The current Non-financial Reporting Directive (NFRD) was an important step in the right direction, but it needs to be revised in order to achieve a number of key points, among which the fact that the quality and scope of the non-financial information to be disclosed has to reconcile different objectives:
1) Be exhaustive enough to satisfy the different information needs of all categories of stakeholders of companies (investors, civil society, customers, employees, suppliers, supervisors, rating agencies).
2) Be comparable between reporting companies so as to make the work of stakeholders possible.
3) Be flexible enough to allow for a minimum level of standardisation and the possibility to report on the idiosyncrasies of each company.
It is essential that the standards of non-financial information that will be adopted should be comparable and consistent not only across the business spectrum, but also regardless of the nationality of the companies reporting. This is essential in a world where both sustainability and investment issues do not know the notion of border. It is therefore indispensable that 1) the next EU non-financial reporting standards should be enshrined in a regulation, and not in a directive as was the case in 2014 (we should have a NFRR); and 2) that the reporting of companies should be compulsory and not optional as is the case under the current NFRD.
Key points of the Finance Watch response:
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