FERMA welcomes EU sustainability reporting proposal

FERMA has given its support to the European Commission proposal to develop a common standard on sustainability reporting. FERMA calls on the Commission to employ corporate language in this standard, notably to refer to enterprise risk management (ERM).

The Commission’s legislative proposal for a Corporate Sustainability Reporting Directive will reform the existing rules on disclosure of non-financial information in annual reports for companies operating in Europe.

For risk managers, the ability to compare and evaluate information on sustainability will help them more accurately assess risks and opportunities related to sustainability. By this, FERMA means encouraging businesses to frame decisions in terms of financial, environmental, social and human effects and the associated risks to resilience and long-term value creation. 

Valentina Paduano, chair of the FERMA sustainability committee, said: “The Commission proposal to define common standards for sustainability reporting is an important step forward in terms of transparency, accuracy and quality improvement of non-financial information of companies.

“It will help companies collect and report all needed information following a common methodology, so improving the sustainability reporting language within the EU. We believe that ERM should be part of this standard as an established method of managing risks and opportunities.”

The proposals will mean a fourfold increase in number of companies required to report on sustainability metrics. It will raise the bar in sustainability information and prove a considerable change for many companies. This is where FERMA believes risk managers can make an important contribution.

Many risk managers are involved of the production of sustainability reports for their organisations, for which a reporting standard will be helpful.