The response to the report stresses that it is important to clarify the two directions of impacts: the Non-Financial Reporting Directive (NFRD) addresses the impact of the company’s activities on the environment and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) the physical impact of the environment on the company. Accountancy Europe notes that the report is not entirely clear which approach is applied in which instance.

The response also notes that while the concept of materiality is an element of both the TCFD and the NFRD, they may be seen as differing in their interpretation. Accountancy Europe suggests clarifying both concepts and how they can be aligned to each other - which will also help to avoid boilerplate disclosures.

While the Accountancy Europe response expresses understanding for the urgency to focus firstly on climate change related issues, it also stresses the importance of addressing social aspects. Climate-related matters should not be treated in isolation as this could have a negative impact elsewhere.

Finally, the response notes that more and more stakeholders including investors want to know whether or not they can trust reported information by companies and therefore ask for independent assurance over the reported information. Therefore, Accountancy Europe believes that it may be necessary to discuss assurance over non-financial information.

Please click to download the full response from the Accountancy Europe website.