Including both financial and non-financial information is known as "integrated reporting" by public companies. Currently the US Securities & Exchange Commission isn’t even allowing voluntary filing of non-financial data to be included with financial reports by public companies. US GAAP does not include non-financial accounting metrics
Great article from the global law firm of Baker McKenzie about mandatory requirements from securities regulators for public company sustainability disclosure that also needs to be included in financial reporting as a company “best practice.” CFOs, financial reporting teams and management accountant responsibilities are going to become much more broaden as corporate social responsibility tasks are expanded under this C-Suite
Interesting article in the UK’s Financial Director about yearend non-financial reporting required by UK companies as part of the EU mandate for 6,000 + public company requirement to report non-financial information to the capital markets and important stakeholders such as investors. The UK most now adopt the European Union’s own rules around the reporting on long-term risks and strategies as part of the new EU Non-Financial Reporting Directive
Great article in Sustainable Brands and the significance of non-financial reporting disclosure by companies and its direct relationship to investor behavior… According to a recent Ernst & Young survey : Investors are increasingly using non-financial performance to draw conclusions on value and to better inform their decisions, since it’s often a sign of operational excellence if a company shows they are handling environmental, social and governance (ESG) issues well
According to the most recent posting by Broc Romanek of CorporateCounsel.net the US SEC is actively moving forward on public company disclosure of sustainability/ corporate social responsibility reporting – also know as “non-financial” – “integrated reporting” -- including disclosing such topics as board diversity. Non-financial reporting, such as sustainability and CSR/ESG reporting has expanded over the last twenty years. Many US public companies now produce an annual sustainability report (independent of the annual financial report) and there are a wide array of ratings and standards around
Over the years the IMA has championed the use of XBRL as a machine-readable data format for financial reporting to promote greater transparency and accountability to support economic growth and new jobs in the capital markets. ESMA states in its disclosed press release that it has concluded that Inline XBRL is the most suitable technology to meet the EU requirement for issuers to report their annual financial reports in a single electronic format because it enables both machine and human readability in one document. The digital format will allow users such as investors, analysts and auditors to carry out software supported analysis and comparison of large amounts of financial information. Access to annual financial reports for both professional and retail investors is essential for creating robust capital markets across the EU. Will the US Securities and Exchange Commission follow suit and move towards mandating Inline XBRL for public company financial reporting? As reported in FCW -- One of the final rules that could make it through before the end of US SEC Chair White's tenure at the US securities regulator is a proposal to require the use of inline XBRL in the submission of financial data for US public company disclosures
Now with the Foundations for Evidence-Based Policymaking (FEBP) Act becoming law – efforts will be underway to deploy XBRL for Federal and possibly state and municipality financial reporting for better data analytics using a machine-readable format like XBRL using common accounting standards for financial reporting. WHY IS GOVERNMENT FINANCIAL REPORTING USING XBRL IMPORTANT NOW?
Likewise, companies have increased their commitments to ESG: Ceres research shows that among that 600 largest public companies, “nearly two-thirds have commitments to reduce greenhouse gas (gHg) emissions, half are actively managing water resources and nearly half are now actively protecting the human rights of their employees by disclosing human capital data in its financial statement reports as well
Use of XBRL for Sustainability Disclosures to Match Financial Data Disclosures to Support Machine-Readable Data Formats for Better Transparency and Accountability: XBRL is a global standard developed to enhance transparency and accountability and this same standard can be used for other non-financial disclosures like ESG reporting