Consultation on 'Non-binding guidelines for reporting of non-financial information by companies'

  • Issuer: European Commission
  • Ends on: 18/03/2016

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About this consultation

The European Commission (EC) has launched a public consultation to help inform its non-binding guidelines on how large public-interest entities, such as listed companies and banks, could disclose social (including health and safety), environmental and other non-financial information.

These guidelines aim to assist companies in the reporting process, providing them with a methodology that will facilitate the disclosure of relevant, useful and comparable non-financial information. The guidelines will be drawn up in line with the requirements and scope set out in the Directive on disclosure of non-financial and diversity information by certain large companies and groups, which applies to large public-interest entities with more than 500 employees.

Background

In 2014, an amendment to the Accounting Directive (2014/95/EU) was adopted by the European Parliament and the Council regarding disclosure of non-financial and diversity information by certain large undertakings and groups.

EU Member States should transpose the rules on non-financial reporting into national legislation by 6 December 2016 and the EC is organizing transposition workshops to assist national authorities. The EC is also preparing non-binding guidelines on the methodology for reporting non-financial information by end-2016.

Proposed changes

Large public-interest entities (listed companies, banks, insurance undertakings and other companies that are so designated by Member States) with more than 500 employees are required to disclose in their management report relevant and useful information on their policies, main risks and outcomes relating to at least:

  • environmental matters
  • social and employee aspects
  • respect for human rights
  • anticorruption and bribery issues and
  • diversity in their board of directors.

There is flexibility for companies to disclose relevant information (including reporting in a separate report), and they may rely on international, European or national guidelines (e.g. the UN Global Compact, the OECD Guidelines for Multinational Enterprises, ISO 26000, etc.).

Have your say

Please send us your responses to the EC consultation questions (listed below) or any other comments to consultation@iosh.co.uk by 18 March 2016:

Consultation questions

I. General principles and key attributes of the non-financial information

Q1 What aspects of disclosure of non-financial information do you think that should be addressed by the guidelines?

Please, order in terms of importance (1 least important, 9 most important)

  • Materiality/Relevance
  • Usefulness
  • Comparability
  • Avoiding undue administrative burden
  • Comprehensiveness
  • Fairness and balance
  • Understandability
  • Reliability
  • Other, please specify: text

Q2 Who should be considered in your opinion the main audience of the non-financial statement?

Please, check the box of the alternative that you consider more appropriate.

  • The shareholders
  • The investment community in a broad sense
  • Users of information with an economic interest, such as suppliers, customers, employees, etc.
  • All users of information (including consumers, local communities, NGOs, etc.)
  • Other, please specify: text

Q2.1 Would you, please, provide a brief explanation? (text – 400 characters)

Q3 In your opinion, what features make a piece of information material/relevant for the purposes of the non-financial statement?

Please, order in terms of importance (1 least important, 7 most important)

  • Useful for the management/directors of the company
  • Relevant for shareholders or investors' decision-making
  • Necessary to understand the impacts of the company's activity
  • Necessary to understand the company's development, performance and position
  • Necessary to understand how the company manages non-financial risks
  • Other, please specify: text

Q3.1 Would you, please, provide a brief explanation? (text – 400 characters)

II. Content of the non-binding guidelines

Q4 Do you think that the guidelines will be more useful for companies and users if they set out general principles and key ideas or if they put forward solutions in a detailed manner, including on specific sectoral issues? Please, indicate on a scale from 1 to 5 (1 geared towards general principles, 5 high level of detail/prescription)

Q4.1 Would you, please, provide a brief explanation? (text – 400 characters)

Q5 Please, provide a brief description of how you think that the following matters should be treated in the guidelines, including as appropriate how they should be defined and described:

a.    Business model (text – 400 characters)
b.    Policies (text – 400 characters)
c.    Due diligence process (text – 400 characters)
d.    Business relationships (text – 400 characters)
e.    Key performance indicators –KPIs (text – 400 characters)
f.    Outcome of policies (text – 400 characters)
g.    Principal risks (text – 400 characters)
h.    Impact of the activity (text – 400 characters)
i.    Adverse impacts (text – 400 characters)
j.    Information omitted in exceptional cases where disclosure would be seriously prejudicial (text – 400 characters)

Q6 How do you think that the guidelines should approach the disclosure of key performance indicators (KPIs)?

Please, indicate your two preferred approaches (1 Best option, 2 Second preferred option).

  • The guidelines should highlight key principles on how to disclose relevant KPIs and complementariness with narrative and/or financial information as applicable
  • The guidelines should make reference to KPIs proposed by other frameworks where addressing concrete matters or issues
  • The guidelines should include a comprehensive list of KPIs, general and sectoral
  • The guidelines should provide flexibility for companies to exercise judgement in deciding what KPIs should be included in their disclosures
  • Other, please specify: text

Q6.1 Would you, please, provide a brief explanation? (text – 400 characters)

Q7 Do you think that the guidelines should include guidance on specific sectoral issues such as responsible supply chain management of conflict minerals?

Please, indicate on a scale from 1 to 5 (1 geared towards general principles, 5 high level of detail/prescription)

Q7.1 Would you, please, provide a brief explanation? (text – 400 characters)

III. Interaction with other frameworks and other aspects

Q8 How do you think that the guidelines should relate to existing national, international or other EU-based frameworks (such as UN Global Compact, the UN Guiding Principles on Business and Human Rights, OECD guidelines for multinational enterprises, the ILO Tripartite Declaration of principles concerning multinational enterprises and social policy, EMAS, etc.)?

Please, order in line with your views (1 least in line, 6 most in line)

  • The guidelines should include detailed solutions and be an exhaustive document in a way that could make unnecessary for companies the use of other guidelines
  • The guidelines should be complementary to other frameworks
  • The guidelines should make reference to other frameworks where addressing concrete matters or specific issues
  • The guidelines should get general inspiration from other frameworks
  • The guidelines should explain how content produced in the context of other frameworks could be used in the non-financial statement
  • Other, please specify: text

Q8.1 Would you, please, provide a brief explanation? (text – 400 characters)

Q9 Do you think that when preparing the guidelines only the companies included in the scope of the directive should be considered, or that the interests, characteristics and/or requirements of other companies that prepare management reports should be taken into account as well?

Please, check the box of the alternative that you consider most appropriate.

  • Specific to the requirements of the companies under scope of the directive
  • Consider all large companies
  • Consider all companies
  • Focus on the requirements of the companies under the scope of the directive, but also propose best practice for other companies that prepare management reports

Q9.1 Accordingly, do you think that the content of the guidelines should be different according to the targeted companies? Would you please, provide a brief explanation? (text – 400 characters)

Q10 for companies only

IV. Disclosures related to board diversity policy

Q11 Should the guidelines provide more clarity on what companies should disclose as regards their board diversity?

  • Yes
  • No
  • No position

Q11.1 Would you, please, provide a brief explanation? (text – 400 characters)

V. Final

Please, provide, as needed, any relevant document or information that you consider useful for the purposes of this consultation.

In doing so, respondents are invited to take into account the content of recital 7 of the directive:

“Where undertakings are required to prepare a non-financial statement, that statement should contain, as regards environmental matters, details of the current and foreseeable impacts of the undertaking's operations on the environment, and, as appropriate, on health and safety, the use of renewable and/or non-renewable energy, greenhouse gas emissions, water use and air pollution. As regards social and employee-related matters, the information provided in the statement may concern the actions taken to ensure gender equality, implementation of fundamental conventions of the International Labour Organisation, working conditions, social dialogue, respect for the right of workers to be informed and consulted, respect for trade union rights, health and safety at work and the dialogue with local communities, and/or the actions taken to ensure the protection and the development of those communities. With regard to human rights, anti-corruption and bribery, the non-financial statement could include information on the prevention of human rights abuses and/or on instruments in place to fight corruption and bribery.”

IOSH members wishing to also respond individually to the EC can do so by visiting here and responding by 15 April 2016.