The results of a literature review are presented at the beginning, followed by a comparison of the most relevant concepts of reporting concepts and the different approaches taken to understand materiality by applying these concepts. This paper presents both normative legal and historical legal research findings to increase the understanding of the recent legal situation, to clarify interpretations which are needed to fulfil the reporting requirements and to further develop the legal system on sustainability reporting. The reporting content as it is specified by the principle of materiality rests at the heart of this development. In this paper, we outline the historic development of non-financial reporting within the EU from its origin to its proposed abolishment, described in a recent legislative proposal made by the EU Commission. By proposing a reviewed regulation on mandatory sustainability reporting, the EU Commission has tried to address this problem and to promote the further development of more extensive reporting on sustainability matters ( EU Commission, 2021). These compromises have left ample of room for interpretation in corporate practice where these requirements are applied ( Monciardini et al., 2020 Lehner and Harrer, 2019), and above that have also provided opportunities for the EU Commission to specify the reporting requirements according to its own (changing) political priorities. At the same time, the requirements are the result of compromises made due to their historical and conceptual roots and political implications. Historically, these mark the first step taken to increase transparency and to reveal the impact of the company's activities on sustainability matters. This ambiguity arises due to the very nature of the current non-financial reporting requirements. Many have recognized that this has become one of the most urgent issues that needs to be addressed under the current non-financial reporting regime within the EU (e.g. For this reason, considerable differences in how this principle is understood and thus applied in practice have materialized ( Venturelli et al., 2020 EU Commission, 2018b). Further guidance on the correct interpretation and operationalization of this requirement, however, is absent. The latter does not involve any concrete reporting requirements, beyond the need to disclose any information “necessary for an understanding of the undertaking's development, performance, position and impact of its activity”. Within the European Union (EU), non-financial reporting is a specific reporting concept that displays features of these two concepts ( Baumüller and Schaffhauser-Linzatti, 2018) and has been more commonly applied over the past two decades. This is the case in the field of reporting concepts that influence the sustainability performance of companies, such as sustainability and integrated reporting ( Unermann and Zappettini, 2014 Eccles et al., 2012). The more heavily reporting requirements rely upon the principle of materiality, the more relevant these possible benefits and threats become and, thus, merit attention. In this key position, it serves as a principle to be upheld in the light of “disclosure overload” issues ( AASB, 2014), but also presents a considerable threat to the completeness and comparability of reporting information provided, because the reporting company might practice overly extensive discretion ( Brennan and Gray, 2005). Materiality is central to most considerations made to maintain or improve the decision usefulness of corporate reporting with respect to its target audience. The specific and elusive nature of one of the fundamental principles of accounting in its entirety has attracted the attention of practitioners, researchers and those setting standards for decades (e.g. “Materiality, like beauty, is in the eye of the beholder” ( Hicks, 1961, p. Introduction: in search of materiality for non-financial information The full terms of this licence may be seen at Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Copyright © 2021, Josef Baumüller and Karina Sopp License
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