ERT Expert Paper – Non-Financial reporting standards (“NFRS”)
ERT Members’ recommendations on how to report on sustainability in an aligned way.
The idea to develop binding reporting standards for non-financial information is gaining traction rapidly on EU level but also internationally.
Already today a large number of international initiatives, frameworks, standards, taxonomies and metrics for the reporting of non-financial information exist. None of these standards is comprehensive, all require differing level of details which makes it necessary to use several standards at the same time multiplying the costs for companies. Diverse approaches and objectives pose the threat of increasing fragmentation globally.
ERT members lack clarity about how they should report on sustainability in an aligned way. Concerns are also emerging over increasing regional and domestic regulatory requirements and their impact on global competitiveness. The current fragmented framework leads to inefficiencies and ineffectiveness with regards to sustainability disclosures. Different standard-setters require different types of reporting with differing indicators and KPIs and differing level of details. This leads to high additional reporting costs for the preparer. The user is confronted with a potentially huge number of KPIs and information on the sustainability of the preparer. Ultimately it becomes more and more difficult for the user to assess and compare the sustainability of preparers.
In this Expert Paper we talk about:
1. The benefits of international standards
2. The disadvantages of a European set of standards
3. How to set up international standards: main principles