Does mandating corporate social and environmental disclosure improve social and environmental performance?: Broad-based evidence regarding the effectiveness of directive 2014/95/EU

Charl de Villiers; John Dumay; Federica Farneti; Jing Jia; Zhongtian Li

doi:10.1016/j.bar.2025.101558

Does mandating corporate social and environmental disclosure improve social and environmental performance? Broad-based evidence regarding the effectiveness of directive 2014/95/EU

Charl de Villiers^*, John Dumay, Federica Farneti, Jing Jia, Zhongtian Li

^*Corresponding author for this work

Department of Accounting and Corporate Governance

Research output: Contribution to journal › Article › peer-review

3 Citations (Scopus)

10 Downloads (Pure)

Abstract

Given that the aim of corporate social and environmental disclosure mandates is to improve corporate social and environmental performance, this study investigates the impact of such mandates on performance. Using a difference-in-differences analysis, we examine trends in corporate social and environmental performance before and after the introduction of Directive 2014/95/EU (hereafter, the Directive), comparing affected European companies with companies in the United States (US), based on a balanced sample of 358 European companies (excluding United Kingdom (UK) companies, because they were subject to additional regulations that came into effect around the same time) and 470 US companies from 2009 to 2020. We find that European companies' performance has not improved substantially since the Directive came into effect in 2017, nor have they improved compared to US companies. Thus, the evidence suggests that the Directive has not improved European companies’ social and environmental performance. Our study provides broad-based evidence of the (in)effectiveness of mandating corporate social and environmental disclosures to enhance performance. Our findings will be of interest to regulators considering disclosure mandates, as well as stakeholders and investors interested in enhancing social and environmental performance.

Original language	English
Article number	101558
Pages (from-to)	1-20
Number of pages	20
Journal	British Accounting Review
Volume	57
Issue number	1
DOIs	https://doi.org/10.1016/j.bar.2025.101558
Publication status	Published - Jan 2025

Bibliographical note

© 2024 The Author(s). Published by Elsevier Ltd. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.
This article is a reprint of the premature publication, now in the correct volume and issue. This error bears no reflection on the article or its authors. The publisher apologizes to the authors and the readers for this unfortunate error. For citation purposes, please use the current publication details; Journal of Econometrics, 57/1, 101558.**DOI of current item: 10.1016/j.bar.2025.101558

Keywords

Corporate social responsibility
Corporate sustainability
CSR
Directive 2014/95/EU
Mandatory non-financial disclosure
Social and environmental performance

Access to Document

10.1016/j.bar.2025.101558Licence: CC BY

Publisher version (open access)Final published version, 1.02 MBLicence: CC BY

Cite this

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title = "Does mandating corporate social and environmental disclosure improve social and environmental performance?: Broad-based evidence regarding the effectiveness of directive 2014/95/EU",

abstract = "Given that the aim of corporate social and environmental disclosure mandates is to improve corporate social and environmental performance, this study investigates the impact of such mandates on performance. Using a difference-in-differences analysis, we examine trends in corporate social and environmental performance before and after the introduction of Directive 2014/95/EU (hereafter, the Directive), comparing affected European companies with companies in the United States (US), based on a balanced sample of 358 European companies (excluding United Kingdom (UK) companies, because they were subject to additional regulations that came into effect around the same time) and 470 US companies from 2009 to 2020. We find that European companies' performance has not improved substantially since the Directive came into effect in 2017, nor have they improved compared to US companies. Thus, the evidence suggests that the Directive has not improved European companies{\textquoteright} social and environmental performance. Our study provides broad-based evidence of the (in)effectiveness of mandating corporate social and environmental disclosures to enhance performance. Our findings will be of interest to regulators considering disclosure mandates, as well as stakeholders and investors interested in enhancing social and environmental performance.",

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note = "{\textcopyright} 2024 The Author(s). Published by Elsevier Ltd. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher. This article is a reprint of the premature publication, now in the correct volume and issue. This error bears no reflection on the article or its authors. The publisher apologizes to the authors and the readers for this unfortunate error. For citation purposes, please use the current publication details; Journal of Econometrics, 57/1, 101558.**DOI of current item: 10.1016/j.bar.2025.101558",

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Does mandating corporate social and environmental disclosure improve social and environmental performance? Broad-based evidence regarding the effectiveness of directive 2014/95/EU. / de Villiers, Charl; Dumay, John; Farneti, Federica et al.
In: British Accounting Review, Vol. 57, No. 1, 101558, 01.2025, p. 1-20.

Research output: Contribution to journal › Article › peer-review

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AU - Dumay, John

AU - Farneti, Federica

AU - Jia, Jing

AU - Li, Zhongtian

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AB - Given that the aim of corporate social and environmental disclosure mandates is to improve corporate social and environmental performance, this study investigates the impact of such mandates on performance. Using a difference-in-differences analysis, we examine trends in corporate social and environmental performance before and after the introduction of Directive 2014/95/EU (hereafter, the Directive), comparing affected European companies with companies in the United States (US), based on a balanced sample of 358 European companies (excluding United Kingdom (UK) companies, because they were subject to additional regulations that came into effect around the same time) and 470 US companies from 2009 to 2020. We find that European companies' performance has not improved substantially since the Directive came into effect in 2017, nor have they improved compared to US companies. Thus, the evidence suggests that the Directive has not improved European companies’ social and environmental performance. Our study provides broad-based evidence of the (in)effectiveness of mandating corporate social and environmental disclosures to enhance performance. Our findings will be of interest to regulators considering disclosure mandates, as well as stakeholders and investors interested in enhancing social and environmental performance.

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