CSR Disclosure in Polish-Listed Companies in the Light of Directive 2014/95/EU Requirements: Empirical Evidence

Abstract

On 15 December 2016, new non-financial reporting requirements were implemented in the Polish Accounting Act (PAA) which would be enforced from 1 January 2017. This act resulted from the transposition of Directive 2014/95/EU. New requirements oblige certain groups of entities to disclose non-financial information on environmental, social and employee-related matters, respect for human rights, anti-corruption and bribery matters. The purpose of this paper is two-fold. Firstly, this study analyses the new non-financial reporting requirements implemented in PAA, which were created from the transposition of the Directive. Secondly, this study investigates the current extent and quality of corporate social responsibility (CSR) reporting in companies listed on the Warsaw Stock Exchange (WSE) and their compliance with the new requirements. The sample comprises 150 selected listed companies on the WSE. The data were collected from annual reports, separate CSR reports, and companies’ websites. Content analysis and a rating scale were used to measure the level of CSR disclosures. The results show that companies prefer annual reports to communicate voluntary CSR disclosures. In the majority of cases, CSR disclosure of companies were not compliant with the new requirements. Companies placed little emphasis on reporting about human rights and anti-corruption. This suggests that the new reporting obligation should increase the extent and quality of non-financial disclosure among Polish listed companies.

1. Introduction

Corporate social responsibility (CSR) was formally introduced in the European Union (EU) by the European Commission in the Green Paper [1], which defined it as “a concept whereby companies integrate social and environmental concerns in their business operations and their interaction with their stakeholders on a voluntary basis”. Many definitions of CSR have been produced since that time, although this concept is perceived in the EU as the most relevant [1]. The aforementioned definition highlights the view that the CSR concept is mostly focused on dialogue and interaction between a company and its stakeholders. The instrument that is commonly used for this dialogue and interaction is CSR reporting. In this paper the authors use terms such as CSR reporting, sustainability reporting, CSR disclosure, sustainability disclosure interchangeably.

It can be said that CSR reporting reflects the evolution of corporate reporting and includes issues concerning a company’s environmental and societal impacts and policies [2]. In this reporting process, a CSR report is a communication tool that provides information, both internally and externally, about the social and environmental aspects of the operations of companies. Over the last decade, the number of CSR reports has increased significantly. According to Global Reporting Initiative (GRI) statistics, 43,207 reports were published in 2016 in the GRI database, which is an increase of approximately 18% compared with 2015 [3]. The distribution of CSR reports differs across regions. Almost half of published CSR reports (47%) in 2012 originated from the European region, 17% from Asia, 14% from North America and 14% from Latin America [4]. Despite the above data it is worth noting that reporting enterprises still form only a small minority of companies worldwide.

It is still not clear whether CSR reporting should be based on a voluntary or mandatory basis. This lively debate has been continuing for more than 10 years now. At the beginning, companies advocated in favour of voluntary reporting, while non-governmental organizations or other pressure groups expected mandatory reporting. Currently, both companies, investors and analysts are accepting and promoting legal regulations in the area of CSR reporting [5]. Votes favour the mandatory regulations for CSR reporting results due to two related reasons. The first reason is the lack of transparency, as it is believed that companies will not disclose material data unless they are obliged by law. The second reason is the limited usefulness, as CSR information disclosed on a voluntary basis is incomplete and irrelevant to stakeholders [6].

It is considered that mandatory regulation is the only way of improving the quantity and quality of non-financial information [7]. This intuition has been confirmed by several studies. According to Jackson et al. [8], twenty-four Organisation for Economic Co-operation and Development (OECD) countries have shown that companies that report on a mandatory basis adopt significantly more CSR activities. Crawford and Williams [9] has shown that the quality of non-financial disclosures is lower in countries without regulative pressures, such as United States of America, compared to countries with regulations, such as France.

Mandatory regulation could also positively influence a company’s market value. Wang and Li [10] examined disclosures in Chinese companies and found that higher CSR reporting quality has a positive impact on the market value of the company. Further, Ioannou and Serafeim [11] have examined companies from China, Denmark, Malaysia and South Africa and found that mandatory disclosure increases the extent of disclosure. Moreover, the results suggest that increases in the disclosure of sustainability driven by regulations are associated with increases in firm valuations.

Irrespective of the current discussion, the publication of CSR reports is still not mandatory for all companies. The current CSR reporting practices can be grouped into three categories. The first category covers companies that do not disclose their social and environmental activities since they do not treat it as a relevant matter. The second category includes companies that disclose CSR information on a voluntary basis. The third category covers companies that are obliged to disclose their CSR activities under some specified conditions (e.g., size or industry).

After the financial crisis, from 2008 Europe has become the most active region in promoting transparency and disclosure of CSR. In November 2010, the EU Commission launched a public consultation examining companies’ disclosure of non-financial information, such as social aspects, environmental information, human rights and sustainable development. The current EU legislation addresses the disclosure of non-financial information, in particular the Fourth Company Law Directive related to annual accounts [12]. This requires that companies make certain information on environmental and employee aspects of their activities accessible to the public, where appropriate, to the extent necessary for an understanding of their development, performance or position. After consultation, the summary report has been issued.

The European Commission report [13] revealed very high heterogeneity and diversity of applied solutions in member states, which has led to the fragmentation of the EU legislative framework. Several member states (including the UK, France, The Netherlands, Sweden and Denmark) have introduced disclosure requirements that surpass those of the Fourth Company Law Directive. Certain member states have made the disclosure of non-financial information mandatory. Others have adopted a “comply or explain” approach. The subject scope of the requirements also varies. Certain member states subjected large companies to mandatory reporting, while other states only required listed companies or state-owned enterprises to report. Some member states refer to international reporting guidelines, while others have set up their own national reporting guidelines. The report states that considerable demand has grown in the EU for improving the comparability, reliability and relevance of information disclosed by companies, such as on issues relating to social and environmental aspects.

In 2013, the European Parliament in its two resolutions, namely “Corporate Social Responsibility: accountable, transparent and responsible business behaviour and sustainable growth” [14] and “Corporate Social Responsibility: promoting society’s interests and a route to sustainable and inclusive recovery” [15], acknowledged the importance of increasing the transparency of information on sustainability, such as its social and environmental aspects. Furthermore, they called on the Commission to bring forward a legislative proposal on the disclosure of non-financial information by companies.

On 22 October 2014, the new Directive 2014/95/EU of The European Parliament and The Council was issued, which relates to the disclosure of non-financial and diversity information by certain large undertakings and groups [16]. In order to enhance the consistency and comparability of non-financial information disclosed throughout the Union, certain large undertakings (according to article 1) have to prepare a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters. This statement should include a description of the policies, outcomes and risks related to those matters and should be included in the management report of the undertaking concerned. The Directive applies to large public-interest entities (PIEs), with an average of 500 or more employees. According to the European Commission, this will affect approximately 6000 large companies and groups across the EU. New requirements were applied in all member states for the financial year starting on 1 January 2017 or during the calendar year of 2017 [16].

Following the regulations of this Directive, the new accounting regulation [17] amended the Polish Accounting Act (PAA) and obliged certain groups of entities to disclose additional non-financial information on CSR in two alternative forms of communication, namely a separate part of the management commentary or a completely separate CSR report, from 1 January 2017 in Poland. The new duty of disclosing non-financial and diversity information has set a common standard for subjected companies and forces them to re-consider their practices that need to be reported. As a result, many responsible business practices could be cultivated in the search for (sustainable) competitiveness, while more undertakings could become part of the initiative for sustainability [18].

There is a lack of research investigating the possible impact of the Directive requirements on companies in member states. The relevant exemption in this matter is one study [19] which was conducted in Italy. The results show that there is still an important information gap that needs to be filled even among large entities. However, multi-national companies are the positive exception. Thus far, sustainable reporting in Poland was based on a voluntary basis and was not regulated by the State. Despite the lack of such an obligation, companies used to make additional voluntary disclosures on non-financial information regarding CSR issues in different forms and extent, especially large, listed or public trust companies [20]. According to recent meta analyses [21,22], CSR disclosure research in developed countries has predominantly focused on North America (e.g., Thorne et al. [23] in Canada, Cho et al. [24] in United States), Australia (e.g., Deegan and Gordon [25]), and north-western Europe (e.g., Gray et al. [26] in the UK, Cormier et al. [27] in Germany, and Chauvey et al. [28] in France). Less attention has been paid to southern Europe (e.g., Italy and Spain) and eastern Europe (e.g., Poland and Slovenia). In particular, there is a lack of empirical research concerning Polish CSR disclosure practices. A wide literature review was conducted by Waniak-Michalak et al. [29], which explored the BazEkon and EBSCO databases in addition to using the Google Scholar web search engine. This review indicated that most publications related to CSR and accounting themes (1984–2016) in Poland have focused on literature reviews, with only a few based on empirical studies (e.g., [30,31]). In contrast, the latest studies related to the issue of non-financial information in Poland have included small research samples [32,33] or have not discussed disclosures in the context of compliance with the requirements of the EU Directive [34,35,36]. Due to the fact that there is a lack of studies focusing on the potential contribution of the Directive to CSR disclosure in member states, especially in Poland, we decided to make this the focus of this present study.

Our research is based on the legitimacy theory, which is extensively used in studies related to CSR reporting [37,38,39,40,41,42,43]. One of the most commonly cited definitions of legitimacy has been formulated by Lindblom [44], who defines legitimacy as “a status, which exists when an entities value system is congruent with the value system of the larger social system of which the entity is a part. When a disparity, actual or potential, exists between the two value systems, there is a threat to the entities’ legitimacy”. Lindblom’s definition emphasises that entities should undertake actions consistent with social values and expectations [45], which should be adapted according to social pressures [46]. Deegan [7] suggests that in accordance with the legitimacy theory, entities disclose CSR information to create an impression that they are socially responsible. From that point of view, entities disclose CSR information in order to create, maintain or restore their legitimacy.

Considering the changes in regulations, there is the question as to what extent new CSR reporting requirements align with current companies’ disclosure patterns. Nowadays, companies already report about CSR activities on a voluntary basis, but research on sustainable disclosure [47] has pointed to an increasing incompleteness in the information reported. Moreover, an information gap in this matter still exists in EU member states [19]. Thus, it is possible that the new CSR reporting requirements will affect PIEs, as they have not yet disclosed necessary non-financial information. In addition, as current regulations require companies to disclose minimum information on environmental and labour issues, varying levels and quality of disclosure can be expected, especially in CSR categories required by the amended PPA. Patten [48] has documented that mandatory increases in some negative CSR information are accompanied by associated increases in the provision of other more positive CSR information. Given the reluctance of companies to disclose negative information, we anticipate that companies will avoid disclosures in categories that may adversely affect their legitimacy.

It is also interesting to consider which forms of communication (management commentary as a part of an annual report, a completely separate CSR report, or information on a company’s website) are preferred for disclosing non-financial information. Currently, the publication of the management commentary is mandatory, while the preparation of a separate CSR report or posting information directly on the website is voluntary. Hence, we assume that companies are more likely to present information in a management commentary than in a separate CSR report. According to research theoretically grounded in the legitimacy theory [45], the choice of a medium for information disclosure is dependent on the target public for the intended message. Management commentaries as part of annual reports are directed at investors, while CSR reports are aimed at the broader public. Since investors have different information needs compared to other stakeholders, we assume that the extent and quality of CSR disclosures depend on the medium of communication.

Moreover, extensive research [49] has shown that companies from different industries focus attention on different stakeholders in sustainable reporting due to the nature of their activity. Many studies using the legitimacy perspective [39,40,41,42,43] have confirmed that there is a link between the extent of CSR disclosure and the industry profile. In general, companies in industries with a larger potential environmental impact are more likely to disclose environmental information due to legitimacy reasons, while companies in industries with high visibility to final consumers (such as banks) are more likely to disclose information on community involvement [50]. It can be assumed that a similar dependence of CSR disclosure occurs among industries in the Polish market.

Taking the aforementioned points into consideration, the aim of this paper is two-fold. Firstly, this study analyses the new non-financial reporting requirements in the PAA. Secondly, it investigates the current state of sustainable reporting in companies listed on the Warsaw Stock Exchange (WSE) and how this complies with the new requirements. Focusing on the second aim, the present study examines what is the extent and quality of PIEs’ CSR disclosures a year before the implementation of new regulations, and to what extent the implementation of new regulations would require specific adjustments of PIEs to meet the requirements.

This study mainly addresses five research questions (RQ):

RQ1:

What disclosure media are preferred by Polish PIEs to communicate their CSR practices on a voluntary basis?

RQ2:

What is the extent and quality of the voluntary CSR disclosures made by Polish PIEs in particular forms of communication?

RQ3:

What is the quality of the voluntary CSR disclosure amongst Polish PIEs in each CSR category considered?

RQ4:

What is the quality of the voluntary CSR disclosure amongst Polish PIEs across industries?

RQ5:

To what extent do the voluntary CSR disclosure amongst Polish PIEs comply with the new requirements introduced by the PAA, which are effective from 2017?

In order to answer the research questions, a content analysis and rating scale were used to measure the level of CSR disclosures in five categories, namely: environment, labour practices, human rights, community involvement, and anti-corruption.

Our study contributes to the CSR disclosure literature in the following ways. First, our study contributes to the ongoing discussion about “mandatory against voluntary” non-financial disclosure by indicating to what extent mandatory directive regulations transposed into Polish law may improve the quality of information disclosed by listed companies on a voluntary basis. Second, we contribute content analysis of CSR disclosure to the literature by developing a new CSR measurement instrument, which considers the latest CSR reporting requirements of the Directive 2014/95/EU. Third, the results enhance the understanding of the differences in CSR applications and disclosure between new and old EU countries. Finally, the research results contribute to the understanding of the extent and quality of CSR voluntary disclosure practices in Poland, where there is limited empirical evidence.

The paper is structured as follows. In Section 2, we present the new reporting requirements in Poland. In Section 3, research hypotheses and research methodology are described. Section 4 presents results and interpretation. In Section 5, we discuss the main results of the study. Section 6 includes the main conclusions.

2. New Reporting Requirements on Non-Financial Disclosures

The personal scope of the new accounting regulations in Poland covers large PIEs having headquarters in Poland, including credit institutions, insurance undertakings, investment fund undertakings and listed undertakings with securities admitted to trading on a regulated market in one of the EU member states. These PIEs must fulfil the following two criteria in the current and preceding financial year:

• 500 employees—in relation to average full-time employment in the year; and
• 85,000,000 PLN (Polish zloty)—in relation to total sum of assets at the end of the financial period, or 170,000,000 PLN in relation to net income on sold goods and products (services) for the financial period.

For parent undertakings, the criteria were extended as follows. If the data of parent undertaking and all its subsidiary undertakings given at the end of a financial period and preceding the following financial period:

• after consolidation, exclusions exceed the two criteria mentioned above; or
• before consolidation, exclusions exceed the following two criteria:
  • 500 employees—in relation to average full-time employment in the year; and
  • 102,000,000 PLN—in relation to total sum of assets at the end of the financial period; or 204,000,000 PLN in relation to net income on sold goods and products (services) for the financial period.

Both the directive and its Polish transposition have established a minimum legal requirement approach regarding the extent of the non-financial information. An entity that is a subject of the new regulations is obliged to disclose the information to the extent that is necessary for understanding the undertaking’s development, performance, position and the impact of its activity related to environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters as a minimum, including:

• a brief description of the undertaking’s business model;
• non-financial key performance indicators relevant to the particular business;
• a description of the policies pursued by the undertaking in relation to social, employee and environmental matters, respect for human rights, anti-corruption and bribery matters, including those matters and the outcome of those policies;
• a description of the principal risks related to those matters linked to the undertaking’s operations including its products or business relationships and those with suppliers, which are likely to cause adverse impacts in those mentioned areas, and the way the undertaking manages those risks.

It is important to note that several of these issues (i.e., non-financial key performance indicators, information concerning environmental and labour matters) have been already disclosed on the basis of the regulations existing before the change in the PAA (formerly Article 49 par. 3 PAA). Therefore, the remaining entities that are obliged to prepare the management commentary will have to continue to fulfil their current obligations to disclose a minimum level of information on environmental and labour issues. The new regulation follows the “comply or explain” approach under which, if the undertaking does not pursue one or more policies, the non-financial statement should provide a reasoned explanation for not doing so. Undertakings that are subject to new requirements may choose the form of presentation of the non-financial information. The possible two alternative variants are as follows:

• a statement on non-financial information in management commentary as a separate part; or
• a separate report on non-financial information (apart from management commentary).

According to the first variant, it is important to note that the whole required range of information must be presented and commented on in a separate part of the management commentary, even if they need to be repeated in another part. In the second variant, the entity is obliged to inform in the management commentary that a separate report has been prepared and all required data has been covered. Moreover, the form of a separate report depends on the choice of the undertaking, with potential forms including a CSR report, sustainability report, and integrated report.

Irrespective of the adopted variant, the publication of the non-financial information must be published in a period of time that does not exceed six months after the balance sheet date. However, the place of publication is different between variants. In the first variant, the statement as part of a management commentary must be published in the KSR (State Court Registry) no longer than 15 days after the approval of its financial statement. In the second variant, the entity is obliged to publish a separate report on its website.

The information related to impending developments or matters in the course of negotiation may be omitted by an undertaking in exceptional cases where in the duly justified combined opinion of the members of the management and supervisory bodies, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking. However, the undertaking is not allowed to omit this information if such an omission prevents a fair and balanced understanding of the undertaking’s development, performance, position and impact of its activity. Moreover, a non-financial statement or the separate report will be subject to checks by the statutory auditor or audit firm. However, the auditor is only concerned on whether the entity reports a necessary extent of information or whether it gives reasons for the lack of policy in relation to one or more issues. This audit will not provide stakeholders with any level of certainty about the quality of the non-financial disclosures.

3. Research Methodology

Our initial sample includes all firms listed on the WSE on 3 August 2017. The sample selection procedure consists of three steps:

• Searching whether company has its residence in Poland. If yes, we proceed to step 2. If not, it is eliminated from further analysis.
• Searching whether the Notoria Serwis Database (NSD) (this contains an updated, standardized format of financial statements for all companies listed on the WSE—reporting both in accordance with Polish and international accounting standards) covers all data necessary for further analysis (employment, assets and income) on 31 December 2015 in single or consolidated reports. If yes, we proceed to step 3. If not, it is eliminated from further analysis.
• Searching whether the company fulfils criteria concerning employment, assets and income on 31 December 2015. First, we checked criteria concerning the data from single reports. If the company did not fulfil criteria or there was no available data we checked the data from consolidated reports. If the criteria were fulfilled, the company was classified to be part of the research sample or eliminated otherwise.

As it was impossible for us to collect the exclusion data before consolidation, we used criteria dedicated to single reports in both cases (single reports and consolidated reports).

Following the above-mentioned three steps, the final study sample was composed of 150 Polish companies listed on the WSE out of 494 gathered in the NSD. The industry coverage of the research sample is presented in

Table 1. Industry coverage by sample.

Industry	Number of Companies
Automobiles	4
Banks	13
Basic materials	3
Buildings materials	4
Chemicals	6
Construction	13
Developers	1
Electro-engineering	15
Energy	6
Finance-others	2
Food	11
Hotels and Restaurants	2
Industry-others	1
Insurance	1
IT	9
Light industry	3
Media	3
Metals	10
Oil and Gas	3
Pharmaceutical	1
Plastics materials	3
Retails	10
Services-others	12
Telecom	2
Wholesale	8
Wood and Paper	4
Total	150

Source: own elaboration.

. According to estimates given by the Polish Ministry of Finance [51], approximately 300 undertakings would be subject to the new non-financial disclosure requirements. This means that our research sample covers 50% of the whole population.

The collected data are grouped in two categories: (1) data concerning employment, assets and income comprised of the absolute values; and (2) the CSR disclosure data used to calculate statistics. The data from the first group were obtained from the NSD on 3 August 2017. The data from the second group were hand-collected from three communication channels, which are namely the management commentary as a part of annual reports, separate CSR reports, and the websites. In order to examine CSR disclosures in the management commentary and separate CSR report, the time scope was 2015. To examine disclosures in the third communication channel, we accessed companies’ websites in July 2017.

The study focuses on the non-financial information disclosed in communication channels of the firms in the research sample. The examination of each channel was conducted separately, which means that the same information in one channel could be or not be disclosed in the other channel. To quantify the CSR-disclosure practices, a content analysis technique was utilized. In order to investigate the level of CSR disclosure, an assessment instrument was developed. Our instrument is based on the new PAA requirements with regards to the non-financial information, thus ensuring its reliability [52]. Following the new requirements, we examined the existence of non-financial information separately in five categories, namely:

• Environment
• Labour Practices
• Human Rights
• Community Involvement
• Anti-Corruption

In order to assign points to each category, we developed a rating scale. This scale allows us to evaluate the categories disclosed by the companies in their disclosure media according to the numeric relevance presented in

Table 2. Rating scale.

Scoring	Explanation
0	no information, when the company does not make any reference to the subject in its annual report, CSR report or website.
1	reduced information, when the annual report, CSR report or website only mention the concept/term, but do not mention any specific activity or policy.
2	general information, when the annual report, CSR report or website mention the theme and contain general information on policies or activities connected to it.
3	detailed information, when the annual report, CSR report or website disclose in detail specific programs on the theme, in addition to general information.
4	very detailed information, when the annual report, CSR report or website disclose non-financial performance indicators, and a description of procedures and risks associated with the theme, in addition to the detailed information.

Source: own elaboration.

. Each company was scored separately according to the quality of information disclosed in each media. In order to decrease the subjectivity of this evaluation, we employed cross-check analysis (scores given by one author were checked independently by the second author and conversely). Discrepancies across members of the research team were discussed and reconciled.

In addition, following prior studies [53,54], we used Cronbach’s alpha coefficient to assess the internal consistency of the employed scale. Its value ranges between 0 and 1, with a value higher than 0.70 indicating a sufficient level of reliability. The alpha coefficient value for the scale was computed for both disclosure media and communication channels, which are namely the management commentary, CSR report and website. The alpha coefficient values were 0.9411, 0.909, 0.985 and 0.919, respectively, which indicates that the items included in the scale captured the same underlying construct.

4. Results and Interpretation

Table 3. Descriptive statistics.

Variable	Minimum	Maximum	Mean	Median	Std. Deviation	Coefficient of Variation
Employment	504	38,877	3477	1373	5698	16,388
Assets	97	262,380	10,688	897	31,806	29,759
Income	76	60,466	2818	831	6415	22,765

Notes: Employment, number of full-time employees; Assets, value of assets in million PLN, Income, value of income from sales of products and goods in million PLN. Source: own elaboration.

shows that all companies in the study meet the criteria for the disclosure of additional non-financial information. The lowest level of employment, assets and income in Polish-listed companies was 504 full-time employees, 97 million PLN and 76 million PLN, respectively, which is above the criteria required in the new regulations. As the average numbers demonstrate, companies in the sample differ considerably in terms of employment (3477), assets (10,688) and income (2818). This is also demonstrated by the high values of the standard deviation, which indicates that the sample is not homogenous.

Figure 1 depicts the number of companies utilising particular media as a communication channel. Approximately three quarters of the analysed companies (114 companies; 76.0%) use at least one channel of communication. This means that almost a quarter of companies (36 companies; 24.0%) do not communicate their CSR practices at all. As shown in Figure 1, more than half of the companies (87 companies; 58.0%) disclose CSR information in annual reports, although this is the only CSR disclosure media for 25 companies (16.7%). Furthermore, more than half of the companies (89 companies; 57.8%) present information about CSR on their websites, which is the only CSR disclosure medium for 24 companies (16.0%). A small proportion of the companies (28 companies; 18.7%) prepare a separate CSR report, which is the only communication channel for one of these studies. On average, every seventh company (22 companies; 14.6%) uses all forms of communication for CSR information. Thus, Polish-listed companies seem to attribute greater importance to annual reports and the Internet as disclosure media compared to the CSR reports.

Results in Figure 2 show that in annual reports, 13 companies (8.6%) disclose information in all five categories considered, while as many as 93 companies (62.0%) do not disclose social responsibility information. Other companies (29.4%) present one (10.7%), two (8.7%), three (6.7%) or four (3.3%) of the categories considered. In websites, the minority (12 companies; 8.0%) disclose information in all five categories considered, while as many as 89 companies (59.3%) do not disclose social responsibility information. The rest of the companies (32.7%) present one (10.7%), two (3.3%), three (12.0%) or four (6.7%) of the categories considered. On the other hand, 19 companies (12.7%) disclose information in all five categories considered in CSR reports, only a few companies (7 companies; 4.7%) present 1–4 categories, while the majority (128 companies; 82.7%) do not prepare a CSR report.

We compared the information disclosed in the annual reports with similar information disclosed in the CSR reports or on websites in Figure 3. This indicates that environment, labour practices, human rights, community involvement and anti-corruption categories are more present in CSR reports (respectively 96%, 85%, 85%, 92% and 73% out of all published CSR reports) than in annual reports (respectively 79%, 63%, 37%, 74% and 23% out of all annual reports that disclose at least one of the categories considered) and on the websites (respectively 87%, 66%, 36%, 77% and 30% out of all companies’ websites that present at least one of the categories). The largest difference concerns certain categories, such as human rights and anti-corruption. These two categories appear much less frequently in annual reports and web pages than in CSR reports.

Table 4. Disclosure by categories of CSR in all disclosure media.

CSR Disclosure Categories	None (0)	Reduced (1)	Generic (2)	Detailed (3)	Very Detailed (4)	% (2 + 3 + 4)	% (3 + 4)
Environment	55	24	21	23	27	47%	33%
Labour Practices	76	15	17	19	23	39%	28%
Human Rights	99	10	16	4	21	27%	17%
Community Involvement	60	24	14	26	26	44%	35%
Anti-Corruption	112	7	8	0	23	21%	15%
Totals	402	80	76	72	120	36%	26%

Notes: Columns 2, 3, 4, 5 and 6 reflect the number of companies’ disclosure media evaluated with 0, “None”; 1, “Reduced”; 2, “General”; 3, “Detailed”; 4, “Very detailed”, respectively, for each one of the categories. In columns 7 and 8 the percentage value of the evaluations (2 + 3 + 4) and (3 + 4) are shown, respectively. Source: own elaboration.

demonstrates that in all types of disclosure media, there are relevant disclosures in an average of 36% of cases. Furthermore, the criteria were disclosed with detail or considerable detail in 26% of these media. The above average values may appear to be insignificant for the analysis due to the inclusion of three communication channels together.

When the disclosure media are reduced to annual reports, it is possible to obtain clearer results. On average, 21% of criteria is disclosed with some relevance, while 12% provide detailed or very detailed disclosures (

Table 5. Disclosure by categories of CSR in annual reports.

CSR Disclosure Categories	None (0)	Reduced (1)	Generic (2)	Detailed (3)	Very Detailed (4)	% (2 + 3 + 4)	% (3 + 4)
Environment	85	20	17	18	10	30%	19%
Labour Practices	100	14	14	15	7	24%	15%
Human Rights	121	8	13	2	6	14%	5%
Community Involvement	94	14	16	19	7	28%	17%
Anti-Corruption	132	5	6	2	5	9%	5%
Totals	532	61	66	56	35	21%	12%

Notes: Columns 2, 3, 4, 5 and 6 reflect the number of companies’ annual reports evaluated with 0, “None”; 1, “Reduced”; 2, “General”; 3, “Detailed”; 4, “Very detailed”, respectively, for each one of the categories. In columns 7 and 8 the percentage value of the evaluations (2 + 3 + 4) and (3 + 4) are shown, respectively. Source: own elaboration.

). When only CSR reports are considered, the results are 15% and 14%, respectively (

Table 6. Disclosure by categories of CSR in CSR reports.

CSR Disclosure Categories	None (0)	Reduced (1)	Generic (2)	Detailed (3)	Very Detailed (4)	% (2 + 3 + 4)	% (3 + 4)
Environment	123	2	1	2	22	17%	16%
Labour Practices	126	2	0	2	20	15%	15%
Human Rights	126	2	2	2	18	15%	13%
Community Involvement	124	2	0	3	21	16%	16%
Anti-Corruption	130	1	1	0	18	13%	12%
Totals	629	9	4	9	99	15%	14%

Notes: Columns 2, 3, 4, 5 and 6 reflect the number of companies’ CSR reports evaluated with 0, “None”; 1, “Reduced”; 2, “General”; 3, “Detailed”; 4, “Very detailed”, respectively, for each one of the categories. In columns 7 and 8 the percentage value of the evaluations (2 + 3 + 4) and (3 + 4) are shown, respectively. Source: own elaboration.

). When only companies’ websites are considered, the results are 24% and 17%, respectively (

Table 7. Disclosure by categories of CSR in websites.

CSR Disclosure Categories	None (0)	Reduced (1)	Generic (2)	Detailed (3)	Very Detailed (4)	% (2 + 3 + 4)	% (3 + 4)
Environment	78	19	17	27	9	35%	24%
Labour Practices	92	18	13	19	8	27%	18%
Human Rights	117	11	9	5	8	15%	9%
Community Involvement	78	25	9	28	10	31%	25%
Anti-Corruption	124	8	6	4	8	12%	8%
Totals	489	81	54	83	43	24%	17%

Notes: Columns 2, 3, 4, 5 and 6 reflect the number of companies’ websites evaluated with 0, “None”; 1, “Reduced”; 2, “General”; 3, “Detailed”; 4, “Very detailed”, respectively, for each one of the categories. In columns 7 and 8 the percentage value of the evaluations (2 + 3 + 4) and (3 + 4) are shown, respectively. Source: own elaboration.

). These average values in the individual communication channels still seem to hold little significance for the analysis due to the high variability within disclosure criteria.

Polish-listed companies are especially interested in reporting their environmental issues. From the analysed companies, 47% disclosed information regarding the environment, with 33% of these having detailed or even very detailed information (Table 4). More companies disclose detailed information on the environment in annual reports (19%; Table 5) than in CSR reports (16%; Table 6).

Furthermore, community involvement is predominantly featured in the information disclosed. About 35% of the analysed disclosure media have detailed or very detailed information on community involvement (Table 4). Community involvement criteria is disclosed with detail in 17% of the annual reports (Table 5) and in 16% of the CSR reports (Table 6).

Another issue frequently disclosed is labour practice. The disclosure of such a category is detailed or very detailed in 28% of the analysed companies (Table 4). A total of 15% of the companies report detailed information on this category in annual reports (Table 4) and in CSR reports (Table 6).

By contrast, the human rights and anti-corruption criteria do not have detailed disclosure rates above 20% in each media (Table 4, Table 5, Table 6 and Table 7).

The results also revealed evident discrepancy in disclosure policies. The level of CSR disclosure varies considerably between industries. There are three industries (

Table 8. CSR disclosure by industries.

CSR Disclosure Categories	None (0)	Reduced (1)	Generic (2)	Detailed (3)	Very Detailed (4)	% (2 + 3 + 4)	% (3 + 4)
Basic materials	0	2	0	3	10	87%	87%
Energy	2	1	3	0	24	90%	80%
Oil and Gas	0	0	3	1	11	100%	80%
Telecom	5	0	0	0	5	50%	50%
Banks	17	9	8	15	16	60%	48%
Chemicals	8	6	2	1	13	53%	47%
Construction	27	11	6	6	15	42%	32%
Media	8	1	2	4	0	40%	27%
Electro-engineering	49	7	4	6	9	25%	20%
Finance-others	7	0	1	2	0	30%	20%
Industry-others	4	0	0	1	0	20%	20%
Food	35	9	1	8	2	20%	18%
Wholesale	25	4	4	3	4	28%	18%
Wood and Paper	10	4	3	3	0	30%	15%
Metals	29	5	9	2	5	32%	14%
Retails	37	6	0	7	0	14%	14%
IT	33	4	2	1	5	18%	13%
Services-others	42	3	8	7	0	25%	12%
Automobiles	12	2	4	1	1	30%	10%
Plastics materials	13	0	1	1	0	13%	7%
Buildings materials	10	5	5	0	0	25%	0%
Developers	5	0	0	0	0	0%	0%
Hotels and Restaurant	6	0	4	0	0	40%	0%
Insurance	0	0	5	0	0	100%	0%
Light Industry	13	1	1	0	0	7%	0%
Pharmaceutical	5	0	0	0	0	0%	0%
Totals	402	80	76	72	120	36%	26%

Notes: Columns 2, 3, 4, 5 and 6 reflect the number of companies’ disclosure media evaluated with 0, “None”; 1, “Reduced”; 2, “General”; 3, “Detailed”; 4, “Very detailed”, respectively, for each one of the categories. In columns 7 and 8 the percentage value of the evaluations (2 + 3 + 4) and (3 + 4) are shown, respectively. Source: own elaboration.

), where CSR is disclosed in great detail in the vast majority of companies: basic materials (87%), energy (80%) and oil and gas (80%). Only about half of the companies in the telecom (50%), banks (48%) and chemicals (47%) sectors disclose their social responsibility in detail or much detail. CSR is disclosed with little detail in the construction (32%) and media (27%) sectors. CSR is mostly not disclosed in other sectors. There are sectors (electro-engineering, finance–others and industry–others) where only every fifth company reports its social responsibility in detail or much detail. There are several sectors where the study showed a total absence of detailed or very detailed CSR information.

5. Discussion

The results show that most Polish-listed companies use at least one channel to communicate CSR activity, with greater importance placed on annual reports (and the Internet) as disclosure media compared to CSR reports. This finding is consistent with previous studies conducted on the banking industry [32,50], which showed that banks devote more attention to annual reports compared with the other communication channels.

The extent and quality of voluntary CSR disclosure among Polish PIEs differ in particular forms of communication. In fact, all CSR categories are more present in published CSR reports than in annual reports or on the websites that disclose in at least one of the categories considered. The largest difference concerns certain categories, such as human rights and anti-corruption. Our finding is consistent with Italian evidence [19], which indicated that the quality of non-financial information disclosure is much higher in voluntary CSR reports than in mandatory annual reports.

Considering the changes in regulations, the companies that publish CSR information in several channels have to present complete CSR information in at least one channel, which would improve its usefulness and comparability. Furthermore, the findings of the research show that regardless of the medium, only the minority of companies disclose CSR information in all categories required by the amended PAA. Furthermore, there are relevant disclosure in an average of 36% of the cases across all disclosure media, with 26% of these having detailed or very detailed disclosure in these criteria. Thus, the extent and quality of voluntary CSR disclosure among Polish PIEs does not meet the new requirements introduced by the PAA effective from 2017 in most cases. The companies that are subject to new regulations must improve the completeness of non-financial information in all required categories. If a company does not pursue a policy in a particular category, it will be required to include in the non-financial statement a reasonable explanation for not doing so. According to the new regulations, only some non-financial information may by omitted, being exceptions rather than the general rule. The results of the research allow us to state that the level of compliance of Polish companies is low compared to that of Italian companies, which show an average non-financial information score of about 49% [19].

In our study, we also answer the question regarding the quality of voluntary CSR disclosure among Polish PIEs in different CSR categories. In fact, the quality of CSR disclosure varies in each category. Polish-listed companies are especially interested in reporting their environmental issues. Furthermore, community involvement and labour practices are predominantly featured in the information disclosed. However, the disclosure in those areas does not meet the requirements of the amended PAA in most cases. A large number of the companies still have a considerable amount of work to do in order to improve the level of reporting in the area of human rights. Among the CSR categories, anti-corruption deserves careful attention, as it is not disclosed by most companies. The differences in the quality of CSR disclosures have been confirmed by previous studies conducted in the banking sector [32,50].

We also examined the extent and quality of voluntary CSR disclosure among Polish PIEs and how it differs between industries. Consistent with previous studies [37,39,40,41,42,43], our research revealed a significant variability in CSR disclosure across industries. Companies in the basic materials, oil and gas, and energy sectors report CSR information most frequently. Other sectors, including telecom, banks and chemicals, also disclose CSR information relatively often. On the other hand, there are several sectors where the study showed a total absence of detailed or very detailed CSR information. Based on the results, it can be stated that the implementation of the new regulations in specific industries will require different levels of adjustments in terms of non-financial information.

6. Conclusions, Limitations and Future Research Agenda

According to Camillieri [55], EU countries prefer a mix of voluntary and mandatory measures to improve CSR disclosures in their respective jurisdictions. This indicates that there is scope for national governments (e.g., Polish) to introduce further guidance for society and companies to ensure that they comply with the latest EU practices and developments in CSR reporting. When European entities respond to regulatory pressures, they also address environmental, social and governance (ESG) and economic deficits for the benefit of all stakeholders.

This study explores the state of voluntary CSR disclosure in Polish PIEs listed on the WSE a year before implementation of mandatory non-financial reporting. In the light of the results, it can be stated that the new reporting obligation should contribute to increasing the extent of non-financial disclosure among Polish-listed companies. This could also confirm the important role of mandatory regulation in improving the quality of disclosure of non-financial information.

Taking into account the above considerations, several recommendations can be drawn. The research showed that companies were already involved in the CSR activities of environmental issues, community relations or labour practices. These were reported more frequently compared to other CSR dimensions, such as anti-corruption or human rights. In order to improve the CSR reporting level, companies could implement adequate policies and strategies.

CSR reporting is currently produced largely within the extent of the annual reports of companies. Minimal effort is needed to prepare a separate, stand-alone CSR report, which is currently the global trend. Thus, regulatory bodies could provide guidelines and set a policy regarding CSR reporting to improve the current state of disclosures. Furthermore, by providing a framework or recommendation of a leading company (e.g., GRI), they could enhance the extent of CSR reporting. This would increase the comparability of companies’ CSR reports in order for the stakeholders to better evaluate the CSR initiatives conducted against what has been committed to.

The main limitation of the study is that the sample contains only listed companies, which accounts for 50% of all undertakings that potentially will be subject to new regulations. Future research could focus on exploring the remaining Polish population and undertake comparative studies across different member states. Moreover, future studies should take into consideration the evolutionary process of non-financial disclosure covering 2016–2017 in order to indicate the contribution of the new directive to non-financial disclosure.

Despite the aforementioned limitation, we believe that our study makes the following contributions to the existing literature. First, our study contributes to the ongoing discussion about “mandatory against voluntary” non-financial disclosure, which is still a challenge relating to suitability. One of the findings of this debate is that voluntary disclosure often indicates the extent to which mandatory regulations may enforce compliance [56]. This is especially important given that the new mandatory non-financial reporting requirements from Directive 2014/95/EU were transposed into Polish law.

Second, to the best of our knowledge, our study is one of the earliest contributing to the understanding of the extent and quality of CSR voluntary disclosure practices by Polish companies in the context of the requirements of Directive 2014/95/EU. In order to evaluate the state of the art of CSR, we used the new measurement instrument, which is based on specific categories and rating scores that consider the latest requirements of the PAA from the transposition of Directive 2014/95/EU. Cronbach’s alpha coefficient indicated very high reliability of our CSR measurement concept. We believe that our instrument enriches the literature examining content analysis of CSR disclosures, due to it having a different construction to those proposed in the literature [19,37].

Third, the research results provide evidence on CSR disclosures a year before the transposition of new mandatory reporting regulations in one of the EU emerging markets. As it is relatively new, the Polish market is not very advanced in CSR issues and has relatively low CSR-disclosure requirements. The results enhance the understanding of the differences in CSR applications and disclosure between new and old EU countries. Finally, consistent with prior research [37,39,40,41,42,43,45], the current study also contributes by documenting the effect of communication form and industry on CSR disclosure in Poland, where there is limited empirical evidence.