Video: https://youtu.be/Y8lvZKmluMM
Companies in the European Union with over 500 employees are required to comply with the Non-Financial Reporting Directive and disclose non-financial information on environmental issues. However, reporting to date hasn’t been sufficient both in terms of quantity and quality, and the EU Green Deal has made it clear that environmental and climate disclosure must improve. As a result, the Commission is reviewing the Non-Financial Reporting Directive, with a public consultation underway until May 2020.
Should large companies and financial institutions expect major changes? Given the ambitious EU Green Deal commitments and the gaps in reporting to date, it certainly seems so.
CDSB's Managing Director, Mardi McBrien, EU Policy Officer at Frank Bold, Joanne Houston, and CDSB's Policy and External Affair Director, Michael Zimonyi, joined this special policy-driven webinar to address:
- what may likely change in terms of environmental and climate reporting;
- who may be affected and how;
- what didn’t work and why; and
- what needs to be improved for the Directive to deliver on its intended purpose.
Item 3. Developing EPOC’s PWB related to mitigation for 2025-26
Decoding the review of EU's Non-Financial Reporting Directive
1. March 2020 | Tweet @CDSBGlobal
What You Need to Know:
Decoding the Review of EU’s Non-Financial Reporting Directive
Joanne Houston,
EU Policy Officer,
Frank Bold
Mardi McBrien,
Managing Director,
CDSB
Michael Zimonyi,
Policy and External Affairs Director,
CDSB
2. March 2020 | Tweet @CDSBGlobal
Webinar information
• Q&A session: ask your questions using the Q&A option on your right-hand side
• Feel free to submit your questions throughout the webinar
• In case of technical problems, use the chat function to flag them
• This webinar will be recorded and shared with slides
cdsb.net/NFR
4. March 2020 | Tweet @CDSBGlobal
To provide decision-useful environmental
information to markets via the mainstream
corporate report
5. March 2020 | Tweet @CDSBGlobal
Reporting Requirements
REQ-01 Governance REQ-07 Organisational boundary
REQ-02 Management’s environmental
policies, strategy and targets
REQ-08 Reporting policies
REQ-03 Risks and opportunities REQ-09 Reporting period
REQ-04 Sources of environmental
impact
REQ-10 Restatements
REQ-05 Performance and comparative
analysis
REQ-11 Conformance
REQ-06 Outlook REQ-12 Assurance
cdsb.net/Framework
The CDSB Framework
6. March 2020 | Tweet @CDSBGlobal
Background to the
Non-Financial Reporting
Directive
7. March 2020 | Tweet @CDSBGlobal
EU NFR Directive
Where should it be disclosed?
.
What
should be
disclosed?
Annual Report
Flexibility to include information
in separate report under certain
circumstances.
How?
Guidelines
• Guidelines on Non-financial
Reporting
• Guidelines on Reporting
Climate-related Information
Who?
Public Interest
Entities
employing >
500 people
• Business Model
• Policies
• Policy Outcomes
• Principal Risks
• Non-financial KPIs
What You Need to Know
8. March 2020 | Tweet @CDSBGlobal
• Enables investors to
evaluate the non-financial
performance of large
companies; and
• Encourages companies to
develop a responsible and
sustainable approach to
business
Why is it important?
9. March 2020 | Tweet @CDSBGlobal
What’s next?
“…companies and financial
institutions will need to increase
their disclosure on climate and
environmental data so that
investors are fully informed about
the sustainability of their
investments. To this end, the
Commission will review the Non-
Financial Reporting Directive.”
EUROPEAN COMMISSION
The European Green Deal
10. Decoding the review of EU's
Non-Financial Reporting
Directive
Alliance for Corporate
Transparency
www.allianceforcorporatetransparency.org
@EUCorpReporting
Project coordinated by
12. 12
Methodology
Policies Outcomes Risks KPIs
1. Environmental matters
Climate change, use of natural resources, pollution, waste, biodiversity and ecosystem
conservation
2. Social and employee matters
Employee and workforce, Tax transparency
3. Respect for human rights
Supply chain management, Impacts of indigenous rights and communities, High-risk areas
for civil and political rights, Conflict resources, Data protection
4. Anti-corruption and anti-bribery matters
Anti-corruption policies, Whistleblowing
14. 14
Presentation of information
96% of companies provide a non-financial statement, however:
No KPIs provided
KPIs provided in different parts of the report
KPIs provided in a summarized statement(s)
Clear structure for Policy - Outcomes - Risks
10.5
67.6
37.5
21.9
18. 18
Key findings
1. Presentation of KPIs (< 22%)
2. Vague disclosure (policies, outcomes, risks)
3. Targets (less than 40% report on climate targets)
4. TCFD criteria are not applied (strategies, scenarios)
5. Environmental issues (relevance of information disclosed)
19. 19Contact us
Joanne Houston
EU Policy Officer
joanne.houston@frankbold.org
+32 28 931 063
Social Media
www.allianceforcorporatetransparency.org
@EUCorpReporting
http://eepurl.com/dJPBjQ
Contact us
20. April 20 | Tweet @CDSBGlobal
The changes needed for effective
Non-Financial Reporting
Michael Zimonyi
Policy & External Affairs Director
CDSB
21. April 20 | Tweet @CDSBGlobal
CDSB’s work on Non-Financial Reporting
cdsb.net/Framework
Climate Change and Natural Capital Information
CDSB
Framework
Annual Report / Integrated Report
(MD&A, Form 10-K/20-F, Lagebericht, Form 56-1)
22. April 20 | Tweet @CDSBGlobal
Red lines for successful NFRD revision
1. Make reporting in the management report mandatory
• “It is hard for investors and other users to find non-financial
information even when it is reported”
• Connectivity of information
• Governance of information
• Supervision of information
Ensuring that the NFRD supports Europe’s goals
cdsb.net/NFRD
Annual
Report
2021
23. April 20 | Tweet @CDSBGlobal
Red lines for successful NFRD revision
2. Increase scope by changing business size to >250 employees
“Expanding the NFRD's scope should capture all those companies that significantly impact the
environment due to their sector's environmental and social profile.”
– Accountancy Europe
Ensuring that the NFRD supports Europe’s goals
cdsb.net/NFRD
24. April 20 | Tweet @CDSBGlobal
Red lines for successful NFRD revision
3. Apply the TCFD’s recommendations for ESG information, such as biodiversity and
natural capital
• A unified approach, ensuring consistency and connectivity of information globally;
• Strengthen links between financial & non-financial information;
• ESG information in the management report should cover all four elements of the TCFD (i.e.
Governance, Strategy, Risk Management, Metrics & Targets; and
• Explicitly state “climate”.
Ensuring that the NFRD supports Europe’s goals
cdsb.net/NFRD
25. April 20 | Tweet @CDSBGlobal
Red lines for successful NFRD revision
4. Keep the investor in mind
• Materiality
5. Strengthen governance disclosures
• Incorporate TCFD into Article 20 of Accounting Directive – ‘corporate governance statement’; and
• Clarify definitions of ‘policies’ and ‘due diligence’.
Don’t forget supervision – ESMA Report on Enforcement
Ensuring that the NFRD supports Europe’s goals
cdsb.net/NFRD
26. April 20 | Tweet @CDSBGlobal
Thank you
Michael Zimonyi
Policy & External Affairs Director
E-mail: michael.zimonyi@cdsb.net
www.cdsb.net
@CDSBGlobal
27. March 2020 | Tweet @CDSBGlobal
Questions?
Mardi McBrien,
CDSB
With the contribution of the LIFE Programme of the European Union.
Hosted by CDP Europe.
Joanne Houston,
Frank Bold
info@cdsb.net
Michael Zimonyi,
CDSB
28. March 2020 | Tweet @CDSBGlobal
Register on cdsb.net:
Registrations are open!
13 MAY 19 MAY
29. March 2020 | Tweet @CDSBGlobal
Thank you!
LinkedIn:
Climate Disclosure Standards Board
With the contribution of the LIFE Programme of the European Union.
Hosted by CDP Europe.
Twitter:
@CDSBGlobal
info@cdsb.net