Assessing the impact of the NFRD on sustainability in the EU
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2024-07-12
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en
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Abstract
This study examines to what extent the Non-financial Reporting Directive (NFRD) improves the sustainable performance, i.e., the ESG scores, of companies within the European Union. It adds to the academic discipline by providing insights into the limited research that is conducted about the effects of the NFRD on the sustainable performance of companies within the EU. The study repeats and extends a previous study by mitigating its limitations and employing a more extensive methodology. A quasi-experimental research analysis through a difference-in-differences regression model based on matching was conducted. The results show insignificant differences between the treatment group and control group following the implementation of the NFRD and finds no support for a treatment effect for companies subject to the NFRD following its implementation. In conclusion, this study provides no support for a statistical improvement of sustainable performance, i.e., ESG scores, for companies within the EU following the NFRD. This research is restricted due to limited data on the pre-treatment period and ESG scores and financials of small companies. Recommendations for future research include examining the short- and long-term effects and the precursor impact of the NFRD and repeating this study for the newly enacted CSRD in the EU.
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Faculteit der Managementwetenschappen