Less is More in the Age of Information Overload: the Paradigm Shift from a Shareholder- to a Stakeholder-Oriented Market

In our article,  we aim to analyse the issue of non-financial information, as ultimately regulated by the European Directive 2014/95/EU, and its implementation by each European Member State, with an emphasis on the Italian context. The paper examines the relevant rules and specific cases, adopting a comparative view, with the purpose of assessing the effectiveness of the new European framework on both a theoretical and a practical level.

The topic of non-financial information is highly relevant and topical for several reasons. First of all, it confirms the key role of information in the field of company and financial markets law, no longer simply with reference to financial issues (in this regard, think of the renewed regime of market abuse, whose rigid structure has led to a renewal in the actions of actors operating on European financial markets). Secondly, it highlights the importance in contemporary company law of certain issues that have been historically far from the ‘financial’ interests of shareholders, but are instead closely tied to those of stakeholders, in the wider sense of the term. In this regard requirements for full disclosure on socio-economic issues (albeit only from certain particularly relevant systemic entities), are particularly noteworthy, requiring a kind of dialogue between entrepreneurs and stakeholders that was previously unfamiliar.

Drawing on this last observation, a question arises about the current boundaries of the concept of social interest and, more generally, about the ultimate meaning of ‘doing business’. After all, it is absolutely legitimate to wonder what is, today, the entrepreneurial purpose to be followed, even more in view, on the one hand, of the increasing fragmentation and diversification of the shareholder base and, on the other hand, of the stronger appreciation of corporate purposes other than the mere pursuit of profit. Requirements for the disclosure of non-financial information have to be understood in this broader context. Our choice of subject thus traverses corporate governance, corporate social responsibility and social interest.

In order to explore the various aspects mentioned above, our paper is divided into several parts and is accompanied by a careful empirical analysis of some cases of primary importance (Campari, Prysmian Group, Deutsche Bank). The first section is purely theoretical and descriptive in nature, as it is designed to provide an introduction to the regulatory framework. An in-depth analysis of the European regulatory system is conducted, together with a comprehensive study of the Italian regulation, which was a prompt response to the invitation of the European legislator to draft an efficient regulation on the disclosure of non-financial information.

We also consider the impact of the new rules on corporate governance and corporate structures more generally. Within this wide-ranging area, we consider and discuss various aspects, including (i) the role and responsibilities of the board of directors - as well as its internal committees - in relation to the issue of non-financial information, and (ii) the effects of the new rules on the systems of internal corporate control.

With regard to the Italian context, we then examine the topic of corporate social responsibility as affected by the evolution of non-financial reporting requirements. We ask whether it still makes sense to consider CSR in a world in which there are requirements to disclose non-financial information. We consider so-called human centered business models, which are designed to build a ‘personal dimension’ into the company’s structure from the outset. We analyse CSR from a comparative point of view, with an emphasis on both the historical context and the relevant development prospects and challenges.

Further sections of the paper deal with, inter alia, specific board issues (eg independent directors and disclosure of information) and, more generally, with the relationship between the listing and the disclosure of information. Finally, the empirical examination of certain entities, also confirmed by the case-studies provided, is important in the context of this work. Specifically, the issue of non-financial disclosure is addressed with reference to corporate groups, emphasising both strengths and weaknesses of the new regime.

Maria Lucia Passador is a Research Fellow at Bocconi University, Milan.

Federico Riganti is a Post-doc Fellow at the University of Turin.