What is Non-Financial Reporting?
Financial reports have been the golden rule to understanding the value of a company and a fundamental aspect for investors to decide whether their funds and trust are in one or another corporation or business. With the new requirements of the Paris agreement and especially since the signing of the European Green Deal this definition of how to analyze the value of a company, market or sector has been expanded. Factors such as how the business and activity influence the environment, society in general, and its own employees and managers.
One of the most important consequences of the European Green Deal is the incorporation of non-financial reporting for companies living within the EU. These reports are aimed at providing information on environmental, social, and governance (ESG) aspects, in line with the decarbonization strategy of the Paris Agreement and is a formalization of the United Nations 2030 Agenda. These reports follow the so-called Corporate Sustainability Reporting Directive (CSRD), coming into force in 3 phases:
January 1, 2024, for companies already subject to the Non-Financial Reporting Directive.
January 1, 2025, for large companies that are not currently subject to the Non-Financial Reporting Directive
January 1, 2026, for listed SMEs, small and non-complex credit institutions, and captive insurance companies (1).