In 2013, the European Commission adopted proposals for a Directive amending the Accounting Directive in relation to the reporting of non-financial information.
Concerned that the widespread lack of non-financial reporting leads to a lack of inward investment, the Non-Financial Reporting Directive (NFRD) seeks to improve the quality and comparability of company reporting, typically for large entities. This consultation provide opportunity for public comment on the Department of Business, Innovation and Skills’ implementation of the NFRD at Member State level.
Our submission to the public consultation focused primarily on the question of where companies should place the non-financial information that the Directive covers, which includes environmental and climate-related information.
We raised concerns stemming from the opportunity the Directive provided for Member States to offer flexibility on the exactness of this location. Specifically, we argue that certain non-financial information – such as that related to the financial impact of climate change for specific companies – is in fact financially material. Therefore, in an effort to provide clarity for investors, this information should be reported alongside company annual reports to facilitate the disclosure of how it relates to company accounts.