The introduction of the EU Non-Financial Reporting Directive (NFRD) next year imposes a range of obligations on companies with over five hundred employees. One of the most interesting aspects is the requirement for companies to report on the environmental impact of their activities and, furthermore, details of how they are mitigating this impact.
These provisions are being introduced at a time when 'Environmental Social and Governance' (ESG) and broader sustainability themes are rapidly ascending the corporate agenda and the attendant investor appetite for transparent, responsible investment is growing exponentially.
Taken together these two elements present the perfect backdrop for financial institutions to embrace the new age of sustainability and recalibrate their business models ensuring they are fit for purpose in the coming decades. Failure to adapt to the new business landscape will inevitably lead to contraction and demise – so even a reluctance to engage with elements of this new paradigm will send out a damning message to investors.