LARGE COMPANIES could soon have to divulge more information on the social and environmental impacts of their business under proposals announced by the European Commission (EC).
The proposal, which involves an amendment to existing accounting legislation, would require companies with more than 500 employees to disclose relevant and material environmental and social information in their annual reports.
In the UK, large companies are currently preparing for mandatory carbon reporting (see Footprint April), but the European proposals go even further.
Internal Market and Services Commissioner, Michel Barnier, said administrative burdens would be kept to a minimum, however. Concise information, necessary for understanding a company’s development, performance or position would be made available rather than a fully-fledged and detailed "sustainability" report, he explained.
FEE (the Federation of European Accountants) welcomed the proposals. Chief executive Olivier Boutellis-Taft said the proposal moves reporting in the right direction and towards “the need for ‘better’ and not ‘more’ reporting”. He said it is critical to make the bridge between financial performance and the broader picture. “In today's world, historical financial information alone is insufficient to inform stakeholders on a business' capacity and prospects to create sustainable value,” he added.
FEE President André Kilesse said “increased corporate transparency is fundamental to enhancing (or regaining) trust in business”.
Commissioner Barnier said: “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.”
Small and medium-sized enterprises (SMEs) are not part of the proposals.
- Footprint recently covered sustainability reporting as part of an industry forum.