Non-financial performance indicators: the power of measures to operationalize the law.

The 254/2016 Legislative Decree, which is implementing in Italy the Directive 2014/95/EU on Non-Financial Information (NFI), has made it mandatory to convey NFI to improve economic, social and environmental corporate communication. An effective mean to operationalize the law is the use of Sustainability Performance Indicators (SPIs). These are powerful tools for communicating companies’ NFI in a synthetic, consistent and comparable way, as confirmed also by the widespread use of the Global Reporting Initiative standard and guidelines that have their strength in the presence of SPIs. With the aim to investigate the effects produced by the new regulation, our chapter analyzes the SPIs disclosed in non-financial reporting produced before and after the 254/2016 Legislative Decree by a sample of Italian companies belonging to the “sensitive sectors” (those with high social and environmental impacts). We use a content analysis and a disclosure index of non-financial reports referring to the 2015–2017 financial years. The longitudinal analysis highlights a decrease of the overall quantity of NFI disclosed via SPIs and a general reduction in their average value, which was more evident in the first year in which the Decree entered into force. The reduction of the disclosure index can be related to the assessment of information reliability, in response to the legal requirement of NFI disclosure. This study is the first attempt to investigate the role played by Italian law on NFI reporting practices, concerning sustainability performance indicators. The results reveal how EU Directive can impact on country-specific regulation, tracing a possible trend on NFI disclosure throughout Europe.