Consultation on the non-binding guidelines on non-financial reporting

Posted by EAA Stakeholder Reporting Committee - Jul 24, 2019

Posted by Laura Girella, Lúcia Lima Rodrigues and Riccardo Stacchezzini, on behalf of the EAA Corporate Reporting Committee

In response to a call for responses by the European Commission on its document entitled Targeted consultation on the update of the non-binding guidelines on non-financial reporting on March 20, 2019, the Corporate Reporting Committee of the European Accounting Association (“the CRC”) submitted its response to the issues raised therein.

The CRC submitted its response to the targeted online consultation carried out by the European Commission (“EC”) in February-March 2019 on the update of the non-binding guidelines on non-financial reporting – supplement on reporting climate-related information. A response was formulated around two main areas of enquiry: a) “How to use these guidelines” which comprised questions about Materiality, Structure of the proposed disclosure, Climate-related risks, dependencies and opportunities and Links with recognized reporting frameworks and standards, and b) “Proposed disclosures” which included Business Model, Policies and Due Diligence, Outcomes, Risks and KPIs. Some observations were also developed with reference to Annex I “Proposed Disclosures for Banks and Insurance Companies”.

With reference to the first area of enquiry, the CRC agreed on the frameworks and standards listed in the guidelines. We also found that the Common Statement of Materiality ( and the Landscape Map ( prepared by the Corporate Reporting Dialogue ( could be helpful to companies in order to clarify and guide them throughout the different documents.

The CRC also recognized that the financial and non-financial perspectives on climate-related issues are increasingly overlapping. These issues are material in the short run not only from a non-financial perspective but also in financial terms. To encourage a balanced treatment of financial and non-financial climate-related disclosures, CRC encouraged the EC to propose a more detailed explanation of the processes determining both financial materiality and non-financial climate-related materiality.

We observed a contradiction in the materiality definition between the NFRD (Non-Financial Reporting Directive) and the annex to the nonbinding guidelines. While the NFRD calls for the disclosure of information that is necessary for an understanding of both (1) the development, performance, position and (2) the external impact of the company (which is also reflected in the existing transposition of the NFRD by most European member states), the annex to the guidelines suggests disclosures if climate is a material issue from either of these two perspectives. We urged the EC to avoid conflicts and deviations from the NFRD.

As for the second area of enquiry, the CRC agreed on the Business Model disclosure as indicated in the guidelines, even though we suggested the EC to consider including additional information to help clarifying the dependencies of the business model on the relevant capitals (natural, social and human). Furthermore, we recognized that moves to build connectivity between financial and non-financial reporting should not be limited to the concept of ‘climate’ alone – but this should be seen as a stepping stone towards the integration of all of the capitals (resources and relationships) an organization uses and affects.

The CRC also agreed on the disclosure of KPIs (Key Performance Indicators) as advanced in the guidelines. In order to further support companies in establishing a fruitful dialogue on climate-related disclosure with stakeholders, the EC may want to include a definition of KPI. Furthermore, a double approach to KPIs disclosure could be followed. The EC may want to indicate whether a KPI is considered essential (must have) or desirable (nice to have).

With regard to Annex I we agreed that banks and insurance companies should be encouraged to disclose their policies and assessment of the impact of their primary activities on the environment. In particular, we found of interest if they could (a) describe the criteria used to analyse lending to clients and investment into companies that affect; climate; (b) disclose the percentage of lending to/investment into polluting industries; (c) Business Model: OT (Strengths, Weaknesses, Opportunities and Threats) analysis related to climate and how climate may affect the Bank's business model; (d) Policies and Due Diligence Process; (e) Outcomes: describe what has been achieved and what has not been achieved by identifying the best practices and what not to do.

In general, the CRC was supportive of the efforts made by the European Commission on their swift action in bringing the TCFD (Task-Force on Climate-related Financial Disclosures) recommendations into the non-financial reporting guidelines, given the recognized importance of climate reporting and its long-term implications on companies. 


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