Do you have more than 250 employees in your company? You are probably obliged to file a Non-Financial Report (NFR)). Let us explain the key aspects of this law and help you to submit it.
In recent years, there has been a growing demand for more transparency from investors, consumers and society at large. This has led many companies to start incorporating sustainability and corporate social responsibility information in their annual reports and statements, complementing financial information. Spanish legislation itself has contributed to boosting this new need for information with Law 11/2018 on non-financial information and diversity.
- What is the Non-Financial Report (NFR)?
In broad terms, the NFR summarises the entity’s corporate social responsibility policies. The document should contain, at a minimum, information on environmental, social and personnel issues, on respect for human rights, on anti-corruption and anti-bribery, and on the company’s commitments to sustainable development. In addition, a set of key indicators should be provided for every issue in the report. The NFR should be prepared by the directors of the entity and verified by an independent expert, such as a statutory auditor.
- To which companies does the Non-Financial Information Act apply?
The first requirement for a company to be obliged to draw up the NFR is to have at least 250 employees. The following criterion is that they either (1) have the consideration of entities of public interest, or (2) during two consecutive years meet the following circumstances:
- Assets over EUR 20 million.
- Annual turnover exceeding EUR 40 million.
- What about subsidiaries of foreign groups?
In foreign groups, the Spanish subsidiary (or the Spanish subgroup) will be obliged to publish the NFR in accordance with Spanish regulations. As a result, the Spanish subsidiary will have two options to comply with the regulations:
- To submit a full individual NFR; or
- To submit a supplementary NFR to the Group’s NFR, including the supplementary information required by Spanish regulations.
- Are you facing the challenge of submitting and filing the NFR for the first time?
The first report can be a delicate process, as it is a new obligation, involves different areas of the company and requires several ways to collect the information. Therefore, the first year is crucial and should serve as a reference to create the structure of the report, establish the communication channels with stakeholders and define the information gathering processes, thus easing the work in the following years.
Contact the team of Bové Montero y Asociados to support you in complying with the NFR filing.
Monica Bové, Consultant