23 September 2020 – Hilde Blomme and Professor Ann Jorissen discuss on the topic of reflections on opportunities and challenges for the profession with respect to the disclosure and reporting of non-financial information. The written representation of the interview is provided by Sandrine Van Bellinghen, Delegate General for European and International Affairs of the IBR-IRE.
Ann Jorissen: Dear Mrs Blomme, Thank you very much for your time and your willingness to share your views with us on the developments that take place in the European Union in the domain of non-financial reporting (NFR), non-financial reporting standards and non-financial disclosure and discuss with us the possible impact it could have on the profession.
We are all aware that in Europe at the moment there is a lot of regulatory activity going on in the area of non-financial reporting, such as the revision of the EU Non-Financial Reporting Directive (NFRD) which is to be linked with the ambitious plan of Europe’s Green Deal and also the sustainable finance initiative.
Can you explain how these policy ambitions of the EU, change the landscape of service to be delivered by accountants and auditors. Do these upcoming changes in EU Regulation embed opportunities, threats and challenges for the profession?
Hilde Blomme: Thank you for the opportunity to have this discussion and inform the Belgian profession on the evolution of non-financial reporting. You could not have chosen a more topical subject matter for the discussion today. If we look first at the European Green Deal, the European Commission committed itself to issue the first EU climate law to enshrine its climate neutrality by 2050. Basically, it implies that they would like to achieve net zero emissions for the European Union by 2050 – for all 27 countries as a whole – by cutting emissions, investing in green technologies and protecting the natural environment. This is a proposal for Regulation on the EU climate law dated March 2020. Since then, over the last six months, the COVID-19 crisis has erupted. However, the Commission remains ambitious with respect to its Green Deal. As we speak, the Commission has presented recently an even more ambitious impact assessment plan to increase the EU greenhouse emissions reduction target for 2030 as a step to get to climate neutrality by 2050: not 50% anymore but a reduction to 55% compared to the 1990 levels. So, the COVID-19 crisis and the consideration of the economic recovery puts even more emphasis on a sustainable economy, on green technologies and on protecting our natural environment.
This objective will continuing to be “the” main priority of the EU for the years to come. It is a very wide policy and implies that the society as a whole will be involved in it: it is for every citizen, for the public sector and for the private sector. Translating this EU objective to our profession, one needs to consider a lower level of legislation and regulation. Ann, you already referred to the NFRD and its revision. So, it is not a coincidence that the EU decided that the Directive of 2014 – although that Directive was a good start – is no longer sufficient and needs to be revised. Later in this interview we will look further into the expected changes with respect to the NFRD. That is where the link with our profession starts to emerge because the Directive is very much about reporting and disclosures. Although the current Directive is not very much focused on the role of the auditor, there is a role. We could say “a limited” one for the moment but there is a clear ambition that this role should be enhanced. With the revision of this Directive – for which there was a consultation in the second quarter of 2020 and a summary of responses at the end of July- there is a clear indication that reporting and auditing in the area of NFI will become more important for our profession. That is the reason it now gets out attention and it is clear that if we look at the outcome of that consultation, the EC received support for a number of their objectives. This will lead to requirements becoming more demanding on more companies in the near future.
The full interview is available in Tax, audit and Accountancy.