Stockholm (NordSIP) – EFAMA, ACCA, Accountancy Europe, Association of German Banks (BdB), CDSB, Frank Bold, IIGCC, Schroders, ShareAction and WWF have decided to join forces to enhance their interactions with the EU institutions. Together with BNP Paribas Asset Management and Candriam, these organisations published a joint statement in support of seven recommendations for the upcoming Non-Financial Reporting Directive (NFRD).
“The European Union, and the world economy, are facing one of the biggest challenges of our time in designing the means and tools to foster a green economic recovery,” the twelve stakeholders say in the joint statement. “It is more important than ever for both the private and the public sector to work together on policy priorities governments should take in reaction to this crisis.”
In this context, “the group believes that the Non-Financial Reporting Directive should make a leap forward in improving the quality, comparability, and consistency of environmental, social and governance (ESG) information.”
The first recommendation endorsed in the joint statement is for the regulations incorporated in the directive to cover “companies that have a significant impact on the environment and society as a result of economic activities and business models to ensure well-targeted reporting”, rather than large listed companies.
The stakeholders also demand that disclosures of non-financial information be made a part of the annual management report. “Including non-financial information in the publicly available annual management report could help improve the connectivity between financial and non-financial information (NFI) and inform the stakeholders to the fullest extent about a company’s performance, risks, future development and impact on the environment and society,” the letter reads.
The rest of the joint letter recommends the directive strengthen the social and governance aspects, not just the climate focus, develop minimum mandatory reporting requirements, including sector-specific requirements focusing on “materiality determination”. The stakeholders also urge the European Commission to build upon existing reporting initiatives to achieve comprehensive non-financial reporting. They also encourage the EU to keep up its international role as “the spearhead in sustainability-related policy”, while bearing in mind compatibility with global standards. Finally, the letter cautions that the NFRD should ensure legislative consistency and avoid duplication of reporting legislation.