Starting in 2024, small and medium-sized enterprises in Spain with more than 200 employees must present a Non-Financial Reporting Directive (NFRD). This new requirement has raised questions for many companies that must now tackle the challenge of documenting their sustainability in a concrete and verifiable way. In this article, we break down what the NFRD entails, how it affects companies, and, most importantly, how to do it transparently without falling into greenwashing.

Why is the NFRD mandatory for SMEs?

The NFRD, regulated by Law 11/2018, was initially mandatory for large companies but is now being extended to SMEs with more than 200 employees. The purpose of this regulation is to promote corporate transparency and sustainability throughout the value chain. Through the NFRD, companies can publicly demonstrate their social, environmental, and ethical impact, improving their relationships with customers, investors, and the community.

Upcoming transition: from NFRD to CSRD

It is important for companies to keep in mind that, starting from the 2025 reports (to be presented in 2026), the NFRD will be replaced by the Corporate Sustainability Reporting Directive (CSRD). This new European regulation will expand transparency obligations and require companies to report their environmental, social, and governance (ESG) impact in a more detailed and harmonized manner across the EU.

The CSRD will increase sustainability requirements by applying stricter standards and expanding the information required for each area. Companies that are already compliant with the NFRD will be better prepared to adapt to the CSRD, but the transition will require adjustments and a higher level of detail in data presentation.

What should the NFRD include?

To comply with the regulation, the NFRD must address key topics that reflect a commitment to sustainability, following the GRI Standards (Global Reporting Initiative) as a reference for a structured and reliable report. The contents should include:

• Environmental Impact: Data on energy and resource consumption, carbon emissions, waste management, and energy efficiency practices. Aligning with the GRI Standards (e.g., GRI 302 for Energy or GRI 305 for Emissions) helps measure and document these impacts in a standardized way.
• Social and Labor impact: Information on working conditions, workplace safety, and equality and inclusion policies. Using standards like GRI 401 (Employment) and GRI 403 (Health and Safety) allows for a structured evaluation of the company’s social welfare.
• Human Rights and Business ethics: Measures to prevent corruption and ensure ethical business practices. In this case, GRI 406 (Non-discrimination) and GRI 205 (Anti-corruption) provide guidelines for addressing these topics.

It is essential that the information is relevant, consistent, and verifiable. The goal is not only to comply with the law but also to ensure that the NFRD reflects true responsibility towards the environment and society.

How to avoid Greenwashing in the NFRD

One of the most common mistakes is falling into greenwashing, which occurs when companies try to project an image of sustainability without real data to back it up. To avoid this, the NFRD must be based on clear, auditable data that reflect the company’s environmental and social impact. Aligning with the GRI Standards is key to providing solid data, as they offer an internationally recognized structure that enhances the credibility of the report.

At We Are Co2nscious, we help companies ensure that their sustainability reports are based on solid and auditable data. We conduct pre-audits and provide guidance in creating NFRD and CSRD reports, ensuring that every piece of data aligns with the GRI and that the company’s commitment is clear and verifiable.

NFRD for companies?

Complying with the NFRD not only ensures that the company aligns with sustainability regulations but also provides important strategic benefits:

• Improved Transparency and Reputation: A complete and well-structured NFRD increases trust among customers, investors, and the community, reinforcing the company’s image.
• Future Preparedness: Adapting to the NFRD now will ease the transition to the CSRD in 2026, when sustainability requirements will become more demanding.
• Boost to Internal Commitment: The preparation of the NFRD fosters a culture of responsibility and commitment throughout the company, which strengthens internal cohesion and a sense of purpose.

Sustainability beyond compliance

The NFRD is more than an obligation for SMEs; it is an opportunity to demonstrate a genuine commitment to sustainability. Adapting to these requirements now not only ensures compliance but also prepares the company for the transition to the CSRD and strengthens its position in an increasingly demanding market. Committing to a well-prepared NFRD aligned with the GRI Standards is an investment in transparency, reputation, and future growth.

At We Are Co2nscious, we are here to support you on this path toward real and lasting sustainability, helping you build reports that honestly reflect your company’s impact and values.

Not sure where to start?

Contact us through our contact form, and we will guide you every step of the way to comply with the NFRD and move toward real sustainability.