EU financial markets watchdog recommends EU Commission consider amending NFRD to provide for set of specific disclosure requirements
"ESMA backs ESG disclosure as short-termism bulwark", 6 Jan 2020
The EU financial markets watchdog has recommended the European Commission take steps to improve the quality of environmental, social and governance (ESG) disclosure...
It said there were shortcomings in existing EU legislation in terms of providing for comparable, relevant and reliable ESG disclosure, which made it “more difficult for the positive relationship between ESG disclosure and long-term investment to materialise”.
It has advised the Commission to amend the Non-Financial Reporting Directive (NFRD), promote a single set of international ESG disclosure standards, and require the inclusion of non-financial statements in annual financial reports.
The Commission has already said it will review the NFRD this year. According to ESMA’s recommendations the EU executive should consider amending the Directive to allow for the development of binding measures, including to provide for a limited set of specific disclosure requirements...
Adopted in 2014, the NFRD requires listed companies to publish reports on the policies they apply in relation to areas such as environmental protection or treatment of employees, but it misses more specific requirements to prepare both narrative and quantitative disclosures.
ESMA also noted that introducing binding measures covering specific disclosure requirements should allow “better coordination” between the availability of data from investee companies and the disclosure obligations imposed on investors under the new sustainable finance disclosure regulation...