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Natural Capital Protocol Referenced in European Commission’s New ‘Guidelines on Non-Financial Reporting’

June 28, 2017 |

This guidance was originally published on the European Commission

When preparing their on Guidelines on Non-Financial Reporting in 2017, the European Commission reviewed national, EU-based and international frameworks. In this work, they stated that the guidelines “owe a lot to the leadership and knowledge of the organisations behind [several] frameworks”, listing the Natural Capital Coalition and Protocol as one of 21 global leaders in this space.


Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large undertakings and groups (‘the Directive’) entered into force on 6 December 2014. This Directive amends Directive 2013/34/EU on the annual financial statements, consolidated statements and related reports of certain types of undertakings. Companies concerned will start applying the Directive as of 2018, on information relating to the 2017 financial year.

Greater transparency is expected to make companies more resilient and perform better, both in financial and non-financial terms. Over time this will lead to more robust growth and employment and increased trust among stakeholders, including investors and consumers. Transparent business management is also consistent with longer-term investment.

The disclosure requirements for non-financial information apply to certain large companies with more than 500 employees, as the cost of obliging small and medium-sized enterprises to apply them could outweigh the benefits. This approach keeps administrative burden to a minimum. Companies are required to disclose relevant, useful information that is necessary to understand their development, performance, position and the impact of their activity, rather than an exhaustive, detailed report. Furthermore, disclosures may be provided at group level, rather than by each individual affiliate within a group. The Directive also gives companies significant flexibility to disclose relevant information in the way that they consider most useful, including in a separate report. Companies may rely on international, EU-based or national frameworks.

Appropriate non-financial disclosure is an essential element to enable sustainable finance. The European Commission decided on 28 October 2016 to establish a High Level Expert Group on sustainable finance. This builds on the Commission’s goal to develop an overarching and comprehensive EU strategy on sustainable finance as part of the Capital Markets Union. The group is expected to submit to the Commission a set of policy recommendations by end of 2017.

National, EU-based, international frameworks

When preparing these guidelines, the Commission reviewed national, EU-based and international frameworks. The guidelines owe a lot to the leadership and knowledge of the organisations behind these frameworks. In particular, the principles and contents described in this document build largely on frameworks such as:

  • CDP (formerly the Carbon Disclosure Project);
  • the Climate Disclosure Standards Board;
  • the OECD Due Diligence Guidance for Responsible Supply Chains from ConflictAffected and High-Risk areas, and the supplements to it;
  • the Eco-Management and Audit Scheme (EMAS) and the related Sectoral Reference Documents;
  • the European Federation of Financial Analysts Societies’ KPIs for Environmental, Social, Governance (ESG), a Guideline for the Integration of ESG into Financial Analysis and Corporate Valuation;
  • Global Reporting Initiative;
  • Guidance for Responsible Agricultural Supply Chains of FAO-OECD;
  • Guidance on the Strategic Report of the UK Financial Reporting Council;
  • Guidelines for Multinational Enterprises of the Organisation for Economic Cooperation and Development;
  • Guiding Principles Reporting Framework on Business and Human Rights;
  • ISO 26000 of the International Organisation for Standardisation;
  • the International Integrated Reporting Framework;
  • Model Guidance on reporting ESG information to investors of the UN Sustainable Stock Exchanges Initiative;
  • the Natural Capital Protocol;
  • Product and Organisation Environmental Footprint Guides;
  • the Sustainability Accounting Standards Board;
  • the Sustainability Code of the German Council for Sustainable Development;
  • the Tripartite Declaration of principles concerning multinational enterprises and social policy of the International Labour Organisation;
  • the United Nations (UN) Global Compact;
  • UN Sustainable Development Goals, Resolution of 25 September 2015 transforming our world: the 2030 Agenda for Sustainable Development;
  • UN Guiding Principles on Business and Human Rights implementing the UN ‘Protect, Respect and Remedy’ Framework.

Read on and download the guidance in full at: European Commission.

Read the accompanying press release here.

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