reportNon-Financial Reporting Directive

It is common for large companies to include wider information into annual reports, but it will soon be a legal requirement for some.  The EU’s Non-Financial Reporting Directive (NFRD) requires certain large undertakings and groups to disclose non-financial and diversity information.


The NFRD applies to large undertakings that are Public Interest Entities (PIEs) with an average of 500 employees over its financial year, and that:

  • Issues transferable securities that are admitted to trading on a regulated market in the EU;
  • Is a credit institution (a bank or building society, though not a credit union);
  • Is an insurance undertaking; or
  • Is designated by a Member State as a public interest entity (for instance because of its business, size or the number of employees).


It has not yet been enacted into UK legislation (but should be by 2017) so the exact requirements are not yet known.


The Directive however requires two disclosures. The first is a non-financial statement.


This statement should give an understanding of its ‘development, performance, position and impact of its activity’. Such ‘matters’ should cover, ‘as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters’.


The content of the non-financial statement includes:

  • Business model;
  • Information on policies for the six ‘matters’ including any implemented due diligence processes;
  • The outcome of these policies;
  • The principal risks related to these ‘matters’ linked to the company’s operations, including, where relevant and proportionate, its business relationships, products and services that are likely to cause adverse impacts in those areas and how the company manages those risks; and
  • Any relevant non-financial KPIs.


The second is a diversity disclosure, as part of the corporate governance statement.


More information will follow once the UK legislation is produced.




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