Up until now, only listed companies have had to disclose information on areas related to environmental, social and employee matters. However, this has been extended to all Public Interest Entities (PIEs) (traded, banking and authorised insurance companies, and companies carrying out insurance market activity) with more than 500 employees.
As investor, customer and stakeholder interest in corporate non-financial matters increases, the improved transparency and comparability introduced by NFRD should provide useful insights for investor decision making. The UK requirements, which are outlined in a new paper, will also encourage businesses to consider which key issues are material to their operations and how they are going to measure and monitor the relevant associated indicators.
These changes have generally been viewed as a progressive and positive development for sustainability reporting, but they do not introduce a significant change in direction from previous requirements.
However, BEIS found that nearly 13,000 of the companies previously reporting will need to begin disclosing information on new anti-bribery and corruption regulations, with 7,000 of these also now required to include information on diversity in their annual reports.
Robbie Epsom, principal environmental consultant at WSP| Parsons Brinckerhoff, said: “All businesses that fall under this scope need to start thinking about what these changes mean to them now. The next steps that firms should be taking include considering which non-financial matters are most relevant, determine the KPIs needed to support reporting requirements, and establish simple systems to start gathering this data now, so you’re ready to report”.
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