The Non-Financial Reporting Directive (NFRD) requires certain large companies to report on social, employee and environmental matters, human rights and bribery & corruption. However, the information that is currently reported does not meet the needs of users.
The European Commission is reviewing the NFRD in order to remedy this and to ensure that companies from whom users need non-financial information report such information, and that reported information is relevant, comparable, reliable, and easy to access and use.
On 21 April 2021, the Commission adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the existing reporting requirements of the NFRD. The proposal
- extends the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises)
- requires the audit (assurance) of reported information
- introduces more detailed reporting requirements, and a requirement to report according to mandatory EU sustainability reporting standards
- requires companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan
The Commission’s proposal envisages the adoption of EU sustainability reporting standards. The draft standards would be developed by the European Financial Reporting Advisory Group (EFRAG). The standards will be tailored to EU policies, while building on and contributing to international standardisation initiatives. The first set of standards would be adopted by October 2022. See the EFRAG reports on development of EU sustainability reporting standards
This high-level conference was an opportunity for interested parties to find out more about the key issues and the objectives of the proposal and of its concrete implications. It alternated between panels and keynote speeches from European and international leaders in the field of sustainable finance, including Commissioner McGuinness. The panels addressed, among other topics, the role of sustainability reporting standards in promoting better sustainability disclosures from companies.
- Keynote speech by Mairead McGuinness, Commissioner for financial services, financial stability and capital markets union
- Speech by Christine Lagarde, President of the European Central Bank