The Federation of European Risk Management Associations (FERMA) has given its support to the European Commission’s proposal to develop a common standard on sustainability reporting.
FERMA called 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 the disclosure of non-financial information in annual reports for companies operating in Europe.
FERMA explains that for risk managers, the ability to compare and evaluate information on sustainability will help them more accurately assess risks and opportunities related to sustainability.
It will also encourage businesses to frame decisions in terms of financial, environmental, social and human effects and the associated risks to resilience and long-term value creation.
However, FERMA has raised its concerns with the proposal to require assurance of sustainability information because the ‘standard’ for reporting has not yet been developed.
Valentina Paduano, chair of the FERMA sustainability committee, says: “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.”
She adds: “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.”
