Transformation of Non-financial Reporting on the Path to Sustainable Development of Society
Year: 2025
Type: article
Abstract: The relevance of the study is driven by society's management demands for financial and non-financial information regarding the activities of its entities, thereby highlighting the importance of modern informational and accounting support for civil society. Research on governance success indicators in European countries has demonstrated the necessity to develop effective mechanisms and tools for government and business influence on achieving sustainable development goals. The study delineates the significance, role, evolution, and development of sustainability reporting at macro-, meso-, and micro-levels, transitioning from past non-financial information to sustainability reporting in the interest of society. The present study examines the history of non-financial reporting implementation worldwide, analysing survey results from large and medium-sized businesses regarding the adoption of sustainability frameworks. The Global Reporting Initiative (GRI) standards and recommendations, which are oriented towards global stakeholders, are recognised as the most widely used worldwide. The IFRS Sustainability Standards have established a process based on integrative thinking, leading to the formation of integrated reporting, which includes sustainability information. There has been a significant increase in the proportion of companies using stock exchange sustainability standards or recommendations. In addition, the study provides a comprehensive review of recent changes to the Exposure Draft Management Commentary, focusing on management's disclosure of factors affecting a company's financial condition and future prospects. The global shift towards mandatory sustainability reporting, as evidenced by the introduction of European Directives (NFRD, CSRD), aims to establish disclosure of responsible business practices. This study examines the challenges and prospects of sustainability reporting in Ukraine. Large companies in Ukraine prepare non-financial annual reports based on the Global Reporting Initiative (GRI) standards or in accordance with the United Nations Global Compact (UN SDGs). It is obligatory for Ukrainian medium and large companies to submit a Management Report, which includes financial and non-financial information characterising the company's condition and development prospects, while disclosing key risks and uncertainties. However, medium-sized enterprises frequently fail to provide non-financial information, and the quality of information presented in domestic management reports remains substandard. The present study analyses the challenges and prospects of adopting sustainability frameworks by Ukrainian small enterprises. The proposal calls for the narrative reporting format to be recognised as a distinct reporting type, characterised by its accessibility and comprehensibility to a wide audience of financial report users. In the context of a contemporary information society, there is an increasing expectation that narrative reporting will be accorded a higher priority than financial reporting. The underlying reason for this is that the former is more suited to meeting the needs of society as a whole, in terms of both format and purpose. In the contemporary phase of societal evolution, the transparency of non-financial reporting and the comprehensive array of standards for its preparation are optimally aligned with the interests of primary stakeholders.
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,078
OpenAlex ID: W4409970898