EU Non-Financial Reporting Directive

CDSB is working closely with EU Institutions 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 around 6,000 companies across Europe 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 Directive as a significant step to increase corporate transparency, relevance, consistency and comparability of non-financial information of around 6,000 large enterprises across Europe.

Although some aspects of the Directive could be improved, CDSB believes that the legislation should serve as a minimum set of requirements across the Union. 

CDSB will work at the EU level to improve the Directive to clarify its requirements and incorporate recent developments, such as the recommendations of the Task Force on Climate-related Financial Disclosures. The 2018 review of the Directive offers an opportunity to make these updates swiftly.

At the Member State level, CDSB will continue building capacity and providing guidance to companies to support the reporting of decision-useful non-financial information to financial markets.

Areas for improvement

One report for all relevant information

While separate reports are valuable in supporting management report disclosure, they are not a replacement for including environmental matters in the company’s primary mode of communication to its shareholders, a document that has to be signed off by the Board of Directors and outlines the overall strategy, targets and performance, among others, of the business.

Incorporate the TCFD recommendations

The G20 Financial Stability Board has recognised the need to bring more visibility of climate risk embedded in markets and has established the industry-led Task Force on Climate-related Financial Disclosures (TCFD), which has prepared disclosure recommendations to address this issue. While the European Commission has already incorporated some of the recommendations into the Non-binding Guidelines to the Directive, the review of the Directive itself in 2018 should be used to incorporate the TCFD more deeply, to reflect these new developments, ensure consistency of information internationally and improve the usability of the information provided to investors and other stakeholders.

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 environmental matters affect companies’ ability to create value over time.

Ultimately, using the CDSB Framework brings benefits to reporters, investors, businesses and wider society by making environmental information clear, consistent and relevant to financial reports. The Framework can be a key contributor to the success of these amendments.

Drawing on experiences of supporting regulators implementing mandatory environmental reporting initiatives, CDSB works closely with the EU Parliament, Council and Member States to make certain that implementation of the directive across the European Union 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. Failure to adopt and enforce 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.


As of January 2017, the Directive has entered into force and companies within scope in Member States that have transposed will have to comply.

The European Commission adopted in 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 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.