The European Commission has proposed an amendment to existing accounting legislation in order to improve the transparency of large companies on social and environmental matters. Key elements of the proposal, dated 16 April, are:

  • Companies with more than 500 employees and a balance sheet total of more than EUR 20 million or a net turnover of more than EUR 40 million have to include a non-financial statement in their annual report.
  • This non-financial statement needs to include information relating to at least environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters, and in particular:

    • a description of the policy pursued by the company in relation to these matters;
    • the results of these policies;
    • the risks related to these matters and how the company manages those risks.
  • Large listed companies have to add a description of their diversity policies for their administrative, management and supervisory bodies to the corporate governance statement included in their annual report. This description has to include aspects such as age, gender, geographical diversity, and educational and professional background. It also has to include the objectives of the diversity policy, how it has been implemented and the results in the reporting period.
  • Small and medium-sized listed companies (not exceeding two out of the following three criteria: 250 employees, net turnover of EUR 35 million or balance sheet total of EUR 17.5 million) are exempted.
  • Comply or explain; companies who don't include specific information or do not have a diversity policy, need to give a clear and reasoned explanation for this in their corporate governance statement.
  • The European Commission expects that the proposed amendment will not become effective before 2016 and that companies will not be required to publish their first reports in accordance with these new disclosure requirements before 2017.

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