What needs to be reported on sustainability-related governance?

April 2021 Issue

This year will be key for future climate policy and especially for sustainable finance in Germany and Europe. Sustainable Finance plays a crucial role in improving climate protection and sustainable growth. To this end, Germanwatch joined forces with the Alliance for Corporate Transparency in order to push towards greater corporate responsibility and disclosure requirements to meet the EU and Paris climate targets.

This is the second article of our briefing series "Full Disclosure: Monthly Briefing on EU Corporate Transparency Regulation", in which we aim to shed light on the need for and benefits of forward-looking reporting requirements in a changing EU regulatory environment.

About this issue:

Currently, the European Commission is revising the EU Non-Financial Reporting Directive (NFRD), which will be introduced later this year along with new corporate governance obligations. They intend to prioritize sustainability in companies’ core business strategy and thus among management and Board.

However, so far Companies do not address and report sustainability-related governance matters sufficiently. In addition, the multitude of reporting standards hamper comparable transparency on these matters. In reaction to these problems, the reform of the NFRD (read more about this in our March issue) aims to clarify which information should be reported on governance and integration of sustainability in corporate strategy in three areas:

1. Company strategy and targets and Board oversight over their adoption and implementation
2. Determination of relevant risks and salient issues (double materiality)
3. Organisation and integration of sustainability in governance