The European Commission received advice on the content and structure of the EU Non-Financial Reporting Directive (NFRD). This EU law requires large companies to disclose particular information on the way they operate and manage social and environmental challenges. The Commission is reviewing the law with the aim of improving sustainability disclosure by companies, so that investors will be better informed about the the sustainability of their investments.

A Project Task Force part of the European Financial Reporting Advisory Group (EFRAG) was mandated to provide recommendations on the NFRD revision, available here.

As part of the Alliance for Corporate Transparency, ShareAction welcomes the advice to the European Commission.

Some of the Project Task Force recommendations are:

  • Have companies take ‘double materiality’ approach, by analysing (a) severe impacts on people and the planet and (b) financial risks to the company.
  • With regard to impacts on people and the environment, the materiality assessment should cover the company’s direct impacts as well as those across the value chain linked to the company’s operations, products or services, including by sourcing, energy use, form and types of employment.
  • For Climate Change, the Task Force specifies concrete information which should be considered material. These include GHG emissions Scope 1, 2, and 3, the level of alignment with planetary boundaries and international targets, transition plans, intermediate milestones; and climate-related risks relevant to the short- and long-term financial performance of the company.
  • Access to information on forward-looking targets and company transition plans is critical to redirect capital flows towards sustainable investments.

Read the alliance’s full response here: Future EU sustainability standards: NGOs welcome the final recommendations of EFRAG’s Project Task Force for the European Commission.

Read ShareAction’s input to the NFRD consultation.