The review of the Non-Financial Reporting Directive – why it’s significant and what to watch for?

Last week the European Commission launched the public consultation on the review of the Non-Financial Reporting Directive.

Read CDSB's eight draft review proposals and complete tracked changes to the Directive.  

Why is this significant? 

The Directive currently requires large listed companies, banks and insurance companies with more than 500 employees to disclose non-financial information on their environmental and social impacts. Reporting under the Directive first began in 2018.

While the introduction of the Directive was a significant milestone for corporate accountability and transparency in Europe, it has not achieved its objectives in its current form.

As announced in the EU Green Deal, the Commission expects companies and financial institutions to improve their disclosure of non-financial information so that investors are better informed about the sustainability of their investment decisions. As part of the Commission’s plan to strengthen the foundations for sustainable investment, the Commission has announced a review of the Directive seeking feedback and evidence on possible reforms and improvements.

The Climate Disclosure Standards Board (CDSB) therefore welcomes the European Commission’s announcement to review the Directive. 

How can we make the Directive fit for purpose?

To ensure that the Directive is fit for purpose to achieve Europe’s ambitious sustainable finance goals, CDSB propose the following changes:

  1. Make reporting in the management report mandatory by removing the exemption to allow the non-financial statement to be reported outside the management report;
  2. Increase scope by changing business size to >250 employees, as by definition of PIEs in Accounting Directive as opposed to >500;
  3. Explicitly state the word climate in the Directive;
  4. Apply the TCFD’s recommendations to disclosure of ESG information in the management report;
  5. Elevate materiality as a useful construct for making decision-useful disclosures from guidance to the Directive and adopt IASB’s new definition of materiality – materiality from the accounting world in the Accounting Directive;
  6. Set the investor as primary audience, while recognising that information may satisfy other stakeholder needs;
  7. Strengthen linkages between non-financial and financial information, in line with the TCFD recommendations; and
  8. Strengthen governance disclosures by incorporating TCFD recommended disclosures a) and b) on governance into the ‘corporate governance statement’ in Article 20 and in the non-financial statement in 19a and 29a of the Accounting Directive.

Read CDSB's red lines in more detail and complete tracked changes to the Directive.  

What are the next steps?

The revision period is open until 14 May 2020.  

Get in touch with Michael Zimonyi ( ), Director of Policy and External Affairs, to discuss CDSB’s proposals in more detail.  

Join the webinar

Join us for a special policy-driven webinar on 31 March where we'll decode the current Directive, examine what worked and didn't work, while discussing the changes that need to be made to the Directive fit for purpose. Sign up here.

For press enquiries or comments from a senior member of the CDSB team, please email