Awareness of integrated reporting is increasing, further progress is needed

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The AFM carried out three thematic reviews in 2016 focusing on the annual reporting of a selected group of listed companies. The reviews concerned integrated reporting, the risk paragraph and the scope and quality of disclosures in annual reports.

The AFM notes that companies are devoting more attention to integrated reporting, but that further improvement can be made, for instance as regards comparability. The AFM also advises companies to provide a sensitivity analysis in their risk paragraph. Regarding the disclosures, the AFM notes that how companies have addressed the scope and quality of their disclosures varies.

Integrated reporting: awareness is growing

The AFM’s review shows that most of the companies are making progress in the right direction with respect to integrated reporting. This is important, since a more integrated approach to management with greater attention to the contribution to strategic goals, as well as management of the associated risks, makes companies stronger. We expect this to lead to more socially responsible investing and promote sustainable financial well-being.

There has been an increase in the reporting of more than only financial information compared to previous years. There is increased attention to the value creation model, the stakeholder dialogue and the materiality analysis. Integrated reporting is expected to contribute to the strategic management within the company and thus is more effective than simply presenting accounts.

Another positive trend is that companies in the AMX and AScX indices are beginning to adopt (aspects of) integrated reporting as well as the AEX companies. On the other hand, the AFM notes that there are still too few companies reporting on certain aspects of non-financial information. There needs to be more attention to the reporting of both financial and non-financial information in one and the same report, the description of how companies create value and the translation of strategy into targets and relevant performance indicators.

Investors and other stakeholders increasingly need non-financial information. Responsible investing also implies that institutional investors have to give account of the social impact of their investment decisions. The AFM also notes that self-regulation is being replaced by regulation and that the FSB, the banking supervisors and the EU are leading the way in the further formulation of this regulation. The AFM calls on companies to participate in these national and international developments and to make further progress with respect to integrated reporting. The implementation of the EU non-financial information directive in Dutch law, which will take effect from the 2017 financial year, will further encourage companies to adopt integrated reporting.

“After the Climate Agreement in Paris and with the increased attention to the reporting of risks other than purely financial reporting risks, the transition to more sustainable business models and a sustainable economy requires mature integrated reporting. Banking supervisors are actively involved nationally and internationally in calling attention to climate change risk and the impact of what are known as stranded assets on the soundness of financial institutions. In our role as the supervisor of reporting by listed companies, we hope that the findings of this review will encourage companies to make further progress with respect to integrated reporting,” says Gerben Everts, executive board member of the AFM.

Risk paragraph: most companies have made improvements

A large majority of the companies are focusing on improving their risk paragraph. The quantification of risks and the inclusion of sensitivity analyses with respect to risks is another area of development. The AFM recognises that reporting sensitivity analyses with respect to major risks is complex and potentially competition-sensitive, but it recommends that companies should provide a sensitivity analysis since such analyses are relevant to the users. Reporting is increasingly provided on material deficiencies, significant changes and scheduled improvements.

Changes to the scope and quality of disclosures varies

The extent to which companies are addressing the scope and quality of disclosures varies. The AFM calls on companies to follow the ‘Disclosure Initiative’ and the ‘Better Communication’ theme of the IASB and to use the results of these projects to further increase the quality and limit the scope of disclosures in the financial statements in the coming years. The upcoming introduction of a number of new and important IFRS standards on financial instruments (IFRS 9), revenue recognition (IFRS 15) and leases (IFRS 16) can be used by companies for this purpose.

Ongoing supervision of financial reporting

In addition to the above-mentioned thematic reviews, the AFM is currently engaged in desktop reviews of the 2015 financial reporting of a large number of listed companies. We will report on our ongoing supervision of financial reporting in early 2017.

Information for the media: For questions, journalists may contact Yvonne van de Kuil, AFM Press Officer, on 06 -27015557 or by e-mail to

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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