The State of Non-Financial Information refers to a report in which organizations provide relevant information about their performance in non-financial aspects, such as environmental sustainability, corporate social responsibility, human rights, diversity and inclusion, among others.
The objective of the EINF is to provide stakeholders with a broader view of the organization's impact in the social, environmental, and governance areas, in addition to traditional financial information. This additional information helps assess the organization's sustainability and commitment to responsible and ethical practices.
It's important to note that the EINF may vary depending on the country and specific regulations. Some jurisdictions have established legal or regulatory requirements for certain organizations to submit non-financial information reports. These reports may include key metrics, objectives, policies, initiatives, and other relevant data related to the organization's non-financial performance.
The EINF can be presented as an independent report or as a section within the organization's annual reports. Additionally, there are international frameworks and standards that provide guidelines and structures for the preparation of non-financial information reports, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).
The process of preparing the State of Non-Financial Information (EINF) involves several key stages. Here's a general guide on how the EINF is prepared:
1. Identification of topics and materiality: The first step is to identify the relevant topics for the organization in terms of sustainability and social responsibility. This involves determining which non-financial aspects are important for the organization and its stakeholders, such as environmental impact, human rights, diversity, and inclusion, among others. It's essential to conduct a materiality analysis to identify the most significant topics and prioritize the collection and disclosure of information related to them.
2. Data collection: Once the relevant topics have been identified, the organization must gather pertinent data and evidence. This may involve implementing data management systems and collecting information from different internal sources, such as human resources, environment, and operations departments, as well as from suppliers and other external stakeholders.
3. Establishment of metrics and objectives: It's important to define specific metrics and objectives to measure and monitor the organization's non-financial performance in relation to the identified topics. These metrics can include key performance indicators (KPIs) related to carbon emissions, water consumption, gender diversity in leadership, among others. Objectives help establish long-term goals and provide a basis for continuous improvement.
4. Analysis and evaluation: Once the data has been collected, an analysis and evaluation of the non-financial information are conducted. This may include identifying trends, comparing with previous years, evaluating performance against established objectives, and analyzing gaps and improvement opportunities.
5.Presentation and disclosure: The organization prepares the EINF report, which includes the collected information, the analysis conducted, and the results obtained. The report must be clear, balanced, accurate, and understandable to stakeholders. Additionally, it's important to comply with applicable reporting requirements and frameworks, such as the Global Reporting Initiative (GRI) or the EU framework on non-financial reporting, if relevant to the organization.
6. Third-party verification: Optionally, the organization may choose to undergo independent verification of the EINF through an external auditing firm or verification entity. This verification provides increased credibility and confidence in the presented information.
In Spain, the preparation of the State of Non-Financial Information (EINF) is regulated by Law 11/2018, dated December 28, which incorporates Directive 2014/95/EU of the European Parliament and of the Council on the disclosure of non-financial and diversity information by certain large companies and groups. This law establishes the requirements for the preparation and submission of the EINF in the country.
According to Spanish regulations, the companies required to prepare the EINF are as follows:
Large companies: Those that meet two out of the following three criteria during two consecutive financial years:
a. Total assets exceeding 20 million euros.
b. Net turnover exceeding 40 million euros.
c. Average number of employees exceeding 250.
Public interest entities: Companies whose securities are admitted to trading on a regulated market in the European Union and considered to be of public interest due to meeting certain additional requirements.
The EINF must include relevant information on environmental, social, labor, human rights, anti-corruption and bribery, and diversity aspects within the company's management. Furthermore, the information must be presented in a balanced, understandable, comparative, and reliable manner.
It's important to highlight that, in Spain, the EINF must be subject to third-party verification by an independent auditor or verification entity to ensure the reliability of the presented information. The obligated companies must include the EINF as part of their management report, which is submitted along with the annual accounts. The report must be approved by the company's governing body and made available to the public within four months from the end of the financial year.
Third-party verification of the State of Non-Financial Information (EINF) involves the independent review of the information presented in the report by an external entity or company. This verification aims to assess the reliability and quality of the non-financial information provided by the company.
In general, there are different types of companies that can perform the verification of the EINF. Some of them include:
- Audit firms: Large audit firms, also known as the "Big Four" (Deloitte, PwC, EY, and KPMG), often offer verification and assurance services for non-financial information. These firms have expertise in auditing and are qualified to assess the quality and accuracy of the presented information.
- Specialized consulting firms: There are consulting firms that specialize in the verification and assurance of sustainability and non-financial reports. These firms have experience in the field of corporate social responsibility, sustainability, and reporting, and can provide verification services tailored to the specific needs of each company.
- Verification and certification bodies: There are organizations specialized in the verification and certification of sustainability and non-financial reports. These entities have expertise in the evaluation and verification of non-financial information and can issue certificates or verification reports that support the credibility and accuracy of the presented information.
When selecting a company to perform the verification of the EINF, it is important to consider their experience, credibility, and reputation in the field of non-financial information verification. It is recommended to seek companies with solid technical knowledge, relevant experience, and recognition in the field of sustainability and non-financial reporting.
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