researchers room to actively interpret the data by generating the codes, and later the themes, rather than searching for themes in the data [35].

In the first step, the authors adopted the identification-of-keywords process. The identification process started with finding the synonyms, related terms, and relevant keywords for the main keywords of the study [36], which were “corporate law, sustainability reporting, company, and corporate disclosure”. Identifying relevant keywords helped in varying the keywords to search for relevant documents for the study. Then, the authors conducted a paper search in the WOS Core Collection database. Finally, the authors extracted articles published in the WOS Core Collection database using search strings in the Basic Search tool, resulting in 573 documents (refer to

Table 1. Search strings from WOS Core Collection and Scopus.

WOS Core Collection

TOPIC: (“corporate law *” OR “company law *” OR “securities law *” OR “regulation *” OR “regulatory approach *” OR “regulatory measure *” OR “disclosure regulation *” OR “securities regulation *” AND “corporate governance”) AND TOPIC: (“corporate reporting” OR “sustainability reporting” OR “CSR reporting” OR “integrated reporting” OR “voluntary reporting” OR “corporate social reporting” OR “environmental reporting” OR “non-financial reporting” OR “integrated sustainability reporting” OR “corporate responsibility report” OR “triple bottom line reporting” OR “sustainable development reporting” AND “companies” OR “firm *” OR “corporation *” OR “organi *ation *”) AND TOPIC: (“corporate disclosure *” OR “corporate transparency” OR “corporate accountability” OR “corporate sustainability” OR “CSR disclosure *” OR “mandatory disclosure *” OR “voluntary disclosure *” OR “sustainability disclosure *” OR “ESG disclosure *” OR “non-financial disclosure *” OR “sustainability disclosure *” OR “non-financial information”)

Scopus

TITLE-ABS-KEY ( “corporate law *” OR “company law *” OR “securities law * OR “regulation *” OR “regulatory approach *” OR “regulatory measure *” OR “disclosure regulation *” OR “securities regulation*” AND “corporate governance” ) AND TITLE-ABS-KEY ( “corporate reporting” OR “sustainability reporting” OR “CSR reporting” OR “integrated reporting” OR “voluntary reporting” OR “corporate social reporting” OR “environmental reporting” OR“non-financial reporting” OR “integrated sustainability reporting” OR “corporate responsibility report” OR “triple bottom line reporting” OR “sustainable development reporting” AND “companies” OR “firm *” OR “corporation *” OR “organi *ation *” ) AND TITLE-ABS-KEY ( “corporate disclosure *” OR “corporate transparency” OR “corporate accountability” OR “corporate sustainability” OR “CSR disclosure *” OR “mandatory disclosure *” OR “voluntary disclosure *” OR “sustainability disclosure *” OR “ESG disclosure *” OR “non-financial disclosure *” OR “sustainability disclosure *” OR “non-financial information”)

).

The Boolean operator OR was used to maximize the search of records. Truncation * was also used in this search, as it enables the function to search different forms of words, hence increasing the possibility of extracting more documents from the search. Then, the refinement of the results followed through the manipulation of the filters provided by the database, which produced 358 papers. The manipulation of the year of publication was to be from the year 2014 to early 2021. The selection of relevant articles starting in 2014 coincides with the introduction of the International Integrated Reporting Framework, which has combined financial and non-financial information in one comprehensive report since December 2013, and which sparked the authors’ interest in studying the academic literature relating to this development. The filter of document types applies to the inclusion of articles and early-access only. Therefore, the filtering excludes this study’s book chapters, book reviews, proceeding papers, reviews, and editorial materials. Next, whenever applicable, the articles are in English, to enable the researcher to better comprehend.

The authors used the search strings with the exact keywords used in the WOS Core Collection database in the Scopus database, and this search resulted in 11 documents being found. No filter was applied in the Scopus database, contrary to the WOS Core Collection database. This result was because only 11 papers were found that included articles from 2014 to the present, and all 11 documents are in English and journal article form.

The authors then manually filtered the documents by reading the article’s title and abstract, known as the eligibility process [37]. The filtering process excluded articles that did not focus on regulations or laws relating to corporate reporting. Examples include an article that examined financial performance after implementing integrated reporting [38]. Also excluded was an article investigating the relationship between board gender diversity with sustainability disclosure [39]. The list extended to the work identifying the link between sustainability reporting and firm value [40,41] and investigating the factors influencing companies in disclosing non-financial information [42]. This filtering resulted in only 71 articles being selected for review. The 71 articles were then exported to the Mendeley reference-manager software. In Mendeley, the exclusion applies to nine more articles because of duplication and relevancy issues, resulting in 63 articles being subjected to thematic analysis in ATLAS.ti version 9 software (see Figure 1).

The 63 articles were exported to ATLAS.ti version 9 software as primary documents, grouped into author, issue number, periodical, publisher, volume, and year of publication. This grouping helps analyze articles according to their published year (Zairul, 2020). Next, the relevant papers were sorted one by one, for coding. In the first round of coding themes, 20 codes were formed. Finally, these codes were grouped into eight significant clusters of themes based on their categories. During this manual sorting, another paper was excluded because of a duplication issue. These themes relate to the research question, “ what are the patterns and trends in the literature relating to regulations on non-financial information in corporate reporting by companies from 2014 to early 2021?” The findings are presented in two parts: the quantitative and the qualitative findings.

4. Findings

4.1. Quantitative Findings

Table 2. The total number of publications per journal from 2014 to early 2021.

Journal	Documents
Accounting in Europe	2
Accounting, Economics and Law: A Convivium	2
American Business Law Journal	2
Business Strategy and the Environment	2
European Company and Financial Law Review	2
International Journal of Law and Management	4
Journal of Business Ethics	2
Meditari Accountancy Research	3
Sustainability	7
Yale Journal on Regulation	2

Source: WoS and Scopus database.

depicts the number of publications per journal. We selected journals with two or more articles published on non-financial information regulations because the majority (35 journals) published one study from the selected years. Sustainability was the journal with the highest number of publications, with seven papers. It published articles on the issue of non-financial information regulations four years in a row, from 2017 to 2020. Journals published on disclosure laws on non-financial information do not necessarily have to be pure legal journals. The journals include Accounting in Europe, Business Strategy and the Environment, Journal of Business Ethics, Meditari Accountancy Research and Sustainability. The results implied that the requirement of disclosures on non-financial information is also a concern and of interest to other disciplines beyond the legal fraternity. This trend indicates the importance of disclosing non-financial information and how to manage it to ensure its effectiveness. The findings also highlighted the disciplines interrelating with disclosure laws on non-financial information, including accounting, business management, ethics, and the economy.

Figure 2 shows that the number of papers discussing non-financial information regulations generally increased from year to year. However, only one article was found to be published in 2021, as this review paper covers publications until March 2021. Nevertheless, seeing the trend in 2020, the authors anticipated that more publications would follow on this issue as the year progressed, considering its importance.

Findings on the publications according to country can assist other researchers in identifying the researched areas and determining future research areas [43]. Based on the findings in Figure 3, researchers focused on the issue of non-financial information regulations in China, European Union countries in groups, Italy, the United Kingdom, and the United States. The publication containing studies on the European Union countries in groups continued every year from 2014 to 2020. However, in 2017, no study related to this matter was conducted in European Union countries. Nevertheless, studies were conducted in European Union member-states individually; Italy, Poland, and Romania, in 2017. The study on European Union countries in 2014 unsurprisingly discussed the integration of sustainability information in corporate reporting. It analyzed how legislation could support integrated reporting [44], considering that the introduction of < IR > Framework was in December 2013. The study conducted in China in 2014 investigated the relationship between regulatory pressures exerted by the government on the breadth of corporate social-responsibility reports [45].

There were two studies conducted in the Netherlands in the year 2014. The studies deliberated on using extraterritoriality and soft law in admonishing companies that disregarded human rights in their operation [46], and examined the effect of the regulatory environment on the application of integrated reporting [44]. The study conducted in Africa in 2014 intended to make companies accountable for false and misleading statements voluntarily published by them [47]. Interestingly, there has been no study on non-financial information regulations in Africa for four years consecutively, after 2014. The most probable reason for this absence lies in the fact that in that most studies conducted in Africa focused on examining the acceptance of integrated reporting. Examples include works that examined first, the development of integrated reporting by companies [48,49]; second, the challenges in preparing integrated reports [50]; third, the potential of integrated reporting in developing value-creation [51]; and fourth, the application of <IR> principles to sustainability disclosures [52], rather than scrutinizing the impacts of regulations on non-financial disclosures. A study conducted in the United Kingdom in the year 2014 focused on the area of corporate accountability regarding human-rights violations [46].

In 2015, the number of publications relating to non-financial information regulation increased to 11. Nevertheless, they then went down to only five publications in 2016, where the studies were conducted in Canada, China, European Union countries in groups, India, and the United States. However, the number of publications relating to this matter surged to 24 in 2019. There were four studies in the United Kingdom and three in both Italy and the United States. Therefore, inspecting the issues explored and discussed by these studies is interesting. A study in the United Kingdom focused on corporate accountability for labour standards, precisely the Modern Slavery Act 2015 [53]. The subsequent study examined the effects of mandatory disclosure under the Companies Act 2006, Regulations 2013, on disclosed sustainability-information [54]. Another study examined how the United Kingdom adopted the 2014/95/EU Directive into their legal system [55], while Ho and Park [29] investigated the approaches by the United Kingdom regarding ESG matters.

Studies in the United States investigated the disclosure approaches to ESG matters [29], corporate accountability of companies that failed to disclose critical climate-change information [56] and the potential of disclosure mechanisms in ensuring the preservation of human rights by companies [57]. As for the studies in Italy, the researchers explored the level of the legal-system adaption to the requirements of the 2014/95/EU Directive [55], the quality of non-financial information after the implementation of the Legislative Decree 254/2016 [58] and the effects of the introduction of mandatory non-financial-reporting obligations by the 2014/95/EU Directive [27]. It is noteworthy that the studies conducted in the United Kingdom and the United States overlapped in one area relating to corporate accountability, implying concern by the scholars.

Another significant finding presented in Figure 3 is a lack of studies in countries aside from the United Kingdom, the United States, European countries, and China. Only three studies relating to disclosure laws were conducted in Southeast Asian countries. Mohan [59] supports the National Action Plans by Southeast Asian countries generally to take cognizance of the international standards for uniformity among these countries, especially on corporate accountability. A study in Singapore examined the effects of mandatory sustainability-reporting-requirements on the stock market [60]. A study in Indonesia investigated the relationship between government regulations and the extent of sustainability-information disclosure [61]. There has been no study in Brunei, Myanmar, Cambodia, Timor-Leste, Laos, Malaysia, the Philippines, Thailand, or Vietnam. Therefore, researching these countries regarding disclosure laws on non-financial information would be of significance and interest.

4.2. Qualitative Findings

The second part of the findings focuses on the qualitative discoveries derived from the ATLAS.ti version 9 software. Eight themes or patterns have been identified in trying to answer the research question. The themes identified are fiduciary duties of directors, corporate accountability, disclosure approaches, stakeholder engagement, the effectiveness of regulatory interventions, the impact of regulations, Directive 2014/95/EU, and the role of different actors, as presented in Figure 4.

Despite being subject to the same category, there are different groupings for the themes of Directive 2014/95/EU, the impacts of regulations, and regulatory interventions’ effectiveness. The basis for such differentiation lies in the fact that Directive 2014/95/EU attracts a specific discussion. On the other hand, the other two themes touched on other disclosure laws, such as the United Kingdom Modern Slavery Act 2015 and the Bribery Act 2010. The articles grouped under the impact of regulations discussed the effect of regulations on different constructs, such as quality of reporting, the quantity of reporting, and corporate behaviour. The articles grouped under the theme of the effectiveness of regulatory interventions discussed the extent or effectiveness of a specific disclosure law in administering non-financial disclosures in corporate reporting. Several articles were grouped under more than one theme. The qualitative findings then proceeded as follows, for the analysis of each theme.

4.2.1. Fiduciary Duties of Directors

Based on the 62 articles reviewed, one of the patterns in the literature relating to regulations on non-financial information by companies is related to directors’ fiduciary duties as shown in Figure 5. The theme of directors’ fiduciary duties revolved around the extent of directors’ fiduciary duties in executing responsibilities under non-financial disclosure reporting. From the sixty-two articles reviewed, only two articles discussed directors’ fiduciary duties. Therefore, this pattern is unique; it stands for a theme independently, and does not belong to any other pattern.

Paramonova [62] conducted a study to interpret the meaning of acting in the ‘corporation’s best interest’ in an interdisciplinary approach. The lawmakers’ meaning was criticized as being vague in their provision of clear guidelines to companies executing their responsibilities. A study by Ajai [63] conducted in Nigeria aimed to formulate a conceptual framework for the director’s fiduciary duty to uphold corporate sustainability. Ajai [63] expands the study by Paramonova [62], to develop a conceptual framework. As only two studies discussed the area relating to directors’ fiduciary duties from a legal context, it is contended that future studies in other jurisdictions would benefit the academic world. In addition, one study emphasizes a need to clarify fiduciary duties in line with the evolving trend of sustainability in the corporate setting [64].

4.2.2. Corporate Accountability

Based on Figure 6, ten studies relate to corporate accountability. Publications within the corporate-accountability theme generally discuss a company’s responsibility under non-financial disclosures.

A study by Emeseh and Songi [47] in Africa explored the possibilities of improving the effectiveness of making companies accountable by their own voluntarily made statements in reports. A study by Humberto [46] supported the basis of the previous research by Emeseh and Songi [47], examining measures to hold companies accountable for their human-rights abuses. In 2015, there were two studies regarding corporate accountability in Southeast Asia [59], and another in the United States [69]. Mohan [59] argued for the embedding of international practices into local laws and policies via national action plans, which could effectively mitigate human-rights violations if properly constructed and implemented. At the same time, the study by Shearer [69] focused on lead, asbestos, and fossil industries, through lawsuits.

Next, only one study discussed the theme of corporate accountability in 2017, which was on regulatory approaches to promote accountability through the United Kingdom Modern Slavery Act 2015 and the United Kingdom Bribery Act 2010 [66]. LeBaron and Rühmkorf [53] continued the basis of the study in the year 2017, by explicitly investigating the regulatory processes that prompted the implementation of the United Kingdom Modern Slavery Act 2015. Another study considered the basis that can be used in a lawsuit by a plaintiff against a company relating to non-disclosure of climate change information [56]. Next, Masiero et al. [68] discussed how relational connectivity could enhance a company’s accountability via Directive 2014/95/EU, which is in line with the study conducted by Humberto [46]. Both studies aimed to enhance the effectiveness of making a company accountable for non-financial disclosure issues. The latest research on the theme of corporate accountability was in the year 2020, and examined the concept of accountability within the context of Directive 2014/95/EU on non-financial information [67].

These findings on the corporate-accountability theme make the literature’s patterns and trends more apparent. Future research may address loopholes by discussing, for example, using different concepts or theories to enhance the company’s accountability. Furthermore, future research may also look at the role of securities law in improving a company’s responsibility. The above analysis shows that Directive 2014/95/EU is the most researched law on non-financial disclosure by companies.

4.2.3. Disclosure Approaches

The following pattern or trend is disclosure approaches as presented in Figure 7. The papers grouped under this theme examine disclosure approaches by countries in managing non-financial information by suggesting recommendations for improving the law or applying new theories in addressing transparency issues. For example, one study discussed the disclosure approaches in the United States and European jurisdictions, specifically the United Kingdom and France, and the transparency model for human-rights protection for companies’ activities [70]. Another study examined the disclosure provisions in the United Kingdom Code of Corporate Governance as a case study [65]. At the same time, Berger-Walliser and Scott [71] reviewed the legalization of corporate social responsibility in the United States, the European Union, and China.

It is intriguing to see that those studies relating to the theme of disclosure approaches started in 2018, whilst there are none consecutively in the years 2014, 2015, 2016 and 2017. This theme started to gain popularity from 2018 to 2020, when six papers in 2020 examined issues concerning this theme. In the year 2019, Ho and Park [29] proposed reforming the disclosure framework by suggesting the amalgamation of public regulations and private ordering, and in that attempt the researchers conducted their investigation in the United States, South Africa, Brazil, the European Union, the United Kingdom, Hong Kong, and China. This study is the only publication related to this theme of disclosure approaches in 2019.

The number of papers published in the year 2020 surged to six, and from observation, the concerns of each study were different. Hence, it is essential to present the purpose of the papers published in 2020, to observe the areas discussed and investigated. Kinderman [72] investigated the link between corporate social-responsibility performance and supranational-law support regarding disclosures in the Nordic countries. Next, Lipton [77] discussed the importance of stakeholder-oriented disclosure, while Saleem et al. [76] examined the evolution of French corporate-governance law, including exposures using the collaboration approach. Mangen et al. [73] explored the content disclosed under mandatory and voluntary disclosures in the marijuana industry in Canada. One study explained why the United States still relies heavily on private ordering in managing non-financial disclosures, and suggested possible reforms [75]. This study by Ho [75] can explain more about the study by Berger-Walliser and Scott [71] that explored the norms in the United States regarding corporate social responsibility. Lastly, Abela [74] focused on business-model disclosures by examining the consistency of data obtained from industry players to conceptualise business models in the literature.

Based on the literature review on disclosure approaches, one possible future study is to examine disclosure approaches of integrated reporting. A study in the South African context suggested that the mandatory adoption of integrated reporting could be the driver for potential enhanced alignment with the SDGs [7], which requires further examination from the legal aspect on other jurisdictions. In addition, a company’s direction in reporting should be beneficial to the other stakeholders rather than the investors alone [78], indicating the significance of integrated reporting.

4.2.4. Stakeholders’ Engagement

The next theme established by utilizing the functions provided by ATLAS.ti version 9 is stakeholders’ engagement as seen in Figure 8. Out of 62 articles, only two are grouped under this theme, despite its importance, which shows that this theme is under-explored [79].

From 2014 to early 2021, the literature that discussed this theme started in 2020, when Lipton [77] examined the feasibility of a stakeholder-oriented disclosure approach. Next, Cosma et al. [79] studied stakeholder engagement in European banks to determine the impacts of regulations on stakeholder engagement, and expanded the study by Lipton [77] as they looked into another angle relating to stakeholders’ engagement. Finally, a study highlighted the importance of stakeholder engagement in achieving the SDGs [80], suggesting vital future studies under this theme, particularly from a legal perspective. A possible future study under this theme would be to develop the study by Cosma et al. [79] to investigate the impacts of disclosure regulations on the stakeholder-engagement process in other sectors.

4.2.5. The Effectiveness of Regulatory Interventions

As shown in Figure 9, several papers discuss the theme of the effectiveness of regulatory interventions. These papers generally aim to investigate how effective regulatory interventions are towards the more successful implementation of social-responsibility performance and enhanced transparency of information disclosure.

One study scrutinized the efficacy of disclosures under Directive 2014/95/EU in achieving sustainability and transparency [86]. Another study explored the extent to which regulations can enhance social-responsibility performance in RMG industries using a new governance approach [81], which extended the parameter of the study carried out by Ahern [86]. Next, Haeberle [87] studied the selective-disclosure rule by the SEC that is said to cause the underproduction of corporate information, hence intending to explore one new mechanism: constructing an information market to address the issue. Georgiev [82] expanded the study by Haeberle [87] when he examined the deficiencies of SEC disclosure rules. Georgiev [82] specifically studied materiality standards that led to the underproduction of information by large companies. Bini et al. [83] examined the effectiveness of regulations on management-commentary disclosure in Italy. Nicolae [84] expanded this further, by evaluating the efficiency of the Australian Corporations Act 2001 in improving climate-change performance by companies. The study examined the synergy between the said act and the Global Reporting Initiative (GRI). Lloret et al. [85] contradicted the study objective of Nicolae [84], demonstrating that regulatory interventions in curbing greenhouse-gas emissions impair sustainable behaviour by companies in Mexico, instead of promoting them. This study by Lloret et al. [85] is unique, as it challenges the assumption that regulations could encourage sustainable corporations.

Another study in line with Lloret et al. [85] is a study by Martin [70] that investigated whether disclosure laws effectively address human-rights issues or can be manipulated to improve a company’s image. Martin [70] paved the way for future studies with a more critical question on the truth of a company’s disclosure. A study by Hess [57] supported the basis of the study carried out by Martin [70], as it examined the potential effect of non-financial information regimes on human rights issues, and highlighted several problems regarding this type of disclosure, such as selective disclosure and impression management. Therefore, based on the literature that revolved around the theme of the effectiveness of regulatory interventions, it is observed that these papers are concerned with whether disclosure regulations can effectively realize sustainability goals.

4.2.6. The Impacts of Regulations

Based on Figure 10, it is unsurprising that most of the articles reviewed revolved around regulation impacts. It is only natural for researchers to investigate and examine the effects of disclosure laws on various constructs. Among the observations based on the literature review on this theme is that several studies aimed to find the relationship between disclosure regulations and the quality and quantity of sustainability reporting [27,45,61,88,89,90,91,92,93,94].

For example, Zheng et al. [45] examined the association between regulation pressure and a companies’ decision to report, and the comprehensiveness of the reporting. Szabó and Sørensen [88] investigated the possible impacts of Directive 2014/95/EU on the quantity of non-financial information disclosure and its consistency and comparability. Next, Venturelli et al. [5] analyzed the extent of non-financial information disclosed by Italian companies after the assimilation of Directive 2014/95/EU into Legislative Decree 254. In contrast, Mion and Loza Adaui [27] explored the effects of Directive 2014/95/EU on the quality of sustainability reporting produced by Italian and German companies. Tarquinio et al. [94] also examined Directive 2014/95/EU, looking at how it influenced the number of sustainability disclosures by Italian companies. Faisal et al. [61] studied the effects of disclosure regulations on the extent of sustainability information by companies in Indonesia, and Loza Adaui [91] studied the consequences of sustainability disclosure requirements on the quality of sustainability reporting in Peruvian companies.

A study by Tiron-Tudor et al. [90] provides fresh insight, as it analyzed the extent of sustainability disclosure by Romanian listed companies before and after implementing Directive 2014/95/EU, where most studies investigated the after-effects of disclosure regulations. A survey by Nicolò et al. [93] examined the relationship between Directive 2014/95/EU and the extent of sustainability disclosures by state-owned enterprises that issued integrated reporting; this study also provides a new perspective, as most studies do not focus on disclosures in integrated reporting.

Interestingly, while most of the literature discussed the after-effects of the introduction of disclosure regulations, Dumitru et al. [101] chose to investigate the quality of non-financial information by companies in Romania and Poland before the introduction of Directive 2014/90/EU. At the same time, Carini et al. [98] also examined sustainability disclosures by oil and gas companies before the introduction of Directive 2014/95/EU. These studies are of importance in assisting us to see clearly how companies change and adapt to comply with the Directive after its introduction, and whether the regulations play a significant role in ensuring sustainability-disclosure compliance by companies.

Another observation is that several studies focused on examining the impacts of sustainability-disclosure regulations on corporate behavior [45,66,92,100,102]. For example, Dong and Xu [102] explored the effects of CSR regulations on CSR disclosure practices in mining companies in China and LeBaron, and Rühmkorf [66] studied the impact of the UK Modern Slavery Act 2015 UK Bribery Act 2010 on corporate behavior. Next, Liu et al. [100] examined the effect of the Australian National Greenhouse and Energy Reporting Scheme on the voluntary disclosure of climate-change information. Finally, Guo and Yang [99] investigated the impact of SEC Guidance 2010 on corporate social-responsibility reporting. These studies chose specific regulations regarding disclosure to examine its effects on corporate practice.

Chakraborty [89] then examined the level of corporate social-responsibility performance and disclosure by banks listed on the Dhaka Stock Exchange. Jackson et al. [92] expanded the prior study by examining the effects of non-financial disclosure regulations on corporate social responsibility in 24 OECD countries. Aureli et al. [24] explored the impacts of mandatory non-financial disclosure, specifically on corporate practices of Italian-listed companies that did not disclose sustainability information before the transposition of Directive 2014/95/EU. Several studies examine a specific response from companies because of disclosure regulations. For example, Hummel and Rötzel [54] investigated the effects of the disclosure regulations on the greenhouse-gas emissions introduced under the United Kingdom Companies Act 2006 Regulations 2013 towards companies’ practices. Hong et al. [104] considered how sustainability disclosure regulations affected companies’ disclosures on green innovation. A study by Lu et al. [95] provides an interesting angle in examining the impact of sustainability reporting regulations on companies in China that are not subjected to disclosure regulations, as most studies investigated the effect of regulations on the subjected entities. Finally, a study by Cosma et al. [79] expanded the previous studies. It examined the impact of the introduction of Directive 2014/95/EU on stakeholders’ engagement process by European banks, which the prior literature under this theme did not discuss.

Next, several studies explored the interrelation between disclosure regulations and stock value or a company’s investment [60,97]. For example, Liu et al. [60] explored the impacts of sustainability reporting regulations on the stock markets of Singapore and Hong Kong, and Cordazzo et al. [97] investigated the effects of mandatory disclosure regulations on the value of non-financial information of Italian-listed companies for investors. Cousins et al. [96] then examined the impact of the United Kingdom Modern Slavery Act 2015 on stock prices. These studies signified the importance of upholding shareholders’ interest in companies by prioritizing their investment returns.

A few studies aimed to investigate selected countries’ reactions to the introduction of Directive 2014-95/EU. For instance, Camilleri [103] explored how some European Union member-states reacted and adapted to Directive 214/95/EU. Then, Aureli et al. [55] studied the transposition of Directive 2014/95/EU into the United Kingdom, France and Italy’s legal systems using the fit/misfit theory. Next, Kinderman [105] aimed to explore governments’ position, specifically France, Germany, and the United Kingdom, towards Directive 2014/95/EU, and analyzed the factors influencing their preferences and the prospect of regulatory harmonization.

From observation, a possible future study under this theme would be to expand the research by Kinderman [105] by investigating Southeast Asian countries’ approaches and preferences in introducing regulations on non-financial information by companies, as most studies focused on European countries.

4.2.7. Directive 2014/95/EU

From Figure 11, considerable literature revolved around the Directive 2014/95/EU theme. This tendency is because most studies relating to non-financial information were conducted in European countries. Some aimed to examine the impacts of Directive 2014/95/EU towards corporate behavior, the quantity and quality of sustainability reporting, stock prices and countries’ reactions and preferences [5,27,55,88,93,94,105,106].

For example, Szabó and Sørensen [88] conducted a study investigating the application scope of Directive 2014/95/EU and its enforcement, as well as examining the likely impacts of this Directive on the quality and quantity of sustainability reporting. Next, Ahern [86] examined the effectiveness of Directive 2014/95/EU in ensuring corporate transparency and sustainability. Then, La Torre et al. [107] aimed to shed light on future corporate-reporting research induced by Directive 2014/95/EU. Masiero et al. [68] investigated the possibility of relational connectivity in improving the accountability of companies with the assistance of Directive 2014/95/EU. La Torre et al. [67] expanded the prior study by Masiero et al. [68], looking into corporate accountability by examining the accountability concept within the context of Directive 2014/95/EU, to provide insights for future research.

4.2.8. The Role of Different Actors

This theme looked for papers that elaborated on the interactions between various actors with non-financial information regulations. Actors could mean the industry, the government, the society or the NGOs.

Based on Figure 12, only two articles discuss the role of different actors, whereas Camilleri [106] studied the role of government in formulating corporate social-responsibility policies in enhancing corporate disclosures, transparency, and accountability towards the stakeholders. Then, LeBaron and Rühmkorf [53] explored the interactions between the industry, NGOs, and the government on the stringency of the United Kingdom Modern Slavery Act 2015. Hence, it is intriguing to examine the role of these actors towards other specific non-financial disclosure regulations by expanding the study by LeBaron and Rühmkorf [53]. One study highlights the significant role of NGOs in achieving environmental sustainability goals [108], indicating their possible participation in implementing SDG policies.

5. Discussion and Future Studies

This review paper highlighted the quantitative and qualitative findings derived from the ATLAS.ti version 9. The perks of utilizing this software in conducting a thematic review are that it assists in document management and makes it easier for the researcher to identify the themes, by coding the relevant sentences relevant to answer the research question posed above. This review paper identified eight themes or patterns to answer the research question: fiduciary duties of directors, corporate accountability, disclosure approaches, stakeholder engagement, the effectiveness of regulatory interventions, the impact of regulations, Directive 2014/95/EU, and the role of different actors. The categorization of themes helps researchers perceive the popularly discussed patterns among scholars, and would assist in determining the gap in the literature relating to corporate disclosure regulations. For example, there is a lack of research into corporate disclosure laws in Southeast Asia countries. No analysis has yet been carried out on the disclosure regulations in Brunei, Myanmar, Cambodia, Timor-Leste, Laos, Malaysia, the Philippines, Thailand, or Vietnam. Future research should address this gap. Hence, conducting studies on corporate disclosure laws in these countries would be essential. To reiterate, most of the studies relating to regulations of non-financial information were conducted in European countries and revolved around Directive 2014/95/EU. This finding emphasizes the need to conduct studies in other jurisdictions, considering that all the United Nations member states have adopted the 2030 Agenda for sustainable development, not only the European countries.

Furthermore, only two studies discussed the theme of directors’ fiduciary duties, and these were in Canada and Nigeria. More research needs to be carried out to explore the extent to which a director can be made accountable regarding non-financial information disclosure, as this area is still under-explored and vague. Therefore, it is contended that future research concerning this area in other jurisdictions worldwide would be valuable to the academic world. Next, many opportunities are available to examine various concepts or theories to enhance a company’s accountability. The issue of a company’s accountability is an ever-revolving subject, considering that companies’ conduct can affect their surroundings significantly, emphasizing the need for more studies in this area. In addition, the securities law should be examined, as it is also relevant in improving a company’s responsibility.

Another possible future study based on thematic review findings would be on disclosure approaches of integrated reporting. It was found that the studies grouped under the theme disclosure-approach research focused on sustainability reporting. This finding is intriguing, since that integrated reporting is said to be the trend for corporate reporting. Furthermore, it was found by one study that companies that publish integrated reports tend to consider the SDGs when providing non-financial information [109]. Hence, it is suggested that more studies relating to disclosure regulations should also focus on integrated reporting.

A following possible future study would be to expand the research by Cosma et al. [79] to investigate the impacts of disclosure regulations on the stakeholder-engagement process in other sectors besides the financial industry. This trend is crucial, as the other industries or sectors also impact their surroundings tremendously. Another suggestion for future studies would be to expand the research by Martin [70] by investigating the extent of companies’ disclosure and discussing potential ways to address the information gap. This study would enlighten the issue of why and how a company manipulates or cherry-picks data to enhance and protect its image and, if possible, provide recommendations to address this problem. Next would be to expand the study by Kinderman [105] by exploring Southeast Asian countries’ approaches and preferences in introducing regulations on non-financial information by companies, as most studies focused on European countries. More studies in the Southeast Asian countries would contribute to a better and more precise understanding of their approaches, and consequently provide suggestions to improve the existing model relating to attaining the SDGs, for example. Lastly, a future study could also be conducted to examine the role of industry players, NGOs, and the government towards specific non-financial disclosure regulations by furthering the research by LeBaron and Rühmkorf [53]. The comprehension of the role of different actors in facilitating compliance with non-financial information disclosure regulations would contribute significantly to the regulators’ management of companies.

Our thematic analysis contributes to creating a frame of reference for the state of knowledge in this research area, and can direct researchers in the design of future studies. However, this study is subject to several limitations. First, the Web of Science and Scopus databases were used to gather the publications for the study. Without a doubt, they represent the best-indexed databases. Future studies, however, might use additional databases such as Google Scholar, Westlaw, and LexisNexis, to obtain better results. Second, the sample data spans from early 2021 to 2014. Therefore, even though the timing attempts to provide a recent account of the recent reflection, a longer term is required. Nevertheless, despite the aforementioned limitations, this paper is still relevant in contributing to the academic literature and practice. Results presented as themes in this paper can serve as a clear guideline to others for the underexplored area on the regulations of non-financial information.

6. Concluding Remarks

As an actively intensifying area for research, the reporting requirement for non-financial information requires a robust direction for further exploration. A thematic review paper is extremely helpful in addressing gaps to contemplate future studies. Thus, this thematic review paper on the patterns and trends in the literature relating to regulations on non-financial information in corporate reporting by companies from 2014 to early 2021 would assist other researchers in investigating more in this area, considering the heightened importance and awareness of sustainability issues globally, which is also evidenced by the SDGs 2030 Agenda. A study found that corporate involvement in contributing to the SDGs is still limited [110]. Thus, further research should also investigate this. Non-financial information disclosed in corporate reporting would enhance the transparency of companies’ business models so they could be better aligned with the SDGs. Furthermore, the IIRC envisages integrated reporting, which integrates financial and non-financial information to act as a mechanism that could align corporate behavior with the SDGs [111]. Therefore, the role of non-financial reporting should not be underestimated, including the regulations governing it.

From a managerial-implication perspective, this study may be useful for companies to pursue strategies to enhance the transparency of non-financial disclosures. Managers should consider this an opportunity to boost their companies’ value and ultimately assist in sustainable development. It is critical to implement SDGs into business models [112]. Companies must consider the business risks associated with failing to plan for the SDGs in the long term [113]. Furthermore, managers should be aware that disclosure could prevent companies from sanctions under mandatory non-financial information regulations. Companies must respect the laws to be considered corporate citizens [16]. In addition, due to the rising demands of stakeholders for non-financial information from companies, it is critical to meet the stakeholders’ needs to maintain their respectable image and preserve trust within society. In addition, transparency of non-financial information could improve the ability to predict high-growth companies, which is essential for stakeholders such as investors who seek to invest, and the policymakers who formulate effective frameworks to support sustainable development [114].