FERMA has told the European Commission that reporting of non-financial matters such as environmental and social performance by companies should become a business process and that the reporting of risks connected with non-financial elements should be aligned with the organisation’s objectives.
“Finding ways to achieve this goal should be a priority,” FERMA has said in its submission today (Friday) to the Commission’s public consultation on the framework to support the Non-Financial Reporting Directive (NFR). “Corporate risk management can support management in making the connection between the risks associated with non-financial elements and the consequences they can provoke.”
Member states’ implementation of the NFR will be discussed at the FERMA Seminar in Antwerp from 8-9 October 2018 along with the use of risk mapping for Corporate social responsibility (CSR) matters.
In its submission, FERMA acknowledges there is a time lag before the benefits of investing in non-financial matters become apparent following the initial short-term financial costs. It says that corporate risk management methodology, especially Enterprise Risk Management (ERM), can mitigate the costs, because it is a pre-condition of ERM to identify the organisation’s principal risks, including those connected with good corporate citizenship, and consider how they can be mitigated.
Finally, FERMA draws the Commission’s attention to the implications of the framework proposals for SMEs, who could now be requested to provide more detailed non-financial information as a condition of doing business with large companies which have to comply with the NFR. “This is an unintended effect of the Directive as the text was originally designed to preserve SMEs from the administrative burden.”