A group of investors, finance industry groups and civil society organisations are calling on the European Union to beef up “non-financial” reporting requirements for companies, such as their impact on the environment.
The EU is currently revising its Non-Financial Reporting Directive, which requires banks, insurance firms and listed companies over a certain size to report a range of data which could impact their value over time.
In light of the COVID-19 pandemic, the group, which includes Europe’s top asset management industry group, EFAMA, as well as asset manager Schroders, proposed changes in a joint letter on Tuesday that it said were crucial to delivering the EU’s goal to slash net emissions to zero by 2050.
The informal group, which also includes accountancy body ACCA and the Association of German Banks, called for seven changes to the rules, which are due to be revised in the first quarter of 2021. WWF, the conservation NGO, is also part of the group.
Among its requests were for the scope of the law to be expanded beyond large listed companies, for companies to disclose the data in their annual management report and for sectors to be given tailored minimum reporting requirements.
The pandemic has left the world “at a crossroads” with a need to improve resilience from an economic, social, and environmental perspective, with all aspects of the recovery interlinked, the group said.
“As the objectives are clear, we now have to put in place the right tools and incentives for each stakeholder from both public and private sector to play its role.”
The EU’s executive Commission will propose a revised sustainable finance strategy for the bloc by the end of the year, aimed at mobilising private investment to aid its emissions-cutting goals and prioritise long-term interests.
“We see the revision of the Non-Financial Reporting Directive as an important element of achieving this,” the group said.
Below is the full list of requirements put forward by the group:
- Expand the scope of reporting beyond large listed companies
- Disclose non-financial information in the annual management report
- Strengthen the social and governance aspects
- Develop minimum mandatory reporting requirements
- Build on existing reporting initiatives (to achieve comprehensive non-financial reporting)
- Keep up the international role for reporting standards
Ensure legislative consistency and avoid duplication of reporting legislation