On 26 February 2014, the Committee of Permanent Representatives endorsed an agreement between the Council and the European Parliament on a draft directive for the disclosure of nonfinancial and diversity information by certain large companies. The agreement will now have to be formally endorsed by the Council and the European Parliament.
The agreement approves a directive proposed by the Commission on 16 April 2013. This directive will be incorporated into the directive on the annual financial statements and reports of certain types of undertakings, which was adopted on 26 June 2013. It will apply to public interest entities (i.e. listed undertakings, banks, insurance companies or undertakings which are of significant public relevance because of the nature of their business, size or corporate status) with over 500 employees. Approximately 6,000 public interest entities in the EU are expected to fall under the scope of this directive.
The directive requires these entities to disclose in their annual report information on policies, risks and results relating to environmental, social and employee-related matters, respect for human rights, anticorruption and bribery matters. These entities are also required to provide information (including objectives, implementation and results obtained) on their diversity policy in the corporate governance statement. The approach to such narrative reporting is intended to be flexible and nonintrusive. Companies may use existing national or international reporting frameworks and are only required to disclose concise, useful information necessary for an understanding of their development, performance, position and impact of their activity. If they consider that some policy areas are not relevant for them, they will be allowed to explain why this is the case, rather than being obliged to produce a policy. Furthermore, disclosures may be provided at group level rather than by each individual affiliate within a group.
The Commission will consider, in a report to be delivered by 21 July 2018, the possibility of requiring large undertakings to produce, on an annual basis, a country-by-country report for each Member State and third country in which they operate, containing information on profits made, taxes paid on profits and public subsidies received. The report will also take into account developments to increase transparency in financial reporting carried out at an international level.
The proposed directive is available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0207:FIN:EN:PDF
The Council's press release is available at: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/141189.pdf
The Commission's statement is available at: http://europa.eu/rapid/press-release_STATEMENT-14-29_en.htm
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