Non-Financial Reporting: The Show must go on!
In the current context, non-financial reporting is of particular importance, as it can support companies in identifying solutions needed to counteract the negative effects generated by the COVID-19 Pandemic, but also to identify development opportunities.
For example, for listed companies, non-financial reporting is an additional tool in attracting capital, stimulating the investors’ decision-making process. During this period, investors need additional guarantees on the soundness of companies, their ability to adapt and react, but also their future plans for different scenarios. In fact, this is valid for all companies, if we replace investors with other categories of stakeholders, such as customers, suppliers, or employees.
What we need to learn from this pandemic is that additional measures are needed to strengthen our business and prepare it for other global challenges, such as climate change, and communicating financial information alone is not enough to demonstrate how prepared a company is.
Going through the necessary steps in the process of preparing a non-financial report, ensures the relevance of the content and the compliance with the legislation, but also supports the company in identifying those areas of interest to stakeholders that can be transformed by the company into development opportunities, such as new products or improved, new markets, diversification of sales channels, etc.
Today, we will talk about non-financial reporting with Mihaela Croitoru, Founder & Managing Partner at INNOVA Project Consulting, a consulting company in the field of sustainability, with a portfolio of important clients that includes among the largest companies in Romania, from various fields of activity : oil and gas, mining, chemical, IT&C, etc.
- What do you think is missing a company that is preparing to report non-financial information for the first time?
The experience of companies in general in preparing annual reports is a very good experience, especially if they are done at an adequate level of detail, which could also help in preparing non-financial reports. However, this experience should be doubled with specific practical experiences and tested methodologies that are adapted to the specifics of the company. A course on the reporting process, on how to make and present a non-financial report by people who have gone through such processes several times would be very interesting and useful for a company that has not prepared such a report. so far or who does not master the subject very well. This is useful, as the process for conducting non-financial reporting is different, and going through certain steps contributes to the level of relevance of the content, but also ensures compliance with legislation.
- What doesn’t the legislation regarding non-financial reporting explain and you will find out in a training program?
A training program helps you better understand the requirements of this reporting, to familiarize yourself with the specific terms, but also with a series of methodologies and tools usually used in preparing non-financial reporting. Instead, the legislation contains only a set of criteria that non-financial reporting should meet, without providing concrete guidance on their fulfillment. In the normative act OMPF nr. 1938/2016 there is, for example, an expression “to the extent necessary for”, behind which lies one of the most important steps in preparing correct and relevant non-financial reporting. Thus, to support companies, we will organize on October 15 a webinar that will briefly present, because there are only 4 hours, the stages of the non-financial reporting process and a selection of useful tools and methodologies for those at the beginning, but also to those who want to consolidate their knowledge in this field. At the same time, for the companies interested in deepening the subject and preparing their reporting teams, we are offering personalized courses, with a longer duration, and also specific consultancy services.
- Many of us say that we know how to prepare a report. Why is it important to attend a specific course and why is non-financial reporting different from writing a simple report?
Every day, we have access to a great deal of information of all kinds and from many sources, and in Romania, in terms of the concept of sustainable development, to which non-financial reporting actually refers, we have a “showcase” full of terms, in some cases misused. For example, there is a great deal of confusion between sustainable development or sustainability, and Corporate Social Responsibility (CSR). For this reason, many companies considered that the CSR or Community Involvement Report that they were usually voluntarily preparing is the same as the mandatory non-financial report or statement, which the above-mentioned normative act requires companies with more than 500 employees. Participating in training courses regarding non-financial reporting delivered by people with practical experience, offers the opportunity to understand correctly from the beginning the process to be followed, the concrete benefits you can have and the efficient planning and management of necessary resources, regardless of their type: financial, human or time.
- What would be the shortcomings of the non-financial reports published in our country? Where do you feel that the know-how is not enough?
Despite the mandatory nature of this reporting established by OMFP no. 1938/2016 which transposes the provisions of EU Directive no. 95/2014, not all companies that have more than 500 employees, pay the necessary attention to the preparation of non-financial reporting. On the one hand, some companies mistakenly consider that there is a difference in content between the two forms provided by law for the publication of non-financial information – a statement or separate report – and choose the first form considering it simpler, and others do not understand the role and importance of this reporting. In the current context, companies need to understand that non-financial reporting is becoming even more important, as it can support them in identifying solutions to counteract the negative effects of the COVID-19 Pandemic, but also to identify development opportunities. We will continue in the next period to raise companies’ awareness of the importance of non-financial reporting through various actions, including training, and to highlight that a transparent company, including for their future plans in case of different scenarios, with a robust system of governance, is more attractive to customers, suppliers, employees, and investors.
About INNOVA Project Consulting
INNOVA is a partner of GRI – Global Reporting Initiative, member of GOLD Community, and an authorized assurance services provider in the field of sustainability recognized by the international institution AccountAbility, as well as an Affiliate Member of the Association for Investor Relations on the Romanian Stock Exchange (ARIR). The company is actively involved in educating the entrepreneurial and organizational environment in Romania, by organizing courses and seminars dedicated to non-financial reporting and is a reliable partner that can support organizations to report non-financial information in accordance with the legislative requirements.