MOVING FROM NON-FINANCIAL TO SUSTAINABILITY REPORTING: ANALYZING THE EU COMMISSION’S PROPOSAL FOR A CORPORATE SUSTAINABILITY REPORTING DIRECTIVE (CSRD)

Josef Baumüller, Stefan O. Grbenic

DOI Number
https://doi.org/10.22190/FUEO210817026B
First page
369
Last page
381

Abstract


Non-financial reporting as established through the NFRD (2014/95/EU) has become a core element of the EU Commission’s ambitions to transform the European economy towards more sustainability. To address the increased criticism which meets the current reporting requirements, the EU Commission initiated the development of a new set of European Sustainability Reporting Standards, followed by issuing the proposal for a new directive to supersede the NFRD. This paper analyzed these proposals in the light of previous findings from academia and corporate practice, contributing to an ex-ante impact assessment. As a result, it shows that improving completeness, comparability and reliability are the two main goals of the EU Commission. However, many of the new proposed requirements are excessive and raise fundamental questions concerning acceptable levels of administrative burden for companies as well as necessary conceptual fundaments for a reporting framework.


Keywords

non-financial reporting, sustainability reporting, sustainable finance, NFRD (2014/95/EU); CSR Directive (2021/0104 (COD))

Full Text:

PDF

References


Accountancy Europe (2020). Setting up for high-quality non-financial information assurance in Europe, Position paper. Retrieved from: https://www.accountancyeurope.eu/wp-content/uploads/200609-Accountancy-Europe-setting-up-for-quality-non-NFI-assurance-paper.pdf. Accessed on: June 26, 2021.

Adams, C., & Abhayawansa, S. (2021). Connecting the COVID-19 pandemic, environmental, social and governance (ESG) investing and calls for ’harmonisation’ of sustainability reporting. Critical Perspectives on Accounting (In Press). https://doi.org/10.1016/j.cpa.2021.102309.

Adams, C., Alhamood, A., He, X., Tian, J., Wang, L., & Wang, Y. (2021). The double-materiality concept. Application and issues. Retrieved from: https://www.globalreporting.org/media/jrbntbyv/griwhitepaper-publications.pdf. Accessed on: November 30, 2021.

AK Europe (2020). Accounting for a Sustainable European Economy? Retrieved from: https://www.researchgate.net/publication/340970139_Accounting_for_a_Sustainable_European_Economy_AK_Europa_Policy_Brief_32020. Accessed on: June 26, 2021.

Alliance for Corporate Transparency (2020). 2019 Research Report, An analysis of the sustainability reports of 1000 companies pursuant to the EU Non-Financial Reporting Directive. Retrieved from: https://en.frankbold.org/our-work/campaign/eu-directive-non-financial-reporting-and-corporate-governance. Accessed on: June 26, 2021.

Baumüller, J. (2020). Nichtfinanzielle Berichterstattung [Non-Financial Reporting]. Vienna: Verlag Österreich.

Baumüller, J., & Omazic, A. (2021). Entwicklungsperspektiven für den Wesentlichkeitsgrundsatz in der nichtfinanziellen Berichterstattung [Development perspectives for the materiality principle in non-financial reporting]. Zeitschrift für Internationale Rechnungslegung, 16(1), 41–47.

Baumüller, J., & Sopp, K. (2021). Double materiality and the shift from non-financial to European sustainability reporting: review, outlook and implications. Journal of Applied Accounting Research, ahead of print https://doi.org/10.1108/JAAR-04-2021-0114.

Capitals Coalition (2021). Transparent. Retrieved from: https://capitalscoalition.org/project/transparent/. Accessed on: June 26, 2021.

CEPS (2020). Study on the Non-Financial Reporting Directive, Final report. Retrieved from: https://op.europa.eu/de/publication-detail/-/publication/1ef8fe0e-98e1-11eb-b85c-01aa75ed71a1/language-en. Accessed on: June 26, 2021.

CSR Europe & GRI (2017). Member State Implementation of Directive 2014/95/EU. Retrieved from: https://www.accountancyeurope.eu/wp-content/uploads/NFR-Publication-3-May-revision.pdf. Accessed on: June 26, 2021.

DAI (2021). Comments on EFRAG Climate Standard Prototype Working Paper. Retrieved from: https://www.dai.de/fileadmin/user_upload/210930_Deutsches_Aktieninstitut_Letter_Mr_Gauzes_EFRAG_Climate_Standard_Prototype.pdf. Accessed on November 30, 2021.

Deloitte (2021). The EU takes a major step forward in sustainability. Retrieved from: https://www2.deloitte.com/fr/fr/pages/sustainability-services/articles/eu-takes-major-step-forward-sustainability-reporting.html. Accessed on: June 26, 2021.

DRSC (2021a). DRSC Briefing Paper zur CSRD vom 21. April 2021 [DRSC Briefing Paper for the CSRD from April 21, 2021]. Retrieved from: https://www.drsc.de/app/uploads/2021/04/210421_CSRD_Briefing-Paper.pdf. Accessed on: June 26, 2021.

DRSC (2021b). CSR-Studie [CSR study]. Retrieved from: https://www.bmjv.de/SharedDocs/Downloads/DE/PDF/Berichte/2021_CSR_Studie.pdf?__blob=publicationFile&v=2. Accessed on: June 26, 2021.

EBA (2021). EBA advises the Commission on KPIs for transparency on institutions’ environmentally sustainable activities, including a green asset ratio. Retrieved from: https://www.eba.europa.eu/eba-advises-commission-kpis-transparency-institutions%E2%80%99-environmentally-sustainable-activities. Accessed on: June 26, 2021.

EFRAG (2021). A literature review on the reporting of intangibles, February 2020. Retrieved from: https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FA%2520literature%2520review%2520on%2520the%2520reporting%2520of%2520intangibles.pdf. Accessed on: June 26, 2021.

EnBW (2021). EU sustainable finance taxonomy case study. Retrieved from: https://www.enbw.com/integrated-annual-report-2020/at-a-glance/eu-taxonomy/. Accessed on: June 26, 2021.

European Commission (2018). Action Plan: Financing Sustainable Growth, COM/2018/097 final. Retrieved from: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018DC0097&from=EN. Accessed on: June 26, 2021.

European Commission (2019). The European Green Deal, COM (2019) 640 final. Retrieved from: https://eur-lex.europa.eu/resource.html?uri=cellar:b828d165-1c22-11ea-8c1f-01aa75ed71a1.0002.02/DOC_1&format=PDF. Accessed on: June 26, 2021.

European Commission (2020). Summary Report of the Public Consultation on the Review of the Non-Financial Reporting Directive, February 20, 2020 - June 11, 2020, Ref. Ares (2020)3997889 - 29/07/2020. Retrieved from: https://www.consob.it/documents/46180/46181/Ares%282020%293997889_summary_report.pdf/bf9a64eb-3b24-4ade-bc5e-c7a1e238ca89. Accessed on: June 26, 2021.

European Commission (2021a). Sustainable corporate governance. Retrieved from: https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12548-Sustainable-corporate-governance_en. Accessed on June 26, 2021.

European Commission (2021b). Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting, COM (2021) 189 final. Retrieved from: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0189. Accessed on June 26, 2021.

European Commission (2021c). Frequently asked questions on the CSRD proposal. Retrieved from: https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_1806. Accessed on: June 26, 2021.

European Commission (2021d). Commission Staff Working Document, Fitness Check on the EU framework for public reporting by companies, SWD (2021) 81 final. Retrieved from: https://op.europa.eu/en/publication-detail/-/publication/5defa792-a2a6-11eb-9585-01aa75ed71a1/language-en. Accessed on: June 26, 2021.

European Lab (2021). Final Report – Proposals for a relevant and dynamic EU sustainability reporting standard-setting, February 2021. Retrieved from: https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FEFRAG%2520PTF-NFRS_MAIN_REPORT.pdf. Accessed on: June 26, 2021.

Hommelhoff, P. (2021). Primärrechtlich begründete Mängel im CSRD-Vorschlag und deren Beseitigung [Primary law-based deficiencies in the CSRD proposal and their elimination]. Der Betrieb, 74(42), 2437–2447.

IFRS Foundation (2021). IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements. Retrieved from: https://www.ifrs.org/news-and-events/news/2021/11/ifrs-foundation-announces-issb-consolidation-with-cdsb-vrf-publication-of-prototypes/. Accessed on November 30, 2021.

KPMG (2020). RBI: Adoption of the indirect counter-proposal. Retrieved from: https://home.kpmg/ch/de/blogs/home/posts/2020/11/adoption-of-the-indirect-counterproposal.html. Accessed on: June 26, 2021.

Lanfermann, G., Schwedler, K., & Schmotz, T. (2021). Nachhaltigkeitsberichtsstandards im Fokus der EU-Gesetzgebung [Sustainability reporting standards in the focus of the EU Commission]. Die Wirtschaftsprüfung, 74(12), 762–767.

McGuinness (2021). Letter to Jean-Paul Gauzès. Retrieved from: https://www.efrag.org/Assets/Download?assetUrl=/sites/webpublishing/SiteAssets/210512+Commissioner+McGuinness+to+EFRAG+on+sustainability.pdf. Accessed on: June 26, 2021.

Müller, S., Scheid, O., & Baumüller, J. (2021). Kommissionsvorschlag zur Corporate Sustainability Reporting Directive: von der nichtfinanziellen Berichterstattung zur Nachhaltigkeitsberichterstattung [The EU Commission’s proposal on the Corporate Sustainability Reporting Directive: from non-financial reporting to sustainability reporting]. Betriebs-Berater, 73(22), 1323–1327.

Sopp, K., & Baumüller, J. (2021). Auf dem Weg zu europäischen Standards für die nichtfinanzielle Berichterstattung? Teil 1: Projektendbericht des European Corporate Reporting Lab @ EFRAG [Towards European standards for non-financial reporting? Part 1: Project final report of the European Corporate Reporting Lab @ EFRAG]. Zeitschrift für internationale und kapitalmarktorientierte Rechnungslegung, 21(6), 254–268.

Value Reporting Foundation (2021). Creating value managing impact through integrated sustainability disclosure event. Retrieved from: https://integratedreporting.org/news/creating-value-managing-impact-through-integrated-sustainability-disclosure-event/. Accessed on June 26, 2021.

Velte, P. (2021). Prüfung von Nachhaltigkeitsberichten nach dem Entwurf einer „CSR-Richtlinie 2.0“: Vergleichende Analyse der Reformmaßnahmen und kritische Würdigung [Audit of sustainability reports according to the draft of a "CSR Directive 2.0": Comparative analysis of the reform measures and critical appraisal]. Die Wirtschaftsprüfung, 74(10), 613–620.

World Economic Forum (2021). 60 organizations release open letter for EU to act on ESG. Retrieved from: https://www.weforum.org/agenda/2021/10/57-organizations-release-open-letter-for-eu-to-act-on-esg/. Accessed on November 30, 2021.

Zülch, H., Ottenstein, P., & Schneider, A. (2021). The New Corporate Sustainability Reporting Directive (CSRD) Proposal – Are German Firms Already Compliant?. Zeitschrift für internationale und kapitalmarktorientierte Rechnungslegung, 21(7–8), 345–348.




DOI: https://doi.org/10.22190/FUEO210817026B

Refbacks

  • There are currently no refbacks.


© University of Niš, Serbia
Creative Commons License CC BY-NC-ND
ISSN 0354-4699 (Print)
ISSN 2406-050X (Online)