Deloitte comment letter on the consultation on the revision of the NFRD

Published on: 10 Jun 2020

We have commented on the European Commission’s consultation on the revision of the Non-Financial Reporting Directive (NFRD).

In our comment letter, we share comments on why changes to the NFRD are needed and on the key factors that should be taken into consideration by the EU legislators when adopting such changes:

  1. The current NFRD requirements do not ensure the reliability and comparability of the information reported by companies, nor do they sufficiently meet the needs of investors or help preparers to communicate the risks and opportunities they face.
  2. We support an interconnected approach between companies’ financial reporting and their non-financial reporting.
  3. Non-financial information should be disclosed in companies’ mainstream corporate reporting, not in a separate report.
  4. Non-financial reporting standards are needed to achieve this.
  5. We support global standardisation because the issues faced are global ones and many businesses have global supply and value chains and global investors.
  6. Recognising that economies around the world are at different stages in their drive to sustainable development, we support a ‘building block approach’ where core standards are adopted by all but can be supplemented by local requirements to reflect public policy priorities.
  7. Europe is in a very good position to accelerate the global process towards companies reporting transparent, high-quality, relevant and comparable non-financial information and has the vision to make a real difference.
  8. The concept of materiality of non-financial information needs clarification. Both a) the effect of non-financial matters on a company’s development, performance and position (dependencies) and b) the external impact of the company’s activities, should be taken into account when deciding if non-financial information is material.
  9. The non-financial information to be reported against a non-financial reporting standard should be assured, to enhance its reliability, comparability and credibility. This requires a standard for assurance.
  10. We support non-financial disclosures being digitised and made machine-readable. 
  11. Regarding extending the scope of the NFRD, a more extensive regime will increase costs for some companies not currently reporting non-financial information, or reporting it minimally. However, a consistent, proportionate, clearer and streamlined regime will provide benefits for a wide group of stakeholders and preparers.

Please click to download the full comment letter below (cover letter with main messages first, followed by completed questionnaire).


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