According to the Non-Financial Reporting Directive (NFRD), public interest entities (PIEs) are obliged to publish a non-financial statement with material information on their business model, policies, outcomes, risks and risk management and key performance indicators related to environmental, social and employee matters, respect for human rights, and anti-corruption and bribery matters. The non-financial statement should not only provide the information that is relevant to determine the value of the company (financial materiality), but also the information that is important to understand the external impacts of the company (environmental and social materiality). These two forms of materiality are increasingly intertwined, as for instance the stress tests on the impact of climate change on financial institutions illustrate. Besides the NFRD, there are other relevant sustainability disclosure requirements at EU level. The regulation on sustainability-related disclosures in the financial services sector (Sustainable Finance Disclosure Regulation, SFDR) requires financial market participants and financial advisers to disclose sustainability information at entity and product level. CEPS developed a methodology to identify which companies are covered by the NFRD and SFDR in the 2021 “Study on the Non-Financial Reporting Directive”.
Now, under this project, CEPS yearly provides data to MSCI on which companies are subject to EU financial sustainability requirements at EU level. When new legislation enters into force, like in the case of the Corporate Sustainability Reporting Directive, that will also be covered.
