CDSB: The review of the Non-Financial Reporting Directive – why it´s significant and what to watch for?

27 February 2020

As announced in the EU Green Deal, the EC expects companies and financial institutions to improve their disclosure of non-financial information so that investors are better informed about the sustainability of their investment decisions. As part of the EC’s plan to strengthen the foundations for sustainable investment, the EC has announced a review of the Directive.

To ensure that the Directive is fit for purpose to achieve Europe’s ambitious sustainable finance goals, CDSB propose the following changes:

  1. Make reporting in the management report mandatory by removing the exemption to allow the non-financial statement to be reported outside the management report;
  2. Increase scope by changing business size to >250 employees, as by definition of PIEs in Accounting Directive as opposed to >500;
  3. Explicitly state the word climate in the Directive;
  4. Apply the TCFD’s recommendations to disclosure of ESG information in the management report;
  5. Elevate materiality as a useful construct for making decision-useful disclosures from guidance to the Directive and adopt IASB’s new definition of materiality – materiality from the accounting world in the Accounting Directive;
  6. Set the investor as primary audience, while recognising that information may satisfy other stakeholder needs;
  7. Strengthen linkages between non-financial and financial information, in line with the TCFD recommendations; and
  8. Strengthen governance disclosures by incorporating TCFD recommended disclosures a) and b) on governance into the ‘corporate governance statement’ in Article 20 and in the non-financial statement in 19a and 29a of the Accounting Directive.

Full press release on CDSB


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