NBIM calls for EU human rights and corruption reporting standards

Letter to the EU describes existing standards as “not entirely satisfactory”

Norges Bank Investment Management (NBIM), manager of Norway’s mammoth NOK10.4tn (€385bn) Government Pension Fund Global, has called for European corporate reporting standards on human rights and corruption, describing them as areas where “existing international standards are not entirely satisfactory”.

The remarks were made in NBIM’s submission to an ongoing European Commission consultation over the Non-Financial Reporting Directive (NFRD), which require large European companies to disclose their policies in areas such as diversity, social responsibility, environmental protection, human rights and corruption.

One of the main pillars of the EU’s strategy on sustainable finance is an overhaul of the NFRD. Due to the Coronavirus pandemic, the final results of that project will now not be published until 2021. 

The deadline to give feedback on the NFRD has been extended to 11 June. Submissions can be made here.

Currently, disclosures made under the NFRD do not need to be made against a set of unified standards, although the Commission has published non-binding guidelines in 2017 – later updated in 2019 – to be used by reporting companies.

This development of a common standard for non-financial reporting is among the focuses of the consultation, in addition to assurance, scope of disclosure and simplifying the process among others.

The consultation has particular importance for European investors and financial institutions, who are themselves facing new requirements for sustainability-related disclosures under the EU Sustainable Finance Action Plan. Ensuring that that firm-level sustainability reporting standards are fit-for-purpose and aligned with the new rules for investor disclosure, would make it simpler and cheaper for investors to comply. A separate consultation by the three European Supervisory Authorities on the rules’ technical standards is ongoing until September 1, 2020.

In their feedback, NBIM suggested that financially-material sustainability disclosures relevant to investors were integrated into annual reports, while information not financially material could be disclosed through other channels to create a “clear distinction” between the two.

In addition, NBIM said that the Commission should build on existing standards and work with international standard-setting bodies to “ensure comparability of disclosures at international level” by investors. 

NBIM has faced media scrutiny recently, over its appointment of hedge fund billionaire Nicolai Tangen as Chief Executive.