Finance for Tomorrow recently submitted a response to the NFRD (Non-Financial Reporting Directive) consultation.
The current Non-Financial Reporting Directive (NFRD) has been an important step, but it needs to be updated in order to achieve a number of key points, including the fact that the quality and scope of non-financial information to be disclosed has to reconcile different objectives:
- Be sufficiently exhaustive to satisfy the different information needs of all categories of corporate actors (investors, civil society, customers, employees, suppliers, supervisors, rating agencies).
- Be comparable between reporting companies in order to make the work of stakeholders possible.
- Be flexible enough to allow for a minimum level of standardisation and the possibility to take into account the particularities of each company.
Such improvements should at the same time avoid companies from having to comply with several standards when operating globally, but also help them to use non-financial reporting requirements as a steering tool.
The response, proposed by the members of the Finance for Tomorrow Europe Taskforce, suggests in particular five recommendations to move towards a simplified but ambitious EU-led standard:
- Converge to the widely adopted ESG classification
- Preserving the dual materiality approach
- Simplifying the mandatory obligations of large companies
- Introducing a simplified voluntary framework for SMEs
- Promoting international alignment
Equally, two other recommendations are made regarding the report itself:
- Implementing a two-dimensional report :
- Give non-financial reports the same value as financial reports.
To read the full response :