By: Andromeda Wood, Senior Director of Global XBRL Strategy at Workiva
There are many factors involved in effective financial reporting, which can make it a complex and time-consuming task without the right technology or infrastructure to accelerate it. But it is critical that companies invest this time and resource to deliver an accurate representation of finances, including revenues, expenses, profits, capital, and cash flow, as demanded by stakeholders.
However, business performance reporting is changing. The new proposals for the Corporate Sustainability Reporting Directive (CSRD) will have an impact on internal processes, building on the existing Non-Financial Reporting Directive (NFRD) and will apply to all large companies and all listed companies in the EU. This means an increase from 11,000 businesses who were subject to existing requirements, to nearly 50,000 that will need to follow detailed EU sustainability reporting standards.
Sustainability comes to the fore
Regulation is directing fund and asset managers to ensure that the information and funds are assessed against a common set of criteria (for example, EU sustainable finance, in particular the EU Taxonomy and associated Sustainable Finance Disclosure Regulation). These changes echo the mood of investors both big and small, who are starting to scrutinise where their money is going, as ethics and moral values move up priority lists.
As a result, the decision of whether a business can secure funding is increasingly dependent on how a company performs against environmental, social and corporate governance (ESG) factors. Companies who fail to demonstrate the right metrics (or progress towards them), may face challenges accessing capital.
Read the full article here.
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KEYWORDS: Workiva, Andromeda Wood, NYSE:WK