The European Commission has today proposed an amendment to existing accounting legislation in order to improve the transparency of certain large companies on social and environmental matters. Companies concerned will need to disclose information on policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.
Internal Market and Services Commissioner, Michel Barnier said: “Today we are proposing important legislation on business transparency across all sectors. This is about providing useful information for companies, investors and society at large – much demanded by the investor community. Companies that already publish information on their financial and non-financial performances take a longer term perspective in their decision-making. They have lower financing costs, attract and retain talented employees, and ultimately are more successful. This is important for Europe’s competitiveness and the creation of more jobs. Best practices should become the norm. The new rules will only apply to large companies with more than 500 employees as the costs for requiring small and medium-sized enterprises (SMEs) to apply the new rules could outweigh the benefits.”
Under the proposal, large companies with more than 500 employees would be required to disclose relevant and material environmental and social information in their annual reports. The approach taken ensures administrative burdens are kept to a minimum. Concise information which is necessary for understanding a company’s development, performance or position would be made available rather than a fully-fledged and detailed “sustainability” report. If reporting in a specific area is not relevant for a company, it would not be obliged to report but only to explain why this is the case. Furthermore, disclosures may be provided at group level, rather than by each individual company within a group.
The proposed measure has been designed with a non-prescriptive mind-set, and leaves significant flexibility for companies to disclose relevant information in the way that they consider most useful. Companies may use international or national guidelines which they consider appropriate (for instance, the UN Global Compact, ISO 26000, or the German Sustainability Code).
As regards transparency on boardroom diversity, large listed companies would be required to provide information on their diversity policy, covering age, gender, geographical diversity, and educational and professional background. Disclosures would set out the objectives of the policy, how it has been implemented, and results. Companies which do not have a diversity policy would have to explain why not. This approach is in line with the general EU corporate governance framework.
Read more here: http://europa.eu/rapid/press-release_IP-13-330_en.htm?locale=en