What are the legal obligations under the EU Directive on non-financial reporting? How do these differ from current UK regulations?

1. Legal insight- what the EU Directive
on mandatory sustainability reporting
means for your company
YOUR HEADING
September HERE
2014
10.05.2011

2. Key objectives
• increase transparency and increase relevance,
consistency and comparability of non financial
information
• increase diversity in boards of companies
• increase the company’s accountability and
performance

3. Legal elements of the Directive
1.to amend the Accounting Directives
1.1 to amend article 46 and 46a of the Fourth
Directive and Article 36 of the Seventh Directive
2. the legal basis for the proposal is based on
article 50(1) of the Treaty, which is the legal
basis for adopting EU measures
3. ratified on 15 April 2014

4. What must be covered?
• Article 46 1(b) will require large companies to
disclose a statement in their Annual Report
including material information relating to :
– environmental
– social
– employee-related matters
– respect of human rights
– anti-corruption and bribery
•

5. What must the statement include?
1.a description of its policies
2.results
3.risk-related aspects

6. What can companies rely on?
• Companies can rely on the:
– UN Global Compact,
– UN Guiding Principles on Business and Human
rights,
– OECD guidelines for MEs,
– ISO2600,
• They must disclose which framework they have
relied on

7. What if companies don’t do this?
• Where companies do not pursue policies in
relation to ONE of more of these matters, it
must provide an explanation why it has not
done so
• Implication is that companies will need a
policy and procedures in place to meet the
requirements of the Directive
• Member states to determine enforcement
measures

8. What companies are covered by the
obligations?
• The obligation applies only to those
companies:
o whose employees exceeds 500 AND
o exceeds a balance sheet total of 20 million
euros OR a net turnover of 40 million euros

9. Listed companies diversity
requirements
• Large listed companies are to provide
information on their diversity policy, including
aspects concerning age, gender, geographical
diversity and educational and professional
background – this must be included in the
corporate governance statement. Where
companies do not have a diversity policy they
will be obliged to explain why this is the case

10. What about third party verification?
• The report would also contain a report of the
statutory auditors opinion concerning the
consistency or otherwise of the annual report,
including non-financial information contained
in the annual report

11. When will the Directive come into
force?
• 2015-2016
• member states have 2 years to transpose the
Directive into national legislation

12. How does it differ from current UK
reporting standards?
• the UK Companies Act 2006 (Strategic Report and
Directors) Regulations 2013 requires listed, large
and medium sized companies to report on their
non-financial information. Only listed companies
have to provide KPIs.
• there is therefor a possibility that more large
companies will be caught by the provisions of the
EU proposal.
• for more information on the regulatory
requirements for UK Companies see our guide at
www. Clt-envirolaw.com

13. Questions to ask your board?
• Does your company have more than 500
employees? Is it listed? Where?
• What is the annual turnover?
• What policies do you have in place for
environmental, social, human rights and bribery
issues?
• Does the company have a diversity policy?
• Have you considered how to get the report
audited?

14. Help needed?
• Email us at info@cltenvirolaw.com
• We would love to have a chat!

15. www.clt-envirolaw.com