BIS has issued a consultation paper seeking views on the best approach to implementing the Non-Financial Reporting Directive which came into force on 14 December 2014 and must be implemented by member states by 6 December 2016 and will apply to financial years starting on or after 1 January 2017.
The Directive will require large public-interest entities with more than 500 employees to publish an annual non-financial statement containing information relating to the environment, social and employee matters, respect for human rights, anti-corruption and bribery matters. Public-interest entities (PIEs) include companies listed on EU markets, some unlisted companies such as insurance companies, credit institutions and others designated as such by Member States because of their activities, size or number of employees.
In the UK all companies (unless subject to the small companies exemption) already have to include some non-financial matters in their standalone strategic report. The content of the report depends on the size of the company and quoted companies are subject to additional reporting requirements.
In the consultation paper BIS asks for feedback on:
- Different implementation options.Two different approaches are put forward.The first where the EU regime would apply to those PIEs that fall within its scope, which would mean repealing the current additional requirements for quoted companies or a second approach where there are separate reporting requirements for large PIEs covered by the Directive and separate reporting requirements for quoted companies under the Companies Act 2006.
- whether the UK should take on board the option for member states to allow companies to prepare a separate report containing non-financial information outside of the annual report
- Whether the UK should adopt the option to require the non-financial statement to be independently verified and what the relative advantages and disadvantages of doing so might be.
Part 2 of the consultation paper takes the opportunity to seek feedback on options for wider reforms to the scope of narrative reporting by UK companies that fall outside the scope of implementing the Directive.
The Consultation closes on 15 April. This is the same date the EU consultation on guidelines for reporting non-financial information closes. For details of this consultation please see the article in last month's newsletter.
The BIS consultation paper can be found here.