NFRD: Definition
Adopted by the European Union in 2014, the Non-Financial Reporting Directive (NFRD) requires specific companies to furnish non-financial disclosure documents alongside their annual reports, commonly referred to as “sustainability reports.” By 2018, all 28 EU member states had incorporated the NFRD directive into their national legislation, imposing compliance obligations on companies operating within their territories with a workforce exceeding 500 employees. This directive is applicable to public-interest companies with over 500 employees in the EU, encompassing approximately 6,000 companies and groups, including listed companies, banks, insurance firms, and other entities of public interest. The directive recommends adhering to international standards such as the UN Global Compact, OECD Guidelines, ISO 2600, or the Global Reporting Initiative (GRI). Furthermore, this directive amends the accounting directive 2013/34/EU.
For Sustainability Managers
Understanding NFRD helps you select the right frameworks and meet evolving disclosure requirements.
For CFOs
NFRD directly impacts financial planning, risk exposure, and regulatory compliance costs.
For Sustainability Reporting
NFRD is a core element of sustainability reporting that auditors and regulators expect to see addressed.
Related Terms
1.5°C
The Paris Agreement commits countries to limit global warming to well below 2°C above pre-industrial levels, with an even more ambitious target of 1.5°C to avert severe climate changes. Achieving the 1.5°C trajectory necessitates halving emissions by 2030 and reaching net-zero emissions by 2050.
AASB
The Australian Accounting Standards Board (AASB) is a government agency in Australia responsible for developing and maintaining financial reporting standards applicable to entities in both the private and public sectors of the Australian economy. This includes the development of accounting and external reporting standards and guidance related to sustainability-related financial information, which is aligned with principles, caters to external report users' needs, and can be subject to assurance and enforcement.
Accreditation
Accreditation refers to the procedure through which an official acknowledgment is bestowed upon a certification body or organisation, affirming their competence and ability to carry out certification assessments that are both valid and dependable. Normally, accreditation is provided by an acknowledged accreditation entity that assesses the certification body's procedures, proficiency, and adherence to global standards.
Assurance
Trust is of paramount importance in any industry. However, there are occasions when changes or questions arise, prompting managers, owners, and other stakeholders to verify the validity of an organization's business processes and adherence to governance standards. To obtain this information, they may request a review from a firm that offers assurance services. Assurance reporting summarises the results of this evaluation, determining whether the organisation has successfully met the assurance objective.
CDSB
The Climate Disclosure Standards Board (CDSB) was an international consortium of entities dedicated to aligning the global corporate reporting model by equating natural and social capital with financial capital. The CDSB has now merged into the IFRS Foundation, integrating into the ISSB, with its resources remaining accessible through its legacy website.