The Danish Institute for Human Rights makes submission for Non-Financial Reporting Directive

15 June 2020

On 11 June 2020 the Danish Institute for Human Rights (DIHR) made a submission to a public consultation opened by the European Commission to collect the views of stakeholders on possible revisions to the provisions of the EU Non-Financial Reporting Directive (NFRD).

The NFRD requires certain large companies to include a non-financial statement as part of their annual public reporting obligations on four sustainability issues, including human rights.

The DIHR submission focused on three areas which it views as necessary to improve the NFRD with respect to human rights:

Regulatory alignment: The DIHR submitted that any revision of the NFRD needs to align both with the UN Guiding Principles on Business and Human Rights and other regulatory developments, including efforts undertaken under the EU’s Sustainable Finance Action Plan and any prospective regulation mandating human rights and environmental due diligence.
Human Rights Disclosures and Double Materiality: The DIHR submitted that any revision of the NFRD should clarify the obligations of reporting entities in relation to human rights and actively address the shortcomings of the concept of materiality by using the principle of severity to drive prioritisation of reporting on critical impacts.
Standardisation and Structure: The DIHR submitted that revision of the NFRD should require that reports are prepared and presented in a standardised manner and utilise common standards and that reports are digitised in a machine-readable format and be deposited in an official repository, to be established by the EU, enabling company reporting to be accessible and comparable by a range of stakeholders.

The DIHR submission draws from the expertise of the Human Rights and Business Department, which has worked for 20 years with companies, states and civil society to build a global environment in which negative impacts on human rights by business activities are minimised, including through implementation of the UN Guiding Principles on Business and Human Rights. That work has included analysis of company reporting on human rights, developing indicators for companies, and advice to companies on human rights due diligence including with respect to reporting.