Non-financial disclosures demands for EU firms
Greater demands are to be put on some European firms to make more non-financial disclosures, after an agreement was reached on the subject among MEPs.
An amendment to existing accounting legislation will be introduced that will improve transparency among certain large companies on social, environmental and diversity matters.
It will mean much greater efforts will be needed to ensure compliance with European Union accounting rules. The changes will cover the environment, social and employee-related matters, human rights, anti-corruption and bribery, and diversity on boards of directors.
“Companies, investors and society at large will benefit from increased transparency,” said Michel Barnier, commissioner for the Internal Market and Services.
The amendments will affect companies with more than 500 employees, thought to be amount to roughly 6,000 across the EU, though the move raises the prospect of similar requirements gradually being placed on smaller companies.
However, Mr Barnier was keen to play down any suggestion that smaller companies could eventually be caught up in the legislation.
“The new rules will only apply to some large companies with more than 500 employees, as the costs for requiring small and medium-sized enterprises (SMEs) to apply them could outweigh the benefits," he said.
Meanwhile, he said that while the European Commission has to report back on country-by-country reporting on tax matters by 2018, he was “sorry that the spirit of the European Council conclusions will not be taken forward as quickly as I had hoped”.
According to the release from the EC, the reporting rules leave “significant flexibility” for companies to disclose relevant information how they would like to, such as in a separate report or as part of their annual financial results.
Companies will be able to use international, European or national guidelines which they consider appropriate, including the UN Global Compact, ISO 26000, or the German Sustainability Code, the EC said.