The European Union has adopted its first law requiring disclosure of non-financial information by large companies. About 6,000 large companies and groups will be affected by the new law, which requires the inclusion of environmental, human rights, diversity, anti-corruption, and anti-bribery information in annual reports. Additional information focuses on the company’s diversity policies, including age, gender, educational level, and professional background of administrative and management staff as well as boards of directors.

The quality enhancing components of our framework will boost transparency, and corporate social responsibility processes without placing an undue administrative burden on the compliance officers.
We believe that the proper disclosure of non-financial information will enhance the accountability of large firms towards corporate citizenship and allow stakeholders to use socially responsible business conduct and promoting sustainable growth as an incentive.

Country by country tax reports
The directive(2) affects public interest entities with more than 500 employees. Those entities are listed companies, banks, insurance firms, and other undertakings deemed to have significant public relevance because of their size, status, or nature of their business. Small and midsize enterprises are exempt from the new rules.

Companies falling under the new directive also may be required to include country by country tax reports for any country in which they operate, including information on profits earned, taxes paid on those profits, and any public subsidies received. The European Commission is expected to make its recommendation on the country-specific tax reports by 2018, which is a separate issue from new reporting mandates for companies in the extractives industry.

Sustainability reporting is not fluffy hot air.
Even though member states will have two years to transpose the non-financial reporting directive into national law and corporates have to disclose the sustainability reports for the 2017 financial year, it is advisable to incorporate, embed and integrate the procedures and components in the daily processes. With proper methodology it is also possible to automate the entire process in the IT system which makes the reporting more material and not just fluffy hot air.


(1) http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/intm/144945.pdf

(2) http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm

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