Non-Financial Reporting Directive (NFRD) · Climate Dictionary

The Non-Financial Reporting Directive (NFRD) is a regulatory framework established by the European Union to promote transparency and accountability among large corporations. It requires companies to disclose non-financial information, such as environmental, social, and governance (ESG) performance, in addition to their financial reports.

Why NFRD

The directive aims to increase transparency and accountability for companies' non-financial impacts, promoting sustainable and responsible business practices. It was introduced to address the growing demand for companies to disclose their ESG performance and to promote a more sustainable and inclusive economy.

Timeline

The NFRD was adopted in 2014 and came into effect in 2018. It requires companies with more than 500 employees to include a non-financial statement in their annual reports, covering areas such as environmental matters, social and employee-related issues, respect for human rights, anti-corruption and bribery policies, and diversity on company boards.

how NFRD is important

The NFRD is important because it promotes transparency and accountability for companies' environmental, social, and governance (ESG) impacts. It encourages sustainable business practices by requiring companies to report on their non-financial performance. The directive also supports responsible investment by providing investors with ESG information to make informed decisions. Additionally, the NFRD contributes to the transition towards a more sustainable economy by encouraging companies to consider their environmental and social impacts.

References

Non-financial Reporting Directive - European Parliament — European Parliament The disclosure of non-financial information is considered as vital for managing change towards a sustainable global economy by combining long-term profitability with social justice and environmental protection. The objective of the NFRD is therefore to raise the transparency of t…
From the NFRD to the CSRD — IFLR The Directive 2014/95/EU sets the rules on disclosure of non-financial and diversity information relating to the ESG areas (environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery, and diversity on company …
Non-financial Reporting — worker-participation.eu The EU 2014 Non-financial Reporting Directive (NFRD) requires large public-interest entities in the EU to publish non-financial information on an annual basis. Although it represents a milestone in non-financial reporting (NFR), the Directive has not been strong enough to guarant…