Group presents NFRD recommendations amid COVID-19
23 June 2020 Brussels
Image: Nhemz/shutterstock.com
A number of stakeholders have created an informal group on sustainable finance to support seven recommendations for the approaching Non-Financial Reporting Directive (NFRD).
Representatives from European Fund and Asset Management Association (EFAMA), Association of Chartered Certified Accountants (ACCA), Accountancy Europe, Association of German Banks (BdB), Climate Disclosure Standards Board (CDSB), Frank Bold, Institutional Investors Group on Climate Change (IIGCC), Schroders, ShareAction and World Wide Fund for Nature (WWF) issued a joint statement, with confirmed support from BNP Paribas Asset Management and Candriam.
Ahead of the NFRD, the group wished to emphasise the importance of sustainable finance as the European Union and the world economy attempts to recover from the COVID-19 pandemic.
The seven recommendations, based on an economic, social, and environmental perspective, aimed to adopt a long term view of both the public and private sector in relation to sustainable finance strategy, with revision of the NFRD as a key element.
The group advised for expansion of the scope of the NFRD to cover smaller companies that still have a significant impact on the environment, and to create a more broadly balanced approach.
It was recommended that non-financial information be disclosed in the annual management report to holistically assess company performance beyond financial factors, as well as the introduction of minimum mandatory reporting requirements to “ensure comparability, consistency, and reliability”.
The group further addressed reporting by recommending that the NFRD build on existing reporting initiatives to consolidate and simplify ESG issues in a global context. While the statement expressed support for the EU’s ambitious sustainability policies, it also emphasised the importance of international reporting standards in order to work cohesively when facing global climate challenges and to ensure legislative consistency.
The final recommendation highlighted the NFRD should strengthen the social and governance aspects of wider ESG factors, such as human rights matters, employee issues, health and safety, and Board and management overview of non-financial risks.
Representatives from European Fund and Asset Management Association (EFAMA), Association of Chartered Certified Accountants (ACCA), Accountancy Europe, Association of German Banks (BdB), Climate Disclosure Standards Board (CDSB), Frank Bold, Institutional Investors Group on Climate Change (IIGCC), Schroders, ShareAction and World Wide Fund for Nature (WWF) issued a joint statement, with confirmed support from BNP Paribas Asset Management and Candriam.
Ahead of the NFRD, the group wished to emphasise the importance of sustainable finance as the European Union and the world economy attempts to recover from the COVID-19 pandemic.
The seven recommendations, based on an economic, social, and environmental perspective, aimed to adopt a long term view of both the public and private sector in relation to sustainable finance strategy, with revision of the NFRD as a key element.
The group advised for expansion of the scope of the NFRD to cover smaller companies that still have a significant impact on the environment, and to create a more broadly balanced approach.
It was recommended that non-financial information be disclosed in the annual management report to holistically assess company performance beyond financial factors, as well as the introduction of minimum mandatory reporting requirements to “ensure comparability, consistency, and reliability”.
The group further addressed reporting by recommending that the NFRD build on existing reporting initiatives to consolidate and simplify ESG issues in a global context. While the statement expressed support for the EU’s ambitious sustainability policies, it also emphasised the importance of international reporting standards in order to work cohesively when facing global climate challenges and to ensure legislative consistency.
The final recommendation highlighted the NFRD should strengthen the social and governance aspects of wider ESG factors, such as human rights matters, employee issues, health and safety, and Board and management overview of non-financial risks.
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