EU Commission calls on businesses to disclose more environmental information
The European Commission has proposed an amendment to existing accounting legislation which aims to improve the transparency of large companies on social and environmental matters.
Companies concerned will need to disclose information on policies, risks and results on environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.
Internal Market and Services Commissioner, Michel Barnier said: “Today we are proposing important legislation on business transparency across all sectors. This is about providing useful information for companies, investors and society at large – much demanded by the investor community.
“Companies that already publish information on their financial and non-financial performances take a longer term perspective in their decision-making. They have lower financing costs, attract and retain talented employees, and ultimately are more successful”.
Barnier said the new rules will only apply to large companies with more than 500 employees as the costs for requiring small and medium-sized enterprises (SMEs) to apply the new rules could outweigh the benefits.
Under the proposal, large companies with more than 500 employees would be required to disclose relevant and material environmental and social information in their annual reports.
The Commission’s proposal means that concise information which is necessary for understanding a company’s development, performance or position would be made available rather than a fully-fledged and detailed sustainability report.
If reporting in a specific area is not relevant for a company, it would not be obliged to report but only to explain why this is the case.
Furthermore, disclosures may be provided at group level, rather than by each individual company within a group.
The Commission said the proposed measure has been designed with a non-prescriptive mind-set, and claims to leave significant flexibility for companies to disclose relevant information in a way that they consider most useful.
It added that companies may use international or national guidelines which they consider appropriate, including “the UN Global Compact, ISO 26000, or the German Sustainability Code”.