Accountancy Europe leads the non-financial reporting debate

Accountancy Europe releases 3 publications to shape the debate on non-financial information (NFI) reporting. Accountants have the skills and knowledge to lead this discussion. Based on their expertise, Accountancy Europe urges more reliable EU NFI reporting, offers a view on NFI assurance, and progresses the debate on a global NFI standard setter.

In our response to the European Commission (EC) Non-Financial Reporting Directive consultation, we support corporate reporting that connects financial and non-financial information. We advocate for strengthening NFI assurance requirements, building a common comprehensive NFI standard and tackling the substantial issues in NFI reporting. In particular, the EU should consider that:

• standard setting requires a multi-stakeholder approach with robust, independent governance and sufficient resources
• a voluntary, simplified reporting standard for SMEs could reduce administrative burden and effectively support delivering information on demand
• the materiality definition should be clarified to encompass wider impacts on society and the environment
• assurance should be mandated at EU level
• the scope should encompass all companies that significantly impact the environment and society
• NFI should be disclosed as part of the management report, and needs to cover what is material to the company

We released Setting up for high-quality non-financial information assurance in Europe to supplement our consultation response. This position paper investigates 3 conditions to provide high-quality and consistent NFI assurance across Europe:

• the EU regulatory framework should mandate independent external assurance
• all assurance service providers need to abide by professional standards (competence, quality, ethics)
• public oversight should cover all assurance service providers

In the broader debate to improve NFI reporting, the EC announced that it intends to develop a European NFI standard setter. Before this announcement, we had issued a Cogito project where an independent task force built the case for setting global interconnected NFI standards.

Our new Follow up paper: interconnected standard setting for corporate reporting analyses the feedback received from our 40+ respondents. Their key takeaways include:

• developing a ‘system solution’ should be the ultimate goal to deliver global NFI reporting standards connected to financial information
• achieving this goal could be in steps, such as bilateral moves towards closer aligning NFI reporting standards, policy developments, and expanding the mandates for multilateral organisations
• following a ‘building blocks’ approach, where regional or sectoral requirements may be added to the core set of global NFI reporting metrics
• building on the best of NFI frameworks and standards may be quickest
• embracing the leading role that the EU has to play

A significant achievement of this project is the exclusive statement from CDP, Climate Disclosure Standards Board, Global Reporting Initiative and Sustainability Accounting Standards Board, which confirms their commitment to working together towards a globally harmonised system. This answers stakeholders’ calls for NFI initiatives to move more decisively towards convergence.

Our work to achieve reliable and comparable NFI reporting facilitates the shift to a sustainable economy. If corporate information is transparent, includes environmental and social impact, and can be verified, stakeholders can make the right decisions to help move to a sustainable economy.