Andreu Bové Una taxonomía



Non-financial reports: a taxonomy

AUTHOR: Andreu Bové. Tax adviser at Bové Montero y Asociados


The  Spanish National Securities Market Commission (CNMV) has published its supervisory report on annual accounts for 2018. The section on Non-Financial Reporting (NFR) reveals that 13 companies submitted qualifications in the verification report, while requests for supplementary information were made to an additional three companies, and a series of recommendations were sent to a further 25 companies for their consideration when preparing the NFR as of next year. This would appear to directly contravene the following statement from the report itself: “The issuer should draw up its NFR in accordance with legal requirements to prevent the verifier from including qualifications.”

Despite all this, – it’s not all bad news – the CNMV also admits that “an improvement in quality has been observed” in the reporting, while encouraging companies to “continue in this vein”.

Be that as it may, let us go back to the starting point. The entry into force of Act 11/2018, of 28 December, transposing the Directive on the disclosure of non-financial and diversity information by certain large undertakings and groups, requires the management of these corporate entities to prepare an NFR, that is, a document attached to the annual accounts, which is submitted for verification by an independent third party. For financial years beginning from 1 January 2018, entities or consolidated groups meeting the following two requirements are required to report his information:

  • The average number of staff over the year is over 500 employees.
  • It is a public-interest entity (e.g. banks, insurance companies), or an entity that meets two of the following three requirements over two consecutive years:
    1. total assets over 20 million euros
    2. revenue over 40 million euros
    3. average number of staff over 500 employees

It should also be noted that from financial years beginning from 1 January 2021 (inclusive), the staff requirement will be reduced to 250 employees.

Broadly speaking, the NFR summarises the entity’s policies on corporate social responsibility. Specifically, the document must at least contain information on issues related to:

  1. the environment,
  2. social matters and employees,
  3. respect for human rights, and
  4. the fight against corruption and bribery.

It will also include information on the company’s commitment to sustainable development, subcontracting and suppliers, consumers, tax reporting, and any other significant information, providing key indicators for each issue.

Consolidated groups and subsidiaries

In consolidated groups, dependent Spanish entities will not have to prepare this document as long as the group NFR contains all the information provided for in the Directive. However, the Spanish subsidiary (or sub-group) must publish the NFR in accordance with Spanish regulations.

It is worth noting that Spanish regulations include more reporting obligations than those provided for in the Directive. Therefore, in the case of consolidated groups with parent companies situated abroad, the Spanish subsidiary (or sub-group) must prepare

  1. a complete individual NFR that complies with Spanish regulations, or
  2. a partial individual NFR which includes the additional information required by Spanish regulations as compared to the Directive.

In conclusion, let us reflect that in the current climate of growing importance of sustainability and corporate social responsibility, the NFR is the ideal means to project the business world’s development in both these areas onto society as a whole. Without forgetting, of course, that this information already represents a fundamental decision-making factor regarding strategy for investors and other interested parties.


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