About 6,000 large companies and groups across the EU will be required to disclose certain non-financial information on environmental and social impacts as well as diversity policies for boards of directors under a new directive adopted Monday by the EU Council.
Large public-interest entities with more than 500 employees will be required to disclose certain non-financial information in their management reports.
These large companies will be required to disclose information on policies, risks, and outcomes regarding:
- Environmental matters.
- Social and employee aspects.
- Respect for human rights.
- Anti-corruption and bribery issues.
Large listed companies will be required to provide information on their diversity policy for their boards on matters such as age, gender, and educational and professional background.
The directive will be published into the EU Official Journal and enter into force 20 days after publication. Member states will have two years to incorporate the directive into national legislation. Companies affected by the directive will be required to start reporting in their financial year of 2017.
Smaller companies will have no new requirements.
Michel Barnier, the European Commission’s vice president in charge of internal market and services, said in a news release that the directive will drive the long-term performance of the EU’s largest companies by significantly improving their transparency and the disclosure of material non-financial information.
“Companies, investors, and society at large will benefit from this increased transparency,” Barnier said. “This is important for Europe’s competitiveness and the creation of more jobs.”
The directive is the first step towards implementing European Council conclusions of May 22nd 2013 on the need for further transparency on tax matters and for ensuring country-by-country reporting for large companies and groups.
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.