European Union Moves towards Disclosure of Non-Financial Information. The European Parliament and the European Council have reached agreement on a proposed amendment to existing accounting legislation to improve the transparency of certain large companies on social, environmental and diversity matters.

 

Under the proposal, large public interest companies with more than 500 employees will be required to disclose relevant and useful environmental and social information in their management reports. For purposes of the proposal, “public interest companies” include listed companies as well as some unlisted companies, such as banks, insurance companies, and other companies that are so designated by EU Member States because of their activities, size or number of employees.

 

Companies will be required to disclose concise, useful information necessary for an understanding of their development, performance, position and impact of their activity, rather than a fully-fledged and detailed report. Furthermore, disclosures may be provided at a group level, rather than by each individual affiliate within a group.

 

Affected companies will need to disclose information on policies, risks and results with respect to environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on boards

of directors.

 

Large listed companies also will be required to provide information on their diversity policy, including information on age, gender, educational and professional background of their board members. Disclosures are to set out the objectives of the policy, how it has been implemented, and the results. Companies which do not have a diversity policy will have to explain why not. This approach is in line with the general EU corporate governance framework.

 

In next steps, the proposal must be adopted jointly by the European Parliament and the EU Member States in the Council.  The proposal is expected to be put to a vote by the European Parliament in April, and the Council will then vote on whether to adopt it. 

 

A press release on this proposal is available at:http://europa.eu/rapid/press-release_statement-14-29_en.htm