ESG-related non-financial performance indicators

: evolution and current practice of reporting by ten European banks

Abstract

The evolution of business theory and practice in the last decades brought to light the importance of non-financial performance indicators in corporate reporting. This thesis aims to study the evolution and current practice of reporting of non-financial measures of Environmental, Social and Governance (ESG) performance in a sample of ten banks supervised by the European Central Bank. The comparative analysis of banks’ disclosed reports in the years of 2007, 2016 and 2019, based on selected standards representing the best practices in the market regarding ESG reporting, resulted in a total of 5,324 reported/not-reported observations reflecting the extent to which banks’ disclosures are coherent with the standards. Comparing through reporting scores the number of disclosures actually reported by banks to the total number of analyzed disclosures showed that the selected banks only partially comply with ESG reporting standards, and particularly struggle in the areas of environmental and social performance. Corporate Governance reporting practices are the ones most aligned with the selected standards in all three years. All banks (with only one exception in social reporting) were found to improve their reporting practices throughout the years in the three ESG dimensions. Results show that significant evolution has occurred, which is undoubtedly linked to the fact that non-financial reporting not only mitigates reputational risks and contributes to social legitimacy, but also entails an opportunity to better align the interests of managers to those of the stakeholders, and helps to ensure that these stakeholders’ demand for information is met.

Date of Award	8 Jul 2020
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Gérard Naulleau (Supervisor)