Europe leads the way on transparent, non-financial reporting
The European Commission is planning to enhance business transparency by requiring larger companies to include social and environmental information in their annual financial reports. It has put forward a proposal to amend accounting legislation to force companies with more than 500 employees to disclose their environmental policies, risks and results, as well as other social and employee-related information. The move is designed to build resilience across Europe by integrating environmental strategies into companies’ wider goals. Read more…
The new measure was first put forward under the Single Market Act in 2011 and reiterated in subsequent Communications on corporate social responsibility (2011) and corporate governance (2012). Extensive consultation was carried out with Member States, companies, investors and other stakeholders to develop options for a single, effective model of disclosure that would offer clarity without imposing undue administrative burdens.
Under the proposal, large companies will be required to provide information on their environmental and social policies, geographical diversity and the ways in which these are implemented. The Commission says the reporting approach will be flexible, involving concise information rather than a fully-fledged and detailed sustainability report. Disclosures may be provided at group level, rather than by each company within a group.
The European Internal Market and Services Commissioner, Michel Barnier, said the changes were about providing useful information for companies, investors and society at large, which was “much demanded by the investor community”. He said companies that had already implemented these changes to their reporting had lower financing costs, attracted and retained talented employees, and were ultimately more successful.
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