Disclosure of non-financial Information – amendments to reporting under the EU taxonomy regulation
Loading...
Journal Title
Journal ISSN
Volume Title
School of Business |
Bachelor's thesis
Unless otherwise stated, all rights belong to the author. You may download, display and print this publication for Your own personal use. Commercial use is prohibited.
Author
Date
2020
Department
Major/Subject
Mcode
Degree programme
Laskentatoimi
Language
en
Pages
29+7
Series
Abstract
The European Commission has actively introduced new legislative initiatives to facilitate the transition to more sustainable economy and contribute to the United Nations Sustainable Development Goals (SDGs) and the objectives of the Paris Agreement. Recently, one of the main policy areas has been sustainable finance which the European Union has promoted in order to reorient capital flows towards sustainable investment. With this regard, the cornerstone has been so-called Taxonomy Regulation (Regulation (EU) 2020/852) introducing a unified classification system which identifies environmentally sustainable economic activities. Due to the new regulations it is likely that non-financial information will increase in importance and benefit investors, stakeholders and society. The transparency and quality of non-financial information can be seen as prerequisites for sustainable finance. Therefore, the focus of this research is on non-financial disclosure from the perspective of sustainability. First, this research examines the current non-financial disclosure obligations and the new requirements imposed by the Taxonomy Regulation. Second, this research evaluates whether the content of the disclosure is sufficient in terms of sustainability. This research studies mandatory non-financial disclosure obligations of large, public-interest entities (PIEs). Currently, these entities must disclose non-financial information in relation to environment, social and employee matters, human rights as well as anti-corruption and bribery under the EU’s Non-Financial Reporting Directive (Directive 2014/95/EU) and the Finnish Accounting Act (1336/1997). However, the Taxonomy Regulation entered into force in July 2020 includes a new disclosure obligation on how and to what extent the economic activities qualify as sustainable. In order to determine the sustainability, the regulation requires substantial contribution to one or more environmental objectives and defines the Do No Significant Harm principle as well as the minimum safeguards. The findings suggest that the Taxonomy Regulation is a step further in sustainability. However, the Non-Financial Reporting Directive is currently under the European Commission’s review and there is a need to align its provisions with the Taxonomy Regulation. In addition, the social dimensions of sustainability should be taken into account in the future as well as simplified standards for small and middle-sized enterprises considered. In conclusion, the findings indicate that the taxonomy has potential to scale up sustainable finance and promote sustainable economic activities.Description
Thesis advisor
Kykkänen, TapaniKeywords
non-financial disclosure, sustainability, sustainable finance, taxonomy, classification system, The Non-Financial Reporting Directive (NFRD), the accounting act, the taxonomy regulation
