The new EU directive on non-financial reporting will affect 6,000 companies from 1 January 2017
Today marks the deadline for all countries in the European Union to transpose the EU Directive on Non-Financial Reporting (also known as NFR Directive), a major development in corporate reporting. The directive mandates large companies (those Public Interest Entities with 500 or more employees) to report non-financial information – which among others includes information on environmental policies, risks and impacts – in their annual report, to maintain alignment with the reporting of financial information.
Several countries across Europe have already transposed the directive or have legislation in place that meets its requirements, including Denmark, Sweden, Finland, Estonia, France, Germany, Greece, Slovakia and Hungary. Others are in the process of developing their national legislations, including the Netherlands and the UK.
The Climate Disclosure Standards Board (CDSB) has been working for almost 10 years on the integration of non-financial information within mainstream corporate filings, helping companies, regulators and investors to understand the benefits of reporting climate change, environmental and natural capital information with the same rigour as financial information.
Michael Zimonyi, Policy and External Affairs Manager, CDSB, said: “This directive benefits all: companies, investors, stakeholders. Reporting environmental information in the annual report makes perfect sense for shareholders, as they can access all the information they need to make sound investment decisions in one place, in a way that keeps the information timely and comparable.
We encourage all countries to transpose the directive into national legislation in the shortest possible timeframe, to create the enabling environment for around 6,000 companies across Europe, which will need to start collecting and preparing the relevant information for financial years beginning on or after 1 January 2017.”
The directive represents an opportunity to increase European companies’ long-term competitiveness and Europe’s long-term sustainable growth prospects, while levelling the playing field with countries that already had mandatory reporting legislation in place.
In September CDSB and CDP launched the EU environmental reporting handbook to help companies prepare to comply with the directive. The handbook includes 13 practical case studies, showing how European companies are reporting non-financial information in their mainstream report, integrating environmental sustainability information within their business models.
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About the Climate Disclosure Standards Board
The Climate Disclosure Standards Board (CDSB) is an international consortium of business and environmental NGOs. We are committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital. We do this by offering companies a framework for reporting environmental information with the same rigour as financial information. In turn this helps them to provide investors with decision-useful environmental information via the mainstream corporate report, enhancing the efficient allocation of capital. Regulators also benefit from compliance-ready materials. Recognising that it is equally essential to have information about both natural capital and financial capital for an understanding of corporate performance, our work builds trust and transparency needed to foster resilient capital markets. Collectively, we aim to contribute to more sustainable economic, social and environmental systems. www.cdsb.net