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Summary of responses to the EC consultation on the revision of the NFRD

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29 Jul 2020

In February 2020, the European Commission (EC) launched a public consultation on a revision of the EU Non-Financial Reporting Directive (NFRD). A summary of responses is now available on the EC website. However, the summary ignores the many calls the consultation elicited for global standard-setting as opposed to regional standard-setting in non-financial reporting.

Among the proposals included in the consultation document was the suggestion that an EU standard-setter could be installed that would set European non-financial reporting standards. Only recently, the Commission tasked the European Financial Reporting Advisory Group (EFRAG) to undertake preparatory work for possible European standards on non-financial reporting.

While respondents to the consultation agreed that standardisation in the area would be beneficial, the idea of a Europe only solution met resistance. These comments are not reflected in the summary on the EC website. The only paragraph acknowledging that non-financial reporting is not solely a European issue notes that "the EU should cooperate with other major jurisdictions and non-EU investors to make sure that the EU standard is widely recognised".

Beyond the EC consultation, there have been repeated calls for international standard-setting in this area. More often that not, the IFRS Foundation is believed to be the right place to establish such a standard-setter (a parallel Board to the IASB). Most recently, the Eumedion Foundation published a position paper Towards a global, investor focused standard setter for corporate non-financial reporting.

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