14 May 2020
Call for mandatory non-financial reporting in the EU
In an article written for EURACTIV – an independent pan-European media network – Carol Adams calls for mandatory non-financial reporting in the EU. Carol Adams is Professor of Accounting at Durham University Business School and former chair of GRI’s Stakeholder Council and well versed in the sustainability field. In her article she sets out why, as part of the EU’s Non-Financial Reporting (NFR) Directive, enforceable requirements are needed to ensure companies prioritise environmental and social impacts.
GRI summarise the key points raised in their article here, and these are copied below:
- Transparent disclosure will not occur unless EU reporting requirements are mandatory and enforced by a pro-active regulatory body with powers to require changes.
- Endorsing the GRI Standards, developed through rigorous and independent processes mirroring those of accounting standards, in an updated NFR Directive would mean it stays up to date — so no need to keep revising legislation
- The NFR Directive must incorporate the best of the most used frameworks and standards — which are the GRI Standards, the Integrated Reporting framework and TCFD. The alternatives ‘don’t ask the right questions’, have little traction with EU companies and are insufficient to alert corporate stakeholders on the impacts that matter.
- If companies do not disclose their material negative impacts it can lead to unsustainable activities — that’s bad for the European economy and bad for the environment and society.
- A more substantial NFR Directive can help companies help themselves — by making them put a higher priority on social and environmental risks and opportunities.
In our view her article joins the debate on bringing in a more regimented process for sustainability reporting which will enable stakeholders to have increased clarity over the long-term implications for business and to enable comparability between different reporting organisations.