EU non financial reporting directive (2014/95/EU)

EU law requires large companies to disclose certain information on the way they operate and manage social and environmental challenges. This helps investors, consumers, policy makers and other stakeholders to evaluate the non-financial performance of large companies and encourages these companies to develop a responsible approach to business.

Greater transparency is expected to make companies more resilient and perform better, both in financial and non-financial terms. Over time this will lead to more robust growth and employment and increased trust among stakeholders, including investors and consumers. Transparent business is also consistent with longer-term investment as reflected in the impact assessment of the Directive 2014/95/EU.

WHY?

Directive 2014/95/EU (The EU Directive on disclosure of non-financial and diversity information by certain large undertakings and groups):

• The EU Directive on disclosure of non-financial and diversity information by certain large undertakings and groups entered into force on 6 December 2014.The deadline for transposition into national legislation by Member States was 6 December 2016.
• This directive amends the accounting directive 2013/34/EU.
• The companies concerned disclose the relevant will have to apply the Directive as of 2018, on information relating to the 2017 financial year.
• The disclosure requirements for non-financial information apply to certain large companies with more than 500 employees.
• The Directive gives companies significant flexibility to disclose relevant information in the way that they consider most useful, including in a separate report.

WHO?

EU rules on non-financial reporting only apply to large public-interest companies with more than 500 employees. This covers approximately 6,000 large companies and groups across the EU, including

• listed companies,
• banks,
• insurance companies,
• other companies designated by national authorities as public-interest entities.

WHAT?

Under Directive 2014/95/EU, large companies have to publish reports on the policies they implement in relation to:

• environmental protection,
• social responsibility and treatment of employees,
• respect for human rights,
• anti-corruption and bribery,
• diversity on company boards (in terms of age, gender, educational and professional background).

Based on EU press release.