NFRD

The Non-Financial Reporting Directive (NFRD) was Directive 2014/95/EU of the European Parliament and the Council, adopted in 2014. It required certain large public-interest entities to disclose non-financial information relevant to how they operate and address social and environmental challenges, human rights, anti-corruption and bribery, and board diversity. The directive aimed to increase transparency and enhance the durability of corporate business models by integrating sustainability considerations into annual reporting.

Scope and subjects: The NFRD applied to large public-interest entities with more than 500 employees within the European Union. Covered topics included environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery, and diversity on boards of directors. Entities could present this information in the management report or in a separate non-financial report, alongside their financial disclosures.

Reporting requirements: Companies were to provide a description of their business model, policies pursued, the results of those policies, principal risks related to those matters, and non-financial key performance indicators where appropriate. The information was intended to be integrated into corporate reporting and subject to national enforcement frameworks. The directive did not universally require independent assurance of the non-financial disclosures.

Status and succession: The NFRD served as the EU framework for sustainability reporting until it was largely replaced by the Corporate Sustainability Reporting Directive (CSRD). The CSRD expands scope to more entities, introduces EU-wide reporting standards, requires audit or assurance of reported information, and aims to standardize and digitalize sustainability disclosures across the EU.