Mandatory Non-Financial Reporting from the EU perspective

Mandatory Non-Financial Reportin

At a plenary sitting on 15 April 2014, the European Parliament adopted the directive on disclosure of non-financial and diversity information by certain large companies and groups.



Mike Boonen

Partner | Audit

KPMG in Belgium


At a plenary sitting on 15 April 2014, the European Parliament adopted the directive on disclosure of non-financial and diversity information by certain large companies and groups. The directive will enter into force once adopted by the Council and published in the EU Official Journal.

Selected Public Interest Entities will need to disclose information on policies, risks and outcomes relating to environmental matters, social and employee-related subjects, respect for human rights, anti-corruption and bribery issues and diversity in their board of directors. The scope includes approximately 6,000 large companies and groups across the EU.

The Directive leaves significant flexibility for companies to disclose the required information in the way that they consider most useful, or in a separate report. Companies may use international, European or national guidelines, in the manner that they consider appropriate (for instance, the UN Global Compact or ISO 26000).

The Directive provides for further work by the Commission to develop guidelines in order to facilitate the disclosure of non-financial information by companies, taking into account current best practice, international developments and related EU initiatives.

A further executive summary is provided below for your convenience. More information can be found on the website of the European Commission, in the Single Market section by following Accounting and Non-Financial Reporting.


Objective of the Directive:

  • Bringing change within strategy and management for long-term performance in companies
  • Key for investors in terms of improving their capital allocations
  • Create a European level playing field on non-financial reporting



The Directive concerns your entity if it meets ALL of the three criteria below:

1.Your entity is a large undertaking (balance sheet total of EUR 20 million or a net turnover of EUR 40 million
2.and your entity exceeds 500 employees during a financial year
3.and your entity is a public interest entity (listed on European stock exchange, bank or insurance company, designated as a public interest entity by national definition of EU Member States)



If your entity meets all three criteria, then it needs to include a non-financial statement in its consolidated management report.

If your entity is a subsidiary undertaking, they may be exempted from the reporting obligation if their parent entity includes the non-financial statement in the consolidated management report.




  • Entities in scope will need to disclose information on environmental matters, social and employee-related matters, human rights, anti-corruption and bribery and diversity.
  • The non-financial statement shall also, where appropriate, include references to, and additional explanations of, amounts reported in the annual financial statement.
  • Undertakings may rely on national, EU-based or international frameworks and if so, shall specify on which frameworks it has relied upon.



Comply or explain:

  • Where an undertaking does not pursue policies in relation to one or more of these matters, the non-financial statement shall provide a clear and reasoned explanation for not doing so.
  • If an undertaking has no diversity policy in place, the statement shall contain an explanation as to why this is the case.
  • Safe Harbour Clause: Member States may allow undertakings to omit the disclosure of information relating to impending developments or matters in exceptional cases, acting within the competences assigned to them by national law and having collective responsibility for it, if the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking.




  • Include non-financial statement in the management report or issue a separate report



Liability and verification:

  • Member States shall ensure that the members of the administrative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law, have collective responsibility for ensuring that the reported information is drawn up and published in accordance with the requirements of this Directive.
  • Member States shall ensure that the statutory auditor or audit firm checks whether the non-financial statement or the separate report (see section 6) has been provided.
  • Member States may require that the information in the non-financial statement (consolidated non-financial statement) or the separate report is verified by an independent assurance services` provider.
  • The statutory auditor or audit firm shall express an opinion regarding information on the reporting obligation related to the principle risks and the non-financial KPIs (specified in point c) and d) of section 4).



Next steps:

  • 15 April 2014 Planned joint adoption of the Directive by the European Parliament, followed by formal adoption by the Council of the EU in September (tbc)
  • 2014/2015 The European Commission shall prepare non-binding guidelines on methodology for reporting non-financial information, including non-financial KPIs, general and sectorial, with a view to facilitate relevant, useful and comparable disclosure of non-financial information by EU undertakings. In doing so, the Commission shall consult relevant stakeholders.
  • 2016 Transposition period to implement the Directive into national law.
  • 2017 Directive becomes applicable to companies that fall under the scope (tbc)
  • 2018 The EU Commission releases a review report with possible new legislative proposals: e.g. on extending the scope to large non-listed undertakings and the possibility of introducing an obligation for country-by-country reporting on profits made, taxes paid on profits and public subsidies received.





The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


© 2023 KPMG Central Services, a Belgian general partnership ("VOF/SNC") and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

Connect with us

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today