Impact of Non-Financial Information to Multinational Companies (Research Paper Sample)

IMPACT OF NON-FINANCIAL INFORMATION TO MULTINATIONAL COMPANIES
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Abstract
Non- financial reporting has over the years become an integral aspect of any successful company. The purpose of this research paper is to take a keen look at the impact non-financial information has on multi-national companies. Some of the findings in the paper include the aspects of non-financial information. The paper has solely focused on the impacts of non-financial information on company investors, employees, company decision-making by stakeholders, and also the impact the non-financial information has on sustainable accounting in a multi-national company. The research done has been keenly analyzed and carefully explained using diagrams. The findings in this paper do not focus on a specific multi- national company but generally looks into the impact non-financial information can have in any multi-national company across the world. The drawn conclusion on the impacts is that both financial and non-financial information plays a key role in determining multi-national companies' success.
Introduction
Human activities across the globe have become one of the leading causes of environmental pollution, biodiversity degradation, and global climatic changes among many other global changes. However, not only has human activity played a huge role in global changes but also different businesses across the globe have also contributed to the global changes. Therefore, companies all over the world have over the years developed new tactics of curbing these global challenges through the creation of business reports. A business report includes financial and non-financial information that provides a comprehensive outlook of a given company's activities and the consequences of the activities not only to the business itself but also to the environment and other business holders at large. The purpose of this study is to look at the impact of non-financial information specifically on multi-national companies.
Non- financial reporting comprises different aspects in business like the environment, social aspects, human rights, corruption, employee rights, the business model, and outcomes among many other aspects. Therefore, with the existence of non-financial information, multi-national companies across the globe can be held accountable to whether they adhere to all the above-mentioned aspects and the impact the companies’ have on the community at large. Today, many countries across the globe have adopted the inclusion of non-financial reports to companies’ management reports, as a necessity for any establishing or existence companies. According to Vuković, Markota Vukić, and Sesar (2020), in December 2014, the European Parliament adopted non-financial reporting in companies, and through this, all companies with 500 or more employees have had to include non-financial information in their management reports. The impacts that the non-financial information holds on a company are many. This research paper will focus on the following impacts: non-financial information impact on companies' investors, companies' employees, the impact of non-financial reports on a companies' decision making, and finally the impact the non-financial information has towards sustainable accounting in multi-national companies.
Literature review
The following research paper has focused mainly on the impact non-financial information has on multi-national companies. The information gathered has been compiled and supported by different other sources. Additionally, the following research has been sectioned into three main sub-sections. The research is also inclusive of diagrams that have been used to clearly support the data and give further clarifications. The first section is the introduction that narrows down on what non-financial information is and the different aspects of non-financial information. The next section is the body which mainly is divided into five sub-sections with each sub-section focusing on the impact of non-financial information on a multi-national company. The research also includes references from other sources which have acted as supporting evidence in the research. In the last section is the conclusion which narrows down every finding of the research and gives a solid stand to the topic.
1 Non- financial information Impact on Companies' Investors
Today, many multi-national companies rely on investments from other stakeholders like future investors, to enhance their companies’ success and even expand the businesses. It is no doubt, therefore, that non-financial information takes a critical part in ensuring that a company can attract the right investors. Similarly, the information contained in the non-financial report can act as a guideline tool in ensuring that investors understand the company’s stand in terms of human, financial, natural, and social capital. Research indicates that most multi-national companies across the globe have adopted non-financial report compilation as they have realized that the non- financial reports are a modern method of attracting investors in the business. Moreover, investors are drawn to invest in companies that show a promising future and this can only be achieved if the company shows support in other areas outside of its internal matters. The non-financial acts as a company blueprint guide to its long-term goals and therefore can be a source for future investments.
The Deloitte white paper on how CFO’s that are chief financial officers can manage risks and create long-term values, also states that it is important for companies to look into the environmental, social, and governance risks. Similarly, making investors must obtain the information necessary to enable them to evaluate even future claims about the economic impact of sustainability initiatives (Fisch 2018). Also, non-financial reports ensure that investors understand exactly what different companies are willing to promote in regards to environmental, social, and even human justice. Majority of existing multi-national companies over the years through the adoption of non-financial reports, have successfully increased and expanded their companies with the help of investors. Consequently, for any multi-national company looking to attract more investors into the company, it is paramount that they focus on creating non-financial data.
1 The non-financial impact on multi-national companies' employees
Non- financial information on multi-national companies includes employee rights. Through the information provided in a non-financial report, the majority of multi-national companies with large numbers of employees can monitor a lot of employee-related issues like turnover, employee compensation, and even employee rights in the companies. Similarly, multi-national companies can motivate their employees and ensure that talent is retained in the company through non-financial information.
Apart from employee compensation, a multi-national company can keep track of employee turnover using non-financial information. As a result of the large numbers of employees in many multi-national companies, the company tends to place individuals in departments depending on their skills and input into the company. Therefore, the company must be able to keep track of employees’ turnover rates in the company to avoid complacency. Similarly, through a non-financial report, a multi-national company can ensure that it can identify and retain its best talents in the company. Research indicates that most employees in multi-national companies tend to retire early or move jobs due to different reasons. Therefore, it is paramount that multi-national companies can curb such losses at an early stage. Additionally, employee rights are an integral part of a non-financial data report. It is through a non-financial or that a multi-national company can ensure that the rights of their employees are not abused and that every employee feels safe and protected working for the company.
1 Non- financial information on multi-national companies' reputation
The existence of a good reputation in any company can be measured through different scopes including customer satisfaction, environmentally friendly goods, and good employee compensations among many others. A good reputation, especially for multi- national companies, acts as a voice for the company amidst existing competition in the market. Over the years, multi- national companies like Adidas, Toyota, Apple, and Microsoft among many others have stood the test of time in terms of market competition due to their good reputations. Such multi-national companies have already existing non-financial reports that act as a guideline to their company. Through the non-financial information, the companies can show their existing support for the environment, surrounding communities, social justice among many other external aspects. The support in areas like the environment can earn the companies a good reputation as different stakeholders can see what companies stand for. A company like Nike inc. which is one of the world’s largest software companies has shown its eminence support and care for the environment through its reusable shoe initiative in which the company recollects the old shoes and produces new pairs from the old pairs (Kumar & Malegeant 2006). The initiative which is seen in their company’s website has earned them a good reputation in the marketplace and ensured that the company stays ahead of competition from other software companies. Also, there are several competitions like the Deloitte Green Frog A...