Beyond Financials: Understanding the Implications of NFRD and CSRD on Non-financial Reporting

Abstract

In an area where transparency and accountability are two crucial corporate governance factors, the Non-Financial Reporting Directive (NFRD) and the Corporate Sustainability Reporting Directive (CSRD) present key legislative acts to foster these principles. Both directives determine that selected companies must include and publish non-financial information in their annual business reports (such as environmental and social matters, human rights, etc.) alongside financial ones. NFRD and CSRD have been implemented for companies to report more comprehensive information about their operations, informing all interested individuals and groups about the information they need for their decision-making, thereby reducing risk, extending the scope of information, and providing a comprehensive view of the company's management. Both directives determine how companies report on their social and environmental impact and signal a shift towards sustainable CSR business practices. This paper aims to determine the methodology and develop a research model to evaluate the effect of NFRD and CSRD on non-financial information reporting in practice.