European Commission Executive Vice President Valdis Dombrovskis has issued a request for technical advice mandating EFRAG to undertake preparatory work for possible EU Non-Financial Reporting Standards in a revised Non-Financial Reporting Directive (NFRD). In addition, Executive Vice President Valdis Dombrovskis has invited EFRAG Board President and European Lab Steering Group Chairman Jean Paul Gauzès to consider the possible need for changes to the governance and financing of EFRAG in the context of the possible development of European non-financial reporting standards.
The EC adopted an updated Work Programme on 27 May 2020 that foresees the publication of a legislative proposal to revise the Non-Financial Reporting Directive (NFRD) in Q1 2021. One of the possible ways of enhancing the comparability, reliability and relevance of information disclosed by companies pursuant to the NFRD will be to mandate the use of a common set of non-financial reporting standards. Such standards could also facilitate the assurance of non-financial information, its enforcement and its digitisation using a taxonomy (tags) and a structured data standard.
Pursuant to the above, the EC has mandated EFRAG to undertake preparatory work for the elaboration of possible EU non-financial reporting standards. The EC has not yet taken any decision about the future role, if any, of standards in the context of the forthcoming revision of the NFRD and the preparatory work will allow for the swift adoption and implementation of European standards, should that be the choice of the Commission’s legislative proposal.
The preparatory work will be carried out by a multi-stakeholder Project Task Force (PTF) that will be appointed by the Steering Group of the European Reporting Lab @ EFRAG (European Lab) and is expected to be completed in early 2021, with a progress report to be released at the end of October 2020. A call for candidates for this project task force will be issued shortly.
In addition, the EC has invited EFRAG Board President, European Lab Steering Group Chairman and former MEP, Jean Paul Gauzès to consider a possible need for changes to the governance and financing of EFRAG if it were, subject to the findings of the preparatory work and subsequent legislative decisions, to be entrusted with the development of European non-financial reporting standards in a revised NFRD.
Jean-Paul Gauzès, EFRAG Board President and Chair of the European Lab Steering Group, welcomed the issuance of the two mandates noting that:
EFRAG is honoured by the confidence of the EC in its request for EFRAG to undertake this important first step towards possibly developing European non-financial reporting standards. The EC has taken account of EFRAG’s established reputation and key role in the development of financial reporting standards, our more recent involvement in the non-financial reporting arena through the European Lab and opportunities for the interconnectivity between financial and non-financial reporting.
The mandate to EFRAG on preparatory work for the elaboration of EU non-financial reporting standards can be found here.
The ad personam mandate to Jean-Paul Gauzès, EFRAG Board President, can be found here.