The implications of the new EU directive on non-financial reporting
When the European Union adopts a new directive on non-financial and diversity information, the world of CSR and affected companies both have to respond. Company Secretaries and CSR professionals will need to react to this new directive and learn how to revise and adapt their strategy accordingly. Quickly understanding the implications of the new directive and its impact need to be a priority.
Who will this new directive on non-financial information affect?
The directive, which has a report or explain approach to providing the required information, is intended to provide greater transparency and accountability of non-financial information. It will affect large companies operating in the EU (those with over 500 employees) – approximately 6000 so-called ‘Public Interest Entities’.
What are the main implications of the new directive?
There are three main implications being adopted as a result of the new directive:
- It will be mandatory for companies to report on human rights, anti-corruption, social and employee-related matters, environmental matters and bribery.
- Companies will have to outline their business model, outcomes and risks of the policies on the above topics. They’ll also need to describe the diversity policy applied for management and supervisory bodies.
- Companies will be urged to use an acknowledged framework, including GRI, UNGC, the UNGP on Business and Human Rights, OECD Guidelines, ISO 26000 and the ILO Tripartite Declaration .
What is the expected outcome of this directive?
In short, the directive will help to improve corporate transparency. It will also help improve the relevancy, consistency and comparability of non-financial and diversity information disclosed by companies.
Its adoption demonstrates the EU’s commitment to improving accountability of non-financial information. Teresa Fogelberg, Deputy Chief Executive, GRI said: “This vote is a victory for transparency and this is a great day for the future of sustainability reporting”. She adds that: ‘This directive is the vital catalyst needed to usher in a new era of transparency in the largest economic region in the world’.
Want to find out more about the implications of this new EU directive for you and your organisation? Talk to us.