The Legal Affairs Committee significantly strengthened the proposals put forward by the European Commission, which require all large European companies to disclose information in their annual report regarding their impacts on the environment and on human rights throughout their supply chains.

According to the European Coalition for Corporate Justice (ECCJ), the position raises the prospect of a heated stand-off with member states as some national governments are seeking to “water down” the Commission’s proposals.

The Parliament will now enter into negotiations with the Commission and Council on the future of the non-financial reporting reform.

Commenting on the outcome, coordinator of the European Coalition for Corporate Justice, Jérome Chaplier, said: “The Parliament is sending a clear signal that companies must be transparent about the impacts of their activities on people and the environment, wherever they operate.
Citizens are entitled to know if their clothes have come from an unsafe garment factory in Bangladesh, or if there are conflict minerals in their smartphone.”

Chaplier added that while it was disappointing that MEPs had not stepped-in to tighten loopholes in the proposal – including correcting the absence of specific monitoring and enforcement mechanisms – the proposals for mandatory reporting still represent an important step towards creating a level playing field across Europe.

The Parliament is expected to face tough negotiations with the Council where some member states are believed to be resisting a robust mandatory approach, and are pushing for the inclusion of wide-ranging exemption clauses to allow companies greater flexibility.

Chaplier said: “The Parliament must now remain firm in its position and stand up to those within the Council who are intent on negating the very purpose of this reform. Countries like the UK, Germany and Poland are trying to make the legislation meaningless. Improved corporate transparency is essential for workers, communities, consumers whose lives are affected by companies’ activities. This reform is in the interests of everyone.”

The European Commission estimates that just 2,500 out of 42,000 large European companies currently disclose environmental and social information.

The ECCJ argues that the voluntary nature of these reports and the lack of common standards mean that much of the information reported is effectively meaningless, or company greenwashing.

Leigh Stringer

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie