Social Value International Response to EU Consultation on NRFD
In collaboration with several Joint Member Networks, Social Value International have led a coordinated response to the EU consultation on NRFD. SVI led a consultation period that included an open webinar, a collaborative Google Doc to gather consensus on the 45 survey questions, and the co-creation of a position statement.
The full position statement can be downloaded here.
Below is a summary of the 4 key recommendations:
- Assurance of non-financial reporting is essential for the credibility and usefulness of the data. Scrutiny of non-financial information should be equal to that applied for financial information. Non-financial information should be presented alongside financial information, any separation increases the likelihood of it not informing decisions. Assurers should be independent and yet be knowledgeable enough to challenge professional judgements over ‘dual materiality’.
- Materiality positions and the process for determining what impacts are included in reports should be disclosed in all non-financial reporting with explicit reference to the dual approaches to materiality. Ideally, organisations should include all impacts that matter to all people (who are impacted) regardless of whether the impacts are financially material to the organisation.
- The scope of the Non-Financial Reporting Directive should be widened to include small and medium sized companies (fewer than 250 employees and either a turnover of up to €50 million or a balance sheet total of up to €43 million) as well as subsidiaries.
- Reform of accounting standards. Reporting disclosures are important but should be linked to a reform of accounting standards that integrate non-financial impacts onto the balance sheet. This will help root the information in business management practice and operational decision making.