13th October 2014
Concerns have arisen over the ability to fulfil the adoption of a new directive for the disclosure of non-financial information.
The Council of the European Union announced that it would be taking up a directive for non-financial information to be disclosed following months of negotiation and debate. It would require 6,000 listed large businesses across the EU to ensure environmental and social impact information is included in their financial reports.
This directive is intended to make sure large businesses demonstrate improved transparency and corporate social responsibility without placing undue administrative burden on those involved.
In the council's statement, Italian minister of economy and finance Pier Carlo Padoan said that higher transparency through the disclosure of non-financial information will make large firms more accountable to European citizens.
However, it has not yet been specified how businesses should report the information. There is no international financial reporting standards equivalent either for non-financial reporting. This means that there could be issues with consistency across member states.
Climate Disclosure Standards Board (CDSB) managing director Mardi McBrien said that the EU's intention is good but added: "As drafted, the directive will not sufficiently address the information gap due to the lack of consistent and comparable information that will be reported."
She said that the European Commission should develop its guidance further, making it consistent and recommending member states to do the same when they implement it.
CDSB has been working with industry stakeholders, which includes firms and membership organisations, to find ways to establish methods of reporting information in a consistent and timely manner.
The directive only affects companies with more than 500 employees, including listed companies, banks, insurance firms and other undertakings that are in the public interest. This could be to do with the size, status or nature of the business. Small and medium sized businesses are not included under the new rules.
Information that should be reported includes the company's diversity policies, such as the age, gender, educational level and professional background of administrative staff, management staff and directors.