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EU Member States are due to transpose the so-called Non-Financial Reporting (NFR) Directive, which aims to increase EU companies’ transparency in respect of environment and social matters by December 2016. The European Commission is currently consulting on non-binding guidelines to provide companies with a methodology to facilitate the disclosure of this type of information.
In order to raise further awareness on this issue and to better understand the interaction of the NFR initiative on corporate governance, ECIIA, ecoDa and ACCA recently organised an event called “Non-Financial Reporting: The impact on the relationship between Boards and Auditors”. The well attended conference provided an opportunity for stakeholders to discuss the key success factors for accurate and effective non-financial reporting, and how boards, internal and statutory auditors can better cooperate for an efficient implementation of the NFR directive. [...]
Richard Howitt MEP said: “The Non-Financial Reporting Directive is an enabling piece of legislation designed to work out all environmental, social and governance aspects that have an impact on the company, how they are managed and how they affect business strategy. It is about reforming company reporting to include non-financial information; it is not about adding administrative burden. It will make the European businesses better. Environment, social aspects and human rights have an impact on finances in the long term. This directive is very much about long-term value creation. We call it non-financial but at the end it is all about finances.
We cannot think about this in a bubble. There are many other initiatives and work being done around this issue. We haven’t invented our own European framework with the NFRD – we have adopted international frameworks. It is up to us to make sure that European companies are globally competitive.”
For many speakers, the implementation of the NFR Directive should be seen an opportunity, providing we connect disclosures to strategy and decision making process at board level. It was stressed that investors should challenge companies on relevance, completeness and the presentation of their annual reports to enhance quality. Several speakers also stressed that it was important to develop integrated thinking to enhance board thinking.