Global corporate performance evaluation and sustainability reporting

Amongst the recent trends in the field of sustainability reporting, the implementation of Corporate Sustainability Reporting Directive (CSRD) and related legislation by the EU and its member states poses a number of challenges for stakeholders. A key issue in this regard is the recognition of the inextricable link between sustainability issues and financial factors — the traditional focus of business disciplines for many years. In this sense, there is a growing need for interpretive models that express a firm’s overall performance based on both financial and non-financial factors. This need cannot be met by simply combining data and information from both areas into a single document (such as the integrated report). The risk is creating overly complex, unstructured, and inconsistent documents (both over time and across contexts) that can confuse users and, in some cases, “paralyze” their ability to make informed decisions. This paper proposes a model able to capture the overall performance of a company, into which both the financial factors and the non-financial (including sustainability) items are taken into account and related. The novelty of the current study, and its most meaningful outcome, consists in the exact construction of an innovative accounting model that comprises, in numerical terms and in terms of the relationship between financial and non-financial dimensions; in doing so, the sustainability reporting ceases to be an adjunctive factor that is detached from the financial reporting sphere, and is specifically related to and harmonized with the latter.