EU Non-Financial Reporting Directive

CDSB aims to work closely with the EU Parliament, Council and Member States to ensure the implementation of the Non-Financial Reporting Directive (NFR) across the European Union is achieved using international reference points such as the CDSB Framework for reporting environmental information.

The Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups amends the Accounting Directive 2013/34/EU. It requires companies concerned to disclose in their management report, information on policies, risks and outcomes as regards environmental matters, social and employee aspects, respect for human rights, anticorruption and bribery issues, and diversity in their board of directors. CDSB welcomes the amendments as a significant step to increase corporate transparency, relevance, consistency and comparability of non-financial information of around 6,000 large enterprises across Europe.

Noting that some aspects of the proposal could be improved, CDSB believes that the legislation, should serve as a minimum set of requirements to inform its transposition by Member States. CDSB invites the EU to use its influence and leadership to promote greater consistency of approach to reporting practices so that a common language may inform decisions on which the long-term flourishing of the economy, the planet and society depend.

The CDSB Reporting Framework

To encourage greater uptake of non-financial information, CDSB has worked with the world’s leading accounting firms, membership bodies such as the ACCA and the International Federation of Accountants (IFAC), business and environmental NGOs, to produce the CDSB Framework for reporting environmental information. This Framework assists companies to integrate environmental information with financial performance in mainstream reports, providing investors with greater insight than the financial report alone, thus improving their ability to make decisions about how climate change affects value creation over time.

Ultimately using the CDSB Framework brings benefits to reporters, investors, businesses and wider society by making climate change information clear, consistent and relevant to financial reports. It should play a vital role in ensuring the amendment is executed with success and should be referenced in the proposal as the legislative process now shifts to the Parliament and the Council.

Drawing on experiences of supporting regulators implementing mandatory environmental reporting initiatives, CDSB will now work closely with the EU Parliament and Council and Member States to make certain that implememntation of the directive across the EU-28 is achieved using international reference points such as the CDSB Framework for reporting environmental information.

An opportunity for the European economy

The directive will help investors by making more relevant information available from a larger number of European companies. It therefore represents a significant step forward for European and international investors who seek timely, material, comparable and forward-looking information on non-financial risks and opportunities in order to make better informed investment decisions. Failure to adopt the legislation will make such decisions more difficult and costly for investors, and will increase the risks of harming European companies’ international competitiveness.

CDSB believes that the directive should not be seen as a burden on companies, but an opportunity to increase European companies’ long term competitiveness and therefore Europe’s long term sustainable growth prospects. As of end of 2011, assets managed under investment strategies incorporating non-financial information represented in excess of EUR 10.5 trillion globally, of which almost two thirds are managed by European investors. In addition, investors managing assets in excess of EUR 65.8 trillion support the disclosure of corporate greenhouse gas emissions and climate change data. This growth is in part fuelled by the mounting evidence that there are links between how well a company manages environmental and social issues and its financial performance or access to lower cost of capital.

CDSB is a member of the Corporate Sustainability Reporting Coalition (CSRC). Convened by Aviva, the CSRC represents financial institutions, professional bodies, NGOs and investors with assets under management of approximately US$2 trillion.


The European Commission adopted on 16 April 2013 a proposal for a directive enhancing the transparency of certain large companies on social and environmental matters. This Directive amends the Accounting Directives (Fourth and Seventh Accounting Directives on Annual and Consolidated Accounts, 78/660/EEC and 83/349/EEC, respectively). The objective is to increase EU companies’ transparency and performance on environmental and social matters, therefore contributing effectively to long-term economic growth and employment. Companies concerned will need to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.

This measure was announced in the Single Market Act in April 2011, and in the Communication “A renewed strategy 2011–2014 for Corporate Social Responsibility” issued in October 2011.

On 6 February 2013, the European Parliament adopted two resolutions (“Corporate Social Responsibility: accountable, transparent and responsible business behavior and sustainable growth” and “Corporate Social Responsibility: promoting society’s interests and a route to sustainable and inclusive recovery”), acknowledging the importance of company transparency in this fields.