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In January 2024, the Non-Financial Reporting Directive (NFRD) was officially replaced by the Corporate Sustainability Reporting Directive (CSRD). The CSRD has broadened the scope and the reporting requirements of the NFRD. 

Essential for companies reporting on the NFRD: The first CSRD report of companies in the scope of NFRD is due in 2025 for the financial year 2024.

Stay current with the latest reporting requirements and learn more about the CSRD and how it impacts your company here.

What is the Non-Financial Reporting Directive (NFRD)?

  • The Non-Financial Reporting Directive (NFRD) requires companies in scope to publish a non-financial report on their ESG performance together with their annual management report.
  • The NFRD aims to help investors, civil society organisations, consumers, policymakers, and other stakeholders evaluate the non-financial performance of large companies and encourages these companies to develop a responsible approach to business.
  • The European Union proposed it in 2014 and enacted it in 2016. The first report was to be disclosed for the financial year of 2018.

Which companies have to comply with the NFRD?

The NFRD applies to approximately 11 700 companies and groups across the European Union, including companies that:

Are a large undertaking, exceeding two out of three of the following criteria for two successive accounting periods:

  • A balance sheet total of EUR 20 million, or
  • A net turnover of EUR 40 million, or
  • Average number of employees of 500.

Are a public-interest entity, meaning any entity which is:

  • Trading transferable securities on the regulated market of any Member State or
  • A credit institution, or
  • An insurance undertaking, or
  • Designated by a Member State as a public interest entity (more info on how the Member States define the scope here).

What do companies need to disclose under the NFRD?

The non-financial report should include:

  • A brief description of the undertaking's business model
  • A description of the policies pursued by the undertaking about ESG matters, including due diligence processes implemented
  • The outcome of those policies
  • Non-financial key performance indicators relevant to the particular business across:
    • Environmental matters
    • Social matters and treatment of employees
    • Respect for human rights
    • Anti-corruption and bribery
    • Diversity on company boards (in terms of age, gender, educational and professional background)
    • The principal risks related to those matters.

The NFRD timeline implementation

  • In 2017, the EU published guidelines to help companies disclose environmental and social information in their non-financial report.
  • In 2019, the EU published additional guidelines on reporting climate-related information in a non-financial report.
  • These EU guidelines are not mandatory, and companies may decide to use international, European, or national guidelines according to their characteristics or business environment.
  • The first CSRD report of companies within the scope of NFRD is due in 2025 for the financial year 2024.

Find out more about the CSRD and how it impacts your company here.

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